Dealing with evolving BRI

It has been more than a decade since Chinese President Xi Jinping came up with the Belt and Road Initiative (BRI), a massive infrastructure project, to enhance both hard and soft connectivity with countries in the Global South. In this period, over 150 countries have signed the BRI documents, and Chinese foreign investment in those countries has exceeded $60bn.

Nepal signed up to the BRI in 2017, and ever since it has been a thorny subject that has divided the political parties and the public. Over the past few months, there has been a heated debate regarding the controversy over the Chinese side claiming the newly opened Pokhara International Airport being a BRI project. In the parliament as well as in public forums, ministers and politicians face this question: Is Pokhara International Airport under BRI? While they insist that it is not, many are not convinced. 

A few days back, speaking at a meeting of the Parliamentary Committee, Foreign Minister NP Saud said that Nepal has not executed any projects under the BRI. Tourism Minister Sudan Kiranti has also been making a similar statement. But the Chinese side seems adamant in their position that all of its recent bilateral cooperation with Nepal falls under the BRI framework. In meetings with Nepali politicians and officials, the Chinese side has even presented some basis for such a claim. But top leaders of major parties have not spoken a single word about it, nor has the Nepal government officially taken up this issue with Beijing.  

China is of the view that since Nepal has become a BRI member, whatever cooperation happens between the countries falls under the broader framework of the BRI. This not only includes the development of  infrastructure projects, but also the aid that Nepal received during the Covid-19 pandemic. For China, the 14-point agreement signed during President Xi’s 2019 Nepal visit is the basis of that claim. 

The second paragraph of the first point in that agreement says: “Nepal and China take the Belt and Road Initiative as an important opportunity to deepen mutually-beneficial cooperation in all fields in a comprehensive manner, jointly pursue common prosperity, and dedicate themselves to maintaining peace, stability, and development in the region.”

On the basis of this point, according to a senior diplomat who recently met with Chinese Ambassador Chen Song, the Chinese side is claiming that all projects are under the BRI.  

During Xi’s visit, Nepal and China agreed to elevate the bilateral relationship into a Comprehensive Partnership of Cooperation. A few months ago, in a closed-door discussion with editors, the Chinese ambassador said they regard Pokhara International Airport as a BRI project, but it is okay if the Nepal government does not say so.

As the BRI debate rages on, China has come up with Laws on Foreign Relations, which is likely to complicate the matter.  The law shall apply to the conduct of China’s diplomatic relations with other countries, its exchanges and cooperation with them in the economic, cultural, and other areas, as well as its relations with the United Nations and other international organizations. 

Article 18 of the laws says: “China calls for putting into action the Global Development Initiative (GDI), the Global Security Initiative (GSI), and the Global Civilizational Initiative (GCI), and endeavors to advance a foreign affairs agenda on multiple fronts, at a different level, in various areas and of multiple dimensions.”  

Programs under the GDI, in collaboration with the UN agencies, have already been implemented in Nepal. As far as the GSI and GCI are concerned, the Nepal government has not made any position on it. 

China is seeking Nepal’s support in GSI and GCI, but Nepal is not willing.  But Beijing has already put the GSI and GCI under the broader framework of BRI. 

China’s BRI claim resembles the Indo-Pacific Strategy (IPS) of the United States in Nepal. Since 2018, American officials have been saying that whatever bilateral grants and assistance the US provides to Nepal is under the broader IPS framework. The US officials often say that there is no military component in Millennium Challenge Corporation (MCC), though it is a part of the IPS. So, like the IPS, the BRI is gradually becoming a hard-to-understand issue after 10 years of its launch.  

Upendra Gautam, a China expert, says like the US is saying that all its assistance falls under the IPS, China too is saying the same thing regarding the link between its support to Nepal as part of the BRI.

“It is either IPS or BRI, it is up to us how we deal with those countries,” says Gautam. “Now the Chinese officials are linking the BRI with financial institutions. If there are any issues, we can communicate with the Chinese side.”

The debate and controversy surrounding the BRI has also been fueled by the lack of homework and research that Nepali leaders and government ministers lack. The form and nature of BRI is gradually evolving with more components, and no one seems prepared. 

Of late, the Chinese side has been insisting on the implementation of BRI in Nepal. Recently, Home Minister Narayan Kaji Shrestha and Chairman of the National Assembly Ganesh Timilsina visited China. 

In meetings with Timilsina and Shrestha, high-level Chinese officials underlined the need for the implementation of the BRI in Nepal. 

The BRI issue is likely to figure out when Prime Minister Pushpa Kamal Dahal visits China later this year.

In Nepal, BRI is primarily perceived as an infrastructure project, though it has five distinct priority areas: policy coordination, infrastructure connectivity, unimpeded trade, financial integration, and connecting people.

Not only on BRI, but China’s claim over other initiatives such as Global GSI, GDI and GSI has also put the Nepal government in a quandary. During the Dragon Festival organized in Pokhara recently, Chinese Ambassador Chen raised eyebrows by saying that the festival was the implementation of GCI.

China was partly emboldened to make such a claim also partly because former President Bidya Devi Bhandari attended a virtual program of the GSI in September 2022. Bhandari had taken part in the program despite the Ministry of Foreign Affairs advising her not to. 

When National Assembly Chairman Timilsina visited China in the second week of June, Zhao Leiji, chairman of the People’s Congress

In the second week of June, he held discussions on the BRI and other initiatives with Zhao Leiji, chairman of the People’s Congress, and other Chinese officials. 

In one of the meetings, the Chinese side also thanked Nepal for supporting GDI and welcomed the support and participation in the GSI and GCI for jointly promoting peace, stability, and prosperity in the region and the world. 

China’s claims on the BRI and its other latest programs like the GSI run counter to Nepal government’s position, which states that there have not been any official decisions yet and that all the initiatives put forth by China are being studied.  

Nepali leaders are adopting a very cautious approach regarding China’s unilateral claims. On the BRI, Nepal is not in a hurry to take a loan to construct infrastructure because there are already questions about financial viability and sustainability of some projects, such as Pokhara International Airport, Gautam Buddha International Airport, Kathmandu-Terai Fast-track. 

Over the past 10 years, there have been a lot of changes in the original BRI document. China has emerged as a lender of last resort for developing countries that are having difficulty repaying their BRI debts. 

According to the AidData report, by the end of 2021, China had undertaken 128 rescue loan operations across 22 debtor countries worth $240bn. These operations include many so-called rollovers in which the same short-term loan is extended again and again to refinance maturing debts. 

Learning lessons from many countries, China is now cautious to provide loans under the BRI, while Nepali leaders are also equally careful to avoid a potential debt issues.