After mounting criticism of its ‘debt trap’ diplomacy, the Chinese leadership seemed keen to emphasize ‘debt sustainability’ for all BRI participant countries, at the just-concluded second BRI Forum in Beijing. It also commit­ted to more transparency in BRI projects. This is music to the ears of the advocates of greater connectivity with China, which is essential if Nepal is to shed its ‘India-locked’ status. Yet in this corruption-ridden and foreign-dependent country there is also a strong case for transparency and sustainability of any kind of external debt, from China or any other country or institution.

 

Most notably, neither India nor the US took part in the BRI Forum, in any capacity. (Attending the forum were 37 heads of state and representatives from nearly 100 countries.) In the lead-up to the second forum, concerns over a debt trap filled Indian and US media outlets, if sometimes with a grudging acceptance of BRI’s benefits. The Americans maintain Nepal should resist Chinese financing unless it’s clearly in Nepal’s interest. This worries China. For the Chinese, the Ameri­can involvement in Nepal is strategic and aimed at undercutting China’s rise. This is why the ‘US-spon­sored Free Tibet activism’ in Nepal is again a growing concern for Beijing.

 

The ‘US-sponsored Free Tibet activism’ in Nepal is again a growing concern for Beijing

 

Any support Nepal gets via the BRI may be contingent on Nepal’s ability (or lack thereof ) to deal with this core security issue for China. Yet the Chinese gave President Bhandari’s visit the highest impor­tance, notwithstanding that it had to host so many high-level dignitaries all at once. Bhandari’s coverage in the Chinese media was lavish. Particularly notable was how Nepal was portrayed as an integral part of the BRI. During the trip the all-important protocols to the transit and transport treaty were signed too. A full-fledged feasibility study of the Key­rung-Kathmandu rail should soon start. It would be a surprise if these developments didn’t worry New Delhi. Many believe a new, more muscular Indian policy, one aimed at limiting China’s growing clout in Nepal, is in the cards.

 

When President Xi comes to Kathmandu, most likely around October, Indian and western concerns will reach new heights. The Oli government’s central foreign policy plank of ‘diversification’ away from India, to avoid another blockade ‘at all cost’, is the right one. Yet with India, China and the US all tugging in different directions, it will also be devilishly difficult to pull off.