Submit your Article

Sandwiched between India and China, Nepal occupies a unique position in these countries’ strategic calculations. China, which has traditionally adopted a pro-establishment policy in Nepal, is seen to have become increasingly assertive in its engagements there since the 2015 massive earthquake in Nepal. Under such circumstances, one can expect greater competition between China, India and the United States (US) in Nepal in coming days. Since China announced its ambitious Belt and Road Initiative (BRI), also known as One Belt One Road, in 2013, it has been quite assertive in its approach toward Nepal. This became apparent when China began increasing its engagement with Nepal after the massive earthquake in April 2015 devastated several parts of the landlocked country. China provided $483m in grant assistance for 25 reconstruction projects in five sectors: infrastructure, people’s livelihood in mountain areas, archeological heritage renovation, disaster preparedness and health for post-quake reconstruction1 When the ‘unofficial blockade’ by India had precipitated a backsliding in India-Nepal relations, Nepal’s Prime Minister KP Sharma Oli signed multiple agreements on his visit to Beijing in March 2016 related to infrastructure development with China. There has also been a constant flow of security assistance from Beijing to Kathmandu since then. This includes aid to the tune of $2.6m in 2008, RMB20.8m in 2009, $7.7m in 2011 and $32.3m in 2017. Further, in 2017, Nepal and China began the first-ever joint military drill, ‘Sagarmatha Friendship’, which was a major turning point in their bilateral defense cooperation. India, the US and the UK have long been Nepal’s major defense partners. However, in recent times, China has emerged as one of Nepal’s most important major defense partners. In 1989, Nepal purchased military hardware such as anti-aircraft guns, medium range surface-to-surface missiles and AK-47 rifles, whose sale was halted with the fall of the monarchy in 1990. During the short royal takeover, Beijing resumed its weapons sale to King Gyanendra by providing around $1m to fight the Maoist insurgency. There has also been a constant flow of security assistance from Beijing to Kathmandu since then. This includes aid to the tune of $2.6m in 2008, RMB20.8m in 2009, $7.7m in 2011 and $32.3m in 2017. Further, in 2017, Nepal and China began the first-ever joint military drill, ‘Sagarmatha Friendship’, which was a major turning point in their bilateral defense cooperation. During the visit of Deputy Prime Minister and Defence Minister Ishwor Pokhrel to China in October 2018, both countries signed an agreement in which China pledged to increase its military support to Nepal by 50 percent to strengthen Nepal Army’s disaster management capabilities and to better equip Nepal’s United Nations peacekeeping missions. Besides financial assistance, the People’s Liberation Army has also increased the number of war college seats and National Defense Course quotas for Nepal Army officers. The recent engagement between the two countries goes on to suggest that China is set to overtake Nepal’s traditional defense partners. Despite the previous resolution of border disputes between Nepal and China, there have been reports of Chinese encroachment of Nepalese territory in Humla in recent times. On 21 Aug 2021, the Deuba government formed a panel, led by Jaya Narayan Acharya, Joint-Secretary at the Ministry of Home Affairs, to study the boundary issues along the Nepal-China border from LimiLapsa to Hilsa of Humla. The panel concluded that there are issues at Pillars 11 and 12 and suggested that the government resolve the issues by forming a joint inspection group of experts. The six-member panel, which had representatives from the Nepal Police, Armed Police Force, National Investigation Department and the Department of Survey, stated that there are issues needing bilateral attention. However, China denied such encroachment. India, on the other hand, is concerned about China’s growing proximity to Nepal. New Delhi will undoubtedly find it challenging to successfully manage China’s expanding footprint in Nepal on its own. It is also predicted that the US is going to be more proactive in Nepal after its $500m Millennium Challenge Corporation (MCC) grant project was ratified in the Nepalese parliament in Feb 2022. Nepal started to view the MCC with suspicion after the US Acting Deputy Assistant Secretary for South Asia, David J Ranz, remarked that the MCC project was an important initiative under the US Indo-Pacific strategy during his visit to Kathmandu in May 2019. The remark led the Left parties of Nepal to believe that the MCC would invite the China-US rivalry to Nepal. Media reports and analysts see a Chinese hand behind the anti-MCC protests, as China has understood the MCC to be an integral part of the US Indo-Pacific strategy, putatively designed to encircle China strategically. In such a situation, one can expect greater competition between China and the US in Nepal, moving forward. China is in favor of a stable Nepal with a strong government so that it can push its development projects, especially under the BRI. Additionally, a stable government in Kathmandu would serve China’s primary interests in maintaining security in the Tibetan Autonomous Region. This is because only a strong and stable government can address Chinese demands and its strategic interests in Nepal. China has been accusing external actors (read Western powers) of making use of Nepal’s fragile situation (read Tibet). Hence, Beijing would prefer a government in Nepal that is sensitive to Chinese interests. Breaking away from the traditional norms of China’s pro-establishment policy, Beijing is interested in engaging with different political parties because, apart from its major security interests, China now also wants to dilute, if not challenge, India’s predominant influence in the country. Thus, Beijing is proactively engaging in public diplomacy and establishing several development projects within Nepal to expand its leverage. This is part of Jaiswal’s journal article under Nepal’s Foreign Policy in a changing world, a joint publication of the Institute of South Asian Studies-National University of Singapore (ISAS-NUS) and Nepal Institute for International Cooperation and Engagement (NIICE) on Nepal’s Foreign Policy in A Changing World

It is my great pleasure to come to Nepal, a flower-filled beautiful country, as the 22nd Ambassador Extraordinary and Plenipotentiary of the People's Republic of China to Nepal. I would like to express my heartfelt respect and sincere thanks to friends from all walks of life who have cared about and supported the development of China-Nepal relations for a long time. Linked by mountains and rivers, China and Nepal enjoy ever-lasting friendship. More than 1,600 years ago, Chinese eminent monk Faxian and Nepali eminent monk Buddhabhadra exchanged visits and cooperated in translating Buddhist classics echoed through ages. In Tang Dynasty, the eminent monk Xuanzang visited Lumbini, the birthplace of the Buddha Sakyamuni, and left precious written records. In Yuan Dynasty, the famous Nepali craftsman Arniko came to China, and built Miaoying Temple in Beijing. Since the establishment of diplomatic relations in 1955, China and Nepal have always been respecting, trusting and supporting each other. In the critical moments of responding to the 2015 Nepal earthquake and fighting against the COVID-19 pandemic, the two countries have lent mutual support to each other, setting an example of equal treatment, friendly cooperation, and mutual benefit between neighboring countries. In 2019, President Xi Jinping paid a historic state visit to Nepal. The two heads of state agreed to build the Strategic Partnership of Cooperation Featuring Ever-lasting Friendship for Development and Prosperity. In recent years, under the framework of the Belt and Road Initiative and the Global Development Initiative, China-Nepal practical cooperation in various fields has been improved both in quality and efficiency, and the trans-Himalayan Multi-Dimensional Connectivity Network has gradually taken shape. In October 2022, the 20th National Congress of the Communist Party of China was successfully held in Beijing. The most important result of the meeting was the election of a new central leadership of the CPC Central Committee with General Secretary Xi Jinping at its core. China embarked on a new journey to build China into a modern socialist country in all respects and advance the rejuvenation of the Chinese nation on all fronts through a Chinese path to modernization. Not long ago, Nepal successfully held federal and provincial elections, and formed new government. Changes of the world, of our times and of history are unfolding today in ways like never before. In the face of new situations, new opportunities and new challenges, China will, as always, firmly support Nepal in safeguarding state sovereignty and national dignity, exploring a development path suited its national conditions, and pursuing independent domestic and foreign policies. China is willing to work with Nepal to stay true to our original aspirations, inherit friendship, join forces to seek common development, and build a closer China-Nepal community with a shared future in the new era. As the new ambassador to Nepal, I am deeply aware of the glorious mission and great responsibility. I will follow the important consensus reached by President Xi Jinping and Nepali leaders, stay devoted and dedicated to outline their freehand brushwork of bilateral relations into a meticulous painting. There is a Nepali saying “even a drop of water can fill a tank”. Chinese also say “the fire burns high when everybody adds wood". I stand ready to work closely with Nepali friends from all walks of life, gather wisdom and pool strength to bring more benefits to the two peoples, and jointly write a new chapter of the China-Nepal strategic partnership of cooperation featuring ever-lasting friendship for development and prosperity. The speech provided by new Chinese Ambassador to Nepal Chen Song who arrived Kathmandu on Sunday to assume his post.

People in Nepal appear to have a high tolerance for the city’s chaotic streets, potholed roads, and power shortages. The country known as a tourist hub has seen an upsurge in the number of tourists, but the numbers have not helped the country cope with rising inflation, it appears. On the contrary, they appear to have impacted the livelihoods of local communities. At a time of national unrest and discontent, on Dec 26, Pushpa Kamal Dahal was sworn in as Nepal’s Prime Minister in Sheetal Niwas amid tumultuous political rivalry and skepticism, with the goals of reviving the economy and balancing international power-play. Despite his optimism, Dahal is sure to encounter more challenges than in his previous two terms in office, both inside and abroad. Dahal’s first objective will be to restore people’s trust in the government. To enhance the effectiveness of government operations, Dahal should be more aggressive in promoting a transparent government mechanism and undertaking wide-ranging accountability measures. Nepal’s GDP per capita has remained stagnant for years. The new government should invest more in infrastructure, create new jobs, channel additional industrial capital to boost tourism, and obtain different sources of income for the people, while also focusing on reducing the trade deficit, maintaining currency stability, adding liquidity to the market, and curbing inflation. Diplomatically, Dahal faces a more difficult situation, as China, although actively promoting the Belt and Road Initiative to enhance infrastructure investment and construction in Nepal in recent years, was totally frustrated with previous Prime Minister Deuba’s series of anti-China measures. The United States, which regards China as a rival, is trying to bind Nepal to its “Rebalancing Asia and the Pacific strategy” as part of its global stranglehold on China’s development, while India, which has a territorial dispute with China, wishes to intensify intervention in Nepal’s domestic politics due to its hegemony over Nepal’s energy and trade. Despite signing of the Millennium Challenge Corporation (MCC) agreement between the former government and the United States, Dahal must ensure that its terms do not supersede Nepal’s laws, and that foreign staff executing the agreement do not have the same legal protection as diplomats do, to deter potential espionage. Moreover, notwithstanding the government’s final veto of the US’ State Partnership Program (SPP) project, Dahal must make it clear to every citizen that any type of foreign military presence does not serve Nepal’s best interests, and a free and independent neutral position would provide Nepal a stronger edge in the rivalry among superpowers. The road ahead is challenging in terms of bilateral relations, but there are some beams of hope too. One-way trade is now possible through the China-Nepal Hilsa/Purang port and two-way trade has just resumed through the Kyirong-Rasuwagadhi border after a three-year hiatus due to the epidemic. Gradual reopening of more Nepal-China links means more development opportunities for Nepal’s northern Himalayan region. What’s even more thrilling is that the Sino-Nepal cross-border railway connectivity project has seen new progress. On Dec 27, a group of six Chinese experts arrived in Kathmandu to initiate a survey for the development of the cross-border rail link. This railway line, once opened, will not only bring new opportunities for tourism but will also improve Nepal's export pattern and enhance Nepal's economic resilience. It is an important step in the construction of linkages that will help Nepal fulfill its long-cherished dream of transforming from a land-locked country to a land-linked country, ushering in a new era. In the long run, the railroad will also be connected to South Asia, considerably improving Nepal’s strategic position, and bringing greater opportunities for Nepal. Besides, the inauguration of Pokhara Regional International Airport, constructed with Chinese assistance, has opened new prospects for the country that is hugely dependent on tourism. Increased air connectivity resulting from this infrastructure will bring tangible benefits to the tourism industry and to the Nepali people. With effect from Jan 8, China will remove restrictions for international visitors wanting to enter the country and resume outbound travel of Chinese citizens. This will surely contribute to the Nepal Tourism Decade strategic action plan. Before the pandemic, tourists from China accounted for the largest number of tourists visiting Nepal from a single country. With a gradual easing of travel restrictions, Nepal can attract more Chinese tourists to give its economy a boost. The BRI cooperation projects should be pushed forward without delay. Both Nepal and China are aware of certain foreign geopolitical interests at play. The onus is on the new government to take the northern neighbor into confidence by keeping external interventions at bay. Incomplete China-Nepal projects should be expedited and issues requiring immediate attention sorted out promptly. Since Prachanda is not a new face in the leadership position, he should be aware of the sensitivities of an immediate neighbor and should not repeat some activities of the previous government that had upset China. Government engagements should be based on trust and friendship, not on political posturing. Beijing looks forward to deepening cooperation with the new government in Kathmandu, and expects a similar gesture from the new government. The author is a Chinese scholar with interest on Nepali affairs

More than a month after the elections for new members of the parliament and provincial assemblies, Pushpa Kamal Dahal has managed to form a coali- tion government. This is Dahal's third term as Nepal's prime minister. In the new parliament, he has the support of 169 members, including 78 from the Communist Party of Nepal-Unified Marxist Leninist (CPN-UML), 32 from his own CPN (Maoist Center), 20 from the Rastriya Swatantra Party, 14 from the Rastriya Prajatantra Party, 12 from the Janata Samajbadi Party, six from the Janamat Party and four from the Nagarik Unmukti Party. Prachanda is also backed by independent lawmakers, Prabhu Sah, Kiran Kumar Sah and Amresh Kumar Singh. One of the major challenges confronting the new government under Dahal is to bring political stability in Nepal. In the November 2022 elections, the Maoist party contested as a part of the Nepali Congress (NC)-led coalition. However, after the announcement of electoral results, the Maoist party formed a coalition government with the opposition. Given the past political equations between Dahal and CPN-UML leader, KP Sharma Oli, a question on political stability hangs. On the policy front, the state of Nepal's economy is a matter of serious concern for the new government. Largely driven by high prices of food items and fuel, Nepal's inflation rate touched, as recorded by the country's central bank and reported in the media, 8.64 percent in September 2022. It was around 3.49 percent in 2021. The Inflation Expectations Survey for the first quarter of 2022- 23, published by Nepal Rastra Bank, reported that the inflation is expected to hit 12 per cent within a year. Another tension is growing unemployment which, along with inflation, is forcing many young Nepalis to seek jobs in other countries. According to the Department of Foreign Employment record mentioned in a media report, in the FY 2021-22, an average of 1,745 people left Nepal every day to seek employment abroad. This number is likely to increase to 2,546 persons leaving Nepal each day in the current fiscal year. A challenging geostrategic terrain Lying between India and China, Nepal has always faced challenges to balance its relationships with the two Asian powers. On the basis of their political ideology, Nepal's leadership has been always tagged by many outside and Nepali observers as either "pro-India" or "pro-China". However, there is no drastic difference between the NC and communist parties on core foreign policy matters For instance, in its election manifesto, the NC stated that it will adopt diplomatic means to resolve boundary issues with India and maintain good relations with both New Delhi and Beijing. During the election campaign, Oli posited that if voted to power, he will balance the country's ties with both countries for mutual benefit. Besides India and China, the United States (US) has emerged as an important actor in Nepal's domestic politics and foreign affairs. The Millennium Challenge Corporation Nepal Compact and the State Partnership Program (SPP) have brought Kathmandu very close to Washington. After a long debate, Nepal's parliament ratified the MCC in early 2022. On the contrary, under pressure from the opposition and some members of his own party, Sher Bahadur Deuba- led government terminated Nepal's partnership with the SPP in 2022. Inclement climes Nepal is a "climate risk" country. According to the World Bank and the Asian Development Bank's publication on Climate Risk Country Profile, by 2030, around 199,000 Nepalis may be affected by floods. At that time, the annual impact of floods on the country's gross domestic product may be around $574 million. Climate change and its impacts will severely affect the poor, those living in the remote regions of the country and people engaged in subsistence agriculture. Nevertheless, the Nepali government has hardly restrained itself from taking decisions on projects involving serious damage to forest areas. A recent example is the government's decision to build an airport at Nijgadh, 175 kilometers south of Kathmandu. Paradoxically, the NC-led government demonstrated its concerns about environmental issues and signed a "concessional financing agreement" worth $100m with the World Bank to support "Green, Resilient, and Inclusive Development" in August 2022. This agreement has been opposed by many Nepali activists who argue that the country should receive climate finance instead of loans, given its minimum contribution to global emission. To conclude, the fate and tenure of the Dahal-led government highly depends on how deftly he manages to keep his coalition partners together, especially the CPN-UML. Dahal and Oli have enjoyed sweet and bitter relations in the past. On the domestic policy front, rising rates of inflation and unemployment demand that the government take effective steps. On foreign policy, Prachanda is likely to be tagged as a "pro-China” leader, but, as a tested and experienced leader, he knows how to pursue his country's interests by keeping it away from India-China or US-China tensions. Finally, the growing economic impact of climate change and environmental deterioration need some serious attention from the government. The author is a Research Fellow at the Institute of South Asian Studies (ISAS), National University of Singapore (NUS) Acknowledgement: This is a summary of a recent Insights paper published by ISAS-NUS