Shifting Balance of Power and Nepal’s “Equidistance Policy” Towards India and China


Post 1791-92 when the Chinese forces trounced Nepalese army from Tibet, Nepal was reduced as a “tributary state”, sending tribute to China once in a five year, the last being in 1910. Nepal played the so called “China card” against the British India during the Anglo-Nepalese War of 1814-1816, but China refrained from help and pronounced “Ghurkhas as bullies and insatiably avaricious, responsible for fomenting trouble in the south-western frontier.” When Nepal tried to play the “British India card” threatening China that it will throw its allegiance to the British, China got irked and rebuked Nepal: “if you throw your allegiance to the British, then you would not be entitled to send tributes to the Celestial Empire…As regards dealing with the tribes outside our frontiers, the Celestial Empire will not extend militarily assistance to any of the warring side [referring to the Nepalese invasion of Sikkim]. The Celestial Empire is least bothered if your country concludes peace or goes to war with the British, approach or eventually throws your allegiance to the British.” (Deepak, B. R. India and China 1904-2004: A Century of Pace and Conflict, p.13).

Today, when China has emerged as the second largest economy of the world and the challenger to the established hegemon, to expect China to be indifferent to the smaller countries in the vicinity and beyond, as shown above would be a wishful thinking. As for Nepal or any other country, not to benefit from the Chinese deep pockets, would equally be foolish and ignoring the ground realities. As for India, which rather than helping Nepal to overcome the calamity of devastating earthquake in 2015, threw Nepal further in the abyss of misery by ‘supporting’ the Madhesi blockade. Furthermore, Oli the then Prime Minister had blamed India for removing him “by remote control” when he concluded trade and energy deals with China in the wake of the blockade. China and Nepal were likely to announce the Lhasa-Kathmandu rail link under the ‘Belt and Road Initiative” of China during Chinese President Xi Jinping’s prospective Nepal visit that had to be cancelled in the wake of Oli’s resignation. In December 2017 parliamentary elections, the alliance of the communist parties in Nepal registered an impressive majority amidst anti-India sentiments and Oli was sworn in as Prime Minister once again in mid February 2018.

It is in this background that K. P. Oli, as popularly known is visiting India, albeit there are already noises in Nepal that the visit has been announced unilaterally by New Delhi, not giving enough time to Oli to prepare for the visit. Will he be able to convince New Delhi that his policy of “equidistance” is not an embrace with China? Will he buy New Delhi’s argument that China’s entrenchment in Nepal remains a concern for India? Will he be able to extract as mush benefits from India as he has been able to extract from China, especially when the Modi government is already in election mode? And, will India introspect as to why a culturally close neighbour has moved away from its so called “sphere of influence”? There are no easy answers to these questions, however, we may find some answer if New Delhi introspects the question of Nepal moving away from former’s influence.

It is economy stupid! In November 2017 during a two two-day Nepal Investment Summit, 89 companies from China committed an investment of $8.3 billion in various sectors compared to an investment of $317 million committed by 21 Indian companies present at the Summit. Even Bangladesh and Sri Lankan commitment far exceeded the Indian investment. China is executing projects such as the building of Pokhara airport budgeted at $216 million, Melamchi Water Supply Project at $294.4 million, $ 3 billion Lumbini Project that will have an airport, hotels, convention centre, temples and a Buddhist university and well connected with highway. $2.5 billion Budhi Gandaki hydroelectric project that Nepal scrapped last year is certainly going to be given back to China. The 750 MW project to be built on the West Seti River is also being built by China.

Prime Minister Narendra Modi during his Nepal visit in 2014 blamed previous Indian governments for letting Nepal down. In tandem with his counterpart, unveiled a plaque for the police academy that India had promised to Nepal in the 1990s. Like much of the ‘foundation stone’ ceremonies in India, the academy remained an empty promise. The Chinese seized the opportunity and built a swanky academy with a cost of $350 million in a record two years time and gifted it free of cost to Nepal in June 2017. India’s other projects in Nepal such as Rs. 33108 crore Pancheshwar multi-purpose project on Mahakali river envisaged in the 1990s and revived during Modi’s Nepal visit has not made much progress. During the Nepal Infrastructure Summit 2017, India announced to build Delhi-Kathmandu and Kolkata-Kathmandu railways to increase Nepal’s connectivity with India, is likely to remain an announcement for times to come; China meanwhile plan to complete the Lhasa Kathmandu line by 2020 and 2022. It is this noncommittal approach of India added its arm twisting of Nepal that today China is deeply entrenched in Nepal’s infrastructure, energy and transport sectors. By signing of the “Belt and Road Initiative” with China, Nepal’s would be connected even better with China through rail, road, dry ports, optical fibres so and so forth.

Simultaneously, China has been assisting Nepal in strengthening its armed forces. In 1989 when Nepal imported arms from China, India imposed economic sanctions and closed 13 of the 15 transit points on India-Nepal border. This was the time when India enjoyed exclusive influence, however, today Nepal is not only buying military equipments, it has also concluded first ever military exercise named “Sagarmatha Friendship 2017” with China in April 2017. Moreover, while India has taken its cultural ties for granted with Nepal, China has invested $80 million to boost its soft power in Nepal. Dozons of China Study Centres, a Confucius Institute in Kathmandu University and a few Confucius Classrooms are imparting Chinese language and culture training to thousands of Nepalese. It has been reported that Confucius Institute alone has trained over 20,000 Nepalese in a decade. These include from armed forces, police, bureaucrats, businessmen so on and so forth. Ministry of Education of Nepal has announced that it will offer courses in Chinese. Today, over 3000 Nepalese students are studying in Chinese universities on Chinese government scholarship programs.

Why has Nepal and other neighbours of India embraced China. It didn’t happen overnight, it has been happening since the economic rise of China in the last 40 years. In these years starting from India’s parity with China, latter’s economic muscle has become 5 times bigger than India at $13 trillion and the gap is yawning. The Indian blockade, be it in the 1960s, 1989 or 2015 may have crippled the Nepalese economy, nonetheless, added salt to the injuries and flared anti-India sentiments in Nepal. Conversely, will China salvaging Nepal from its difficulties? May be to some extent but to replace India’s 15 transit points of open India-Nepal border with a 900 kilometre Nepal-Lhasa road is just impossible. India alone can have the magnanimity of opening its border to Nepal, not any other nation. This magnanimity needs to be replicated In other spheres, and India needs to act more and be less cacophonous at home and abroad.

India needs to lie low, strengthen its domestic economic drivers, build capacities and make India attractive to its neighbours and the World. Until that happens strategies how to engage with and integrate these nations into our economic development, show magnanimity in various disputes and increase our footprints in these countries. In this context, India may have selective approach to China’s Belt and Road Initiative, and reap benefit from the bilateral and multilateral engagement with China. The trans-Himalayan region where Nepal lies at the heart, would be crucial for, transport, trade and tourism. We must think beyond the security prism as far as 3Ts are concerned, and if at all we would like to make this shared neighbourhood a better place to live! From this perspective, Oli’s India visit is extremely important, even if his coalition government at home may already have run into some difficulties. Here again, India must assure him that she aspires to see a stable and prosperous Nepal.