Nepal is walking a tightrope between India and China

This year, amid a raging pandemic, a looming global economic crisis and devastating floods and landslides, the Himalayan nation of Nepal has been in political and diplomatic turmoil over its disputed border with its much larger neighbour, India. The dispute has deepened strains within the current government and reignited debate over the future of Nepal’s relations with India and China.

On May 8, India inaugurated a link road built in a disputed territory which falls near a strategic three-way junction with Nepal and China. Nepal’s Prime Minister KP Sharma Oli, who was already facing multiple domestic political challenges, adopted a defiant stance against New Delhi and deemed the new road an attack on Nepal’s sovereignty.

He issued a new map which places the disputed region within Nepal’s borders and swiftly passed it through both houses of the parliament. His ruling Nepal Communist Party (NCP) also pushed an amendment to the country’s citizenship law that requires foreign women marrying Nepali men (most of whom are Indian) to wait for seven years for naturalisation.

Oli’s nationalist stance earned him some much-needed support among the Nepalese public, but proved insufficient to silence his many critics who have long been demanding his resignation citing his failure to provide effective leadership at a time of crisis. Commentators and officials both in India and Nepal accused him of cynically using the border dispute to stir nationalist sentiment and outmanoeuvre his rivals in the NCP, or acting at China’s behest.

In response, Oli has claimed that his political rivals within the ruling party are “colluding with India to oust him from power”. His chief opponent in the NCP, former Prime Minister Pushpa Kamal Dahal – commonly known as “Prachanda” – described the accusation as “neither politically correct nor diplomatically appropriate,” asserting that it was he, not India, who sought Oli’s resignation.

Rivalries within the NCP undoubtedly played a role in aggravating Nepal’s political crisis. Nevertheless, it is also impossible to deny the significant role Nepal’s two giant neighbours, India and China, have played in bringing about the turmoil.

All politics is local

In May, the Indian Army chief General MM Naravane went out of his way to suggest that Oli’s objection to India’s road construction was instigated by Beijing. Indian news outlets, particularly those close to the ruling Hindu nationalist Bharatiya Janata Party (BJP), relentlessly attacked Oli for his alleged pro-China and anti-India stance. One Indian channel directly warned Oli not to challenge India, a country on which “you depend so heavily”.

The Indian media has obsessively reported on the activities of the Chinese Ambassador to Nepal, Hou Yanqi, even levelling tasteless allegations that the “model-like” envoy has “honey-trapped” Oli. She has indeed been active throughout the crisis, holding numerous meetings with senior Nepali political leaders. And China does appear to be standing by Oli in this dispute, but there is no evidence that Beijing is goading him into taking on New Delhi.

India too is by no means a mere bystander. Top Indian intelligence officials, according to a report in the Daily Pioneer, have been actively courting senior Nepali politicians. The Indian media’s relentless onslaught on Oli also gives weight to the 68-year-old leader’s accusations that India is actively working to topple his government. And so too does the recent past. India has brought down several governments in Kathmandu over the years.

Observers generally see Oli as supported by Beijing and Prachanda by New Delhi. There is, however, little publicly available evidence to support the claim that New Delhi is propping up Prachanda to replace Oli.

Prachanda has his own reasons for sparring with Oli. In 2018, the leftist parties of Oli and Prachanda merged. The two men have shared the post of chairman of the newly-formed NCP and reportedly agreed to alternate as prime minister over the course of the NCP’s five-year term in power, which is now at its halfway point. Last November, Prachanda reportedly accepted a revised deal that would give him control over the party while allowing Oli to continue as prime minister. Oli appears not to have held up his end of the bargain, hence Prachanda’s anger.

Even if Prachanda is indeed backed by New Delhi, the partnership is likely tactical and temporary. Prachanda has had a complicated relationship with India. India facilitated the integration of Nepal’s Maoist rebels – led by Prachanda – into the political fold in the mid-2000s, but also helped force Prachanda’s resignation as prime minister in 2009 after he took on the Nepal Army, a key lever of Indian influence.

Notably, Prachanda has not played the anti-Beijing card to gain the upper hand against Oli. In fact, he has also taken positions as of late that can be seen as pro-Beijing. While Oli supported the United States Millennium Challenge Corporation’s (MCC) Nepal compact – which Washington says aims to increase the availability of electricity and lower the cost of transportation in the country – Prachanda opposed it, citing US statements linking the project to the Indo-Pacific Strategy, which is largely seen as a China containment policy.

Prachanda made a veiled reference to the MCC project in an address to the Chinese Communist Party last month, stating that any developmental assistance inconsistent with the country’s policy of non-alignment “can’t be accepted by any means.”

Indian heavy-handedness created opening for China

If Oli is forced to resign, it would not necessarily be an enduring setback for Beijing. As Nepali news editor Biswas Baral argues, the cohesion of the NCP is more important for Beijing than Oli’s survival. Furthermore, the NCP leadership is likely to sustain its desire for China to play a balancing role even after Oli’s departure, due to its deep-rooted fear of Indian dominance.

Over the decades, India has played a paternalistic role in Nepal, which has been helpful in many ways. However, New Delhi has also been heavy-handed and abusive in its dealings with its Himalayan neighbour, leveraging the landlocked country’s dependence on it for access to the sea. India is Nepal’s largest trade partner, accounting for 65 percent of its imports and 57 percent of its exports in 2017.

India has used connectivity as a coercive tool, blockading Nepal three times in the past 30 years – most recently in 2015 after a devastating earthquake. The blockade imposed by India on Nepal in 1989 was partly out of concerns over Nepal’s growing proximity to China. While China’s military sales to Nepal grew, India remained the predominant external power in the country.

India’s most recent blockade of Nepal has proved to be a strategic folly, stirring Nepali nationalism, which has had an anti-India strain. The blockade roughly coincided with China’s launch of the Belt and Road Initiative (BRI), giving Beijing an opportunity to step in and pledge large sums of aid and investment.

China’s massive investments in extending its domestic rail network toward its western and southwestern frontier amplify its efforts to reshape the region’s economic geography. Its drive to expand connectivity in the region, for example, provided Nepal with an alternative route to the sea.

In 2016, China and Nepal concluded a transport agreement that gives Kathmandu access to four Chinese eastern seaports. While India’s Calcutta port is closest to Nepal by distance, Chinese rail service to Tibet, which borders Nepal, provides it with maritime access that may be shorter in time and more competitive in cost than Calcutta.

In 2017, Nepal officially joined the Belt and Road Initiative, making clear to India, a lead opponent of the BRI, that it is now a country with options.

More money, more problems

There is, of course, a price to siding with China. Beijing is notorious for its unfair trade practices. And its economic partnerships with developing countries are often based on loans rather than grants. Many high-risk recipients of Chinese lending struggle to repay their debt to Beijing – a trend that has triggered accusations of “debt-trap diplomacy”.

Following their transport agreement, Beijing and Kathmandu are also in talks for building a trans-Himalayan railway linking Nepal to China’s domestic transport network, but the estimated $2.5bn cost of the project may eventually prove too expensive for Nepal. Should the project move forward on a loan basis, Kathmandu may struggle to generate the revenue-generating capacity to repay it, and the country could end up trading Indian dominance for Chinese.

Allying with Beijing also requires ritualistic professions of agreement on its “core interests” and policing of Chinese national migrants and refugees, such as Uighurs and Tibetans. Notably, Nepal recently backed China’s new national security law for Hong Kong.
Neither China nor India are benign, altruistic powers. Nepali leaders appear to be aware of that. Even if Prachanda comes to power with some help and support from New Delhi, he is unlikely to push away Beijing’s hand.

Whoever leads Nepal in the years to come will have to manage a geopolitical environment that is only growing in complexity. Today, Nepal is area of contestation not just between China and India, but also in the broader U.S.-China Cold War.

At first glance, Prachanda’s opposition to the USS MCC’s Nepal compact appears to make little sense. Washington is offering a $500m grant, not a loan, to Kathmandu to support the construction of a high-voltage electric power line and upgraded roads. But some Nepali observers fear that the power line project, which will link to India’s electric power grid, may increase Kathmandu’s dependence on New Delhi and harm its burgeoning trade partnerships with Beijing.

Nepal is between a rock and a hard place. It undoubtedly wants US support, but equally fears increasing Indian dominance and hence wants to keep China on its side for balance. To receive much needed aid and protection, it somehow needs to simultaneously satisfy these regional and global superpowers, who are all capable and willing to manipulate Kathmandu’s internal divisions and weaknesses for their own benefit. Such a difficult balancing act requires more than will. It requires political stability at home and consensus among domestic power brokers – all of which, unfortunately, have proven to be elusive in Nepal.

The views expressed in this article are the author’s own and do not necessarily reflect Al Jazeera’s editorial stance.