Rana leaves for China amid loan vs grant debate

Foreign Minister Arzu Rana Deuba departed for China on Thursday at the invitation of her Chinese counterpart, Wang Yi. Her visit aims to set the tone for Prime Minister KP Sharma Oli’s upcoming trip to Beijing, scheduled for December 2.

Deuba is set to meet with Wang on Sunday (November 29) to finalize the agenda for Oli’s visit. Oli’s four-day visit has drawn attention to China’s Belt and Road Initiative (BRI), which has become a focal point of national political discourse. The ruling coalition of CPN-UML and the Nepali Congress (NC) remain divided on how to approach the BRI, prompting behind-the-scenes negotiations to form a unified position ahead of the visit.

The extent of any consensus between the two parties remains unclear. A key point of contention lies in Beijing’s 2020 BRI Implementation Plan. The NC has expressed significant reservations about the document, and a task force has proposed revisions, including changes to its title. Whether Beijing will accept these modifications is uncertain. While all three major parties now agree that Nepal should not accept loans under the BRI, a critical question lingers: Does the BRI framework include provisions for grants?

Speaking with the media before her departure, Foreign Minister Deuba sought to downplay the perceived differences between the two coalition partners. “The media hype about disagreements is exaggerated. A joint task force is addressing the concerns, and much will depend on how the negotiations unfold,” she said. However, official documents suggest that grants are not part of the BRI framework. Research indicates that China has not provided grants for BRI projects, aligning with the initiative’s emphasis on shared development rather than international aid.

The BRI White Paper underscores its collaborative nature, stating that it prioritizes equal participation, voluntary engagement, and freedom from political or economic preconditions. It explicitly notes that the BRI is neither an aid program nor a geopolitical tool but a framework for joint development.

Kalyan Raj Sharma, chairperson of the Nepal-China Friendship Forum, criticized the ongoing debate over loans versus grants, calling it “inherently problematic.” He argued that the BRI is a corporate framework requiring Nepal to define its priorities. “We should focus on two aspects: small-scale project collaboration and long-term infrastructure development. Within this framework, modalities could include grants, concessional loans, or others. First, let’s finalize our vision before getting bogged down in loan-versus-grant debates,” he said.

UML leader and former Foreign Minister Pradeep Kumar Gyawali echoed this sentiment, stressing the need to align Nepal’s interests with the Chinese initiative. “Instead of determining where our priorities overlap with the BRI, our discussions have been reduced to a binary narrative of loans versus grants,” Gyawali remarked. He maintained that under the current economic climate, Nepal should avoid loans for large infrastructure projects.

Former Foreign Secretary Madhu Ram Acharya was more critical, describing Nepal’s engagement with the BRI as a “classic case of how not to negotiate.” He highlighted rushed, top-down negotiations and excessive politicization. “The BRI Implementation Plan formalizes the ‘strategic partnership’ agreed upon during President Xi Jinping’s visit in 2019. Such a comprehensive agreement should not be signed hastily or without safeguarding Nepal’s national interests,” Acharya argued.

As Oli’s visit to China approaches, the BRI remains a complex issue at the intersection of domestic politics and international diplomacy. Nepal faces the delicate task of navigating its priorities while ensuring that the collaboration benefits its development goals. Whether the visit will yield clarity on the BRI and its modalities remains to be seen, but it is clear that the framework offers opportunities—if Nepal can negotiate effectively.