India must focus on Nepal’s geo-economics

FIFTH-time Nepal Prime Minister Sher Bahadur Deuba’s visit to India was unique in many ways. It is the first visit of a PM from Nepal in four years, the last being PM KP Oli’s unheralded arrival in 2018. Deuba came after unseating Oli and being appointed PM by the Supreme Court, leading to a Right-Left alliance of convenience. Even so, Deuba’s biggest triumph was managing the vote in the passage of the controversial $500 million US Millennium Challenge Corporation (MCC) grant. The proxy war between the US and China over the MCC got mired in domestic politics and mudslinging. China had won a similar battle against the US in Sri Lanka.

Chinese Foreign Minister Wang Yi was in Kathmandu days earlier to sign nine agreements, most of which were reworded and unimplemented old agreements. Wang warned the US of interference in the internal affairs of Nepal — a charge commonly reserved for India — and vowed to protect its sovereignty and territorial integrity.

Nepalese commentators, normally pro-China, have been critical of Beijing for its extreme interference in Kathmandu’s domestic politics to maintain the unity and longevity of the now dismantled Nepal Communist Party, even saying that the US should have heeded the lessons learnt by New Delhi through its micro-management of Nepal. Another notable thing is Nepal’s clear condemnation of Russia’s invasion of Ukraine, though in 2014, it had abstained from voting on Russia’s annexation of Crimea.

Overlapping Deuba’s visit, Nepal held a two-day meeting of the World Hindu Federation, inaugurated by Cabinet Minister Prem Ale, who said that Nepal could revert to being a Hindu state through a referendum if such a demand is made, though Nepal’s constitution has declared it a secular state. This must have pleased the BJP-led government and its ideologue, the RSS, as much as the fact that for the first time, a visiting PM met ruling party leaders at the BJP’s new headquarters in New Delhi.

The BJP has gone about systematically weaning a pro-India and pro-US Nepali Congress, whose President Deuba is, from its traditional, but fading ally, the Indian National Congress. The BJP head of the Foreign Affairs cell, Vijay Chauthaiwale, has travelled frequently to Kathmandu to cultivate NC leaders, especially Arzu Rana, Deuba’s powerful wife, who tied a rakhi on his wrist.

After its setbacks in Nepal following the economic blockade, which led to Nepal turning North, and the Kalapani border dispute, India had mended fences with friend-turned-foe Oli, who had spurned China over maintaining Communist unity and had begun doing business with the Indian government till he was dethroned by the Supreme Court. The government now enjoys good relations with the two mainline parties as well as the smaller ones.

The passage of the MCC on February 27 with an interpretative annexure was surprising following Left allies Prachanda and Madhav Nepal having been brought on board after Deuba read the riot act. I was in Nepal when the China-US battle over the MCC was being waged on the streets of Kathmandu and elsewhere. The US threats and Chinese coercion were ably parried by Deuba as he steered the majority vote, with Oli’s UML remaining neutral. The Chinese see the MCC as a part of the US’Indo-Pacific strategy to containing China and limiting the BRI.

In the historic triangular relationship among India, China and Nepal, a fourth pole, the US, has now been added.

In this geostrategic context, Deuba’s India visit had a clear Modi signature: development laced with Hindutva. At the Nepal Embassy reception, Deuba was presented with a replica of the Ram Mandir instead of the usual Taj Mahal model or some other Indian artefact. He also spent a day in Varanasi, Modi’s constituency, visiting the refurbished Kashi Corridor. Combined with a visit to the BJP headquarters, these events will impact Nepal’s local and national elections later in the year.

During their official talks, Deuba raised the highly emotive Kalapani border dispute, agreeing that it should not be politicised. Deuba and Modi jointly inaugurated the 35-km train service between Jayanagar in India and Kurtha in Nepal to be extended another 69 km to Bardibas. Four agreements of enhancing connectivity and energy cooperation, the introduction of the RuPay card in Nepal, greater cooperation in power trade — Nepal will sell its surplus power to India — and the construction of 132 health facilities were signed.

A joint Vision Statement on hydropower in which Nepal sought greater Indian private sector investment and agreement to expedite the DPR on the long-pending Pancheswor project was welcomed. Nepal became the 105th country to join the India-led International Solar Alliance. A 90-km 132-KV Solu corridor transmission line built by India was handed over to Nepal.

The two sides also discussed the misuse of the open border by unwanted elements and defence and security cooperation with India. While Modi called bilateral relations as ‘unique’, Deuba referred to them as ‘highly important’. Lately, Nepal has become allergic to the term ‘special relations’.

India’s concerns in Nepal are dominated by the security threat from the North, which some Nepalese leaders wish away. These concerns had enlarged after Doklam in 2017, when Foreign Minister KB Mahara said Nepal would be ‘neutral’. Given the two-year ongoing confrontation in Ladakh and the Galwan clash, Kathmandu needs to show more sensitivity to the China threat. Similarly, the Chinese proposal to build a rail line from the border town of Kirung to Kathmandu with questionable commercial benefits calls for a rethink. Nepal must also appreciate that India cannot compete with a China with deep pockets, but India’s investment over 75 years is far in excess of what China has been pumping into that country recently.

India’s focus has to be on geo-economics — towards a prosperous Nepal, to help it create wealth and jobs so that one-third of its population is not on errands abroad. India has stopped looking at which government is in power in Nepal as long as there is mutual respect, mutual trust and mutual concern for each other’s national interests. On December 16, Defence Minister Rajnath Singh said: “We will bow our heads to maintain good relations with Nepal.”