Saud’s approach with big powers

Sun Haiyan, deputy minister of the International Liaison Department of the Chinese Communist Party visited Nepal from Jan 26-29. Among other engagements, she held a meeting with second-rung leaders of the national parties represented in the federal parliament. At the meeting, she said that some forces were trying to spoil Nepal-China relations. Sun didn’t name names but she was hinting at the US and India. 

Of late, bilateral exchanges between the two countries have increased. China has also become more vocal and loud in Kathmandu. At the same time, India and the US have also expedited bilateral exchanges with Nepal at multiple levels. Meanwhile, the current government led by Pushpa Kamal Dahal is grappling to maintain cordial ties with all three powers. 

The Ministry of Foreign Affairs is led by Nepali Congress’s Narayan Prakash Saud who is an inexperienced politician in the realm of foreign policy and international relations. This article delves into how the current government is dealing with India, China and the US. 

India

With India, the Dahal-led government has adopted the approach of focusing more on development and economic partnership. Foreign Ministry officials say the signing of power trade agreement with India to export up to 10,000 MW electricity is a key remarkable development in bilateral relations. The agreement, they say, has also created a conducive environment for foreign investment in Nepal’s hydropower sector. Another significant development linked to this deal is India’s nod to allow Nepal to export 40 MW electricity to Bangladesh, which is likely to be operationalized from July this year. After a long time, the dream of regional power has been materialized.

Similarly, officials claim several connectivity and other bilateral projects are moving ahead, and the government has been able to secure Indian support for survivors of the Jajarkot earthquake. India has also increased the grant amount by InRs 1bn to be provided to Nepal under the fiscal year 2024-25. In the new provision, India will be providing Nepal with a total grant of InRs 6.50bn.  

As far as the long-standing issues such as border disputes and the report of Eminent Persons’ Group is concerned, it seems that the present government has adopted a different approach. The Dahal government is unlikely to push India to receive the EPG report. 

As for the Treaty of Peace and Friendship 1950, according to a top diplomat, the present government is of the view that there should be an all-party consensus within the country before approaching India. On border disputes, the government reckons that both political and bureaucratic levels should work simultaneously. 

Speaking at a program a few days back, Foreign Minister Saud said that border disputes between Nepal and India should be resolved on the basis of political consensus. “We have a joint technical committee in this regard. The committee should be activated after which the leadership of both countries should resolve this problem diplomatically based on the facts,” he said. 

China

After the formation of the Dahal-led government, bilateral engagement and exchanges between Nepal and China have increased notably. China seems serious about expediting the works of some projects, such as Ring Road expansion and maintenance of Araniko Highway, among others. Similarly, the two sides have started the paperwork to expedite the construction of cross-border transmission lines while preparations have begun to construct an agro industrial park in Chitwan and Gorkha. 

Over the past few months, both air and road connectivity between the two countries have widened. But the current government still faces the criticism of giving less priority to China, particularly concerning the Belt and Road Initiative (BRI) projects. Beijing has been pressing Kathmandu to sign the BRI implementation plan at the earliest, but the Dahal-led government has not shown much enthusiasm for it.  

A few days back, Deputy Prime Minister and Minister for Home Affairs Narayan Kaji Shrestha said at an event that Nepal and China were working to finalize the BRI implementation plan. But the Ministry of Foreign Affairs has made it clear that Nepal will not take loans from China to realize the BRI projects.

 With big projects, such as those envisioned by the BRI, showing no signs of progressing, China has of late directed its focus on small projects in Nepal, ones that could immediately bring changes in people’s life. A senior official at the Prime Minister’s Office says as the Nepali Congress has been dictating the conduct of foreign policy, there has been little progress in regard to bilateral partnership with China.

While Beijing is pleased with the position taken by Prime Minister Dahal and the senior leaders of major parties against the independence of Taiwan, China still seems wary of the growing influence of Western countries in Nepal.

US

Foreign Minister Saud says there has been substantial improvement in the relationship with the US. For some years after 2018, the Nepal-US ties mainly revolved around the issue of ratifying the Millennium Challenge Corporation (MCC) through parliament. The much controversial issue has now been resolved following the parliamentary endorsement of the MCC Nepal Compact, but some technical details are still there. 

In the MCC, rising cost of the proposed projects is one of the key issues which needs to be resolved through bilateral talks and negotiations. Nepal has already made it clear to the American side that it is not in a position of investing more money in the projects.  

In the past, the US’ Indo-Pacific Strategy (IPS), seen by many as a tool to curb China’s growing influence, had also impacted the Nepal-US relationship. But the American side has managed to downplay the IPS concerns, though some of its components are under implementation. 

During his visit to the US, Foreign Minister Saud held talks with his American counterpart Antony Blinken and other high-level government officials. Along with increasing the volume of bilateral assistance, American private companies have shown interest to invest in Nepal’s tourism, agriculture, medical and other areas, and they are seeking an appropriate environment. In 2023, there was a series of visits from the American side. In the meeting with Saud, Blinken said Nepal is a valued partner in the Indo-Pacific region which has given a clear message that America accords high priority to its relationship with Nepal.