Records with the Ministry of Foreign Affairs (MoFA) show that between 1960 and 1990 (i.e. during the Panchayat era), Nepal used to exchange frequent high-level visits with countries other than India and China. But such exchanges started petering out after the 1990 political change.

Data from the past two decades clearly show that Nepal’s high-level engagements have been confined to its two immediate neighbors, and that they have mostly been one way. In this period, there have been frequent high-level visits from Nepal to India and China, but fewer reciprocal visits to Nepal. High-level visits from India to Nepal have increased in the past couple of years, but such visits to Nepal from China have become rarer.

During the Panchayat regime, the kings tried to visit as many countries as possible. Such trips were aimed at garnering more development aid. The monarchy made efforts to reduce Nepal’s dependence on India and China for development needs.

Political parties agree that Nepal needs to diversify its bilateral relations beyond India and China, and that a stable government with a five-year mandate has opened a window of opportunity. The KP Oli-led government too has been trying to develop a narrative that it is diversifying its foreign relations. But there is little substance to back it up.

To meet the aspiration of graduating to a middle-income countries by 2030, Nepal has to maintain seven to eight percent annual growth. This calls for massive investment. Nepal needs an estimated $8 billion annual FDI inflow to graduate to a middle-income country in the next 10 years or so.

Money matters
One of the major factors that prompted the Oli government to diversify external relations is to bring in more foreign aid, much like what King Mahendra did in the 1960s and 70s. After the government was formed last year, Oli had expected a high volume of investment from India and China for infrastructure development. But except regular bilateral support, such investment did not materialize. During Oli’s state visits to India and China, no big economic package was announced; the focus was on completing pending projects. There was a time when its two big neighbors competed to provide more development aid to Nepal—but no more.

This led the Oli government to look beyond the immediate neighbors to the meet the country’s development needs. “We require massive investments in infrastructure development and advanced and innovative technology, for which our domestic resources are insufficient. We need the international community’s support and cooperation to fill the resource gap,” Foreign Minister Pradeep Kumar Gyawali is quoted as saying in his ministry’s website.

Foreign policy experts, however, say that while diversification is important, Nepal cannot overlook the roles of its neighbors for its economic development and prosperity. “Obviously we should broaden our foreign policy, but India and China are still the key to our economic development. Unfortunately, we haven’t been able to identify our priorities and define key national interests,” says Sundar Nath Bhattarai, Founder President of the Association of Former Career Ambassadors of Nepal.

Other foreign policy observers also think the new government has tried to diversify foreign relations, but without serious homework and without identifying priority areas. Visiting a plethora of countries without a substantial agenda, they stress, does not serve the country’s interest.

After taking charge of office, Oli has gone on eight foreign visits (see box). Attracting foreign investment is always a top priority of these visits. But the prime minister has not been able to draw investment from the countries he has visited in this period. “We should assess success on the basis of outcomes, not the number of visits,” says Bhattarai.

 

PM Oli’s foreign visits
- Europe: June 8-16, 2019
- India: May 30-31, 2019
- Cambodia and Vietnam: May 9-15, 2019
- Switzerland (Davos): 20-26 Jan, 2019
- Costa Rica: 27 September, 2018
- UNGA (New York): 22 Sept-3 Oct, 2018
- China: June 19-25, 2018
- India: April 6-8, 2018

 

Eggs in many baskets
Besides PM Oli, Foreign Minister Gyawali has also visited a number of countries and attended several bilateral and multilateral forums. In December last year, he visited the United States and held bilateral talks with US Secretary of State Michael R. Pompeo. Earlier, in November, Gyawali had visited Japan. In a gesture of reciprocity, Japanese Foreign Minister Taro Kono visited Nepal the following month. These visits carried some weight as such visits had not taken place for a long time.

Europe was a good choice in terms of economic diplomacy, but PM Oli’s visits to the continent have come under scrutiny for a number of reasons. First, every visit of a head of government or state is either a ‘state’ or an ‘official’ visit. But PM Oli’s visits to the UK and France were designated as ‘formal’, in violation of established diplomatic practice.

Second, no bilateral agreements were signed during Oli’s visits to the UK and France. After India, the European Union is Nepal’s second largest trade partner, and Nepal has old ties with Britain and France. But Oli’s visits were marred by a lack of preparation. He could not meet the British monarch and no formal ceremony was organized for him. (Oli did meet Theresa May, but she had already resigned as prime minister.) In France also, Oli could not get an audience with President Emmanuel Macron. Nor was any substantial agreement signed to bring in investments. “In terms of investment and economic cooperation, European countries matter a lot for us, but merely visiting them would not yield the desired benefits,”
says Bhattarai.

That a Nepali prime minister visited Britain after 17 years was possibly the only positive feature of Oli’s trip. Prime Minister Sher Bahadur Deuba had officially visited the UK in 1996 and 2002, while Prime Minister Girija Prasad Koirala had visited France in 2001. In 1994, King Birendra had paid a state visit to France while he undertook an unofficial visit to the same country in 1989.

Earlier, PM Oli had visited Vietnam and Cambodia, which also drew flak on the grounds that Nepal does not have strong economic and diplomatic ties with them. “Foreign policy is not an area for adventures... In fact, diversification is a wrong word in international relations. Foreign policy is not an arena where you look to ‘diversify’, but to promote your national interests,” said former Foreign Minister Ramesh Nath Pandey in a recent interview with APEX.

Constantino Xavier, a fellow at Brookings India, a think tank in Delhi, is more sympathetic to the Oli government’s attempts at diversification. “Post-Wuhan, with China and India cooperating again, Nepal’s scope to play off its two neighbors has reduced,” he told APEX. “Diversification of relations under PM Oli in recent months is giving Nepal more options, especially beyond the great power competition between China, India and even the US
and Japan.
Xavier thinks that with political stability at home, and new ambassadors finally in place, the Oli government has greater incentives to expand relations with more countries, especially in Europe, Central and Southeast Asia. “The EU and multilateral organizations like the Asian Development Bank can play an important role in diversifying Nepal’s development options,” he says.