Dr. Nihar R. Nayak is Research Fellow with MP-IDSA, New Delhi. His areas of expertise are: political transition in the eastern Himalayan region, non-traditional security, soft power diplomacy, left wing extremism, and cooperative security in South Asia.
Dr. Nayak has a Ph.D in International Politics from Jawaharlal Nehru University, New Delhi. He was Visiting Fellow to the Peace Research Institute Oslo in June 2006 and July 2007. He did a special course on Peace Research at the International Summer School of Oslo University in 2007.
He has been Visiting Faculty at the Centre for the Study of Nepal, Faculty of Social Sciences, Banaras Hindu University since 2011. He was Guest Faculty at the Lal Bahadur Shastri National Academy of Administration (LBSNAA), Mussoorie from 2006 to 2011. He has both national and international publications to his credit including the book Strategic Himalayas: Republican Nepal and External Powers.
Dr. Nayak’s current research project is “Impact of Climate Change in the Himalayan Region: Security Implications for India”.
Research Fellow, IDSA, Dr Nihar R Nayak’s paper entitled ‘From barter to Dollar: Revival of SSR in Central Himalayas and its implications,’ was published in the book ‘Unfolding Central Himalaya: The Cradle of Culture’, edited by B.K. Joshi and Maheshwar P. Joshi.
China has created a constituency within the Nepal Army during the last few years. Some senior officers of the NA favour deeper military cooperation with China to reap more benefits.
India-Nepal relationship has always been regarded as one of the most successful examples of bilateral relations worthy of emulation by states while relating to India in the neighborhood. India and Nepal have open border between them; Nepalese nationals work in India and even serve in Indian security forces to safeguard Indian borders; and in terms of cultural connectivity, historical linkages and volume of people-to-people contact both the countries have set a unique template in interstate relations.
However, Indian soft power has seldom helped in removing Nepalese prejudices about India — as an imposing big brother with scant respect for Nepal’s core economic and strategic interests. A cursory look at the relationship suggests that ever since 1950, there have been several phases of turbulence between the two countries. Therefore, not a single major project has been successfully implemented in Nepal during the last 70 years. Nepal has always been critical of India’s foreign policy approach towards it. Political parties — the Nepali Congress, CPN-UML, Maoists and Royalists — have been critical of India’s efforts to micromanage internal politics and interfere in internal matters of Nepal.
There was a slump in bilateral relationship in May 2016 when Nepal unilaterally cancelled its President’s visit to India. In fact, Nepal went to the extent of recalling its Ambassador to India by accusing him of conspiring to dislodge the then Oli government. The present turbulent phase has started since the new constitution of Nepal was promulgated on 20 September, 2015 disregarding Indian concerns about recognition of the interests of the Madhesis and Janajatis.
While India expected that the constitution would bring long-term peace and stability to Nepal, the Oli government failed its people and acted in a high-handed manner creating a situation where country runs the risk of division along ethnic and regional lines. Despite India’s repeated suggestions to make the constitution an inclusive one, the then government and top leaders of major political parties failed to accommodate the interests of the marginalised groups — Dalits, tribal, Janajati, women and Madhesis. As these groups expressed their displeasure against the constitution by demonstrating on the streets, including in the Terai region, rather than welcoming the new constitution, India 'noted' its promulgation and simultaneously expressed its concerns about unmet aspiration of various ethnic communities. Rather than appreciating Indian position in favour of a united, well-integrated and inclusive Nepal, the ruling parties and Kathmandu elites have wrongly interpreted Indian sentiments in this regard as being interfering and overbearing. They have held that India did not want the constitution to come through and therefore, it chose to support anti-constitution movements in the Terai region. Such messages from the ruling elites have percolated to the grassroots level and generated massive anti-India sentiments in Nepal.
The ruling elites justified their take on India’s position on the constitution and linked it up with Madhesi protests along the India-Nepal borders. Instead of addressing the grievances of marginalised groups, major political parties in Kathmandu internationalised the issue by projecting it as an India-imposed blockade. At the same time, the CPN-UML and Maoist leaders wanted to take political mileage of the situation by fomenting anti-India sentiments among the common people to expand their political constituencies.
Most surprisingly, instead of initiating intra-Nepal dialogue with the agitating groups, Kathmandu perhaps wanted to resolve the issue of protests at the borders by having dialogue with India. The decisions of Oli government created an atmosphere of mutual suspicion and affected bilateral reactions. It did not encourage any bilateral mechanism with India and aimed at resuming dialogue, with the condition that India should ask the Terai protesters to withdraw border blockade.
Even Nepalese Army chief and prime minister’s visits to India in February 2016 were finalised on the condition that India should first remove the border blockade and resumption of essential goods to Nepal. However, both the visits took place after border blockade was withdrawn while Nepal government brought out two amendments in the new constitution and assured to address remaining constitutional issues through dialogue.
Despite ex-PM Oli’s claim that all misunderstanding were removed between India and Nepal during his visit, people perceived that bilateral relations were not on the track as it used to be before. State-to-state relationships were there, but warmth was missing. This perception was created due to, first, the absence of a joint communiqué (JC) at the end of Oli’s India visit. The joint communiqué was a casualty, because India reportedly wanted to include a statement relating to addressing remaining constitutional issues in a time bound manner and promote political stability and economic growth. Nepal did not want to include any constitutional issues in the JC.
Second, immediately after his Delhi visit Oli signed 10 MoUs with China during his China visit. Nepalese media as well as leaders of some of the ruling parties made public statements that transit agreement with China could reduce dependence on India and it could be utilised as an alternative route for Nepal in case its borders were closed by protesters in future. Third, Nepal officially expressed its serious concerns over discussion about Nepal's problem in India-EU joint statement issued at the 13th European Union-India Summit in Brussels. The MoFA, Nepal, said in a statement recently that "the constitution making and its promulgation are essentially internal matters of a country."
The bilateral relationships reached its lowest ebb when the Nepalese media and ruling party leaders accused India of trying to overthrow the Oli government in May 2016. Prime minister Oli took a unilateral decision to cancel the President’s visit to India and called back Nepal's Ambassador from Delhi. India was unfairly blamed by leaders of the ruling parties for interfering in internal affairs of Nepal and conspiring to topple the Oli government, which was linked to visits of senior opposition leaders from Nepal to New Delhi in April. Despite facilitating Nepal’s experiment with democracy and its continuing aid for humanitarian causes in post-earth quake period, India was projected as an overly interfering neighbour.
Despite these blames and counter blames — putting the onus on each other in the media, foreign ministers of both the countries were in constant touch. During Nepal Foreign Minister Kamal Thapa’s Delhi visit in June 2016, which was his fifth visit to India since October 2015, both the foreign ministers agreed to reactivate all bilateral mechanisms, including foreign ministerial level Joint Commission, while keeping differences aside.
After that decision, while the bilateral relationship was gradually improving by holding bilateral mechanisms and both the countries were discussing the date for Nepal President’s visit to India, the CPN (Maoist Center), second largest coalition partner of Oli-led government, withdrew support from the CPN-UML. India was again dragged into sudden domestic political upheavals in Nepal. Oli and some ministers in his cabinet directly accused India of conspiring to topple the Oli government, which India rejected and observed that as an internal matter.
Amid this turbulent bilateral relationships and rising anti-India sentiments in Nepal, Prime Minister of Nepal, Pushpa Kamal Dahal, arrived in Delhi on 15 September for a four-day official visit with an objective to reset the bilateral relations. This has been the second official visit of Nepal’s Prime Minister to India this year and Dahal's first overseas visit after assuming to power in August 2016. Analysts both in Kathmandu and New Delhi feel that the visit might help in re-setting India-Nepal bilateral relations.
The visit opened up a new chapter in India-Nepal relations. The outcome of the meeting between the two prime ministers was that bitterness and misunderstanding between two countries would be resolved soon. Both the countries vowed to cooperate with each other on economic and security issues. Taking the relationship to a new height, New Delhi and Kathmandu singed three agreements on 16 September. India recognised the new constitution with a hope that "Nepal will successfully implement the Constitution through inclusive dialogue accommodating the aspirations of all sections of your [Nepal’s] diverse society." India also signed a new Line of Credit (LoC) worth $750 million for post-earthquake reconstruction. By acknowledging Nepal as a potential development partner, India has agreed to extend an additional LoC for new projects such as Phase-II of Terai roads, power transmission lines, substations and a polytechnic in Kaski district. Both the countries have agreed to push for speedy and successful implementation of the ongoing hydro-power projects, and development and operationalisation of transmission lines with an objective to fulfill energy requirements and revenue generation for Nepal. Although, Prachanda has scored high by making the visit successful, the real challenges come from implementation of the constitution with a spirit of inclusiveness.
The article was originally published in Firstpost.com
China, the US, and some EU countries prefer continuation of the Left alliance in Nepal for their concern over replacing “secularism” with “Hinduism” in the Nepal’s Constitution. Therefore, the EU, which has a reputation of backing human rights and social justice for the marginalised groups, surprisingly keeps silence even when the Janajatis and Madhesis feel that their interests are not accommodated in the new Constitution. Despite facilitating Nepal’s experiment with democracy and its continuing aid for humanitarian causes, India is projected as an overly interfering neighbour. India has nobody to blame but itself for the growing influence of other countries in Nepal for consistently poor assessments of the Nepal’s political situation and half-hearted measures to mitigate the issues
The hope of a stable and thriving Nepal seems to be slowly fading away after the promulgation of the new Constitution adopted in September last year. The Constitution is increasingly losing support and faith of a large number of people. It has failed to take the democratic process forward. After a gap of three months, the Federal Alliance (FA), a conglomeration of Janajatis and Madhesis, has started the second round of agitation against the new Constitution after rejecting the Government’s offer of peace talks. Around 27 marginalised and Janajati groups/political parties are participating in the agitation in Kathmandu at present. Further, the prevailing political turbulence is catalysed by differences between ruling and opposition parties on emerging political issues related to the implementation of the Constitution, suppression of the views of coalition partners, and the fact that external rather than internal influences are shaping the dynamics of the ruling UML-CPN coalition.
Democracy in peril
The coalition partners backing the Oli Government, as well as the opposition groups, have criticised the Government’s decision to hold local bodies’ elections by December 2016 without finalising the provincial boundaries. They have also been critical of Government policies and programmes and called them “false assurances”. Even the CPN-Maoists, the second largest coalition partner of the Oli Government, has been critical of the Government’s decision to recall Nepal’s Ambassador to India and cancellation of President’s visit to India in a hurried manner.
Civil society groups have filed a writ against the nine-point agreement signed in May 2016 between the UCPN (Maoist) and the UML. Section 7 of the agreement talks about bringing amendments in the new Constitution, transferring insurgency-era human rights violation cases from the Supreme Court to the Truth and Reconciliation Commission (TRC) and offering blanket amnesty to the rights offenders during the insurgency period. At the same time, the Government is extremely intolerant of any criticism levelled against its policies and is allegedly suppressing freedom of expression. While one Canadian national, Robert Penner, was deported from Nepal for criticising the Government’s apathy towards the Madhesi people, the Press Council of Nepal has demanded public apology from a private TV channel for airing an interview with CK Rout, a Terai leader, who has been reportedly demanding an autonomous Madhesh province.
Recently, a section of the media reported illegal arrests of some journalists and political activists during the ongoing Federal Alliance agitation in Kathmandu.
Collusion of interests
Instead of focusing on governance and reconstruction issues, the Government in Kathmandu is mostly focusing on retaining its hold on power by fuelling ultra-nationalist sentiments and cleverly putting all blame on India for non-cooperation. Meanwhile, the Government has successfully garnered external support by pitting major powers (read China, EU, USA and India) against each other.
The same tactic is being used to keep its coalition partners silent and ensure their continued support to the Government. When Prachanda highlighted the failure of the Government to address the demands of the marginalised groups, problems of governance, and snags in reconstruction efforts and wanted to form a national unity Government by bringing the Nepali Congress on board in May this year, Oli reportedly used the “China card” and forced Prachanda to continue with his party’s support to his Government.
From the Chinese point of view, this is being projected by analysts as a unique opportunity for China to extend support to the alliance of the Left-wing political parties (an alliance of the CPN-UML, Maoists and some other left parties) both to neutralise India’s influence in Nepal and to checkmate perceived US-India efforts to mobilise Tibetan refugees against China.
Recently, China signed ten MoUs with Nepal, including one for providing transit facilities to Nepal, infrastructure connectivity and joint feasibility study for proposed oil and gas deposits in Nepal. Of these MoUs, Oli Government has already implemented the MoU on construction of Pokhara international airport, and projects for exploration of oil and gas within a month’s time. The Government has also accorded high priority to projects by China in its policies and programmes. Therefore, it has been a win-win situation for China to ensure loyalty of the Left-alliance in return for economic and strategic support at a time when the ruling elite in Kathmandu is looking away from India.
Interestingly, while China is suspicious about the US interests in Nepal and wants to counter it by nurturing the Left-wing parties, as per many perceptive observers in Kathmandu, the US has, quite paradoxically, extended its support to the ruling Left-alliance to ensure that it does not pander to Indian Right-wing’s anxiety over forced conversion in Nepal. Although the US does not officially show any policy differences with India on Nepal, privately, its embassy officials articulate that they do not trust the Modi Government because it has the potential to revive Hinduism in Nepal. For example, despite being aware of shortcomings in the new Constitution, Alaina B Teplitz, the US Ambassador to Nepal, said in a statement on May 11, 2016, “Nepal’s Constitution is a milestone… the debate around the new Constitution has been dominated by political rhetoric rather than specifics of the Constitution…the concerns of the United States (pertain) to gender parity in conferring citizenship, and restrictions on religious conversion.” There is also a
perception in Kathmandu that the US encourages evangelist activities by some NATO member countries and international NGOs.
Like the US, some EU countries also prefer continuation of the Left alliance for their concern over replacing “secularism” with “Hinduism” in the Constitution. Though the EU has a reputation of backing human rights and social justice for the marginalised groups, surprisingly, it has maintained its silence even when the Janajatis and Madhesis feel that their interests are not accommodated in the new Constitution, and more than 50 Madhesis lost their lives during the anti-Constitution agitation. Although EU and India asked Nepal to make the Constitution inclusive in a joint statement during Prime Minister Modi’s Brussels visit in March 2016, the EU Ambassador to Nepal is far from responsive to any such commitment from EU’s side.
Isolated actor
It appears that these three major powers prefer continuation of the present Left coalition to any dramatic change in Nepalese polity under pressure from Madhesis or Janajatis backed by India. This has unfortunately isolated India which has been fighting for inclusion, federalism, peace and stability in Nepal. India has been unfairly blamed for interfering in internal affairs of Nepal and trying to topple the Oli Government, which was linked to the visits of senior Opposition leaders from Nepal to New Delhi recently.
Despite facilitating Nepal’s experiment with democracy and its continuing aid for humanitarian causes, India is projected as an overly interfering neighbour. This perception has flourished ever since India expressed its reservations on the new Constitution and raised its concerns over failures to accommodate marginalised groups’ demands. The same issue reappeared during Nepal Prime Minister’s visit to India and both the countries failed to issue a joint statement at the end of the visit. India reportedly wanted to mention the phrase, “Addressing the remaining Constitutional issues in a time-bound manner, and promote political stability and economic growth,” in the statement, which the Nepalese Government refused to accept.
India has nobody to blame but itself for the growing influence of other countries in Nepal over a period of time. Its consistently poor assessments of the Nepal political situation and half-hearted measures to mitigate that since September 2015 have left India with very limited options in Nepal. When the Nepalese media and ruling party leaders accused India for attempting to overthrow the Oli Government in May 2016, and PM Oli took unilateral decision to cancel the President’s visit and called back its Ambassador from Delhi, India remained a mute spectator. The South Block reportedly panicked while rumour floated in Kathmandu that the Oli Government might declare Indian Ambassador to Nepal as a persona-non-grata.
Geo-political constraints
However, it would be wrong to conclude that Oli took all his recent decisions only with Chinese backing. While China factor remained important, a number of other factors have played a key role. Oli and the Kathmandu elites are aware that India cannot go beyond a point. First, it cannot close the borders or limit Nepal-India trading points, as it did in 1989 due to security seasons. In fact, as Nepal laboured under the political and economic crisis because of Madhesi protests, the armies of both countries played an important role in calling off the border blockade in February 2016. Any such measures from the Indian side in future could affect the security cooperation between the two countries. India cannot afford that. Second, Nepalese nationalism is rooted in anti-Indianism. The UML-Government, especially Oli, has successfully capitalised on the situation since mid-2015 and emerged as an unchallenged India-basher in Nepal. The UML’s electoral position has improved further with the support of China and some of the EU member countries. Other parties in Nepal are extremely fragmented and fear that any future political line they take to address the Madhesi issue by bringing about amendments in the Constitution may affect their electoral performances.
Thirdly, three key institutions of Nepal the bureaucracy, judiciary and Nepalese Army could be used successfully to implement the 16 and 9-point agreements. While the bureaucracy seems to be in favour of the UML, the party is trying hard to control the judiciary, which recently over-ruled parliamentary procedures while appointing the Supreme Court Chief Justice and eleven judges. It also expects that the Army could be made to fall in line by raking up insurgency-era crime charges and other national security issues. In this regard, the party has prepared a comprehensive national security policy by identifying potential future security challenges.
Lastly, in the last one decade, Nepalese society has undergone drastic changes. The thinking of the new generation Nepalese youth about India and India-Nepal relations has changed. Their reactions to the “border blockade” by the Madhesis were unprecedented. They do not want to be dependent on India. They prefer to work and study in other countries than India. Therefore, reducing dependency on a single source as well as diversifying connectivity and supply options has been a major foreign policy goal of Nepal during the post-blockade phase. It would require innovative and responsive diplomacy by New Delhi to bring back warmth into an otherwise waning relationship.
(The writer is an Associate Fellow, Institute for Defence Studies and Analyses, New Delhi)
While India may wait for full cooperation of other member countries to make SAARC a success, it must take the initiative for forging more agreements in matters concerning economic and social cooperation.
There are multiple levels of relationship between India and Nepal. This article deals exclusively with their bilateral transit relations, focusing on their negotiations in the context of Nepal as a landlocked developing country (LLDC). While LLDCs consider their free access to the nearest seaport through a transit country as a natural right, the transit countries often bargain with them from a position of strength.
To recover ground, India must engage all political parties on the Madhesi issue
At a time when India is confronted with growing negative sentiments in Nepal, China has been reaping a good harvest of positive perceptions. Despite the delay in signing the oil trade agreement and slow progress in reopening the existing Nepal-China trading routes, there has been a phenomenal improvement of Chinese influence and popularity in Nepal over the last few months.
While Indian projects have witnessed attacks by radical Maoist groups and local people due to the perceived blockade from the Indian side, Chinese companies are being allotted new infrastructure projects.
Economic heft
On December 17, 2015, the Nepalese government allotted Chinese CAMC Engineering Company, a subsidiary of China National Machinery Industry Corporation (SINOMACH), to carry out a feasibility study for construction of the Kathmandu-Pokhara electric railway. This project could be part of the trans-Himalayan railway, envisioned by China, to connect Kathmandu.
China is also building a regional international airport in Pokhara. This is the second biggest infrastructure project undertaken by China in Nepal. Moreover, over a dozen hotels in Pokhara have Chinese owners. Chinese telecommunications major Zhong Xing Telecommunication Equipment (ZTE) has four data centres: in Biratnagar, Kathmandu, Hetauda and Pokhara.
Media reports also indicate that 15 Nepalese districts bordering China have received special concessions on grazing land and humanitarian and developmental aid of RMB 10 million ($1.6 million) annually from 2014 to 2018 from Beijing. The Chinese language is also getting more popular in Nepal. Chinese universities are increasingly becoming the preferred destination for Nepalese students.
Other than soft power, China has used its economic diplomacy to project itself as a non-interfering neighbour by welcoming the new constitution of Nepal. It was perceived as a saviour when it agreed to supply 1.3 million litres of petrol to Nepal as grant-in-aid assistance during acute fuel shortages in Nepal due to irregular supplies from the Indian side. China has also agreed to reconstruct the damaged Nepal-China trade routes and open new trading points for easy supply of goods.
China has allowed resumption of Kathmandu-Lasha bus services after 11 years. Moreover, China has been the second largest donor to the ongoing earthquake reconstruction programmes in Nepal. In March 2015, China increased its annual aid assistance from RMB 150 million to RMB 900 million.
Disadvantage India
To boost Nepalese morale further, Chinese Foreign Minister Wang Yi, in a statement, said recently, “China has all along believed that countries irrespective of their size are equal. China and Nepal have always treated each other sincerely and as equals. We hope that the same policy and practices will also be adopted by India.”
Nepal reciprocated the gesture by waiving visa fees for Chinese tourists. There could be three major reasons for the revision of China’s stance vis-à-vis Nepal. First, over a period of time, China has improved its capacity in terms of its technological prowess and economic growth to feel confident to extend support to Nepal across the Himalayas. Second, China wants to use its flexi power as a vision of President Xi Jinping, to disseminate Chinese values and re-establish China’s image at an international level. Third, China did not want to lose this opportunity when it perceived that India’s influence was in decline.
India’s so-called relationship has been based on soft power like history, culture, people-to-people contacts; non-reciprocity in facilities offered by the 1950 treaty. Although India is Nepal’s top economic partner of Nepal in terms of bilateral trade, investments, technical cooperation and annual aid assistance, it has never been treated as a benign power.
Madhesis’ agitation
India-Nepal relations have reached their lowest ebb. India foresaw that the Madhesi agitation could have a spillover effect. On the other hand, there was a strong perception in Nepal that the Madhesi movement intensified especially due to the tacit support it received from India.
The slow movement of cargo from India and the shortage of essential commodities in Nepal due to agitation in the Madhes region has been perceived as an ‘unofficial India imposed blockade’ on Nepal. Some radical Maoist groups have taken advantage of
the situation and attacked the Arun III project office, which is being constructed by the Sutluj Jal Vidyut Nigam (SJVN). Media reports also indicated that suspected Maoists attacked the GMR Energy office in Kathmandu and GMR’s Upper Karnali hydropower project in Surkhet district. Earlier, the Cable Operators’ Association of Nepal stopped broadcasting Indian television channels.
The political crisis in Nepal has led to either cancellation or postponement of regular bilateral meetings between India and Nepal on a host of issues. No substantial progress has been made with regard to the 10 MoUs signed during Prime Minister Narendra Modi’s visit to Kathmandu in November 2014. There are reports of an increase in the activities of Pakistan-based terrorists and the circulation of fake Indian currency.
If Nepal gets an oil pipeline from China — the deal could be inked during Xi Jinping’s visit to Kathmandu sometime in 2016 — the contours of politics in the Himalayan border region of India could change.
The gains for China will always be disproportionately higher than the losses that India would incur if there is a prolonged crisis in the Madhes region. At the same time, leaving the Madhesis high and dry in the present situation, when there is a perception in Madhes that India might reverse its course to placate the leadership in the hill region, could complicate the Nepalese situation. There is a need, therefore, to engage leaders of all political parties and craft another consensus. This can ensure Nepalese unity and integrity at one level and cement India-Nepal ties on the other.
The writer is an associate fellow at the Institute for Defence Studies and Analyses
This article was originally published in BusinessLine..
Breaking its four-decade-long record of dependency on India for fossil fuel, Nepal entered into an oil trade agreement with China on October 28. A memorandum of understanding was signed between the Nepal Oil Corporation (NOC) and China National United Oil Corporation (PetroChina) in Beijing. While confirming the deal China reportedly indicated that it “could well become a long-term fuel supplier to Nepal”.
The agreement was signed while Nepal was passing through a serious oil crisis due to the blockade by people living in the Terai region (read Madhesis) since September 22. However, a large number of Nepalese people perceive the internal blockade as an “unofficial embargo by India”. Media reports indicate that the agreement with China provided a framework for future cooperation between the two countries on oil trade.
Break in tradition?
In fact, Indian Oil Corporation (IOC) has been supplying petroleum products, diesel and kerosene to Nepal at Indian market rates for the last 40 years. There has been an official contract between IOC and NOC for this trade. According to the revised trade and transit agreement of 2006, India allowed 26 trading points, including six points for transit purposes, for both bilateral and transit trade through Indian territory.
The Birgunj-Raxaul trading point is responsible for about 60 per cent of the total (bilateral and transit) Nepalese trade. Oil products from India are carried by both Nepalese (roughly 30 per cent) and Indian (70 per cent) tankers from the nearest oil depots of India to the India-Nepal border.
This arrangement was paralysed after the stir in the Madhesi region gathered momentum following the finalisation of the Nepalese constitution on September 20. The Madhesis felt betrayed by the way the constitution was adopted by the majority in the constituent assembly in clear disregard of their concerns. The response from India was one of concern over the way the majority parties ignored its suggestions to generate a consensus.
The entire Terai belt witnessed violence and mayhem after the constitution was adopted. This inevitably impacted on the trade flow from India as private players felt it was against their interest to continue with their transport services.
In an interesting turn of events, the external affairs ministry voiced the security concerns of Indian transporter associations carrying goods to Nepal due to intensification of the anti-vonstitution agitation in the Terai region by the Samyukta Loktantrik Madhesi Morcha (SLMM) and other groups. . Essential items such as oil could not be transported. Nepal witnessed a severe oil crisis because of the tactic adopted by the SLMM agitators to impose a blockade on major trading points. Shortage of oil severely affected normal life, the healthcare system, public transportation and business in Nepal. Most importantly, earthquake reconstruction work was also affected.
Strain in India-Nepal ties
Bilateral and track-II level interactions between India and Nepal failed to normalise supply of oil from India. Even the visit of the newly appointed foreign minister Kamal Thapa to Delhi failed to improve the situation. A week after the visit, Thapa was reported to have told the Nepalese parliament that “India did not facilitate the supply as per its commitment”.
The Nepalese side looked upon the MEA’s press statement about self-imposed restrictions by the Indian transport association not to carry goods to Nepal for security seasons as an indirect effort by the government to impose a blockade on Nepal. Other examples of Indian insensitivity being cited by many Nepalese observers are: India’s cold response towards Nepal’s request to re-route movement of the tankers; non-cooperation from the Indian side to take action against the agitators for using no-man’s-land to stop movement of transport vehicles; and undue delay being caused at customs and security check points on the Indian side to slow down the movement of oil tankers into Nepal (10 tankers per day as against over 1,000 earlier).
Strategic gain for China?
Two days after Thapa’s visit, the new Nepalese government explored an alternative arrangement for oil supply. In this regard, a high level meeting was organised on October 23 under Maoist leader Narayan Kaji Shrestha, who visited Beijing after the formation of the new government in Kathmandu. It was decided to send an eight-member team to negotiate with China for exploring an alternative arrangement for oil supply. The move was later endorsed by the Nepalese cabinet.
Although India has not officially responded to the bilateral oil trade agreement between Nepal and China, the IOC chairman and managing director stated in a media interaction that they would soon increase the volume of oil supply to Nepal. He also expressed his concerns about the possible loss of IOC’s share in its business volume with Nepal after Chinese entry into the scene. It would surely affect the business of hundreds of Indian transport companies associated with the IOC.
Until the SLMM blockade came into effect, the IOC used to supply around 1.3 million tonnes of petroleum products worth around ₹9,000 crore annually to Nepal. Moreover, even if there is scepticism about the sustainability of Chinese supply of oil to Nepal, China’s entry may dramatically alter the strategic bilateral relationship between India and Nepal.
Optimists in India would hold that the IOC will continue to play a dominant role in Nepal’s fuel supply given the unfavourable terrain and absence of infrastructure for passage of heavy cargo through the Himalayas to bring bulk goods from China. But some analysts in India would argue that India has lost some strategic space to China. So far, China had sought to create a space for itself in the region on the sly. For the first time, perhaps, it has stepped in to reduce Indian influence in Nepal quite openly, and encouraged leaders in Nepal to ignore Indian concerns more confidently.
Therefore, the political and strategic message that flows from this deal is more relevant for India than the volume or sustainability of Chinese supply of oil to Nepal. The entire episode has also left a deep scar in the minds of policymakers in India and Nepal.
This article was originally published in BusinessLine.
The Indian reaction has led to notes of caution by some major countries. China, for instance, has suggested to Nepalese leaders that they should make the Constitution broad based.
The BBIN-MVA would enable seamless sub-regional connectivity, deeper integration on economic issues and people-to-people contact between the four counties.
