China’s BRI and Nepal

Currently, we stand at the crossroads of shifting global alliances, new forms of global power competition, polarity among the traditional and emerging power centers, and the rise of multi-polar world order. The Indo-Pacific region is increasingly becoming the hotspot of the global power contest. South Asia, as one of the growing economic centers, with one-fourth of world population, and the unprecedented rise of China and India, has become the epicenter of global power rivalry.

In this broader geopolitical landscape, Nepal, situated between these two major rivals, is dragged into the power contest of its neighbors. Nepal should carefully navigate the interest of foreign powers and should be able to leverage its geo-political position to realize its agenda of prosperity. Although it is a challenging task, it provides us with ample opportunities.

Formulating proactive foreign policy and smart diplomatic dealing is essential to maximize our national interests. We are clear on isolating ourselves from any strategic, security or military alliances, but we welcome development partnerships that do not undermine our national interests. Now coming to the topic of today’s discussion, we see BRI as an opportunity to materialize our developmental goals, but there are specific issues of concern with the BRI.

China is a long-standing bilateral partner, and one of the countries with strong historic trade, commerce and people-to-people ties. We envision deepening ties with China on mutually beneficial terms. Nepal became a part of China’s Belt and Road Initiative in 2017.

The initial motivation for joining BRI was the prospect of trade and connectivity diversification. However, seven years after signing the MoU, there has been no significant progress on BRI. As the chairman of the International Relations and Tourism Committee of the parliament, I advocate partnerships with any countries to realize our investment needs, but the partnership should be transparent and it should not undermine our sovereignty and should be a win-win situation. With the growing pressure for the BRI implementation plan agreement, we should first have a comprehensive discussion on the provisions of the BRI MoU signed in 2017, which is not yet disclosed by both the governments. The MoU should be brought and discussed in the parliament. And then, we can move onward with the discussion on implementation modality of the projects under the BRI. For this there is a need for national consensus and wider discussion on the modality of partnership under BRI. We have a lot to learn from the global experience of the BRI.

We should be clear on the stance of the financial modality to fund the BRI projects. We cannot simply accept the commercial loans with high interest rates from China with shorter payback periods. Our negotiation with China should focus on grants and concessional loans with interest rates at par with other multilateral financial institutions and should not have any strings attached. The selection of projects under the BRI should be based on comprehensive feasibility study and cost benefit analysis. We should refrain from any projects without economic viability.

There are also concerns on procurement process, financial audit of the investments and construction modality of projects. The projects should be open for bidding to all interested companies globally, Nepal should have the right to conduct financial audits of the projects under BRI. Meanwhile, projects should also procure local resources, manpower and should be able to transfer technology to ensure sustainability of the projects. At the same time, we should consider the environmental and social sustainability of the projects. To ensure this, there should be wider consultations with the multiple stakeholders and detailed study to ensure projects are environmentally, socially viable and do not underestimate the rights of local ethnic communities. I am hopeful Nepal could benefit from the partnership under BRI if China is willing to accommodate our concerns and negotiate on mutually favorable terms. I also urge the Nepal government to clarify the current status of negotiation on BRI and developments in the process. 

The author is head of parliament’s international affairs committee