Twist in the Kathmandu tale
China is showing its deep pockets and diplomatic overreach in Nepal. Days before last month’s elections, a Chinese delegation led by Vice-Minister Li Qun arrived in Kathmandu despite the then Prime Minister Sher Bahadur Deuba’s caretaker government informing Beijing that Kathmandu was preoccupied with the elections. Nonetheless, the delegation came; some members stayed back to try to reunite the Left parties before and after the elections. Luckily for them, the unexpected has happened: Maoists’ Prachanda broke away on Sunday from the Nepali Congress-led coalition to reunite with ex-PM KP Sharma Oli to become the Prime Minister. Former Chinese Ambassador Hou Yanqi had achieved the feat of creating the short-lived Nepal Communist Party in 2018. India will be disappointed as it feels comfortable whenever the Nepali Congress is in power.
Amid the competing interests of Beijing and Washington, India’s stakes in Nepal are vital, but will once again be determined by an unpredictable Leftist government.
Deep pockets indeed, but little aid or grant comes out of them. Chinese interest in Nepal was magnified several-fold after the single-window access during the monarchy changed to multi-window openings after its demise. Just before the elections, Nepal’s Foreign Minister Narayan Khadka and Nepal’s Ambassador to China Bishnu Shrestha signed an agreement with the China International Development Cooperation Agency for a grant of Rs 15 billion for 2023-24. This was in addition to the Rs 58-billion grant for two years released by President Xi Jinping on his first visit to Kathmandu in 2019. Before the Covid outbreak, the Chinese People’s Armed Police had clandestinely established posts to monitor Chinese diaspora as Kathmandu’s popular Thamel neighbourhood had become a Chinatown.
China has promised the moon to Nepal in terms of connectivity — road and rail projects and, recently, hydropower contracts which have switched between India and China. Most of the connectivity activities began after Left leader Oli began looking north following India’s blockade of Terai in 2015, the diktat over the new Constitution and the NCP government’s promulgation of a new map incorporating disputed areas Limpiyadhura, Kalapani and Lipulekh.
Oli was especially soft on China. Siegfried O Wolf, Director (Research) at South Asia Democratic Front, has reported that in 2009, the Chinese crossed into undefended districts in the north and constructed a veterinary centre. In 2017, the Unified Marxist-Leninist (UML) government vaguely admitted that China had encroached upon 36 hectares in 10 areas along the border, as reported by The Himalayan Times. During the rule of the Nepali Congress (NC) and UML coalitions, the governments maintained strategic silence, though one NC legislator belonging to the area revealed details of the ingress.
Nepal does not mention Chinese incursions — even as Beijing keeps countering them — in the same breath as India’s encroachments. A legislator told me that Nepal is scared of China over Tibet and border issues and will not upset Beijing. This historical fact is a legacy of the 1962 war, but was sidelined after India’s 1971 war victory and Sikkim annexation.
China has committed on paper to construct six North-South highways along the border from Tiptilla, Tatopani, Mustang, Simikot, Jumla and Dharchula; and, a second road to Kathmandu from Kirung via Rasuwa as the Kathmandu-Kodari road has been in disuse since the 2015 earthquake, with Tibetan and Nepalese officials shifting to Shigatse. The railway line, 50 km from Kirung, is inching towards it. The Kirung-Kathmandu-Pokhara-Sunauli railway has been on the cards for a decade. A preliminary Chinese survey pointed to severe ecological, terrain and cost hurdles. Talks for its revival have restarted and funds allocated.
Meanwhile, India has also submitted the project report on the Raxaul-Kathmandu railway. The construction of railway lines is unlikely in view of the strained India-China ties.
The Chinese are favourites for bagging projects for new airports — Bhairahawa, Pokhara (a hill was levelled last month), possibly Nijgadh and the modernisation of Kathmandu’s ground handling, which is currently being done by a China proxy, Himalaya Airlines, and the Nepal army. All Indian flights conduct their own ladder-point security following the 1999 hijack of IC-814 (Kathmandu to Kandahar). This China preference among bureaucrats, including army officials, stems from options of looking beyond India’s limited offers on military hardware — 60:40 grant and payment — and other commercial projects.
In both fields, Chinese carrots are persuasive. The Indian ALH (advanced light helicopter) experience during Maoist insurgency proved unpopular with the Nepal army. A helicopter gifted in 2014 has been in disuse since 2019 and was not repaired by HAL till 10 days before the elections.
An Indian red line to keep Chinese companies out of Terai has long been breached. King Birendra had honoured this stipulation during the East-West Highway construction in the 1990s. Chinese workers constructing the $200-million Butwal-Narayanghat road are idling there since 2017-18.
Earlier this year, India bought electricity from Nepal, paving the way for a belated Bhutan model in Nepal. India has stated that it will not buy power from hydropower projects owned by or involving the Chinese. With India-China rivalry rising, Beijing will not let Delhi steal a march on it in Nepal. The carrot of connectivity, especially rail lines, will become a geopolitical disruption for Kathmandu.
Amid the competing interests of Beijing (China-Nepal Economic Corridor) and Washington (Millennium Challenge Corporation’s Nepal Compact), India’s stakes in Nepal are vital and standalone, but will once again be determined by an unpredictable Leftist government.
