BRI projects: A message to Nepal in Mandarin

The friendly Nepal-China relations are well tested. However, the reported inclusion of two small operational projects, Panda Pack Project and Amity Living Water Project in the list of projects under BRI by the third Road and Belt Forum for International Corporation in its meeting held on 17-18 Oct 2023.is disappointing and alarming for Nepal, for it sends two messages. First, China is reluctant to take any new project in Nepal and second, the naming of these two projects warns Nepal not to accept the terms and conditions laid down by China for BRI, which have been accepted by Pakistan and Sri Lanka. It is evident from the indirect messages of the Chinese envoy, who claimed the construction of Pokhara International Airport under BRI, as he knew well that the project was started before Nepal signed it. The envoy’s remarks on the Nepal-India electricity trade were also a pointer that China was not happy with the present dispensation. It has been skeptical toward Nepal since the approval of MCC, the US project by Nepal’s parliament.

PM Pushpa Kamal Dahal did his best to rush to China directly from the US to attend the 19th Asian games opening ceremony at Hangzhou and to meet president Xi jinping. But his plan failed, perhaps, as he could not satisfy President Xi for Nepal not accepting the terms and conditions of BRI. Nepal and China had signed 12 agreements, which included development of electricity connectivity between the two countries.

Dahal, though optimistic to have at least one or two projects out of nine agreed upon previously for approval under BRI, could read the mind of President Xi, who, with his ambitious plan of One Belt and One Road Initiative in 2013 (rechristened Belt and Road Initiative), has succeeded in connecting  China with Europe through Central Asia and South Asia to become the largest economy of the world through its mass production at the lowest cost and technical advancements. 

However, due to Covid 19, the slackened economy of China warranted immediate action to boost the economy. During the premiership of KP Sharma, Nepal-China relations were enhanced to strategic partnership. Naturally, China was very hopeful to bring some projects in Nepal under BRI. Moreover, in recent years, China has been assertive in Nepal’s internal politics and had managed to bring the CPN (Maoist Center) and the CPN-UML together before the 2072 election, which resulted in the coalition securing a majority in the federal parliament and also at provincial and local levels of government. However, it became frustrated with Dahal when he discarded the UMLand joined hands with the Nepali Congress and the CPN (Unified Socialist), defeating the UML in the elections. And since there was no progress on selecting projects under BRI, he annoyed China further.

Even after becoming Prime Minister with UML support, he again betrayed Oli and kicked out UML ministers from his cabinet. All these made China more suspicious of Dahal. It is a truism that Prachanda favored China by canceling the decision of the Dr Baburam  government to construct the Budhi Gandaki 1200 MW project by Budhi Gandaki Hydroelectric Project Development Committee, and  signed the MoU with China Gezouba Group Corporation (CGGC) to be constructed under the engineering, procurement, construction and financing (EPCF) model. His party leader and the then Finance Minister Varshman Puna had accepted a loan from the Chinese EXIM bank for developing the international airport in Pokhara.  Though the Deuba government canceled the project, KP Sharma Oli government again roped in the CGGC in 2018, as was done by the Dahal government.

Nepal went ahead to upgrade its relations with China to strategic partnership during President Xi’s visit to Nepal in 2019. Nepal allowed Chinese language in school curriculum. The PM’s Office authorized a subsidiary company of the Chinese Huawei Technologies Co Ltd after suspending the bidding process to set up the ‘action room’ equipped with a video conferencing hall. Nepal allowed China International Development Cooperation Agency to provide development assistance to 15 northern districts of Nepal and signed a treaty of  Mutual Legal Assistance in Criminal Matters with China, which it does not have with any other country. Nepal,  after breaking its traditional stand,  allowed the bracketing of the word ‘Zhumulangma’ with the Nepali word ‘Sagarmatha’.

In spite of the good intention of Dahal to satisfy China, he could not do so, as he is heading a coalition government. The coalition partners are  not willing to accept any projects under BRI loan with high percentage of interest and shorter period of repayment. These parties can accept projects under aid or grant. And there is no ground to reject the Chinese offer at lower rates of interest and longer timeframe for repayment, as being offered by other international funding organizations. Moreover, China should not equate Nepal with Pakistan and Sri Lanka, as its relations with Nepal are centuries old.