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One of the best articulations thus far of the need to reset Nepal-India ties comes from C. Raja Mohan, among India’s most trusted foreign policy hands. At the risk of over-simplification, his nuanced column for The Indian Express makes two basic points: one, he urges New Delhi to come to terms with Nepal’s “natural politics of balance”; and two, for it to recognize that the “much-vaunted ‘special relationship’ is part of the problem.”

His first argument is that starting with Prithvi Narayan Shah, Nepal has always looked to balance India and China. KP Oli is doing no more than continuing the age-old trend. “Delhi, which puffs up with the mere mention of ‘strategic autonomy’, should not find it difficult to recognize where Kathmandu is coming from,” he writes perspicuously.

Second, Raja Mohan asks Delhi to no more hanker after “a ‘special relationship’ that a large section of Kathmandu does not want”. No bilateral relationship between nations can be built on sentiment, he continues, “whether it is based on faith, ideology or inheritance. Only those rooted in shared interests will endure.”

The strategic thinkers in Nepal have long been making this twin argument, and yet no one in Delhi seemed willing to listen. Many Nepalis are ‘anti-Indian’ precisely because they see Delhi as wanting to foist ‘special relationship’ on them: Given the power and demographic asymmetry between the two countries, the relations were ‘special’ only for the bigger partner. If India saw Nepal as its sovereign equal, it would ditch the ‘big brother mentality’ it inherited from the British and stop seeing Nepal as no more than a supplicant for its favors.

Every country’s foreign policy is rooted in its self-defined national interests. New Delhi’s emphasis on special relationship was also based on the belief that it served India’s interests—whether or not it served Nepal’s. The feeling in Kathmandu is that Delhi has over the years used the special relations to justify its interference in Nepal.

Again, nothing wrong in Delhi pursuing its interests the way it sees fit. It’s only if the Indians realize that the current modus operandi is not working do they need to change track. In this light, Raja Mohan’s recent article comes as a breath of fresh air. Not only does it hint of a realization in Delhi that its foreign policy conduct is breeding resentment in Nepal. I believe it is also a voice of a more confident India that can deal with its small neighbors based on mutual interests rather than outdated and artificial labels.

Paradoxically, therein also lies a need for caution for Nepal. If India revisits its ‘special relationship’, are we prepared to live with the consequences, like the renegotiation of “national treatment to Nepali citizens in India, trade and transit arrangements, the open border and visa-free travel,” as Raja Mohan suggests? Can we pick and choose what we want to retain from the old model? If the goal is to engage more with the rest of the world to reduce the country’s dependence on India, how can Nepal overcome its geographical constraints? Will Nepal then also un-peg its currency with the Indian currency? Forget the concerns of the south for a moment. The more important question is: Have we done any homework on how Nepal, minus the special relationship, will deal with the changed reality of ‘equality’ with India?

However much India and China quarrel over their unsettled borders and their competing influences in South Asia, their burgeoning economic ties would ensure a level of normalcy in bilateral relations. Or so went the old assumption. Hence the two quietly defused the 2017 Doklam crisis, and India time and again underplayed Chinese border adventures. The Indian establishment was most reluctant to blame China for the recent skirmishes in Ladakh as well. It was nothing big and everything would soon be settled amicably, it kept saying. Then the Ladakh crisis reached a tipping point.

The Chinese kept escalating, and it became impossible for India to fudge it anymore. China was intent on making a point. There has been a shift in China’s attitude towards India following the latter’s amendment of its national map in November 2019. The new map placed all the disputed territories in Jammu & Kashmir, including those claimed by Pakistan and China, under Indian flag. Removing all doubts about India’s intent, Indian Home Minister Amit Shah later told parliament that India was also most definitely claiming the Pakistan- and China-occupied Kashmir. This meant India now claimed a vital component of the China-Pakistan Economic Corridor, the flagship BRI project.

Despite their growing trade ties, Indian and Chinese strategic visions are increasingly at odds. China is more and more estranged from the US; at the same time India and the US are steadily inching closer. Indian Army Chief M.M. Naravane could have been venting his frustration at Chinese actions in Ladakh when he implicated Chinese hand in Nepal’s renewed claim over the Kalapani region. For him, with border skirmishes with China escalating, the Indian troop presence in Kalapani is a non-negotiable. Forget tri-lateral economic cooperation. The new game is all about getting a strategic upper hand.

This will exacerbate the tendency in India to see Chinese hand everywhere in South Asia. China for its part had not been that bothered by India’s actions in the neighborhood, for India was always an inconsequential regional player on its own. But as the American and Indian interests converge, China can no longer feign nonchalance.

China finds itself isolated by a ‘concert of democracies,’ with worse to come over the Covid-19 fallout. Thus shunned, it’s getting close to Russia. The two countries have just agreed on a new missile defense system for China. They also plan a joint mission to the moon. Beijing and Moscow see no alternative to working together to minimize the US presence in the Indo-Pacific. As I have written before, it is no more farfetched to imagine China and Russia banding together to foil ‘American designs’ on Nepal. Not long ago, the Oli government was subtly advised from up north to invite Vladimir Putin, say to inaugurate an international Buddhist conference in Lumbini. 

The global Covid-19 pandemic and the resulting ‘China-bashing’ have only exacerbated the old US-China rivalry. China’s hope that India would keep a safe distance from the US and help it counter anti-China Covid-19 narrative has proven misplaced. As has India’s calculation that the ‘mercantilist’ China is ready to ignore its strategic interests in South Asia. Countries like Nepal will have to live with the upshots of their growing differences. The way the Kalapani dispute has resurfaced is only the start of this new, multi-pronged geopolitical drama. 

A dangerous trend is taking hold in India. Since the promulgation of the new Nepali constitution in 2015 and the ensuing victory of the communist coalition under KP Oli, just about any important development in Nepal is now conveniently linked to China. The popular narrative in India seems to be that the current Nepali government is China’s puppet. This sort of gross generalization does great harm to India’s deep, multifarious relations with Nepal.

Even though the ruling NCP’s penchant for China is hard to deny, Nepal-China ties have their limits. Anyone acquainted with the political career of the current Nepali prime minister knows of his traditionally close relations with all the important political actors in New Delhi. But during the Indian blockade Oli found it convenient to distance himself from India and inch closer to China. The calculation paid off as the communist coalition he headed secured near two-thirds majority in the 2017 national elections. In this sense, he is an opportunist. But then which politician isn’t? To his credit, Oli has since tried to improve his frayed relations with India.

Oli realizes that open hostility towards India can extract a very high cost from a Nepali ruler. This is not just because Nepali rulers can’t afford to alienate their ‘big brother’. It is also a reflection of the complex and extensive Indo-Nepal ties. Yet we see India consistently trying to portray Oli as China’s handmaiden and even mull ways to remove him. Perhaps there could have been no bigger folly on India’s part than to first build a road in Lipulekh without consulting Nepal and then to suggest that the natural opposition against the road was orchestrated by China. Such callous treatment of Nepali sentiments has in fact only boosted Oli by rallying the entire country behind their prime minister.

We often hear that India has learned its lesson after the blockade. It hasn’t. Otherwise, why can’t it still respect Nepal as a sovereign country capable of making its own decisions? Why is Nepal still expected to get guidance from the south? Nepal is a functional democracy. If people don’t like this government, they will vote it out in the next election. But even as PM Oli was getting increasingly unpopular at home for his poor political judgment and lack of delivery, India, once again, threw him a lifeline by unilaterally building the road at Lipulekh. This has allowed the blockade-busting prime minister to again project himself as the only leader in Nepal capable of openly standing up to Indian bullying.

India, home to among the most astute geo-strategic thinkers over the ages starting with Kautilya, surely understands its indispensability to Nepal. The fate of the small Himalayan state is inextricably linked to India’s peace and prosperity. While talking of Chinese influence in Nepal, Indian thinkers like to define this or that ‘red line’ for Nepal, perhaps not realizing that the biggest red line for the land-locked country is its geography. Surely, even the most jingoistic Indian commentator does not seriously believe China can ‘replace’ India in Nepal. If you want to be a big power, try acting like one.

Recent developments in the Lipulekh pass of the Kalapani region give a message of intent, and not just of India. China too has shown it is not ready to compromise its multifaceted relations with India for Nepal’s benefit. Moreover, Xi Jinping has a soft spot for Tibet: His late father, Xi Zhongxun, was a great friend of the 14^th Dalai Lama. Xi Jr. is thus keen on Tibet’s development, which he reckons is possible only with India’s help. This is why he has over the years quietly pushed for the opening of the ‘bilateral’ India-china trade route via Lipulekh.

And now Indian Defense Minister Rajnath Singh has seen it fit to ‘inaugurate’ the ‘shortest route to Mansarover’ in the middle of a pandemic. A seasoned Nepali foreign policy analyst who has worked extensively in both India and China speculates the inauguration is a subtle message to the Oli government. First, India brokered the unity between the two Madhesi parties against Oli’s wishes. By bringing up Lipulekh even as the Nepali government struggles with the corona crisis, India is now dialing up pressure on him: pressure to distance himself from China.

If Oli gets the message, perhaps the Indians will be amenable to a three-country solution over the Lipulekh route. If not, India will further consolidate its position in Kalapani and even seek additional leverage against Oli. But whatever happens to Nepal’s concerns over Lipulekh, the larger picture doesn’t change: Modi and Xi want to keep the two countries’ trade relations intact at any cost. They know they need each other if they are to successfully tide over the ongoing global economic crisis.

A settlement over Kalapani is not impossible. The region is not as important to India as it was, say, in 1962, when it lost the infamous border war to China. Chinese movements in the region can now be monitored remotely, via satellites or drones; India does not need troops on the ground. This is not to imply Kalapani has lost all its strategic value for India, just that its usefulness has gone down. Yet New Delhi would like Kathmandu to believe that the region is still mighty important for it and that there won’t be easy compromises.

Again, China is not ready to pick a fight with India over Lipulekh or Kalapani. As we saw in Doklam in 2017, these border disputes have many hidden subtexts. The way the Doklam crisis unfolded also showed how hard it is to change the status quo on the border. As Sam Cowen has pointed out, Nepal will struggle to establish its claim over Kalapani as successive Nepali governments ignored the issue for their vested interests, even as India progressively tightened its grip over the region.

One of two outcomes is likely. India will either continue to engage with Nepal on Lipulekh but it won’t commit to anything, further frustrating Kathmandu. Or, if PM KP Oli is ready to shed his ‘pro-China’ mien, the Indians could help him buttress his image via some concession over the disputed territory. Nepal has limited options. It could try to Internationalize Kalapani. But it is hard to see what that will achieve. Such a move is sure to further fuel India’s ire against Kathmandu. Nor will China be too pleased to be dragged into international arbitration by the government it helped shape. 

“Have you read the new Times of India news report on Nepal?” I ask Upendra Gautam of the China Study Center. He hasn’t. I want to know what Gautam makes of a line in the news report where the writer quotes “official and political sources in India” as saying, “India reckons China will be the worse for wear getting in the mud of the never-ending chaos of Nepali domestic politics.” I ask Gautam if India has learned the hard lesson and was now waiting for China to replicate its old mistakes in Nepal. He isn’t happy I start our conversation by quoting an Indian newspaper.

“You quoting an Indian report shows how Nepalis tend to unnecessarily invoke India-China geopolitical rivalry,” he answers. Why can’t Nepal handle India and China separately? I get what Gautam is getting to. Perhaps I should not have quoted the TOI report right off the bat. But, surely, the Chinese envoy went overboard in meeting so many top NCP leaders and urging them to keep the party united. And what about Xi personally calling President Bhandari, supposedly to sort out the party dispute?

“You have it wrong, it was rather Bhandari who called Xi. So far as the Chinese envoy meeting top NCP leaders of the ruling coalition is concerned, it is natural for China to want a strong power-center in Kathmandu. China believes in a stable government, whoever is in it,” he says.

Vijay Kant Karna, an old observer of Nepal-India relations, isn’t convinced. “What you see is that Chinese interference in Nepali politics has been increasing steadily since Pushpa Kamal Dahal replaced KP Oli as the prime minister in 2016,” he says. The latest Chinese maneuverings leave no doubt in Karna’s mind that China is interested in managing “the internal politics of Nepali parties as well as the government.”

He also doesn’t buy that it was President Bhandari who wanted to talk to Xi rather than the other way around. “My understanding is that Xi called when the legwork of the Chinese envoy in Kathmandu was inadequate to achieve China’s goal,” he says. So China wants Oli to stay? “Is there any doubt about that?” he retorts.

The backers of China in Nepal see the latest Chinese efforts as a reflection of the way they do diplomacy around the world, and there is nothing sinister about it. They deal with strong power centers wherever they do business. But China skeptics espy a clear-cut case of meddling.

I for one think China’s image in Nepal is still largely positive, thanks to its traditional hands-off approach. The more it is seen as trying to influence Nepali politics, the more it will get into controversy. Even in the past, there have been times when the public tide has turned against the Chinese, for instance when it claimed ownership of Mount Everest in 1960.

The way China is being cornered on the novel coronavirus globally, perhaps Beijing sees no alternative to cultivating smaller powers like Nepal to speak on its behalf on the world stage. And the more it does for Nepal, the greater will be its expectations. India may wait and watch for the time being. But history suggests India will intervene when it feels the Chinese have crossed New Delhi’s self-defined ‘red line’ in Nepal.

The writing had been on the wall. Over the next month and a half, 150,000 Nepali migrant workers in the Gulf and Malaysia could be repatriated. This first batch of homecoming workers will comprise those who were working abroad illegally and those who have lost their jobs because of the novel coronavirus pandemic. Host countries like Kuwait, Saudi Arabia and the UAE have offered time-bound amnesty for illegal workers registering to go back to their home countries. Many Nepali workers are taking advantage of this one-time offer of pardon. For instance, over 3,000 of them in Kuwait have registered for repatriation after the Kuwaiti government granted them amnesty and vowed to rehire them if the corona threat dies down. 

Nepal will have a tough time managing these workers. The government says it is working on arranging Covid-19 tests for 150,000 people and on building reliable quarantine facilities for them. But most of these workers are to undergo the unreliable rapid tests. The more reliable PCR test kits are scarce, and it is still unclear where additional test kits will come from. Likewise, the quarantine facilities at the local and provincial levels are without even bare minimum facilities, which is why many folks quarantined there run away. A new spurt of Covid-19 infection is likely if this first batch of returning migrant workers is not managed well. The long-term picture appears bleaker still.

Bar India, there are 1.5 million Nepali migrant workers in the Gulf countries and Malaysia. Many of them will lose their jobs and will be forced to go back to their home countries. Back home, in the economy badly depressed by the corona pandemic, they won’t get many gainful jobs. Even if they get some work, it won’t pay nearly as much as they earned abroad. This sudden income transition will be tough on their families. The government blueprint for creating fresh jobs in agriculture, where people can be immediately employed, is a good start. There is not much time to work out its nitty-gritty. Meanwhile, there could be a minimum income guarantee for all the jobless. As the federal budget for the current fiscal remains mostly unspent, parts of it can be reallocated for things like income guarantee and agriculture modernization. Realistically, with tourism and foreign employment, the two mainstays of Nepali economy, on a downward spiral, things could get progressively harder in the days ahead. But one thing at a time.

Nepali Congress leaders have been egging on Pushpa Kamal Dahal to break free from the Nepal Communist Party, his former Maoist colleagues in tow, for some time. If he agreed, Congress would help him be the prime minister, with the support of Madhesi parties. Dahal stayed put despite his mounting differences with PM and NCP co-chair KP Oli. Yes, he felt resentful of Oli whom he saw as monopolizing power and minimizing his role in the NCP. Yet he also feared the many uncertainties attached to an abrupt break-up.

Now Dahal’s disagreements with Oli are threatening to boil over, following the Oli cabinet’s introduction (and later withdrawal) of a pair of disastrous, self-defeating ordinances. Dahal is thus more open to the prospect of closing ranks with Nepali Congress and the new Janata Samajbadi Party Nepal. For it is not just Oli he has to contend with in the NCP. In the next general convention, whenever that takes place, he will also have to fend off a serious challenge for party chairmanship from Madhav Kumar Nepal, Bamdev Gautam, and possibly even Jhalanath Khanal. Rather, why not lead a new ‘pro-identity’ coalition that corresponds to his projected image as the champion of the marginalized communities?

In doing so he will also get to further mend his frayed ties with India. India had long been lobbying for the merger of the two big Madhesi parties to consolidate its hold on Tarai-Madhes, and to mount a credible challenge against the ‘pro-China’ Oli government. To effect the merger, India also prevented the last minute, Oli-engineered fissure in Upendra Yadav’s Samajbadi Party. Now, with a new ambassador in Kathmandu, the Indians will happily help shape an anti-Oli coalition between the Nepali Congress, the Janata Samajbadi and even the Rastriya Prajatantra Party. If Dahal feels further marginalized in the NCP, and takes up the bait of leading the new pro-identity coalition, he will have to, perforce, mend fences with India.

In contrast, the Chinese want to forestall a fissure in the NCP. The mighty Nepali ruling party came into existence partly because of China’s desire for a strong and friendly force at the helm of affairs in Kathmandu. True, the Oli government’s sloppy handling of the BRI dismays them a bit. But they still think China will be best served by Oli’s continuity. Who knows what a change of the guard in Singhaburdar will bring!

It will also be interesting to see what happens to the MCC bill in the federal lower house if Oli goes. Dahal and ex-Maoists are suspicious, while the Americans desperately want the Nepali parliament to ratify it. The age of the two-pronged geopolitical tug-of-war in Nepal has passed. With the entry of the Americans—not to forget the Russians—the course of events in Kathmandu is likely to be shaped even more from the outside. In this age of disinformation and half-truths, this is not so much a defeatist argument as it is a call for a more fact-based, nuanced foreign policy approach.

India’s decision to closely scrutinize the FDI originating in the seven countries it shares borders with—Afghanistan, Bangladesh, Bhutan, China, Myanmar, Nepal, and Pakistan—epitomizes its fear of China’s growing economic might. (Six other countries have barely any investment in India.) Chinese state enterprises are on a buying spree, looking to snap up companies on the cheap in the countries rocked by the novel coronavirus pandemic, fueling fears of a Chinese economic hegemony. India was spooked. In response, China says India’s new FDI requirements amount to violation of the WTO’s “principle of non-discrimination” as well as “the consensus of G20… to realize a free, fair, non-discriminatory, transparent, predictable and stable trade and investment environment.”

These are early signs that the post-coronavirus world will not be an easy place to trade and do business in. South Asia is projected to be among the regions that are hit the hardest by the pandemic, as their remittance-based economies struggle to tackle growing hunger and joblessness. International help will thus be crucial for the region to recover. Interestingly, even as India has restricted Chinese FDI, it is still importing gargantuan amounts of corona kits from China. Even in the post-corona world, this sort of push-and-pull relation between India and China will continue. One other area of potential conflict between them will be over the virus narrative.

Indian media has been ardently pushing the line that China is responsible for the ‘creation’ and spread of the virus. Even their more nuanced commentaries have a distinctly anti-China flavor. As India’s ex-foreign secretary Shyam Saran recently wrote in The Indian Express: “There is no escaping the fact that Covid-19 may not have become a pandemic if China were a democracy with a free flow of information… This is like original sin, which cannot be whitewashed.” In comparison, Saran lauds India’s ‘open and informed’ approach to the pandemic. He argues that during a crisis there are distinct advantages of being a democracy.

As representatives of the ‘largest democracy in the world,’ the Indian intelligentsia will look to further push this pro-democracy narrative. They will also help build pressure for the formation of a ‘concert of democracies’ both in and outside South Asia.

It is hard to say right now whether the post-corona world will be friendlier to the American IPS or to the Chinese BRI. The Americans and the Indians seem confident that China’s initial mishandling of the corona crisis makes the need for greater democracy self-evident. In this thinking, projects under the BRI will be seen suspiciously as countries will no longer trust the ‘corona-exporting’ China. In reality, the poor countries in the region, which are being further impoverished by the pandemic, will happily accept any help they can get.

As I have written in this space before, at least in Nepal, with the memories of the 2015-16 blockade still fresh, the anti-China narrative will be a hard sell. Indian meddling in South Asia is an old phenomenon, while the Chinese have only recently entered the fray. Countries like Nepal, Bhutan and Bangladesh would like to test for themselves if the Chinese can be trusted. Things won’t change so long as India continues to be seen as the regional hegemon.