A pivot balancing three great powers

Nepal’s strategic location between two major powers, India and China, makes it a crucial player in the geopolitical dynamics of the region and beyond. The country’s location between the two rising, competing and conflicting powers of Asia (China and India) makes it important for Western powers to strike a strategic balancing act in the region. In this situation, Nepal’s strategic location between two of the emerging countries of Asia makes it imperative for the US to launch a regional maneuver. 

In addition, the US and India maintain strategic relationships in the Asia-Pacific region and Quadrilateral Security Dialogue (QUAD). Global power is shifting toward the Asia-Pacific region with strategic bipolarity between the US and China creating several implications for the global order. These developments indicate that the US-led ‘unipolar world’ may not last last long, making way for a multipolar world with China as one of the power centers. 
In recent years, increased cooperation between India and the US through Washington, DC-led projects like the Millennium Challenge Corporation (MCC) is being seen as a counter to China’s BRI in Nepal. China’s debt-based approach to BRI raises concern about the impact of it on the stability and sovereignty of recipient nations, including Nepal. At the same time, MCC has made significant progress within a short span of time, particularly in Nepal’s energy sector, whereas none of the Chinese projects that Nepal signed under BRI in 2017 have materialized/progressed. 

The US believes China’s BRI project is not just an economic initiative but also a geopolitical one and is part of China’s border strategy to expand as well as deepen its global influence. It believes that one of the primary goals of BRI is to export Chinese development and influence, particularly in the developing world. The US-China bipolar strategic rivalry shows that both powers are in a race to influence each other’s ‘regions’. In this situation, the US strategic entry into Nepal and intense rivalry between BRI and MCC projects are reflective of these two countries’ growing competition in world politics.

China views a growing American role in Nepal’s development in recent years as a threat to its presence in the region. Historically, Nepal’s strategic location has shaped Beijing’s delicate balancing act. 

On its part, Nepal presents a range of opportunities for both India and the US, including ensuring stability and security, facilitating economic growth and promoting democratic values. Both countries have also collaborated on advancing Nepal’s legal system, protecting human rights, promoting gender equality and countering Chinese misinformation. Thus, strategic cooperation between India and the US has fostered sufficient trust to see no significant opposition from India regarding the US-led diplomatic efforts in Nepal. All in all, shared interests of India and the US in Nepal provide a strong foundation for cooperation and coordination between the parties involved. 

China has come up with three new initiatives—Global Security Initiative (GSI), Global Development Initiative (GDI) and Global Civilizational Initiative (GCI), which, per Chinese officials, fall under the BRI umbrella. These initiatives, according to the officials, aim to eliminate the root cause of international conflicts, encourage joint international efforts to bring more stability, improve global security governance and promote durable peace and development in the world. But Nepal has reportedly conveyed its unwillingness to join GSI due to risks of data security, unequal distribution of benefits, looming economic dependence, transparency and debt risks. China’s BRI was also seen optimistically initially, but there has been no progress in the past five years even after signing of an MoU with the strategic community seeing a risky amount of debt and a way for Beijing to use its debt leverage to pursue ambitious strategic plans in Nepal. Though 35 projects were originally identified under BRI, Nepal later brought them down to nine. Still, no government in Nepal has committed to moving ahead with these projects due to “concerns over unclear financial terms of Chinese loans”. 

According to diplomats, the Nepal-US relationship is entering a new phase. The US has three distinct interests in Nepal: Political, economic and strategic/military. In terms of strategy, Nepal’s geopolitical location as a gateway for emerging global powers India and China has shaped US interest in Nepal. Different aid programs and a series of high-level visits in recent years are a clear-enough indication of increasing American engagement in Nepal.
Given this context, Nepal must pragmatically balance competing objectives of India, China and the US to advance national interest and priorities. But our governments have largely failed to take timely decisions and initiatives for national development as well as economic upliftment.

The US’ shifting policy toward Nepal is understood as part of the current global power transition. In Nepal, the US-China rivalry has become more visible over the last few years, presenting a great challenge of taking both MCC and BRI together, and balancing the interest of prevailing superpower and emerging superpowers.

 

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