The BRI’s reputation as a potential ‘debt trap’ through which Beijing could establish its hegemony is one of the chief reasons why the Nepal government and political parties are lacking in motivation and commitment to the program. Many commercially unfeasible projects under the BRI in Sri Lanka, Pakistan, and Kenya, among other countries, may have alarmed Nepali leaders.
The controversy over China-funded Pokhara International Airport has further tainted the BRI’s image in Nepal. On January 1 this year, Nepal inaugurated the airport, which was built under Chinese loan but not under the BRI. The loan agreement was inked in 2016, a year before Nepal formally became part of BRI. But a senior official from the Chinese Embassy prompted the Nepal government’s rebuttal. A senior Chinese told this writer that since the BRI was launched in 2013, all the projects implemented thereafter, which include the Pokhara airport, automatically fall under the initiative. The official says China does not wish to make it a big issue if Nepal does not want the airport project to be listed under the BRI. The airport has already come into operation, but so far it has failed to attract international flights. If the Rs 22bn airport fails to make income, the government is sure to face a burden to pay off the loan. In an interview with this journalist, Bikram Raj Gautam, the airport chief, says as it is a long-term investment, it could take some time for the airport to generate income. So there is no debt worry among government officials as they say that the airport was constructed keeping in mind that the government can repay the loans. One major project under the BRI is the cross-border Kathmandu Kerung Railway, for which the Chinese side is conducting a feasibility study. Though the project construction may not take place immediately, China has put it in its long-term plan as a gateway to South Asia. A joint communiqué issued after the second Belt and Road Forum for International Cooperation in 2018 included Nepal-China Trans-Himalayan Multi-Dimensional Connectivity and Nepal-China cross-border railway. If the trans-border railway moves ahead, it will become one of the major BRI flagship projects in South Asia. But Nepal and China are yet to discuss its investment modality. China has agreed to bear the cost of both pre-feasibility study and feasibility study. Nepal has proposed developing the project under grant assistance, but the Chinese side is mum on it. Nepal’s major political parties—Nepali Congress, CPN-UML and CPN (Maoist Center)—are on the same page when it comes to the BRI. They are of the view that Nepal cannot afford to take high-interest Chinese loans to finance its development projects. However, the communist parties continue to speak positively on the BRI in order to appease China. Mainly communist leaders even blame non-communist parties of taking a rigid position on the BRI to spoil the relationship with China. In 2022, Prime Minister Sher Bahadur Deuba reportedly told the visiting Chinese Foreign Minister Wang Yi that considering the looming economic crisis, Nepal cannot take loans under BRI to finance projects. Many took this statement as anti-BRI posture. But this is exactly what communist party leaders are saying to the Chinese side in private meetings. In Nepal, the BRI is perceived as an exclusive infrastructure project, but there are other components as well, such as policy cooperation, unimpeded trade, financial integration and people-to-people connectivity. Lately, the Chinese side has been insisting that whatever they cooperate on or provide assistance to bilaterally is under the BRI framework. Such a position has only made Nepal’s bilateral engagements with China more difficult. More recently, China has come up with new programs such as Global Development Initiative (GDI), Global Security Initiative (GSI) and Global Civilizational Initiative (GCI), which are aimed at building an alternative global order to counter the West, particularly the US. These initiatives aim to promote Chinese values, development models and security issues mainly in the Global South. For a country like Nepal, so strategically placed between China and India, taking positions on these initiatives are going to be challenging to say the least. Our political leadership has a limited and often misleading understanding about these projects, and our academia is heavily influenced by either Western or Chinese narratives. Taking an objective and impartial position under such conditions will be difficult. This is exactly what had happened regarding the American MCC project in Nepal. Dealing with China is going to be more complex in the days to come. It will do well for our political leadership to come up with a unified position.
