Three-way competition and Nepal

The foremost challenge in Nepal’s foreign policy comes from the adjustments we should make in the changing geopolitical and international circumstances, including managing the conflicting interests, geopolitical rivalries, and strategic competition of our neighbors and great powers. The strategic competition between India and China is not new. Another great power, the United States of America, has entered the scene, sometimes with competing strategic interests. We have to operate without being a playground for competition among our neighbors and great powers. Nepal does not wish to be drawn into the “geopolitical contest”, “strategic competition”, and “big power rivalry”. The three-way geopolitical competition in Nepal involving India, China, and the United States is not necessarily against Nepal’s interests, as it can generate benefits and opportunities in aid, trade, and investment. We should develop relations with all powers, focusing on our interests and without taking sides in their geopolitical contests. During the Cold War era, we managed to maintain the best relations with the superpowers—the United States and the Soviet Union—and obtain aid and support from both. There is no reason why we cannot maintain the best relations with India, China and the United States and benefit from their support and cooperation simultaneously. We should deal with them based on our national interests while finding a niche in their competition so we can benefit from them. Because of our relations with major powers and immediate neighbors, we often face difficulty in reaching decisions regarding the initiatives or proposals they bring from time to time, also because they sometimes contain competing interests. The United States of America has been pursuing its Indo-Pacific Strategy (IPS) and seeking to apply it in the countries of the “Indo-Pacific Region,” including through its Millennium Challenge Corporation (MCC). China has launched multiple initiatives, including the Belt and Road Initiative (BRI), Global Development Initiative (GDI), Global Security Initiative (GSI), Global Civilization Initiative (GCI), etc. We should develop principles for dealing with diplomatic proposals from great powers or our immediate neighbors. We should accept them if they are in our interests and not entertain any if that undermines our foreign policy principles. According to our policy on non-alignment, we cannot become a party to any security or military alliance. We should avoid any overture that has a political or strategic objective that seeks to use us against one or another power or neighbor. We should respond to such proposals by assessing their economic viability and benefits rather than political preferences. We should retain our decision-making autonomy without being compelled to choose for or against such proposals. If we maintain such clarity and keep reiterating them, decisions concerning them will be easier. We should take into account the emerging alliances and partnerships in the region, without being dragged into their competition. They include the IPS, Quadrilateral Security Dialogue (Quad), the trilateral partnership between Australia, the United Kingdom, and the United States (AUKUS), the Regional Comprehensive Economic Partnership (RCEP), etc. We need not fear them but rather be vigilant without taking sides while not missing opportunities arising from them for our economic development. We must assess changes in geopolitics and adjust our policies accordingly. Though the world has become a“global village,” geopolitics is back. Geopolitical tensions have increased with the rise of new powers in every region, including ours. There was a time when the power that commanded the seas ruled the world. Then, whichever power controlled the Eurasian mainland extending from the Volga to the Yangtze and from the Himalayas to the Arctic, exercised supremacy. Today, the power that commands the Asia-Pacific region can have geopolitical sway. Now called the Indo-Pacific Region, it is rapidly evolving as the center of gravity for geopolitical contests. The balance of power is shifting to developing countries, particularly in Asia. The continent is retaking its lost dominance in the world economically. Asia has also become a new theater of great power contestation, including in the South China Sea. Our region, South Asia, remains a geopolitical hotspot, thanks to the strategic competition involving great powers, Indo-Pakistan relations, extremism and terrorism, unresolved boundary issues, and the crisis in Afghanistan. The 2017 Doklam standoff and the 2020 Galwan Valley border scuffle between India and China highlight the potential risks of unresolved bilateral boundaries in regional stability and security. India and China cooperate on several issues and platforms while engaging in competition in others. They cooperate on climate change, development, and global governance. Both are members of the BRICS, SCO, Asian Infrastructure Investment Bank (AIIB), etc. Their bilateral trade has reached $135bn. They have a stake in working together for their interdependence and regional stability. We have seen what can happen when they bypass us. Their 2015 agreement for opening the Lipulekh Pass for trade and pilgrimage came without consulting us. An African adage says, “Whether the elephants are dancing or mating, the grass will get crushed in either case”. In the past, we handled geopolitical challenges without compromising our independence and sovereignty. We should keep a constructive engagement with our neighbors and great powers by diversifying our relations, resolving outstanding issues, strengthening regional cooperation and economic integration, pursuing political stability and economic development, and fostering national unity. We need not fear geopolitics but handle it according to our interests. It is our priority to maintain the best relations with India and China and benefit from their economic progress. We need to find a niche to benefit from their competition, especially in the economic realm, without being dragged into their sides. Both are our sources of trade, tourism, investment, and aid. So far, little automatic spillovers from their economic growth have come to Nepal. We must take proactive action to benefit from their economic growth. Nepal’s unifier king, Prithvi Narayan Shah, likened Nepal to a ‘yam between two rocks’. The ‘yam’ needs to extend its roots into the crevices of the ‘boulders’. Nepal should seek economic integration with India and China, enter their supply and value chains to benefit from their economic rise. In economic growth, Nepal is a slow-moving tortoise between a marching elephant (India) and a flying dragon (China). It would be in our interest to invoke the Rhino (Gaida) in us to match them with an equally-robust growth trajectory. At the least, we can move like a rabbit—fast and vigilant—to benefit and catch pace with both. We can benefit from India and China by promoting trade opportunities, offering ourselves as a transit economy, focusing on infrastructure development, including connectivity projects, attracting tourists and FDI, and transferring technology, knowledge, and skills from them. We need to move beyond the slogans of ‘transit economy’, ‘dynamic bridge’, ‘land-linked economy’, and ‘trilateral cooperation’ that our leaders keep reiterating. We need evidence-based studies, proactive diplomacy and specific proposals and agreements. The opportunity to serve as a transit economy may not be there forever. We need to catch such opportunities until they are around with us. We must strive to maintain the best relations with our immediate neighbors with a respectable framework of relations based on sovereign equality and mutual benefit. We need to resolve outstanding issues with India, concerning the review of the 1950 treaty and the Kalapani-Lipulkeh-Limpiyadhura boundary issue, including through the logical conclusion of the report of the Eminent Persons Group (EPG) instituted bilaterally. We should focus on building trust and confidence at the political levels and continue to work at diplomatic and technical levels to safeguard Nepal’s national interests and resolve the outstanding issues with neighboring countries, mainly India. With China, we should find a way to implement projects under the BRI and bring into operation the bilateral transit and connectivity agreements. This is an excerpt from the speech of the author delivered at second YKN lecture series