The first conspicuous similarity between Nepal and Bhutan is that both are precariously sandwiched between India and China. Both are largely mountainous. Both were monarchies until recently. (Bhutan is still one.) Nepali is spoken widely in Nepal as well as Bhutan. But there have been more differences than commonalities in recent times.
Nepal has made progress in its relations with China, especially under the current government. Bhutan, on the other hand, has no diplomatic ties with China. Likewise, the influence of western powers is far more widespread in Nepal than in Bhutan. And while Nepal has taken steps to escape from the ‘exclusive sphere’ of Indian influence, Bhutan is still firmly within it. But it is said the 2015-16 Indian blockade on Nepal and the 2017 Doklam incident have made the Bhutanese ruling class, as well as common citizens, more receptive to China; the risks of reliance on a single outside power are apparently too high.
Although Nepal and Bhutan are members of regional initiatives like SAARC, BIMSTEC and BBIN, they do not have embassies in each other’s capitals. The two countries trade little. Tourism is also miniscule: 10,923 Bhutanese came to Nepal in 2017, and it’s a hassle for Nepalis to go to Bhutan. An old thorn in their relations is the Bhutanese refugees. Bhutan refused to take them back; it still declines the repatriation of 6,600 of them who remain in two camps in eastern Nepal.
Ties between Nepal and Bhutan have been contingent on their relations with India, even in the case of the Bhutanese refugees. As the geopolitical competition in South Asia heats up, the two are bound to face similar challenges. They might as well collaborate.
Nepal and Bhutan
Sandwiched between two Asian giants
Nepal and Bhutan have many things in common: both are landlocked Himalayan countries sandwiched between the two Asian powerhouses, India and China. Both are predominantly agricultural countries dependent heavily on India.Additionally, Nepal and Bhutan are members of the United Nations (UN), the Least Developing Countries (LDCs), the South Asian Association for Regional Cooperation (SAARC), the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC), the Bangladesh, Bhutan, India, Nepal (BBIN) Initiative, and the Non-Aligned Movement (NAM).
India considers both Nepal and Bhutan as falling under its exclusive sphere of influence. Nepal’s case, however, is different as it has started adopting a balanced approach toward India and China, and has been reaping maximum benefits from China’s economic growth. Bhutan, on the other hand, does not have diplomatic relations with China even while it enjoys ‘special relations’ with India.
But public opinion in Bhutan is gradually changing. The Bhutanese seem to have realized that total dependence on India may not always be tenable and that their country should reach out to China. Mainly after the Indian blockade on Nepal in 2015, there are growing voices in Bhutan calling for an end to complete dependence on any one country. China has been offering economic assistance to Bhutan under the Belt and Road Initiative (BRI).
Trade, tourism and transport
Although Nepal and Bhutan established diplomatic relations in 1983, they do not have embassies in each other’s capital. The Nepali and Bhutanese ambassadors in New Delhi are accredited respectively to Thimpu and Kathmandu. High-level exchanges between Nepal and Bhutan are rare. Although Nepal and Bhutan engage in some trade, the prospects of expanding cooperation remain largely unrealized.
Nepal exports to China sculptures and statuary, electric transformers, soaps, garments and footwear. Major imports from Bhutan include gypsum, coal and cement. Even though the balance of trade has traditionally been in Nepal’s favor, Nepal has sustained trade deficit in recent years, according to Nepal’s Ministry of Foreign Affairs. The two countries signed an Air Service Agreement in February 2004, and Druk Air and Bhutan Airlines operate scheduled flights between Paro and Kathmandu. While 5,428 Bhutanese tourists visited Nepal in 2015, as many as 10,923 of them came here in 2017.
In 2005, a Memorandum of Understanding (MoU) was signed between the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) and its Bhutanese counterpart to promote trade and enhance economic relations between the two countries. The first meeting of the Nepal-Bhutan Bilateral Trade at the level of Joint Secretaries of the ministries of commerce was held in Kathmandu on 17 March 2010. The second meeting, held to discuss the draft agreement on bilateral trade, took place in Thimpu on 24-25 May 2011.
Summing up Nepal’s relations with Bhutan, an official at the Ministry of Foreign Affairs, who declined to give his name as he was not authorized to speak on the matter, says, “Ties are neither cordial nor strained. In the past three decades, the issue of Bhutanese refugee dominated the bilateral agenda. While Nepal brought up the issue in every bilateral meeting, Bhutan was reluctant to take its citizens back.”
The issue of Bhutanese refugees has been a contentious topic between the two countries. Even after 16 rounds of ministerial-level talks, Bhutan did not agree to repatriate the Lhotsampas (Bhutanese people of Nepali descent), who fled their country three decades ago and lived in seven UNHRC-sponsored camps in eastern Nepal. Since 2007-08, about 113,000 Bhutanese refugees have been resettled in the US and a few other countries under a UN third-country resettlement program.
There are still about 6,600 refugees in two camps in eastern Nepal who have rejected third-country resettlement. While the refugees enjoy limited freedoms, Nepal has refused to integrate them locally and has been asking Bhutan to resolve the issue through talks. Thimpu, on the other hand, has been trying to persuade Kathmandu to integrate the refugees permanently.
“Nepal wishes to solve the Bhutanese refugee problem with all sincerity and expects the same degree of response from Bhutan,” says the official document of Ministry of Foreign Affairs. “Among other things, Nepal has been requesting Bhutan for the revival of the Ministerial Joint Committee for resolving the problem. Nepal holds firm view that the refugees should be repatriated to their homeland at the earliest with dignity and honor.” Nepal also maintains that Bhutan has not demonstrated interest in talking further about the refugee issue.
But Dr. Nishchal N. Pandey, Director at the Center for South Asian Studies, says Nepal and Bhutan need to move beyond the refugee issue, which he thinks has been an obstacle to furthering bilateral ties. “We have many commonalities with Bhutan. There is a dire need to explore opportunities in trade, tourism and investment, including in hydro-power development. More and more students from Nepal and Bhutan are studying in each other's educational institutions,” says Pandey, who wrote his PhD dissertation on Nepal-Bhutan relations.
The right Nepal has given to the Bhutanese airlines to fly to Kathmandu and then to India has helped promote Bhutanese tourism, Pandey points out. “But Bhutan does not give Nepalis easy on-arrival visas the way we do to the Bhutanese,” he says.
On the issue of the Bhutanese refugees, Pandey believes the resettlement in the US and other countries of the bulk of the refugees is a relief for Nepal. “Lately, we can see the resettled Lhotsampas actively offer their views on democracy and human rights on social media,” adds Pandey.
Back to the future
While Nepal is a secular country with a Hindu majority, Bhutan is predominantly a Buddhist nation. The first visit of the king of Bhutan to Nepal took place in 1987. While he was here to participate in the third SAARC summit, he also went on a pilgrimage to Halesi Madhadev in the district of Khotang. Late King Birendra visited Bhutan in 1988 for consultations on SAARC issues. When Nepal was a monarchy, royal members of the two countries frequently visited each other's country.
Following the 2015 earthquake in Nepal, Bhutan contributed $1 million to rehabilitation efforts; Prime Minister Tshering Tobgay travelled to Kathmandu to personally hand over the aid money. A 78-member relief team was also deployed in the aftermath of the quake on the request of the Bhutanese king.
Many are of the view that the two countries should hold more high-level visits. “The Swambhunath is an epitome of our age-old ties. The stupa has been renovated several times in history, and each time the Bhutanese ruler of the day has sent help,” Pandey continues. Many other monasteries and stupas in Nepal receive regular support from Thimpu. “We need to pass down such aspects of bilateral relations to the future generations. A high-level visit is long overdue. As close neighbors in almost the same geo-strategic location, we need to look toward the future and not allow the past to hold us back,” argues Pandey.
There is only limited potential for expanding bilateral relations because of the refugee issue. The sooner it is resolved, the better the prospects of Nepal-Bhutan ties.