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On August 3, the Chinese Embassy in Kathmandu issued a loaded press statement condemning the Taiwan visit of Speaker of the US House of Representatives Nancy Pelosi. Terming the trip “a serious violation of the one-China principle and the political foundation of China-US relations”, China hoped that the government of Nepal “will continue to abide by the one-China principle and understand and support China’s legitimate and justified position”. Not just that. Nepal should “work together with China to defend each other’s sovereignty, security and territorial integrity.” Perhaps the most straightforward interpretation of this statement is that should China take military action against Taiwan, Nepal is expected to support such a move. Or at least not toe the American line on it.

China has already announced military drills inside Taiwan’s territorial waters. Meanwhile, as a signal of intent, American warships are patrolling the Taiwan Strait. As tensions over Taiwan’s fate escalate, Nepal would be under pressure to pick sides. “Nepal should closely follow the developments in Taiwan but we should not be quick to react,” says Shambhu Ram Simkhada, a foreign policy commentator. Although China and the US are on a collision course, he adds, the chances of a war between them is still very slim. We should not panic just yet.    

Following Nepal’s decision to opt out of the American State Partnership Program (SPP), Nepal-US ties have been somewhat strained. Nepal-China relations have also cooled after the formation of the Deuba government back in July 2021. Lack of warmth in ties often breeds suspicion. Following Nepal’s rejection of the SPP, the Americans would be ultra-sensitive to any signs of ‘Chinese hands’ in Nepal’s foreign policy decisions. The Chinese too would be watching Deuba closely. This is no time to pick sides. Nepal must resolutely defend its right to stay neutral. If the Americans and the Chinese are our friends, they will let us be. 

After much persuasion by his coalition partners, Prime Minister Sher Bahadur Deuba at long last agreed to inform the US that Nepal is opting out of the State Partnership Program (SPP).

The SPP had become controversial in Nepal after its mention in the Indo-Pacific Strategy, another US cooperation program that many see as a tool to cap China’s growing regional clout. 

The US has acknowledged the letter sent by Nepal’s Foreign Ministry and it is likely to remove Nepal from the SPP list. But will that be the end of it?

Many suspect Nepal will have to bear the consequences of turning down the SPP, particularly on the long-standing military-level ties between the two countries.  

Immediately, they say, the Nepal Army will lose out on the $500m it was supposed to get under the program over the next five years to better equip itself against natural disasters.

Retired Major General Victor JB Rana says other areas of cooperation will also be hit, though the US has not said anything about it. America is also likely to suspend some bilateral exchange programs in response.

Anil Sigdel, founder of Washington DC-based Nepal Matters for America, a think tank, says staying out of SPP will definitely be a setback in deepening ties between the two militaries. Nepal’s army will now face additional constraints in securing American resources, training, and other cooperation. The US has been strengthening its defense cooperation in Asia with other countries with similar partnerships and policies. 

Several ex-army officials who spoke to ApEx on the condition of anonymity fear the same. They reckon Nepal’s leadership botched the opportunity for the country to get continued support in areas like natural disaster management and cyber security.

Several factors made Nepal turn down the SPP.

The first was the supposed draft MoU circulated in the media, which had some objectionable provisions including the presence of American troops on Nepali soil. The US has been consistently saying that the document is ‘fake’. Many politicians and experts in Nepal think otherwise.

The mention of the SPP in the much-contested Indo-Pacific Strategy (IPS) also rang alarm bells in Kathmandu. 

The US had listed Nepal as an SPP partner in 2019 following the latter’s repeated requests in 2015 and 2017. But the SPP’s mention in the IPS document changed everything. The left-leaning Nepali politicians then started fearing that the partnership program could harm Nepal-China relations.

Nepal Army Chief Gen Prabhu Ram Sharma has categorically said that the IPS link was the reason the country backtracked from the SPP. The process of joining the partnership program was in itself opaque. 

Former army chief Rajendra Bahadur Chhetri in 2015 had written a letter of intent to the American Embassy in Kathmandu, apparently without adequately consulting then political leadership. There is no information on the content of a second letter sent in 2017.

In doing so, the army was accused of bypassing both the Ministry of Defense and the Ministry of Foreign Affairs. Many suspected that the US was trying to drag Nepal into its military orbit through the SPP.

Whatever the case, say international relations experts, there was no need to scrap the SPP. “If America comes up with a draft, we can negotiate its provisions and remove the ones we do not like, especially those that could affect the sensitivities of our neighbors,” says Rana.

Nepal was already a part of SPP but it was yet to sign a MoU specifying areas of cooperation. 

Besides the SPP, Nepal and the US have various other avenues of military cooperation. Under the International Military Education and Training, the US Army trains and educates Nepal’s military officials. There is also a leadership exchange program, under which Gen Sharma recently visited Australia to attend the Indo-Pacific Chiefs of Defense Conference.

Similarly, the US Army provides both lethal and non-lethal assistance to its Nepali counterpart as a part of its foreign military financing program.

The other areas of cooperation are support on counterterrorism, arrangements for purchasing American military hardware, and cooperation on United Nations peacekeeping operations.

There is a unanimous view that Nepal cannot become a partner in all the issues that come under the SPP’s purview. But, they add, there are many topics like disaster preparedness and cyber security in which the partnership could be continued.

More than 90 countries, including Sri Lanka, Bangladesh and Maldives, are already in such partnerships under the SPP.

The key areas of cooperation under the program are, among other things, disaster preparedness, humanitarian assistance, defense support of civil authorities, counterdrug, border/port security and public private partnership.

But the official page of the SPP also says: “Through SPP, the National Guard conducts military-to-military engagements in support of defense security goals but also leverages whole-of-society relationships and capabilities to facilitate broader interagency and corollary engagements spanning military, government, economic and social spheres.”

A senior retired army official who was privy to the initial SPP negotiations tells ApEx that it is only natural for Nepal to handle the logistics and arrange for the shelter and upkeep of foreign army personnel when they come to help Nepal.

“The SPP was pushed forward after the 2015 earthquake,” he says. “But not on the terms mentioned in the document that is being circulated in the media.”

He is of the view that Nepal should take assistance on the basis of what we need, not what the US wishes to offer. The retired official adds that the Nepal Army has in the past declined many US offers.

In 2013, for instance, the US had sent a draft of a logistics service agreement whereby the Americans would look after the logistics of Nepali soldiers deployed in peacekeeping missions and the Nepalis would handle the logistics of US Army personnel who came to Nepal.

“We said no to it as it could have impacted Nepal’s relations with India and China,” says the ex-officer.

Anil Sigdel, of the Washington-based think tank, says staying out of SPP will definitely be a setback in the ties between two military establishments.

“The understanding in Nepal that such a partnership will go against its non-alignment policy,” Sigdel adds, “but the US is also determined to integrate states and different agencies in its foreign policy objectives.” This, he says, is the crux of the problem.

The Nepal-US military ties will continue, Sigdel adds, but the rebuffing of the SPP will certainly affect cooperation.

The key takeaway from the SPP saga is there should be consultation among key stakeholders in how to deal with big powers. Specifically, there is a need for a broad understanding on the modality of cooperating with the US that has put both economic and military assistance inside the same IPS basket.

Under the current electoral system—a mix of first-past-the-post (FPTP) and proportional representation (PR)—chances are slim of any one party securing a parliamentary majority.  

Yes, in 2018, there was a single-party majority of the erstwhile Nepal Communist Party (NCP). But that was a product of a post-election merger between the CPN-UML and the CPN (Maoist Center).  

More than two parties must join forces in the upcoming parliamentary elections to later form a government. The two major parties, Nepali Congress (NC) and CPN-UML, have near equal electoral strength. This makes the Maoist Center the kingmakers. 

There is a risk of a non-ideological ruling alliance leading to government instability, bad governance, policy disparities and indecision. 

Political analysts say it is not uncommon for parties with similar ideologies to form an electoral alliance. But an alliance between the parties with diametrically opposite ideologies is something abnormal. 

“The Congress and the Maoists, for instance, differ fundamentally, with polar opposite economic and development models,” says political analyst Puranjan Acharya. “A government formed by these two parties won’t be able to deliver.” 

Acharya says parties with such divergent views cannot even formulate a common minimum program, let alone run the country. 

“Ministry-level coordination becomes too,” he adds.  

For now, the ruling coalition among five parties—the NC, the Maoist Center, the CPN (Unified Socialist), the Janata Samajbadi Party and the Rastriya Janamorcha Party—has agreed to retain their partnership going into the parliamentary election.  

One goal, say their leaders, is to fight against ‘the regressive force’, a not-so-subtle reference to UML’s KP Sharma Oli: The UML chairman had twice tried and failed to dissolve the House of Representatives during his term as a prime minister before his government was eventually thrown out by the Supreme Court. 

Oli remains a popular leader and the five-party coalition still sees him as a threat.

But analysts no longer see him as a threat to the constitution. 

“The five parties’ mission was completed when they banded together to unseat Oli,” says Acharya. “Now they should dissolve this unnatural alliance.”  

Maoist Central Committee member Hem Raj Bhandari disagrees. 

“We have to stay together at a time UML has already started discussing the relevance of federalism and secularism,” he says.

He insists that the current alliance, despite the divergent ideologies of its  constituent parties, is still indispensable to safeguard these constitutional provisions.  

But it is hard not to see that personal interests of a handful of leaders have become the driving force behind the current alliance politics. 

The NC leadership, for one, feels an electoral alliance is the only way to ensure the party’s continued presence in power. Ultimately, Prime Minister Sher Bahadur Deuba wants to hand over the reins of both the party and the government to his handpicked leaders.

The party leadership is also wary that the Congress could face electoral drubbing, as it did in 2017, if it contests the election alone.  

Many senior leaders in the party are also in favor of an electoral alliance, as they do not see themselves winning on their own. For instance, senior leader Ram Chandra Poudel is a strong advocate.

But there are voices in the NC that the party should contest the election alone and sit in the opposition if need be. They believe an electoral alliance will weaken the party’s organization in the long run. They cite the example of Bharatpur Municipality, where the party leadership decided to support the Maoist candidates for two elections in a row, causing much disenchantment among the NC rank and file. 

By entertaining alliance politics, Acharya says, the NC has become “an instrument to strengthen other communist parties.”

His observation resonates with NC Central Working Committee member Badri Pandey. “We have many aspirants for MPs and an alliance could again frustrate them no end,” he says. 

Other Congress leaders, however, see it as the only way a post-election Congress government can be formed and stability maintained both at the center and in provinces.  

Thanks to the five-party alliance, the Congress secured 330 seats in May 13 local government elections, a sizable gain from its 2017 haul of 264 seats. 

Meanwhile, the Maoist Center wants to weaken the UML, mainly its Chairman Oli, by forging an electoral alliance with the Congress. Maoist Chairman Dahal has a personal rivalry with Oli who betrayed him on a power-sharing agreement.

“Our chairman is clear that the only way to strengthen the Maoist party is by weakening the UML,” says a Maoist leader requesting anonymity.  

Inside the UML, too, many are in favor of forsaking any kind of alliance. Some leaders even think the party should remain in the opposition for the next five years and work to strengthen the party organization.   

But Oli’s ambition of becoming prime minister may drive the party towards a poll alliance. 

As alliance politics has become the order of the day, ordinary voters have been left frustrated. Major political parties and their leaders are only concerned about getting to power and voters cannot distinguish one party from another. 

What the making and breaking of alliances has done is to send the message that parties do not care about the country, says Acharya. “No wonder, people are making their frustration known by voting for independent candidates.”  

Again, if the major parties were to contest the elections alone, there would be a close competition between the NC and the UML. 

Consider the second Constituent Assembly (CA) elections of 2013, when there was no electoral alliance. The Congress won 196 seats to become the largest party while the UML came in second with 175 seats. The Maoist Center garnered 80 seats and became the third largest party in the assembly. 

But in the 2017 parliamentary elections, the UML and the Maoist Center forged an electoral alliance. Under the FPTP voting, the UML won 80, the NC 23 and the Maoists 36 seats respectively. Under the PR category, the UML and the NC secured almost equal votes, with 41 and 40 seats, while the Maoist got only 17 seats. 

Thus the Congress and the UML stand at equal footing without other parties’ support. But with both vying for power, they are unlikely to take the risk of entering the election ring alone.  

Bhandari, the Maoist leader, says communist parties in particular are going through an ideological dilemma. “They lack a clear vision and program to govern the country,” he says. “The constitution talks about achieving socialism, but the parties do not know how to get there.” 

An alliance without any ideological and political basis, Bhandari warns, is “always prone to failure, just like the Maoist-UML did.”  

“Unfortunately, there is no discussion in the party to chalk out an ideological course,” he adds. “The sole focus is getting to power.” 

Ideologically, CPN (Maoist Center) and India’s Bharatiya Janata Party (BJP) are polar opposites. The former is a communist outfit while the latter is a conservative Hindu nationalist.

This ideological difference may have crossed the mind of Maoist Chairman Pushpa Kamal Dahal when he met BJP President J.P. Nadda in the third week of July. The BJP chief, perhaps to break ice, had told Dahal that there was one similarity between the two parties: both worked for the uplift of the oppressed and marginalized communities.

The two leaders agreed to enhance party-to-party relations through exchanges of delegations by putting their ideological differences aside, in what was the first time that the BJP had officially extended an olive branch to the Maoist party.

But Dahal is not the first Nepali politician to be so welcomed by the BJP in recent times. On April 1, Prime Minister Sher Bahadur Deuba, who was in India on an official visit, had also reached the BJP’s office and held talks with Nadda.

“We had fruitful discussions over strengthening and deepening ties between India and Nepal, especially old-age people bond. We also discussed ways to further party-to-party relations,” Nadda said after his meeting with Deuba.

Exchanges between the BJP and the NC, however, had begun before Deuba’s visit. In August 2021, BJP foreign affairs head Vijay Chauthaiwale visited Nepal at the invitation of the Congress. Similarly, in October 2021, BJP invited a delegation of Congress party led by former foreign minister Prakash Sharan Mahat.

Mahat’s visit was aimed at strengthening ties between the Deuba government and India.

Though Dahal during his recent trip also met with Indian External Affairs Minister S Jaishankar and other high-level government officials, he was in India at BJP’s invitation.

The Indian ruling party of Prime Minister Narendra Modi has also sent invitations to other party leaders, including CPN-UML Chairman KP Sharma Oli.

Between 2018 and 2021, the two parties had a series of interactions. In December 2020, BJP foreign affairs head Chauthaiwale had visited Nepal at the invitation of UML leader Bishnu Poudel.

Over the past few years, BJP has started reaching out to the political parties of South Asian countries. Political analyst Arun Subedi, who closely tracks BJP’s politics, says the party wants “a strong conservative force in Nepal”.

“BJP is trying to cultivate conservative leaders within the major political forces in order to serve India’s security and strategic interests in Nepal,” adds Subedi.

BJP’s ideological wing Rashtriya Swayamsevak Sangh (RSS) is already expanding its presence in Nepal.

Unlike in the past, the BJP’s influence in the foreign policy conduct of Nepal government, especially in neighboring countries, is also increasing.

For instance, BJP foreign affairs head Chauthaiwale played an important role in opening the channel of communication between Nepal and India in 2020. At the time bilateral relations had been strained after the KP Oli government endorsed a new political map of Nepal incorporating areas India claims as its own.

Similarly, NC leaders roped in BJP in order to improve relations with the Indian government after Deuba came back to power.

Of late, the Modi government has been trying to deal with the political forces of neighboring countries with the BJP at the front. To serve its interest, it is adopting a policy of working with whichever party comes to power. 

In Nepal, the BJP’s outreach has contributed to the establishment of a channel of communication at the political level, availing Nepali leaders a chance to voice their concerns at the top political level.

Historically, there have been very few interactions between Nepali political parties and the BJP. BJP emerged as a strong political force only after 1990. Traditionally, the NC had cordial ties with the Indian National Congress and another socialist party. Similarly, the communist parties of Nepal were close to India’s leftist forces.

When the BJP came to power with a thumping majority in 2014, Modi renewed India’s neighborhood policy and one of its key components was elevating ties with political leaderships of neighboring countries. That is why during his Nepal visit, Modi met leaders from across the political spectrum.

Nihar R. Nayak, a New Delhi-based researcher, says the BJP started reaching out to Nepali political parties after realizing that there was a gap in communication.

“BJP has already ruled India for 10 years and is planning to do so for another 5-10 years. It thus wants to build ties with all political parties of neighboring countries, irrespective of their ideology,” he says.

Before 2014, India was engaging at the individual leadership level. But since the BJP came to power, “India has started engaging at the institutional level, which is a major departure in its neighborhood policy,” adds Nayak. 

However, there are some differences between the BJP-led government and the party itself on some key issues related to neighboring countries. The BJP and its ideological wing RSS stress cultural nationalism and Hindu state in Nepal. But the Modi government steers clear of these issues at the governmental level.

It is not only Nepali politicians who have been meeting the BJP leaders in recent times. In June, the party had invited the ambassadors of BIMSTEC countries, Europe, South Asia, and East Asian countries to the party headquarters—all of which are a part of the ‘Know BJP’ initiative.

Envoys of other countries are also keen to build party-to-party ties between the BJP and political parties of their respective countries.

The BJP aims to interact with the political parties of more than 150 countries.  In meetings with their envoys, the party chief has been known to inform the guests about BJP’s ideology, structure, functioning, and the welfare works it has been carrying out. 

The BJP claims to be the largest party in the world with around 180 million members, almost double that of the China Communist Party.  

The political parties of other countries are as keen to decipher the BJP’s unmatched organization-building formula.

Nepal’s major political parties will certainly not contest the upcoming parliamentary elections on their own. What is uncertain, though, is the type of electoral alliances they will forge. 

For now, Pushpa Kamal Dahal’s CPN (Maoist Center) sits on the fence, between the Nepali Congress (NC), its current coalition partner with a liberal ideological bent, and the CPN-UML, a fellow communist party. Dahal wants to wring out maximum benefits for himself as well as his party.

Congress will still be his first priority, but he will then drive a hard bargain. The Maoist party wants the coalition’s tickets in at least 60 of the 165 first-past-the-post (FPTP) seats. A Maoist leader says the party has already conveyed this to the Congress leadership. If not, the Maoist Center will ally with the UML.

The three parties have so far managed to keep the talks on electoral alliances, reportedly taking place at multiple levels, under wraps out of fear of external saboteurs. 

There are reports that Deuba has offered Dahal the posts of the President and the Speaker in the post-election political dispensation. 

Dahal has made his desire to become prime minister known as well. On June 24, he said at an event in Kathmandu that he could take drastic steps to address bad governance if he were to be the prime minister.

The need for an electoral alliance has become indispensable even for senior Congress leaders to win elections. Ram Chandra Poudel, who faced defeat in his last electoral outing in 2017, is a case in point. 

Senior Congress leader Krishna Prasad Sitaula says, “When even electoral dates are not finalized, it is too early to talk about the nitty-gritty of poll alliances.”   

The ruling party is precariously placed, as the seats must also be shared with the CPN (Unified Socialist) and the Madhes-based parties if it wants to keep the KP Sharma Oli-led UML away from power.

“The potent anti-alliance voice within the party and the difficult demands of other parties in the coalition have complicated things,” says NC Central Working Committee leader Nain Singh Mahar.   

Nonetheless, on July 19, Nepali Congress Central Working Committee (CWC) decided to forge an electoral alliance with coalition partners. 

But there is still pressure within the Congress that the party should contest at least 100 seats under the FPTP—a tough ask in a five-party coalition. Some NC leaders fear rival candidates could split votes if the party settles for fewer seats. At the same time, there is a concern that the Maoists could forge an electoral alliance with the UML.

The local poll results have made the Maoist Center more ambitious. Its leaders now claim the party will be a decisive force for at least another five years. The Maoists goal is to become the second largest party after the Congress while also preventing the latter from securing a majority. 

Some Maoist leaders say it is only but natural for Dahal to stake a claim on premiership after he extended full support to Deuba’s bid for prime minister following the collapse of the Oli government. It is time, they say, for Deuba to return the favor. 

“The fate of the electoral alliance revolves around this central issue,” Maoist leader Khagaraj Raj Bhatta says. “The Nepali Congress must show flexibility on power- and seat-sharing to keep the coalition intact.”

Meanwhile, notwithstanding the bitter feud between Dahal and Oli that led to the breakup of the erstwhile Nepal Communist Party (NCP), the Maoist party is also holding talks with the UML on a possible electoral alliance.

Earlier this week, senior Maoist leader Narayan Kaji Shrestha said he is in favor of an alliance with the UML, even if it is impossible to reunite the two parties in the near future.

UML Chairman Oli, however, is in no hurry. He wants to become prime minister for one more term and the chances that he will support Dahal’s premiership bid are slim.

Oli nevertheless has conveyed to Dahal that he is positive about a possible poll alliance, while also making it clear that he will not sign any power-sharing deal before the elections.

Oli is under the pressure from the UML’s second-rung leaders to forge an electoral alliance—if not unify—with the Maoists. There is also pressure from China on Oli and Dahal to come together. 

China had played a crucial role for the 2018 UML-Maoist unity, if only to counter the US influence in Nepal. Although the merger broke down over Oli-Dahal rivalry, Beijing still wants a communist-led government in Kathmandu.

This time, however, China has taken a softer and subtler approach while trying to persuade the two largest left parties in Nepal to work together.

Some Maoist leaders say as neither the Congress nor the UML is in a position to form a government on its own, the post of prime minister is again up for negotiation.

Political analyst Bishnu Dahal also says Maoist Chairman Dahal wants to become prime minister at any cost as he has been out of power for more than five years.  

“Whether the Maoist party partners with the Congress or the UML in the elections, Dahal wants the prime minister’s post for himself,” he says. 

Meanwhile, the Maoists, the CPN (Unified Socialist) and senior communist leader Bam Dev Gautam are trying to forge a leftist ideological alliance in order to increase their collective bargaining power with Congress or CPN-UML. They are also contemplating the formation of a new socialist party. 

New Delhi asks Dahal to keep the coalition intact

Amid talks of electoral alliances, CPN (Maoist Center) Chairman Pushpa Kamal Dahal recently visited India, where he met with the Indian Minister for External Affairs S Jaishankar, National Security Advisor Ajit Doval, and Foreign Secretary Vinaya Mohan Kwatra, among others. 

In an interview, Dahal said that he had assured Indian officials there would be no repeat of the 2017 surprise left alliance this time. 

The Maoist-UML poll alliance and their subsequent merger had caught India unawares.

A New Delhi-diplomatic source says Delhi does not want a repeat of 2017 and has urged Dahal to continue the current alliance with the Nepali Congress. Dahal too has assured senior Indian officials that his priority is continuation of the current five-party coalition.

Indian Prime Minister Narendra Modi did not grant an audience to the Maoist chief, the source says, as the Indian officials Dahal interacted with were not convinced of the sincerity of his pledges. 

Meanwhile, Congress leaders are also in constant touch with New Delhi on likely poll alliances. 

First lady Arzu Rana Deuba, who is in New Delhi for medical treatment, has been in regular consultations with Indian officials. 

The Russia-Ukraine conflict is now six-month-old, with its economic and geopolitical impacts being felt near and far. Above all, countries the world over are having to grapple with ever-rising inflation. Nepal, whose own inflation rate is now inching close to double digits, is not immune to this global trend. The war has also brought about some changes in the country’s foreign policy and geopolitical conduct.

The government-run think tank Policy Research Institute (PRI) recently came up with a report on the war’s impact on Nepal. So what did it find?

Says Bishnu Raj Upreti, the PRI’s executive chair: “One less-noticed effect of the war is the increasing level of psychological threat small countries feel from their big neighbors.”

The lesson is that, adds Upreti, these countries need to be better prepared at navigating the choppy seas of geopolitics.

The war has also triggered a debate on the conduct of Nepal’s foreign policy. The country’s long-standing policy of non-alignment has come under scrutiny, as politicians and foreign policy watchers are divided over Nepal’s position on Ukraine. 

Some argue that Nepal has compromised on its policy of non-alignment and joined the American camp by voting in the United Nations Security Council against Russia’s aggression. 

Foreign policy expert Chandra Dev Bhatta says the current war has led to the emergence of new notions of non-alignment, which poses challenges, yet again, to the post-Second World War global order. 

“This situation has certainly forced many countries including Nepal to revisit their foreign policies,” he says. 

Nepal’s two neighbors, India and China, which remained neutral in the UN voting, are reportedly unhappy with Nepal’s position. 

Upreti says the principled position taken by the Nepal government was correct, but it should have avoided the UN voting considering the strategic interests and sensitivity of our neighbors. “It taught us that we should be more cautious in such issues in the coming days,” he adds.

Bhatta is of the view that the war will pose more and more problems for Nepal, “the longer it drags on.”

The PRI research report says Nepal’s UN position on the war has created suspicion that Nepal could deviate from its non-alignment policy.

“From a geopolitical standpoint, just like Ukraine, Nepal too is in a sensitive situation. In some aspects, we are more vulnerable than Ukraine,” the report says while suggesting that the government clarify its position with India and China to avoid misunderstandings. The continued goal of Nepal’s foreign policy, it advises, should be to protect Nepal’s sovereignty and serve the agenda of prosperity.

Prices of daily essentials including petroleum products have skyrocketed, hitting the poor sections of the society.

Nepal used to import cooking oil from Ukraine while it brought food items, mineral oil and industrial raw material from Russia. Russia’s assistance to Nepal, the PRI report predicts, is likely to go down in the coming days. 

The rise in commodity prices has forced central banks around the world to readjust their interest rates. 

And as the dollar is getting stronger, the Nepali currency is steadily losing its value. The PRI report says this kind of devaluation will further weigh on Nepal’s vulnerable economy.

The war’s continuity could also imperil Nepal’s food security. India has already barred the export of wheat (except to its small neighbors). 

Nepal’s agricultural output is low and food imports are rising. If India faces a food crisis, it could limit food export to Nepal as well. There is also the fear of fertilizer shortage. Nepal should take proactive steps to immediately address these issues, the PRI report suggests.

Upreti, for his part, says “we have to be prepared for the worst.” 

The PRI report says the Russia-Ukraine war could also affect Nepal’s share market. Over the past few months, Nepal’s stock market has been on a downward trend.

Another issue of concern is Nepal’s position on human rights. Raising the incidents of war crimes committed by Russian soldiers in Ukraine, Western countries may bring sanction proposals in the UN system. They will then try to get Nepal to vote in their favor.

Nepal should be prepared to handle such delicate situations, the report recommends. 

The report also suggests ways to mitigate the effects of the war and in dealing with foreign policy challenges. For one, Nepal should brief the international community about its position on the Russia-Ukraine war, stating that it is in line with Nepal’s non-alignment foreign policy. 

As Nepal is the current chair of the South Asian Association for Regional Cooperation (SAARC), Nepal should have taken the initiative to come up with a common South Asian position on the war. (The SAARC member states were divided during the UN voting on the Russia-Ukraine war.) 

The report suggests Nepal stockpiles petroleum products for at least three months while also taking measures to minimize consumption. 

As the war could impact the flow of remittance, it advises, the government should start diplomatic talks with labor-importing countries to find a common way forward. 

Nepal-US relations have hit a bumpy patch of late. First, the parliamentary ratification of a $500m US grant under Millennium Challenge Corporation (MCC) compact ran into a nasty controversy after it was linked to ‘anti-China’ Indo-Pacific Strategy (IPS). The parliament endorsed the compact with an interpretative declaration, which clearly stated that Nepal can never be a part of any military strategy. But within a few months of MCC’s passage, there is now debate over the US State Partnership Program (SPP). Nepal has refused to join the program saying the SPP was mentioned in the 2019 IPS report. ApEx this week organized a roundtable with former ambassadors and security and foreign policy experts to solicit their views on the recent evolution of the US-Nepal ties—with a focus on the IPS and Nepal’s place in it. Excerpts. 

Strategic blunder on army chief’s part to write to the US

Binoj Basnyat, Strategic affairs analyst 

Our government is weak in international relations. The contents of the much-talked Indo-Pacific Strategy (IPS) are country-specific, so Nepal should be clear that it is not an American ‘ally’ but just a ‘partner’ under it. There is a fundamental difference between the two. In our context, there is also a very narrow understanding of the word ‘strategy’ in the Indo-Pacific Strategy. It is an American way of dealing with the countries in the entire Indo-Pacific region, and they usually conduct cooperation and collaboration through such bilateral mechanisms. So the IPS should not be seen as a threat. It does not undercut our long-standing policy of non-alignment. 

As for the State Partnership Program (SPP), it is a way for the Americans to deal and cooperate with the Nepal Army. But it was indeed a strategic blunder on the part of the Army chief to write a letter to the Americans in 2015 requesting to be a part of the SPP. The government of the day should have done this. Also, the Parliamentary Committee on International Relations should have summoned the army chief of the time for inquiry, not the current chief. 

The Americans have many things to offer through various strategies and policies. The question is how we can best use them. To deal with these complex issues, there should be cooperation and coordination among major political parties and key state bodies. 

We must prepare a broad framework of our national interests. On issues of international relations, there is a deep gap among political leaders, government officials and experts. We also lack strategic vision and planning.  

It is vital that Nepal clearly defines its non-alignment policy. It is also important to keep party politics out of sensitive foreign policy issues, and to strengthen our security agencies. 

Relations with big powers should not be project-driven

Geja Sharma Wagle, Foreign policy expert  

Any foreign policy issue is increasingly seen through the narrow prism of nationalism in Nepal. To avoid the recurring confusions and controversies, we must develop separate national security and foreign policy documents based on broad consensus. Those documents of consensus should dictate our security and foreign policies, irrespective of which political party is in power. 

Currently, our dealings with big powers are driven by some specific projects, be it America’s Millennium Challenge Corporation (MCC) or China’s Belt and Road Initiative (BRI). But Nepal’s relations with the US, China or India should not be confined to such specific projects. But this project-driven approach still prevails, overshadowing our long-standing and multi-dimensional ties with these countries. 

We talk of balanced foreign relations, but the time has come to define what kind of balance we seek: a static or a dynamic balance? We must also define our non-alignment and neutrality policy in the changing context. We should maintain dynamic and strategic balance while dealing with big powers, as king Mahendra first proposed in 1960.

Look at Bangladesh and Mongolia, which have successfully maintained a dynamic balance in relations with all major powers for their development. Nepal is focusing more on developing cooperation, but what the big powers want is defense collaboration.  

When Chinese President Xi Jinping visited Nepal in 2019, there was an agreement to elevate ties to ‘strategic partnership’. But there has been no discussion in Nepal whatsoever of what such a partnership entails. We are hastily signing documents as and when they come along, without going into the details, without understanding their nuances.  

Nepal’s US policy influenced by outside actors

Vijay Kant Karna, Professor emeritus of political science 

The government is taking decisions on issues related to the US without much thought or preparation. There has been no focused discussions in Nepal on the Indo-Pacific Strategy, either among political parties or in the parliament. There should have been a broad public discourse. It is not just about America, global powers often come up with new policies and without any deliberation, we in Nepal either accept or reject it. The Ministry of Foreign Affairs is responsible for deeply studying such policies. 

The reality is that we do not have any institutional capacity to handle such issues. Not just with the US, Nepal also has defense cooperation with other countries, including with India and China. Defense collaboration is vital to enhancing our own capacity. 

I doubt if we are making independent decisions on such matters. Perhaps our conduct of foreign policy, including with the US, is being influenced by external actors. 

I do not think our politicians have thoroughly studied the SPP or IPS documents. It is important that they look at these strategies and policies with national interest at the center. But political parties are using foreign and security policies as a tool to fulfill their own interests.  

Foreign powers are guiding our internal political order. For instance, a senior leader of the Chinese Communist Party was in town to facilitate unity among our communist parties. Where else in the world does this kind of open meddling happen?

US-Nepal ties always underpinned by military cooperation 

Suresh Chalise, former ambassador to the US 

To understand the current trajectory of Nepal-US relations, we have to understand their 75-year-long bilateral history. America recognized Nepal much before the British left India. There had been some vital developments between 1945 and 1950, which must be closely studied. Our relationship with America was underpinned by military cooperation from the very beginning. The core of the current problem is that a large section of Nepali population leans towards communist parties. 

They see India as an expansionist and America as an imperialist power. This thinking naturally invites problems. Nepali and the American armies have for long been conducting military exercises. America has also been providing military support to Nepal. There is a strong social and economic bond between the two countries. Whether it is the SPP or any other American project, some people will always see them with a biased eye. 

The cooperation under the SPP is mainly in the areas of disaster management and environmental protection, which are in our national interest. Our security apparatus alone cannot handle those issues. The SPP could have been an opportunity for us had we negotiated with the Americans better. 

Obviously, there is growing competition among the major powers, but we should see this as an opportunity. Until and unless the state mechanisms are strong, there will always be policy inconsistencies. In the conduct of our foreign policy, we should practice strategic autonomy by taking our closest neighbors India and China into confidence. 

It is also important that our politicians mend their ways. For instance, a few months back, when Chinese Foreign Minister Wang Yi was in Nepal, Prime Minister Sher Bahadur Deuba categorically told him that Nepal would not take loans for BRI projects. The prime minister should have avoided such polarizing statements. The same message could have been conveyed at the bureaucratic level. 

Non-state actors setting the terms of debate 

Apekshya Shah, Assistant professor, Department of International Relations and Diplomacy, Tribhuvan University

The Indo-Pacific Strategy has come under fire due to the negative narratives around it and its military component. Controversies surrounding the MCC and the SPP also demonstrate how non-state actors such as media and social media are complicating the space of foreign policy and diplomacy, traditionally dominated by state actors. Misinformation and disinformation have become a cause for concern, which the government must address. 

Lack of a national consensus on foreign policy is the second point to consider. This is critical for any country, we have witnessed the consequences of lack of consensus and politicization of foreign policy. While a policy document is vital, diplomacy is even more important for its implementation. 

In order to balance the interests of all parties involved, we will need even more diplomatic agility. Even in the recent SPP debacle, there was a clear diplomatic mismanagement. 

It is important for Nepal to distinguish between military diplomacy and defense diplomacy. Military diplomacy is peace-time use of armed forces to achieve national and international goals. A country’s defense policy includes more than just the military, from the defense ministry, National Security Council, to Parliament. Military diplomacy has thus become a component of larger defense diplomacy initiatives. Previously, the military was under the supervision of the king who solely handled military diplomacy, but the context has changed since 2007. In these circumstances, it is vital for all parties involved to clarify how military-related diplomatic activities should be carried out and what role the Nepal Army plays. 

The SPP was a diplomatic opportunity for Nepal to negotiate and achieve its defense interests, but neither the government nor the people were able to discuss and understand it.

The patchy history of collaboration with the Nepal Communist Party (NCP, 2018-2021) seems to have taught the Chinese a lesson or two in how to navigate Nepal’s complex and often unpredictable political landscape. In this period, the world’s emerging superpower worked closely with the now dismantled NCP jointly-led by KP Sharma Oli of the CPN-UML and Pushpa Kamal Dahal of the CPN (Maoist Center). All the while, the northern neighbor kept a safe distance from the Nepali Congress, traditionally a party of liberal views and considered close to India and the West. 

But China now seems intent on making a correction on its Nepal policy—and the Chinese Communist Party (CCP) is taking the lead in this. 

Liu Jianchao, head of the International Department of the CCP Central Committee, recently wrapped up his four-day visit to Nepal. During his Kathmandu stay, he expressed China’s desire to mend fences with the Congress party.   

China no longer believes in keeping out of the internal affairs of other countries. In a clear hint of departure from its long-standing policy, Beijing actively courted Nepal’s communist parties, particularly after 2018. A similar trend was seen in other small South Asian countries. 

During his Kathmandu sojourn, Jianchao’s focus was on improving ties with the NC. He even went to the extent of visiting the BP Koirala Memorial Planetarium in Sundarijal and recalled the late NC leader’s role in enhancing Nepal-China relations back in the 1960s.  

Former Nepal’s ambassador to China Rajeshwar Acharya says the message is meaningful for Nepal’s political parties, particularly the Congress.

Over the first five years, the Chinese have realized that lack of communication with Congress has led to a misreading of its intent. 

China is keen on strengthening ties with the Nepali Congress. The Deuba-led government has reciprocated the gesture too, says foreign affairs expert Geja Sharma Wagle.  

Jianchao also tried to give the impression that Beijing treats all parties equally during a dinner with some Congress leaders. Meanwhile, the Congress leaders conveyed to him that favoring certain political parties in Nepal would be counterproductive for China. 

In response, the Chinese leader said that China gives equal importance to all political parties of Nepal. The senior CPC leader also conveyed to the NC his willingness to build party-to-party relations. 

In a separate meeting with Prime Minister Sher Bahadur Deuba, Jianchao categorically stated that China is willing to strengthen strategic communication with the Congress, promote mutually beneficial cooperation, and deepen exchanges and mutual learning on issues related to each other’s core interests and concerns. 

As Beijing is set to reset ties with Nepal, some exchanges of visits are in the cards. Foreign Minister Narayan Khadka is likely to visit China soon, while some senior NC leaders could also land in  Beijing in the near future.  

Earlier, in March, a month after Nepal’s parliamentary endorsement of US $500m assistance under Millennium Challenge Corporation (MCC), Chinese Foreign Minister Wang Yi had come to Nepal. His visit was focused on growing American influence in Kathmandu and regional issues. 

“The NC could emerge as a dominant political force after the upcoming parliamentary elections,” says Chandra Lal Giri, a researcher on Nepal-China relations at Research Center for Nepal and Asian Studies. “China is thus keen to revive cordial ties with the party.”  

“The Congress is a permanent democratic force in Nepal, but China slowed down its engagement with the party after it was relegated to the opposition bench in 2018,” he says. 

This created a perception inside the NC that China was ignoring them. China is trying to clear this misunderstanding.

The relationship between the NC and China soured due to the latter’s exclusive engagement with Nepali’s communist parties. Reports about border disputes in Humla district following the formation of Congress-led government did not help. 

Beijing started seeing the Deuba government as pro-Western and continued to ignore the ruling democratic party. China’s policy of engaging exclusively with the communist parties of Nepal invited criticisms even from within the Chinese Communist Party.

But China enhancing its ties with the NC does not mean it now gives less importance to the agenda of left unity in Nepal. 

China still wants to see communist parties of Nepal back in power, and to see them unite—but not at the cost of upsetting the NC. 

In his private meetings with top communist leaders, sources say, Jianchao pushed for left unity. The Chinese leader had held one-on-one with Oli and Dahal following delegation-level meetings with Nepali leaders and officials. 

He spent more than six hours with Oli and enquired about the possibility of unity or electoral alliance among left parties. If not party unity, China wants to see a coalition government of left parties in power. 

Oli reportedly told Jianchao that the split in the NCP had nothing to do with him and that he has never opposed unification. He, however, added that he did not see left unity happening anytime soon.

Acharya, the former Nepali ambassador, says it is obvious that the visit’s main goal was to push for left unity. 

This was also made clear by Chairman of Nepal Communist Party (Unified Socialist) Madhav Kumar Nepal, who told reporters that Jianchao stressed on unification among communist parties. 

“The Chinese seek friendly and credible partners in Nepal and they feel more comfortable working with left parties,” Acharya said. 

“China’s preference is a left-party led government in order to check growing American influence in its backyard,” says Giri, the researcher. “But the task of maintaining a balanced relationship with the NC and communist parties of Nepal is not an easy one. If China continues to push for left unity, the Congress will naturally continue to be suspicious.”

In his meetings with the Nepali leaders, Jianchao suggested maintaining unity among all political forces to preserve sovereignty and nationalism, a veiled reference to America’s growing influence in Nepal. 

According to Acharya, even minor visits and activities of Americans in Kathmandu alarms Beijing these days. 

China believes that the passage of the MCC compact could herald an era of greater American influence in Kathmandu.

During his Kathmandu visit, Jianchao also appreciated Nepal’s decision to refuse America’s State Partnership Program (SPP) through political consensus. 

According to a Maoist leader, the Chinese leader’s message was that all parties should come together to “resist American pressure” in Kathmandu. 

As always, China also raised the issue of security, only this time more seriously. Beijing fears that with the American influence in Kathmandu steadily on the rise, pro-Dalai Lama activities could increase. 

On China's flagship Belt and Road Initiative (BRI), Jianchao requested the Nepali side to come up with a clear vision and plan based on political consensus. 

Prime Minister Deuba reiterated his position that the country was in no position to accept loans to finance its development projects. 

The Chinese side is also pressing Nepal to implement the agreements signed between the two countries during President Xi Jinping’s 2019 Nepal visit.