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In the past few days the parallels between Nepal and Sri Lanka have been endlessly drawn. Many fear that if our political class does not soon mend its self-serving ways, people here too could take things into their hands. We have been there before. After all, weren’t anti-monarchy protesters in 2006 uncomfortably close to storming the royal palace? Who knows what might have happened had King Gyanendra refused to step down on time? A common gripe among Nepalis is that while they forced out one monarch, multiple monarchs have taken his place. This is one cliché that increasingly rings true.

Although these ‘new monarchs’ have been elected to office, they act as entitled as the erstwhile Shah kings. Ditto with their lack of accountability, vulgar opulence, and complete disregard for their people. The public perception of the government took a beating during the previous tenure of KP Sharma Oli as prime minister (most notably, when he twice dissolved the elected house). As Sher Bahadur Deuba completes a year in office, overseeing a brazenly corrupt and unaccountable administration, public faith in elected leaders has further dipped.

Meanwhile, Nepal’s economic woes continue to deepen with a steady loss in value of the Nepali rupee against the dollar, rampant inflation and import controls. If its politicians don’t get their act together, sooner or later, Nepal, again like its South Asian cousin, could also start seeing crippling shortages of food and other daily essentials. The signs are ominous. Until this week the person in charge of Nepal's finances was running the Ministry of Finance as his personal fief—à la Sri Lanka’s “Mr 10 Percent” Basil Rajapaksa. 

Like Basil’s elder brothers, Mahinda and Gotabaya, Nepali leaders are wont to accumulate more and more power. Instead of dismantling the centralized structure—when former PM Oli brought vital state institutions like the National Vigilance Center and the Department of Revenue Investigation under the PMO—Deuba was happy to milk the consolidated system to his benefit. In the name of ‘coalition compulsions’ there have been all kinds of unholy give-and-take. Electoral seats were ‘adjusted’ to accommodate the kith and kin of top leaders. Tax rates were tweaked for the benefit of the already filthy-rich conglomerates. Taxpayer money was haphazardly spent on vanity projects like view towers. 

Senior Sri Lankan economist Nisha Arunatilake tells ApEx that extreme politicization of Sri Lanka’s institutions had resulted in “improper appointments in leadership positions… mismanagement, corruption, lack of transparency and accountability”. Moreover, constant personnel changes in state institutions and tweaking the number of ministries to suit individuals reduced the efficiency of government processes. Such a weak system could not withstand the shock of the Covid-19 pandemic. The war in Ukraine was the final nail in the coffin of the Rajapaksas’ monolithic state.

All these maladies of the island state sound eerily similar to Nepal’s own recent troubles. It will be foolish to continue with business-as-usual in the face of an approaching disaster. As Arunatilake counsels, “The main lesson [from Sri Lanka] is not to wait until you are in a crisis to fight for change.”

Did India provide a safe haven to Nepali Maoists or was it always intent on crushing them with brute force? The Maoists have maintained that during the insurgency they were hiding in India and the Indian establishment didn’t support them in any way. Their critics pooh-pooh the notion that top Maoist leaders from Nepal could have lived and moved about freely there without the knowledge of the vast Indian government apparatus. This query is of more than academic interest. As CPN (Maoist) Chairman Pushpa Kamal Dahal has pointed out, on it hinges the question of success (or failure) of Nepal’s ‘homegrown’ Maoist movement.

Former Indian Ambassador to Nepal Ranjit Rae infers in his new book ‘Kathmandu Dilemma’ that the Indian government provided no support to the Nepali Maoists living in India. India, apparently, didn’t even know of the Maoist existence in its midst. If anything, India saw the Maoists as a threat, not the least because of its own growing Naxalite problem. Particularly in the wake of the 9/11 attacks, it viewed them more and more as terrorists, just like the US and the UK did. Only after King Gyanendra assumed executive powers in a coup did the Indians rethink their Maoist policy.  

As Rae writes in his book, following the coup, the opinion in India was divided between those who were still intent on decimating the Maoists by strengthening Nepal Army (IB, Indian Army) and those who believed a peaceful way out was the only durable solution (MEA, RAW). One thing is for sure: Had the Indians decided to crush the Maoist rebellion, they could have done so. Even if the Indian establishment didn’t actively support the Maoist leaders waging a war in Nepal from India, they tolerated their existence. Or at least a part of the establishment did.  

Also read: Diplomatic License | Playing Squid Game in Nepal

The Indian security establishment and sections of the bureaucracy wanted to use the presence of the Nepali Maoists in India as a bargaining chip against the royal regime, the ultimate goal being to maintain a semblance of ‘controlled instability’ in Nepal so that India could continue to play within it. 

Perhaps with more high-level political engagement between the two countries, the Maoists wouldn’t have been so successful in orchestrating the insurgency from foreign soil. Unlike the erstwhile Nepali Congress leaders living in exile in India in the 1940s or 1950s, the Maoist leadership in the early 2000s didn’t have extensive engagement with the Indian leaders. Without such political connections, to keep themselves safe, they had to rely on the Indian bureaucrats and spies who came in their contact.  

Moreover, as prime minister, neither Atal Bihari Vajpayee nor Manmohan Singh seemed interested in cementing political ties with Kathmandu. Neither came to Nepal on a bilateral visit during their long tenures (although Vajpayee did come in 2002 for the SAARC summit). As political engagement broke down, interference from Indian security agencies and bureaucrats, who found themselves in charge of India’s Nepal policy by default, increased. In return for providing a safe haven to Maoist leaders, they wanted a greater say in Nepal’s affairs.

In fact, a big challenge in resetting Nepal-India bilateral relations continues to be the multiplicity of Indian foreign policy actors—often working in cross-purposes. As the attention of the political leadership of a rising India continues to shift to big actors, perhaps this will continue to be the fate of smaller countries in the region.  

This year, Nepal ranks as the 132nd most unequal country in the world, with a Gini coefficient of 0.328. (The closer to 1, the higher the level of inequality.) It’s not a bad place to be. By this measure, income and wealth are more evenly distributed in Nepal than they are in, say, the United States (0.411), Bhutan (0.374), India (0.357), Pakistan (0.335)—or South Korea (0.354).

Yet the stark disparities between millions of those who have to toil abroad just to feed their families and Nepal’s richest few who have stashed hundreds of millions of unearned dollars in tax havens still rankle.

Perhaps this is one reason the superhit South Korean Netflix series ‘Squid Game’ is so relatable to a common Nepali, or the citizens of most countries around the world for that matter. Singer Hemant Rana’s poignant 2017 song ‘Saili’ captures the misery of Nepali migrant workers who are forced into a Devil’s bargain: to trade away the most productive years of their lives for an elusive promise of a comfortable life back in their own country when they ‘cross 40’.

They could easily identify with the Squid Game character of Ali Abdul, a struggling Pakistani worker—a husband and a new father—whose wages are cruelly held back by his South Korean employer.  

The series’ plot revolves around a series of children’s games that 456 participants compete in for a grand prize of around $33 million. (Spoiler alert: Don’t read further if you are thinking of watching it.) But there can be only one winner—the rest will have to die. The games’ organizers carefully select these players, who are all neck-deep in debt and so desperate they are ready to embrace a near-certain death for the long shot at the prize-money. The organizers, meanwhile, cater to a cabal of sadistic ultra-rich folks who pay a premium price to watch people die horrible deaths. Ali is among those desperate players.  

Also read: Diplomatic License | Indian ignorance on Nepal

In the abovementioned ‘Saili’ song from the film of the same name, the actor, who is about to leave the country to work abroad, promises his beloved that he will return one day and they will then spend a happy life together. The sad reality is that after years of gruelling work, many migrant workers come back with severe mental and physical traumas. Some don’t make it back at all: Around 8,000 Nepali nationals have died while working abroad over the past dozen years. In many ways, their situation is hopeless.

The same can be said of the character of Seong Gi-hun, the eventual winner of the Squid Game. He enters the series of dangerous games after he fails to put together enough money to treat his diabetic mother, whose leg is already beset by gangrene. On returning home triumphant, he finds his mother lying on the floor, dead. Nor can Seong Gi-hun, with all his money, go meet his daughter who is living with her mother and stepfather in the US. In this dog-eat-dog world of unfettered capitalism, the poor lose even when they win.

Most Nepalis have known the helplessness that accompanies the knowledge that a handful of powerful politicians and super-rich businessmen control their lives.

Governments come and go, as and when these plutocrats fancy. The cartels they control enjoy monopolies over vital sectors like health, education, and transport. Prices of daily commodities are forever on the rise and there is zero guarantee of the quality of products in the market. The concerns of these money-minded elites are completely divorced from those of ordinary folks. It often feels like they are playing a cruel game on the rest of us—a game they can’t lose and we can’t win.  

Save for a few foreign policy greybeards, most Indian analysts have a limited understanding of Nepal. They follow developments here only in relation to China: the hungry dragon, apparently, is gobbling up India’s traditional backyard, a BRI project at a time. Entirely missing the nuances of Nepal-China ties, they nonetheless like to hold forth on the latter’s ‘debt trap’ diplomacy: Look at what the Chinese did in Tibet or what they are doing in Hambantota. That India, a fellow democracy and close neighbor, is Nepal’s only ever-lasting friend. Few of them seem aware that China’s debt diplomacy is something endlessly discussed in Nepal.

But it is also natural for the Indians, representatives of a rising global power, to be more interested in other big powers like the US, China, and Russia, or Pakistan, the constant pain in the neck. Why should they have to worry about comparably inconsequential Nepal? About a country whose rulers have traditionally taken to bashing their homeland to get to and stay in power? Passing knowledge should thus suffice.

Also read: Post-Aukus challenges for Nepal

Typically, only horrendous news from Nepal makes it to the headlines of Indian mass media: the 1999 hijacking of an Indian Airlines plane, the 2001 royal massacre, and the 2015-16 border blockade, for example. Most recently, all the coverage of Nepal is centered on the Nepali political elite falling into China’s trap and compromising on vital Indian interests. In the news now is China’s supposed encroachment of Nepali territories in Humla district, never mind that Nepal and China have amicably settled most of their border back in the 1960s and that the area in question is not even a small fraction of Nepal’s disputed territories with India. In light of the recent India-China border tensions, the Indians have become knee-jerk Sinophobes.

The only way the situation will improve is if the establishment in New Delhi really starts practicing its ‘neighborhood first’ mantra. Although successive Indian governments have vowed to make immediate neighborhood their top priority, seldom is the commitment reflected on the ground. Just like the attention of the broader Indian public, the attention of the Indian foreign policy and political establishment is almost exclusively focused on big powers.

Of course, bilateral relations are a two-way process. Nepal is unsure about its foreign policy priorities, its embassy in New Delhi is toothless, and Nepali leaders are invariably currying personal favors in their dealings with New Delhi, jeopardizing national interest in the process. (Even our prospective police chiefs, it turns out, want to be endorsed by the Indian Embassy in Kathmandu). If we can’t have our own house in order, we shouldn’t crib about outsiders.

Yet that doesn’t obviate the brutal fact that only India, with its economic and military heft, can take leadership of the region. If it is keen on improving its image in smaller South Asian countries, it could do much more: reduce tariffs on their products, allow them easy transit routes, and refrain from meddling in their domestic affairs. It is also incumbent upon the Indian political leadership to continuously remind their brethren of the importance of such countries’ support to realize India’s global aspirations. 

The new Australia-United Kingdom-United States security pact, now famous by its acronym of Aukus, is yet another sign of the Anglo-Saxon world’s increasing headache over China’s growing might in the Indo-Pacific. Under the pact, the UK and the US will help Australia procure nuclear-powered submarines. The three countries will also drastically increase their military and security cooperation. 

Separately, shortly after the announcement of Aukus, the heads of the four countries—Australia, India, Japan, and the US—under the strategic Quadrilateral Security Dialogue, also known as the Quad, met in the White House and recommitted to “…promoting  the free, open, rules-based order, rooted in international law and undaunted by coercion, to bolster security and prosperity in the Indo-Pacific and beyond.”

Though China was not mentioned on either occasion, it was the elephant in the room. Australia took the lead in Aukus formation as it worried that China’s recent activism in the Indo-Pacific was getting out of hand. Australia ditched an earlier agreement to buy French submarines for $90 billion in favor of the American nuclear-powered kind. The old French subs, the Australian strategic community had come to believe, would no longer meet their country’s changing needs.

Yet the most remarkable development over the past few years is India’s change of heart in working with Western and pro-Western allies. Until recently, the Indian strategic community hesitated to align with the Westerners, particularly the US. One, it feared losing its traditional hegemony in South Asia if the American role in the region increased. Two, Indian thinkers understood that however complex India-China ties may become, as two big neighboring nuclear and economic powers, they had to cooperate. By the same logic, the Indians couldn’t be seen as bidding for the Americans in the region. 

Also read: The US failure on MCC compact

But recent border tensions with China seem to have convinced the Indians that only by working with their Western allies can they repel China’s steadily building military pressure—with the tightening China-Pakistan strategic embrace only adding to their urgency. There is also a feeling that Beijing misunderstood India’s accommodating stance as its weakness and hence a clear message needs to be sent. For all these reasons, the Indians may agree to a modus vivendi in South Asia whereby they accept more American involvement here if the Yanks in return agree not to cross certain red lines they draw.  

For Nepal, this could translate into more nudges from the south to green-light American projects, the MCC Compact most important among them. (Despite noncommittal words from the Chinese envoy in Kathmandu, Chinese hostility to the MCC Compact is becoming hard to hide as well.) Concomitantly, it would entail India leaning on its traditional constituencies in Nepal to check China’s ‘grand designs’. The government in Kathmandu will more and more be asked to pick sides between China and anti-China forces.

Chinese state media has designated Deuba “pro-India”. The Chinese will feel vindicated after his government’s latest decision to investigate ‘disputes’ on the Nepal-China border. The traditionally pro-Western Deuba also wants to push the MCC Compact through, but he simply doesn’t have the numbers in parliament and such a move could fracture the ruling alliance. Nepali politics, traditionally so reliant on its two giant neighbors, will be liable to even more outside influence in the days ahead. Good luck with the success of the ‘amity with all, enmity with none’ formula! 

Narayan Khadka is a keen student of international relations and as shadow foreign minister during the previous KP Oli government’s tenure, he is well aware of Nepal’s current challenges on the international stage. Prime Minister Sher Bahadur Deuba is thus justified in appointing him his foreign minister. Khadka’s nuanced understanding of Nepal’s place in the world will serve him (and his country) well in his new role. But then, will he be allowed to function with a degree of independence?

His predecessor as foreign minister, CPN-UML’s Pradeep Gyawali, was also a fine mind, reputed over the years for his calmness and subtlety, the perfect attributes that Nepal’s chief diplomat should possess. Yet in office, he seemed to have no say as Oli virtually dictated the terms of his engagement with the outside world. Instead, to defend PM Oli’s repeated foreign policy bungling, Gyawali had to abandon his traditional calm and become uncharacteristically combative.

Khadka too is known for his calm demeanor and for the nuance he brings to any foreign policy debate. But will Deuba cut him any slack, especially as he seems to be in a mood to use India’s good offices to regain Nepali Congress presidency? Deuba has been unable to come to the defense of the MCC Compact that he signed, nor has he had the audacity to directly talk to India on the drowning of a Nepali national by Indian border forces or on the flying of Indian choppers over Nepali territories. Most recently, the Deuba government, representing Nepal as SAARC chair, failed to convene the SAARC foreign minister-level meeting on the sidelines of the UN General Assembly.

Deuba has always been close to westerners, the US especially. With the Nepali Congress united in favor of the MCC Compact, he will face no opposition to it from within the party. Yet he will have his task cut out convincing the communist parties to come around on the compact. Khadka is in no place to help him either with the compact or the twin incidents with India. 

When assuming office, the new foreign minister assured people that vacant ambassadorships would be filled strictly on merit-basis, after his return from the UNGA. Not everyone has the skills to be a country’s envoy, he said. That is true. But then Nepali ambassadors, save for the few career diplomats from the Ministry of Foreign Affairs, have always been appointed along party lines, and many Deuba loyalists, as well as those affiliated to his coalition parties, are already queuing up. It is also hard to believe that a prime minister who has been unable to expand his cabinet beyond the bare minimum will get to appoint the diplomats of his choice, whether or not they are loyal to him.  

The problem, again, is the lack of even minimal political consensus on Nepal’s foreign policy. This does not mean the main political parties should see eye to eye on all foreign policy issues; in fact, that would be a disaster. But they should at least agree on the fundamentals. Yet that too seems improbable at a time the whole polity—as well as the people—seems nearly neatly divided among the Indian, Chinese and American camps. The proponents of one camp, meanwhile, are convinced that the supporters of the others are no less than traitors.

The Americans have not helped their cause on the MCC compact with Nepal. First, at the start of 2019, it was then US Acting Assistant Secretary of State for South and Central Asian Affairs Alice Wells linking the MCC with the Indo-Pacific Strategy (IPS), with its central goal of containing China’s rise and preserving American economic and military supremacy in the Asia-Pacific. (The IPS document declassified by the Trump administration at the end of its term admits as much.) A few months later, David Ranz, US Acting Deputy Assistant Secretary of State for South and Central Asian Affairs, came to Nepal and confirmed that the MCC and the IPS were inextricably linked.

Strangely, the American Ambassador to Nepal, Randy Berry, speaking via a YouTube video after Ranz’s Nepal visit, admitted that the MCC compact embodies “the values and principles we broadly refer to under the [Indo Pacific] strategy”. He said even the USAID’s post-quake help and the provision of Nepali students going to study in the US were inspired by the same set of values and principles. Basically, he was admitting that all current and future American help to Nepal would come under the IPS (or one of its variants). Yet the MCC continues to insist that its compact with Nepal is not a part of the strategy. What are we missing here?  

No sovereign country gives foreign aid or invests in another country without strategic considerations. The BRI is intended to fulfill Beijing’s strategic goals that are closely tied to the continued growth of the Chinese economy. The same holds for Indian or Japanese or Danish aid to Nepal. Why have the Americans been so hesitant to openly admit that the MCC has retrospectively been made a part of the IPS but, even so, it is still in Nepal’s favor?

Nepali communist parties have always been rabid anti-Americans since their inception in the late 1940s. Even in the 1950s, they used to denounce ‘American imperialism’ and decry US-Nepal cooperation. They are doing the same now, partly because as communists they have this fealty towards the northern neighbor. China, too, has been active in fanning the anti-MCC flames in Nepal. And the Americans seem to have taken the Chinese bait—hook, line and sinker.

I believe the MCC is a part of the IPS, as indicated by many senior US officials, including the current US envoy to Nepal. Yet I am still in favor of the compact’s parliamentary endorsement as it is in Nepal’s interest. This is not because the compact’s unraveling could deter other international investors, although that is a possibility. My bigger worry is that limiting Nepal’s external engagement to India and China could pose a grave risk to Nepal’s sovereignty and independence. 

Nepal needs a strong US presence to forestall the possibility of the country’s fate being decided by (or between) its two giant neighbors. Were it not for the presence of outside actors like the US, EU, and Japan, Nepal, perhaps, would by now have been absorbed by India or China, as Leo E Rose so perceptively warned all those years ago.

For the Americans, the biggest and also the more obvious lesson from the MCC debacle should be to avoid conflicting messaging on its important foreign policy initiatives. In this age of disinformation, your opponents will not resist tweaking your words to fix their context. For Nepal, its rulers should never forget that the country has been able to maintain its independence only via the most delicate balancing between multiple international actors. Even a little disturbance in this equilibrium could imperil its existence.

Evidently, following in the footsteps of the majority of his predecessors as prime minister, the foreign policy of Sher Bahadur Deuba too is mostly based on expediency. After nearly two months in office, he is yet to appoint a foreign minister. His recent actions suggest a tilt to the south, as he soft peddles the drowning of a Nepali national by the Indian border force and the flying of Indian military choppers over Nepali territory. He has also formed a committee, on thin evidence, to investigate possible Chinese encroachment of Nepali territory. The Home Ministry led by his close acolyte then banned anti-Modi protests.

While Deuba sends all the right signals to New Delhi, he also seems intent on securing parliamentary approval for the American MCC compact. Diplomatic cables from the US Embassy in Kathmandu to Washington DC made public by Wikileaks have long described Deuba as a trusted friend of America. Deuba is bound to face a tough time getting the compact approved though; all his allies in the government are opposed to it in its current (or any other) form. The Nepal visit of the MCC head won’t change things much as most communist leaders here have long since made up their minds.

Perhaps Deuba wasn’t that pleased when, upon assuming office, China’s Global Times called him a ‘pro-Indian leader’. Deuba has never had a comfortable relation with Beijing, not the least because of his western proclivities. Ironically, this is also why many in New Delhi mistrust him. The constituency in India for closer strategic ties with the US continues to build in light of the recent India-China border tensions. Yet that doesn’t mean strategic thinkers there are comfortable with the idea of the Americans calling the shots in Nepal, India’s traditional backyard.

Going into the next Nepali Congress general convention, Deuba believes his interests will be best served by being in India’s good books—the country’s age-old need for a delicate balance between India and China be damned. In fact, Deuba was reluctant to become the prime minister by displacing Oli, whom New Delhi was warming up to. Only when domestic politics turned firmly in favor of his prime ministership did he change his mind. The leader of the country’s most illustrious democratic party relying on India to get re-elected as party chair says as much about India’s old interventionist tendencies as it does about our leaders’ utter lack of shame.

Most interesting will be to watch how the Chinese deal with Deuba in the days ahead. They have cultivated a sizable political section in Nepal, which they are sure to use to minimize American presence and to push for expeditious implementation of the nine BRI projects identified for Nepal. Besides, a huge constituency in Nepali Congress is still strongly in favor of closer ties with Beijing; such a ‘nationalist’ stand goes down well with many voters.

The Chinese are in a position to make Deuba’s life difficult if he continues to be seen as pushing the American agenda in Nepal. The kind of misinformation about the MCC Compact circulating on YouTube and the spontaneous anti-MCC rallies from obscure groups are a bitter foretaste of things to come for Deuba.

This again shows the importance of having a foreign policy based on broad political consensus, which will be the starting ground for negotiations with all international actors. It will then be difficult for foreign actors to push their agenda through their divide and rule strategy. But Deuba, again like most of his predecessors, is going the exact opposite way.