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Dr Anil Sigdel is a US-based foreign policy expert. He closely follows world politics with a special focus on South Asia. Kamal Dev Bhattarai of ApEx speaks to him about great power rivalry and its implications for South Asian countries. How do you evaluate Xi Jinping’s neighborhood policy since he came to power in 2013? Once he took the helm, President Xi Jinping began to launch regional and global initiatives one after another, elevating China’s external outreach to an unprecedented level. Now as he moves on with his third term, China’s traditional peripheral countries policies have been already institutionalized into a full-fledged neighborhood policy. China’s proactive neighborhood diplomacy is here to stay. As great powers do, China, with its policy of economic assistance as a tool of foreign policy to increase influence, has tried to ensure that its neighbors will not align with its adversaries, for instance the US or India, in a way that would create unfavorable conditions for China’s strategic objectives. China, therefore, says it wants an amicable and secured neighborhood for China. In the words of Chinese state councilor and foreign minister Wang Yi: “China supports countries in the region (Asia) in distancing from the geopolitical trap.” While President Xi’s predecessor Hu Jintao had also emphasized such policies—common development of China and its neighbors—and worked on them, Xi has substantially boosted that assistance mechanism to achieve clear results. China now has a long-term neighborhood policy, that is its outreach will not have a character of highly generous economic package or surprise deals as seen in the beginning but a more matured engagement with a graph slowly and steadily moving upward. These priorities also emanate from the Chinese thinking that in order to become a regionally influencing power—or even globally—China has to become influential in its own neighborhood first. Moreover, Xi’s thoughts that talk about “new type of international relations” are enshrined into the party constitution. In any case, Xi will continue to push his policies as he sees fit in his third term. We have seen recently that China has been strengthening its ties in the broader South Asia as well – China invited Indian Ocean region countries, excluding India, for a meeting in which Nepal had also participated. As China and India have consistently struggled to find a common understanding along their borders, the importance of South Asian neighbors will remain for China. As seen in the past, to what extent China’s policy in South Asia matters also depends on what type of governments are in place in South Asian countries. In addition, the US is an important player in South Asia, which fuels further frustration to the Chinese Communist Party. How do you see the growing US-China rivalry in South Asia, and where does India stand on it? US-China rivalry in South Asia has led China to go beyond its own traditional red lines by visibly and vocally interfering into domestic politics and foreign policy matters. China has engaged in a war of words with the Americans in Nepal over the MCC grants. It has made controversial statements on Bangladesh’s likelihood of joining the Indo-Pacific policy of the Americans. Similarly, China-India borders have seen frequent skirmishes in recent years, while even the strongest of Chinese partners like Pakistan or Sri Lanka have felt the pressure of balancing their foreign policies. But on the flip side, due to this great power rivalry, the importance of these South Asian nations has clearly increased. It is obviously not easy to balance, but if played well, it can certainly bring opportunities. As far as India is concerned, US-China rivalry in South Asia gives both challenges and opportunities for India. The US policy of bringing more regional Asian partners on board to build a coalition that would balance the massively rising power of China has been a much-needed counterweight vis-à-vis China from an Indian standpoint. Moreover, the Indo-Pacific Strategy has also created a space for India, as a major and like-minded partner of the US, to pursue its own goal of becoming a separate pole by acquiring necessary capabilities and making new partnerships and coalitions with other powers. India, cognizant of the power differential with China, had no choice but to align with the US in the broader policy of cooperation around the Indo-Pacific. India sealed deep defense agreements with the US, became a major partner of coalitions like Quad, and began cooperation in several other domains. The US granting India a Strategic Trade Authorization status, for instance, was on par with what the US did with its Asian treaty allies like South Korea and Japan or the European NATO allies. In a strong signal to China, the US made these exceptions for India to help it acquire civil and military high-end technologies. However, India and the US are not treaty allies with mutual defense. Besides, India maintains suspicion towards growing US outreach in the region of its preeminence. India would welcome the US in South Asia to the extent that it would uphold and boost Indian primacy, but not any bilateral or other cooperation between the US and South Asian countries that would not keep India in the loop. From the South Asian countries’ standpoint, this is how the US should go about, whereas for India it is naturally a matter of concern. India is very sensitive about any military or defense partnership between the US and Nepal or its other neighbors. Instead of these deep defense ties, India has not fully relied on this US-India partnership vis-à-vis China, but has pursued its own policies to keep different options open and play its cards autonomously. India’s ties with Russia have been a thorn on US-India ties. In India’s calculation, Russia is an extremely useful partner for its role in providing critical military technologies, diplomatic counterbalancing to China, and access to Central Asia, balance against China-Pakistan ties, and in the time of Russia-Ukraine war, supplies of cheap commodities from Russia. India-US also have divergences in many different issues, especially in terms of India’s security concerns in its north western periphery, which has kept India from choosing its so-called “strategic autonomy”. How do you evaluate South Asian countries’ engagement with China, particularly on BRI? Although China presents itself as a close South Asian neighbor, India has become the elephant in the room for China and South Asian countries. Unlike other regions such as South East Asia or the Middle East, where China does not see such push backs, India is a regional power in South Asia and a strong rival of China vying for its own influence, thereby posing a major setback for Chinese ambitions. These geopolitical conditions also constrain South Asian countries such as Nepal, Bangladesh, Sri Lanka and Maldives to engage with China to some extent. The South Asian countries, for their part, also prefer to pursue a policy of strategic autonomy by equally engaging with and balancing out India, US and China. They want China but, at the same time, do not want China to be overwhelming and overbearing in their bilateral relationship. Such cautious policy is also manifested in the China-South Belt and Road Initiative. Although every country, except India, has signed BRI cooperation agreements in South Asia, they have carefully watched and learned from the BRI investments in other parts of the world and have become very cautious in finalizing projects with China. In the case of countries like Pakistan and Sri Lanka, they were already taking large Chinese investments even before the BRI. Although President Xi seemingly stepped-up China’s role to contribute to the world economy in the wake of the 2008 financial crisis, his BRI lending model repeated the same mistakes that many Western countries, companies and banks had committed before they burst in 2008. Many roads and airports were abandoned half-built or left totally empty if completed. In the BRI also, instead of pre-planning the contingencies, loans were agreed hastily and problems were being dealt with as they kept coming. Moreover, although the markets were not improving, loans were added in a hope to turn profit and recover which would not happen as seen clearly in the case of Pakistan and Sri Lanka. China’s BRI emphasized large and fast loans, but apparently less on risk assessments. China’s worsening ties with the West did not help, as countries got under huge pressure. Xi’s proactive outreach and massive investments in Maldives led many to suspect China’s “land grab” plan in the strategically vital region. As a consequence, both the US and Europe immediately decided to step up their diplomatic overtures in the island nation. India as the next-door power substantially stepped up its engagement as well. No wonder, Nepal and China have not started any project under the BRI under these circumstances. China, for its part, is also moving from its domestic policy of high economic growth priority to fixing China’s unbalanced and uneven growth across the nation. As a result, its external investment will also be impacted. Moreover, China’s current account surplus — which it enjoyed when Xi came to power—has fallen too. Now with the impacts of covid restrictions and lockdowns, Chinese neighbors will likely see less generous offers. Smaller countries in this region are feeling the heat of great power rivalry. What are your suggestions for small countries in the conduct of their foreign policy? First of all, it would be a mistaken policy to deny the geopolitical competition among great powers in our region and try to stay away from it. Geopolitical competitions are part and parcel of international relations, and any country in the international community cannot remain untouched by it. Therefore, accepting this reality and figuring out how to make the most of it—maintaining peace and stability but benefiting economically—is the right way forward. Especially in the case of South Asian nations, there are several weaknesses. They have a long way to go in building overall capacities and have substance in their regional cooperation. But South Asian nations may still start looking at each other in a meaningful way. Starting a consultation format grouping to promote a South Asian centrality and strategic autonomy would help. The next step would be to work on certain guiding strategic concepts to build a stronger regional bloc of these countries in the future. This in fact will also be in the interests of regional powers and great powers, as they worry that nations may be unduly influenced by their adversaries. How should Nepal engage with great powers in the coming days? What are the foreign policy challenges of the new government? India, China and the US have set their long-term policy priorities to engage with Nepal in the context of a changing geopolitical scenario caused mainly by China’s rise. As a result, any new government in Nepal is going to face a new reality of a need for a tri-lateral balancing act. Despite the hopes Nepal has had for economic growth and development by profiting from the progress of the neighbors, actual experience has been rather complicated. We have to learn a lesson that without a proper balancing of the interests of our external partners, there will not be any significant benefits. Great powers do not pursue a foreign policy of altruism, but of their strategic objectives.  Nepal has seemingly preferred continuity than change in this regard. In other words, as long as a Nepal government fails to creatively use the potential of its partners for the benefit of its own people and the nation, Nepal’s foreign policy will not matter much. And now to make matters worse, the neighborhood story is not just about India and China rising, but India and China potentially ending up in a war. Therefore, how our leaders and policymakers read this situation and formulate policies accordingly, will make a big difference.  

Neeraj Singh Manhas is the Director of Research in the Indo-Pacific Consortium at Raisina House, New Delhi. He has authored three books and has diverse research interests covering Sino-Indian border issues; China in the Indian Ocean; India-China foreign policy; water security; defense and Indo-Pacific studies. His recently-edited book is “Analyzing the Current Afghan Context” (Routledge 2022). His works have appeared in the Institute for Security & Development Policy (ISDP), Observer Research Foundation (ORF), Lee Kuan Yew School of Public Policy, The Hindu Business Line, The Pioneer, Financial Express, and other online platforms. ApEx spoke with him about the risk of Nepal slipping into the gray list of FATF. Different sources are claiming that Nepal will again be put into the FATF gray list. What are the chances?   I think the chances are 90 percent; there is a 10 percent chance that it can be averted, if any technical issue comes up with FATF. APG officials have said they would only incorporate progress made through December 16, 2022 in their mutual evaluation report, as Nepal (the country was on the greylist in 2008-2014) is once again placed in a vulnerable position and is at the risk of being greylisted. This will be quite harmful for Nepal because it has already had to deal with numerous other significant challenges. In the past, several countries’ economies have suffered due to FATF-imposed restrictions. Do you think it will have the same impact on Nepal?  In June 2018, Pakistan was placed on a watch list. Numerous sources have proved that Pakistan's economy suffered losses of over $30bn as a result of FATF’s restrictions. Pakistan, which has a friendly relationship with Saudi Arabia and the UAE, benefited from the latter’s bailout packages. The economic position of Nepal is dwindling, and its current status does not appear encouraging even as it seeks international investments. The lives of ordinary people have been affected, and the economy has been severely damaged by an expanding trade imbalance, a rapidly diminishing foreign exchange reserve, and surging inflation. Indeed, Nepal may slip into a serious financial crisis like Pakistan and Sri Lanka if serious action is not taken.  India has a potential role in helping Nepal frame new laws for money-laundering syndicates during 2008-2014, when it was on the FATF gray list. Do you think India will save Nepal from the FATF radar? India has always believed in “Vasudhaiva Kutumbakam” (the world is one family). Former PM Atal Bihari Vajpayee once stated: “We can change friends but not our neighbors.” India’s position with its neighboring states has always been humble and helpful. Recently, when Sri Lanka was going through a financial crisis, India provided foreign aid multiple times. India helped Nepal frame new laws for money-laundering from 2008 to 2014, things are a bit more difficult for India this time around. Members of the 39-strong FATF have held discussions, with a majority stating that they may go against Nepal in the upcoming FATF meeting, making things pretty difficult for India. Let’s see what happens until then. China has heavily invested in Nepal in its infrastructure, railways, and FDI; the current Prime Minister also shares close ties with Xi Jinping. Do you think China will have a significant role?  China has always helped Nepal fill its infrastructure gaps. As part of China-Nepal BRI Cooperation, both countries signed several MoUs, including Investment and Cooperation on Production Capacity, Human Resource Development Cooperation, and Economic and Technical Cooperation. PM Prachanda is on good terms with Xi Jinping, and everyone is hoping that China will help Nepal in this case. However, China is going through a massive upheaval, what with the Covid-19 pandemic, and mass resentment against their government. It will be interesting to see the Chinese moves vis-a-vis the FATF matter involving Nepal. What significant challenges does Nepal face as it tries to return to track? There are myriad problems facing Nepal, including an economic crisis, lack of better infrastructure, political instability, corruption, brain drain, unemployment, border security, and underutilization of resources. If Nepal slips into the FATF gray list, its challenges will only increase. However, Nepal has identified 15 laws that must be amended to make them compatible with the FATF anti-money laundering case. Some of the significant laws that need amendment are the Assets Laundering Prevention Act-2008, Land Revenue Act-1978, Tourism Act-1978, Securities Act-2007, Human Trafficking and Transportation (Control) Act-2008, Confiscation of Criminal Proceeds Act-2014, Mutual Legal Assistance Act-2014, Organized Crimes Prevention Act-2014, Criminal (Code) Act-2017 and Cooperative Act-2017. In February, when the APG is expected to produce its preliminary report, it will give its opinion. It will prepare its final report, which will determine whether Nepal will be under the International Cooperation Review Group (ICRG) monitoring of the FATF.

The Tharu Commission is provided for in Part 27, Article 263 of the Constitution of Nepal. The Tharu Commission Act, 2017 has been enacted by the parliament incorporating topics like the qualifications of the chairperson and members of the Tharu Commission, status of vacancies, remuneration and service conditions, duties and rights. Bishnu Prasad Chaudhary was nominated the first chairperson of Tharu Commission four years ago. Pratik Ghimire of ApEx caught up with Chaudhary to know about the progress that the commission has made so far.

What are the major working areas of the Tharu Commission?

Our major work is to conduct research on the Tharu community, culture, food, language and all Tharu identity-based issues. We also research problems facing the Tharu community like health, employment and education. The commission regularly conducts awareness programs, skill- and education-based training and workshops for the welfare of the community. Moreover, we study plans and policies of the government and offer suggestions.

Does the government implement your recommendations?

I must say no. The government, to date, has not endorsed our suggestions. It has a major role to make our work effective, meaning that without coordination from the federal government, we can’t even be a proper watchdog. Everything we do, or we require (human resources and budget) to run the office is associated with the government. 

For research activities, we need a huge budget, which we don’t have. For example, data are the foremost requirement for any research but due to the lack of budget, we can’t collect data on our own, so we have to rely on secondary sources. These sources are neither reliable nor accessible. We regularly recommend the government on law and policy making, but they don’t listen. This doesn’t mean these commissions should get executive powers. The duties, responsibilities and rights that the constitution provides us are enough. The problems lie with the government. It must heed our suggestions, and provide us human resources and the budget.

How is the coordination of the commission with three tiers of the government?

Though we work with all three tiers of the government, we are in touch mainly with local and federal governments. For training and workshops, we coordinate with respective local governments while for policy-making, we consult with the federal government.  As we have our main office in Kathmandu and no liaison office outside, it's quite difficult to coordinate, both with the government and the people. 

These commissions don’t have executive powers. In light of ongoing debates about their relevance, do we really need them?

Without these commissions, there will be an identity crisis. In the public service field, Tharu communities were included in the Madhesi cluster after the 2007 revolution. At that time, the Tharu communities had no idea about this. After coming to know about the matter, they protested which resulted in the Tharu revolution—and establishment of the Tharu Commission. The commission has outlined identity-based problems and often warned the government and concerned bodies about the consequences of ignoring them.

Thanks to this, the Tharu cluster is determined for political representation in the Election Act. The Civil Service Act has not incorporated these issues. The Madhesi Commission and the Madhesi leaders have always wanted Tharu and Muslim communities included in their cluster, but we stand firm against it. We have our own history, culture and identity. We won’t let this die down.

How often do you coordinate with other commissions?

We have met with the Madhesi Commission a couple of times for problem identification and resolution of cluster issues. But they don’t want to coordinate with us; they want us in their cluster instead. It appears like they don’t respect our identity. But they should be clear that we are not the Madhesis.

Akshay Golyan is the Managing Director of Golyan Group, one of the leading business houses in Nepal. As a third-generation member of the Golyan family, Akshay has been leading the group's business verticals for the past few years. ApEx caught up with Akshay to talk about the Golyan Group’s business plans. Excerpts: As someone with an academic degree from abroad, how applicable do you find your education to be when it comes to utilizing it for your group? I think education gives you the necessary knowledge to understand fundamental issues and use them in business according to the context of the country. Getting a good education is very important to holistically understand why things happen and how you can tackle the issues. My educational background ranges from finance, marketing, management, and accounting to business development. For me, this is relevant in the context of Nepal. The academic knowledge in these areas has helped me form a solid backbone with respect to business. What differs in Nepal is the way of working which differs from other countries. But the things I learned during my MBA program have provided me with the fundamental knowledge to manage the business. You represent the new generation in the Golyan Group. How have you planned the group's investment? As a group, we focus on four key verticals of Manufacturing, Hotels & Real Estate, Renewable Energy (hydropower and solar power) and Agriculture. Within these four broad sectors, we have certain plans to add new businesses. For example, we are studying an expansion project in our Reliance Spinning Mills. We are also working on establishing two new hotels in Nepal. And, there is also homework going on real estate and hydropower projects. We have tried to focus on these four sectors that are relevant to Nepal in terms of business and are also important for the country's growth. If we look at each sector, manufacturing is export-oriented. Hydropower is going to be the backbone of Nepal and there is the possibility that we will be the net exporter of electricity in the next 2-3 years. The problem is that our policies are not conducive to the things that are going to improve Nepal. Industries in the country are still struggling to get a reliable power supply. There are still 8–9 hours of power cuts in large industries including ours. While we talk about power exports to India highly, no one cares about the power cuts that domestic industries are currently facing. The agriculture sector has been the priority sector for the Golyan Group in recent years. What led the group to invest in this sector?  Though Golyan Agro is registered as a profit-oriented company, we don't trade in large margins. We work on zero to close to zero margins, maybe 2 or 3 percent. Golyan Agro aims to invest in agriculture for the future and to partner with local farmers, local products, and local entrepreneurs to promote Nepali products. Food items or non-food items like tissue paper and sanitizers, everything is made in Nepal. My family's way of thinking is a little different than other families. We like to do things differently. We like to do things that can add value to the people around us. We saw a gap in terms of our food items which have always been imported and way back during the import restriction, there was a shortage of necessities like gas, petrol, and food. Then we decided that we need to contribute towards the growth of Nepali products, produce and agriculture. Your group has also made sizable investments in the energy sector. What are your plans for the future in this sector?  Currently, we have planned to produce around 800 MW from hydro and solar power projects. 800 MW of electricity is a very big portfolio. The only way we can execute this is if the Nepal Electricity Authority (NEA) signs the power purchase agreement (PPA). Currently, we have signed PPAs with NEA for around 200 MW. And, these projects are either in the construction stage or already started generating power. But, there are other projects in our portfolio with a total capacity of 600 MW; the construction of these projects is yet to be started. Our group has already invested close to Rs 1 billion in these projects without signing the PPAs. Nepal needs more electricity for its industries. Therefore, signing the PPA by NEA is crucial for us. Out of these four verticals, which one do you find most challenging?  All of them have a different set of challenges. Renewable energy is facing challenges due to the changes in the policies of the government. As for the manufacturing sector, the challenge lies in the operations of companies. The agriculture sector has challenges, both in terms of policies and operations. The hotel sector is slowly recovering from the impact of the Covid-19 pandemic and the challenge here is to attract more tourists to the country. As a young entrepreneur, what are your advices for startups and new entrepreneurs?  Whenever you want to start a business, you should first decide to do something that you enjoy. No matter how profitable it looks on paper, you should first be interested in it. Then you should look if it's reliable and observe others what they have done and how they are doing it. A little bit of homework and hard work comes a long way. What are the Roots of Nepal and the Feri Bidesh campaigns of the Golyan Group? The Roots of Nepal is a basic idea of what we have been doing for ages. From our history, we have always been told that the Golyan Group is working on energy itself, tourism, hospitality, and agriculture as the base and ultimately the roots of Nepal in the future. So currently, we are trying to focus more on those aspects which is the idea of the Roots of Nepal campaign. Feri Bidesh is just at the initial phase of the Golyan Group where we are trying to focus on the youths of Nepal. Brain drain has been a major issue in Nepal for a long time and we want to share this message with the youth that there are opportunities within the country and new opportunities are also coming.