Revisiting Nepal's Foreign Policy in Contemporary Global Power Structure

Revisiting Nepal’s Foreign Policy
in Contemporary Global Power Structure

Revisiting Nepal’s Foreign Policy
in Contemporary Global Power Structure
Editor
Pramod Jaiswal
G.B. Books
New Delhi
Revisiting Nepal’s Foreign Policy in Contemporary Global Power Structure
Published by
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First published 2017
ISBN: 978-93-83930-72-2
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Dedicated
to
Aahana and Rayan
Contents
Foreword xi
Acknowledgements xv
Contributors xvii
Abbreviations xix
1. Survival of the Small States in World Politics:
Foreign Policy Strategy 1
Pramod Jaiswal
2. Strategic Autonomy: Nepal’s Perpetual Quest
for Change in the Face of Continuity 17
Rohit Karki
3. Foreign Policy of Nepal Towards India: A Small
State Perspective 35
Nazia Khan
4. Relations Between British India and Monarchial
Nepal: Treaty of Sugauli 53
Palu Joshi
5. The 1950 Indo-Nepal Treaty of Peace and
Friendship: Road to Review 65
Mahesh Acharya
6. Nepal-India Diplomatic Relations in a Historical Context 79
Kalpana Khanal
7. Rapprochement of India-Nepal Relations Since 2015 93
Aparna
8. Assertion or Abjuration: India-Nepal Water Relations 104
Shaista Tabassum
9. Democratic Trails and the Waterways: A Case
Study of Water Sharing Between India and Nepal 114
Piyali Dutta
10. Consolidating Nepal-China Engagement and
Emerging Challenges for India 133
Sangit Sarita Dwivedi
11. Nepal’s Deepening Engagement with China:
Challenges for India 148
Chanchal Kumar
12. Rise of China and India: Nepal’s Future in an Affluent
Neighbourhood 166
Monica Verma
13. Nepal and Bhutan - Contrasting Narratives of India’s
Contemporary Relations With Its Himalayan Neighbours 185
Divya Agnihotri
14. Understanding Nepal: Tracing the Predicament of
the Tibetan Refugees in the Country 202
Supreeta Mehta
15. Can Nepal Bridge India and China? An Assessment
of Nepal’s Transit Diplomacy 218
Gaurav Bhattarai
16. Triangular Cooperation Between India, Nepal,
and China: A New Norm of Foreign Policy of Nepal 230
Vijay Jayshwal
17. Unfolding Bangladesh-Nepal Relations in the Age of
Globalization: Current Scenario and Future Directions
From Bangladeshi Perspectives 250
Md. Abul Kashem and Md. Shariful Islam
18. Dynamics of Nepal-Bangladesh Relations 268
Binodkumar Singh
19. Nepal-Sri Lanka Relations: Challenges and Prospects 284
Gulbin Sultana
20. Nepal-Israel Relations: A Unique Partnership in Asia 305
Md. Afroj
21. Nepal and USA Engagement: Does it Have Strategic
Configurations? 318
Ipshita Bhattacharya
22. Canada-Nepal Relations: Opportunities and Challenges 336
Varsha Gautam and Charu Ratna Dubey
23. Nepal’s Relations with the Gulf Cooperation Council
Countries 349
Melissa Cyrill
24. Impact of Foreign Aid on Nepal 380
Sucheta Pyakuryal and Sean Lahav
25. Landlocked Nepal and SAARC 397
Chokey Namgyal Bhutia and Pravhat Lama
26. Mass Media Coverage, Public Opinion and Effect
on the Foreign Policy of Nepal: An
Anthropological Outlook 415
Prakash Upadhyay
Index
Foreword
Understanding of history is vital in the study and conduct of International
Relations (IR). European wars cover most of world history books. As a
student, teacher and practitioner of IR a thought had been stirring my mind
for long. So, I started teaching a course on “The New Asian Century” to
a post-graduate class of mostly diplomats, officials of the UN and other
international organizations in the Geneva School of Diplomacy and IR
with the following proposition: “With their long history of rivalry and wars
for so long, today a war between the British, French, Germans, Spanish,
Austrians and Italians is not only improbable but even unthinkable. Can
we say the same about the major Asian powers and the main drivers of
the new Asian Century? If not, why? If the Europeans can inter-connect
themselves through networks of tunnels and trains underneath the ocean
and across the Alps, aircrafts in the sky and remodel their statecrafts
through vertical and horizontal evolutions of their institutions, why can’t
the great trans-Himalayan civilizations that dominated the early world
start combining their traditional wisdom and modern knowledge for a new
stage of China-India relations in the 21st Century?”
Recent events in Doklam (Donglang) in Bhutan and Lipulekh in Nepal
some time ago confirm the Central Himalayas as one of the epicenters of
the post Cold War global paradigm flux. UN University’s Ramesh Thakur
and Oddny Wiggon’s writing “what happens in South Asia will surely
shape the contours of the global community in the decades ahead” not
only substantiates this prediction but highlights the need for new relations
between China and India as “benign neighborhood powers” not threats
to each other. China and India have suffered external subjugations and
experienced wars with neighbors. Today they are great powers able to
shape global policies, making lessons of history so important.
Nepal is between India and China; that is a fact of geography. China
already has a reserved seat at the global high table and India will soon
reclaim its place there; these are also objective realities. In such a context
how do Sino-Indian relations affect each other and small neighbor like
Nepal? The question does not end there. With new developments on both
sides of South Asia and the Indian Ocean, characterized by heightened
tensions in the Korean Peninsula, new developments in the East and South
China Sea, chaos in the Arab World and tension in the Gulf, how will other
global powers, particularly the current superpower in economic distress
and political stress but with influence on global affairs and technological
and military superiority, react to developments in the Central Himalayas?
As the two main drivers of the new Asian Century, pillars of the coming
global political, economic and strategic order stood eyeball to eyeball, not
only these questions acquire a new meaning but answers are even more
urgent. Not just because they are important for Nepal but also because the
bodily encounters among the Chinese and Indian soldiers along their 2,167
mile disputed border and their media wars at new levels may otherwise
signal a phase of heightened rivalry between two nuclear powers, affecting
the nature of the new global paradigm, course and sustainability of the
New Asian Century and undoubtedly peace and prosperity in the Trans-
Himalayas, Nepal and Bhutan naturally. Thank God wisdom prevailed this
time but a longer term modus vivendi must be found.
Because, in the global powerhouses of ideas debate is raising on the
rise of China under Communism and India shinning with Parliamentary
Democracy. How to fight a war but not in your own territory and how to
win it without your own citizens dying are the most serious questions in
the 21st Century art or science of war. For those interested only in power
and profit, untouched by the sufferings of peoples, what would be a bigger
prize than a war between the world’s most populous nations, largest
armies, growing economies with trillions in reserves?
Big or small, today Europeans exchange their peaks and plains to meet
current needs, open borders and share wealth to ensure future common
security and prosperity. Rather than saber rattling over the Himalayas,
making foes laugh, friends sad and neighbors nervous, China and India’s
leaders of wisdom and courage must resolve differences peacefully,
accommodating their own mutual concerns and interests and taking
neighbors in confidence. Neighbors too must help in confidence building
by keeping their own houses in order, making concerns clear without
“playing cards” and contributing with new ideas. Only then the highly
laudable new visions of Xi Jinping’s “win-win relations in community
of common destiny” and Narendra Modi’s “sab ka saath, sab ka bikash”
will come true and peoples of this region can live in peace, enjoying the
happiness of their own hard work and prosperity of neighbors.
Historically foreign policy has always been a vital tool of Nepali
statecraft, the real test of statesmanship. The nature of political changes
from a long history of monarchy to the Federal Democratic Republic
at such a crucial time and location make Nepal’s foreign policy even
more important and challenging. Relations with India and China as well
as between them offer both the most important opportunities as well
as challenges in the making of Nepal’s foreign policy and conduct of
diplomacy.
National interests guide State policies including foreign policy. But in
a globalized world many problems can be solved only with international
cooperation making national interests harmonization vital. The UN was
created to do that, but had it been effective would the world be in this
state? China and India together with their smaller neighbors can create a
new Trans-Himalayan foreign policy paradigm suitable for the 21st Century
based on national transformation through regional cooperation. This line
of thinking can be the salient new follow-up to this highly commendable
effort of a young scholar Pramod Jaiswal who has brought together many
others to reflect on the topic Revisiting Nepal’s Foreign Policy from many
different perspectives. This book is an important addition on Nepal’s
relations with her neighbors and the world as it passes through the Triumph
and Trauma of its internal political transition in a profoundly changing
region and the world.
Prof Shambhu Ram Simkhada
Former Permanent Representative to the
United Nations and Ambassador to Switzerland,
Member - High Level Foreign Policy
Review Task Force, Nepal Govt. 2017
Acknowledgements
The book aims to understand the complexities and contradictions in
Nepal’s foreign policy in the changing global power structure, where
Nepal’s both neighbours, China and India, will exercise tremendous power
and will have greater say in the global politics. It consists of 26 chapters
from young scholars from Nepal, India, Bangladesh, Pakistan and the US
discussing on Nepal’s foreign relations explaining Nepal’s foreign policy
strategy, its role in regional and multilateral forums and bilateral relations
with different countries.
This book is the outcome of the combined effort of the authors of various
paper incorporated in the book along with my personal contribution
as an editor. Here, I would like to thank all the authors Dr. Aparna,
Dr. Binodkumar Singh, Dr. Chanchal Kumar, Charu Ratna Dubey, Chokey
Namgyal Bhutia, Dr. Divya Agnihotri, Gaurav Bhattarai, Gulbin Sultana,
Ipshita Bhattacharya, Dr. Kalpana Khanal, Mahesh Acharya, Dr. Md. Abul
Kashem, Md. Afroj, Md. Shariful Islam, Melissa Cyrill, Monica Verma,
Nazia Khan, Dr. Palu Joshi, Piyali Dutta, Dr. Prakash Upadhyay, Pravhat
Lama, Rohit Karki, Dr. Sangit Sarita Dwivedi, Sean Lahav, Dr. Shaista
Tabassum, Dr. Sucheta Pyakuryal, Supreeta Mehta, Varsha Gautam, and
Vijay Jayshwal.
I would also like to put on record and acknowledge the support of many
scholars in completion of this book. My special thanks go to Dr. Shambhu
Ram Simkhada, Former Diplomat and Foreign Policy Expert from Nepal
for his constant support and encouragement and
Last but not the least; I would like to thank the publisher G.B. Books for
providing all help and support for publishing the book.
Contributors
Dr. Aparna, Assistant Professor, Centre for International Relations,
Central University of Jharkhand, Ranchi, India.
Dr. Binodkumar Singh, Research Associate, Institute for Conflict
Management, New Delhi, India.
Dr. Chanchal Kumar, Assistant Professor, Janki Devi Memorial College,
University of Delhi, New Delhi, India.
Charu Ratna Dubey, Research Scholar, Centre for Canadian, US and
Latin American Studies, School of International Studies, Jawaharlal Nehru
University, New Delhi, India.
Chokey Namgyal Bhutia, Research Scholar, Centre for South Asian
Studies, School of International Studies, Jawaharlal Nehru University,
New Delhi, India.
Dr. Divya Agnihotri, Assistant Professor, Manipal University, Jaipur,
India.
Gaurav Bhattarai, Strategic Affairs Analyst, The Development Institute,
Kathmandu, Nepal.
Gulbin Sultana, Research Assistant, Institute for Defence Studies and
Analyses, New Delhi, India.
Ipshita Bhattacharya, Research Scholar of International Relations and
History, Barkatullah University, Bhopal, India.
Dr. Kalpana Khanal, Assistant Professor of Economics and Finance,
Nichols College, Dudley, Massachusetts, USA.
Mahesh Acharya, Journalist, BBC Nepali Service, Kathmandu, Nepal.
Dr. Md. Abul Kashem, Professor and Chair in the Department of
International Relations, University of Rajshahi, Bangladesh.
Md. Afroj, Research Scholar at Centre for West Asian Studies, Jamia
Millia Islamia, New Delhi, India.
Md. Shariful Islam, Assistant Professor in the Department of International
Relations, University of Rajshahi, Bangladesh.
Melissa Cyrill, Research Scholar, Centre for West Asian Studies, School
xviii Revisiting Nepal’s Foreign Policy in Contemporary Global Power Structure
of International Studies, Jawaharlal Nehru University, New Delhi, India.

Monica Verma, Research Scholar, Department of International Relations,
South Asian University, New Delhi, India.
Nazia Khan, Research Scholar, Centre for South Asian Studies, School
of International Studies, Jawaharlal Nehru University, New Delhi, India
Dr. Palu Joshi, Assistant Professor of Political Science, Kanoria PG
Mahila Mahavidyala, Jaipur, India.
Piyali Dutta, Assistant Professor, Department of Political Science,
Prafulla Chandra College, Calcutta University, Kolkata, India.
Dr. Prakash Upadhyay, Associate Professor of Anthropology, Prithvi
Narayan Campus, Tribhuvan University, Nepal.
Dr. Pramod Jaiswal, Founder of Nepal Institute for Strategic Analyses,
(NISA) and Executive Director of Nepal Institute for International
Cooperation and Engagement (NIICE), Kathmandu, Nepal.
Pravhat Lama, Research Scholar, Centre for East Asian Studies, School
of International Studies, Jawaharlal Nehru University, New Delhi, India.
Rohit Karki, Faculty at the Master’s Programme in International Relations
and Diplomacy, Tribhuvan University, Kathmandu, Nepal.
Dr. Sangit Sarita Dwivedi, Assistant Professor, Department of Political
Science, Bharati College, University of Delhi, India.
Sean Lahav, Department of Political Science and Public Administration,
University of North Florida, Jacksonville, Florida, USA.
Dr. Shaista Tabassum, Professor, Department of International Relations
University of Karachi, Pakistan.
Dr. Sucheta Pyakuryal, Department of Political Science and Public
Administration, University of North Florida, Jacksonville, Florida, USA.
Supreeta Mehta, Research Scholar, Department of International Relations,
Jadavpur University, Kolkata, India.
Varsha Gautam, Research Scholar, Centre for Canadian, US and Latin
American Studies, School of International Studies, Jawaharlal Nehru
University, New Delhi, India.
Vijay Jayshwal, Advocate at Supreme Court of Nepal and Lecturer,
Kathmandu School of Law, Kathmandu, Nepal.
Abbreviations
ADB Asian Development Bank
AIIB Asian Infrastructure Investment Bank
ASA Air Service Agreement
BASIC Brazil, South Africa, India, China
BBC British Broadcasting Corporation
BBIN Bangladesh-Bhutan-India-Nepal
BC Before Christ
BCIM Bangladesh-China-India-Myanmar
BIMSTEC Bay of Bengal Initiative for Multi-Sectoral Technical
and Economic Cooperation
BJP Bharatiya Janata Party
BRICS Brazil, Russia, India, China, South Africa
BSA Bangladesh Shilpakala Academy
CA Constituent Assembly
CAT Convention against Torture
CCOMPOSA Co-ordination Committee of Maoist Parties and
Organizations of South Asia
CEA Canadian Executive Agency
CEDAW Convention on Elimination of all forms of
Discrimination against Women
CIDA Canadian International Development Agency
CIRDAP Centre of Integrated Rural Development for Asia and
Pacific
CNI Confederation of Nepalese Industries
CNN Cable News Network
CPA Comprehensive Peace Agreement
CPEC China-Pakistan Economic Corridor
CPI-Maoist Communist Party of India-Maoist
CPN-M Communist Party of Nepal (Maoist)
CPN-UML Communist Part of Nepal- Unified Marxist Leninist
CRC Convention on the Rights of the Child
xx Revisiting Nepal’s Foreign Policy in Contemporary Global Power Structure
CSCs China study centers

CSH Child Survival and Health
CTA Central Tibetan Administration
DA Development Assistance
DCCI Dhaka Chamber of Commerce and Industries
DFID Department for International Development
DoFE Department of Foreign Employment
DPR Detailed Project Report
EPG Eminent Persons Group
ESF Economic Support Funds
EU European Union
FAO Food and Agriculture Organization
FBCCI Federation of Bangladesh Chambers of Commerce and
Industry
FDI Foreign Direct Investment
FNCCI Federation of Nepalese Chambers of Commerce and
Industry
FOC Foreign Office Consultations
FTAs Free Trade Agreements
G7 Group Seven
GCC Gulf Cooperation Council
GDP Gross Domestic Product
GEFONT General Federation of Trade Unions
GHG Green House Gas
GoN Government of Nepal
HIT Highways, Information Infrastructure and Transmission
lines.
HIV/AIDS Human Immunodeficiency Virus/ Acquired Immune
Deficiency Syndrome
HVDC High Voltage Direct Current
IBN Investment Board of Nepal
ICC International Chamber of Commerce
ICCPR International Covenant on Civil and Political Rights
IDRC International Development Research Centre
IDSA Institute for Defence Studies and Analyses
Abbreviations xxi
IEA International Energy Agency

IFI International Financial Institutions
IGO Inter-Governmental Organization
ILO International Labour Organization
IMET International Military Education and Training
IMF International Monetary Fund
INGO International non-governmental organization
INR Indian Rupees
IOR-ARC Indian Ocean Rim Association for Regional Cooperation
IR International Relations
JEC Joint Economic Commission
JICA Japan International Cooperation Agency
KBIRD Karnali Bheri Integrated Rural Development
KLA Kamtapur Liberation Army
KTUF Kuwait Trade Union Federation
LDC Least Developed Country
LEA Local Executing Agency
LGBT Lesbian, Gay, Bisexual and Transgender
LLDCs Land-locked Developing Countries
LTTE Liberation Tigers of Tamil Eelam
MEA Ministry of External Affairs
MFA Ministry of Foreign Affairs
MNC Multinational Corporations
MoCTCA Ministry of Culture, Tourism and Civil Aviation
MoLE Ministry of Labour and Employment
MoU Memorandum of Understanding
MPAT Multinational Planning Augmentation Team
MW Megawatt
NAASP New Asian-African Strategic Partnership
NAFA Nepal Academy of Fine Arts
NAM Non-Aligned Movement
NATO North Atlantic Treaty Organization
NBBF Nepal Bangladesh Business Forum
NC Nepali Congress
NCCN National Construction Company of Nepal Ltd.
xxii Revisiting Nepal’s Foreign Policy in Contemporary Global Power Structure
NDFB National Democratic Front of Bodoland

NGO Non Governmental Organization
NLDC Non-least Developed Country
NOC No Objection Certificate
NPR Nepali Rupees
NREGA National Rural Employment Guarantee Act
NRNA Non-Resident Nepali Association
NUG National Unity Government
OBOR One Belt One Road
ODA Official Development Assistance
OHCHR Office of the High Commission of Human Rights
OPEC Organization of the Petroleum Exporting Countries
PDA Power Development Agreement
PLO Palestine Liberation Organization
PPP Purchasing Power Parity
PRC People’s Republic of China
PTA Power Trade Agreement
RICs Refugee Identification Cards
RMB Renminbi
RNA Royal Nepal Army
RPG Role Playing Games
SAARC South Asian Association for Regional Coperation
SAFTA South Asian Free Trade Agreement
SAPTA South Asian Preferential Trade Agreement
SCO Shanghai Cooperation Organization
SDGs Sustainable Development Goals
SLR Srilankan Rupees
SPA Seven Party Alliance
TAR Tibetan Autonomous Region
TBT Technical Barriers to Trade
TEPC Trade and Export Promotion Center
THSAEC Trans Himalaya Security and Economic Cooperation
UAE United Arab Emirates
UCPN (Maoist) Unified Communist Party of Nepal (Maoist)
UK United Kingdom
Abbreviations xxiii
ULFA United Liberation Front of Assam

UN United Nations
UNAID United Nations Programme on HIV and AIDS
UNDP United Nations Development Program
UNESCO United Nations Educational Scientific and Cultural
Organization
UNFPA United Nations Population Fund
UNGA United Nations General Assembly
UNHCR United Nations High Commissioner for Refugees
UNICEF United Nations Children’s fund
UN-OHRLLS United Nations Office of the High Representative for the
Least Developed Countries, Landlocked Developing
Countries and Small Island Developing States
UP Uttar Pradesh
USA United States of America
USAID United States Agency for International Development
USD United States Dollar
USOM US Operation Mission
USSR Union of Soviet Socialist Republics
VPN Virtual Private Network
WFP World Food Program
WHO World Health Organization
WREN Women’s Rural Entrepreneurial Network
WTO World trade organization
1
Survival of the Small States in World
Politics: Foreign Policy Strategy
Pramod Jaiswal
Abstract
F oreign Policy consists of self-interest strategies chosen by the state

to safeguard its national interests and to achieve its goals within the
international relations milieu. It is a plan of action adopted by a nation with
regards to its diplomatic dealings with other countries. Foreign policies
are established as a systematic approach to deal with issues that may
arise with other countries. The formulation of foreign policy is influenced
by domestic considerations, the policies and behaviour of neighbouring
and other states, or plans to advance specific geo-political designs.
Since national interests are paramount, foreign policies are designed by
the government through high-level decision-making processes. National
interest can be accomplished as a result of peaceful cooperation with other
nations, or through exploitation. Usually, the creation of foreign policy is
the job of the head of government and the foreign minister (or equivalent).
In some countries the legislature also has considerable influence. Geo-
politics of the nation also plays an important role in formulating the
foreign policy of a nation.
The purpose of this chapter is to understand the behaviour of small
states in world politics, their foreign policy formation, and strategies to
survive and benefit from the international system. The chapter further
2 • Revisiting Nepal’s Foreign Policy in Contemporary Global Power Structure
analyzes the behaviour and objectives of small nations, like Nepal and
others, in international politics.
International politics is the realm wherein great powers are continually

looking for opportunities to expand their hegemony whenever and
wherever possible (Waltz, 1979). In such a world, small states lying on the
periphery of great powers are subject to intense pressures leading to limits
on their sovereignty.
Objectives of Foreign Policy in International Relations

Foreign policy refers to the ways in which the central governments of
sovereign states relate to each other and to the global system to achieve
various goals or objectives. It is a means by which a country safeguards
its national interests, security, and achieves its economic prosperity,
sovereignty and ideological goals. These multi-dimensional objectives
can be acquired either through peaceful cooperation with other states
or aggression, war, and exploitation. While maintaining relations with
other states, a state is influenced by numerous factors, both domestic
and international. Continuous interaction between internal and external
environment corrects any imbalances and helps a country in achieving
its goals. The internal condition of a country includes its territorial size,
population, resources, level of economic development, and political system.
Along with these, geo-political location, topographical characteristics,
and security perceptions also constitute dimensions that influence foreign
policy. These variables influence a country for its inclination to external
environment in the form of isolation vs. participation and non-alignment
vs. alignment. In addition to this, motivational attributes, leadership
capability, and perceptions are some other elements which influence
foreign policy objectives (Hermann, 1984). Any foreign policy adopted
by a state involves a selection of objectives, mobilization of means of
achieving those objectives, and the use of resources in the implementation
and pursuit of those objectives (Lentner, 1974).
The analysis of foreign policy, the historical background, and
accumulated political experience of states constitutes what Macridis calls
the ‘elements of foreign policy’ in terms of which foreign policy ‘patterns’
are shaped (Macridis, 1989). Within those frameworks it is worthwhile to
Survival of the Small States in World Politics: Foreign Policy Strategy • 3
examine the foreign policy-making institutions and the role of political

elites in the shaping and implementation of foreign policy objectives.
Macridis splits foreign policy into elements and the processes. Patterns
include goals to be achieved and mechanisms by which those goals are
attained.
Leopold von Ranke emphasized the primacy of geography and external
threats in shaping foreign policy, but later writers have highlighted
domestic factors. James N Rosenau, the stalwart of foreign policy studies,
states that:
The goals of foreign policy are a function of the processes by which

they are formulated, just as these, in turn, are influenced by the
objectives which were sought in the past and the society’s aspiration
for the future (Rosenau, 1969). History is an important guide to the
conduct of international relations and the past is often the mirror in
which the future is reflected.
According to George Modelski, foreign policy is ‘the system of activities

evolved by communities for changing the behaviour of the other states
and for adjusting their own activities to the international environment’
(Modelski, 1962). The foremost task of foreign policy, in his view,
‘must be to throw light on the ways in which states attempt to change,
and succeeded in changing, the behaviour of other states’ (Mahendra
Kumar, 1978). While analyzing this definition, it must be emphasized
that the capabilities of big and small states to influence other actors and
the need to adjust in accordance with the changing environment can vary
tremendously.
Small States and International Politics

The foreign policy of smaller states has never been much of a concern to
mainstream theories of international relations, especially for the Realist
School. Since smaller states are positioned very low in the structural
ordering of international system, their influence in international relations
is at best considered to be minuscule. This simplistic logic was briefly
questioned as the emergence of non-alignment, prompted mainstream
theorists in the 1960s and early 1970s to relook at the question and attempt
a theorisation of the behaviour of small states. However, the fading of the

Non-Aligned Movement gave weight to the mainstream argument of ‘small
states having no bearings on international system’. This line of thought is
amply debated in the scholarship and critical theorists have argued that the
‘West’ has had an extractive relationship with the ‘Rest’, and therefore, the
‘Rest’ are peripheral figures in the core of Western practices of domination
and its conceptions of world order. But even critical theorists give little
independent space to these small states. In their discourse on imperialism,
they too are complicit in robbing the smaller states of any autonomous
decision-making processes.
The foreign policy of small states has the primary aim of ensuring
survival and strengthening the position of the state in the international
environment. Bigger states have similar objectives but the small state is
often faced with problems of viability in terms of economics and politics
and the vulnerability of a political, economic and military nature from its
larger neighbours.
The small state is largely ineffectual in the international system if it relies
on isolationism. By itself, the small state usually has very little influence
in the international arena and therefore it is usually through international
organizations that small states try to promote attitudes conducive to their
survival, primarily by developing their status as independent sovereign
nations. The attitude of small states towards international organizations
have been explained as providing a sense of formal equality, a degree of
security from membership, and the possibility that such membership may
constrain other larger states from threatening actions. Though this sense of
security may be more psychological than real, such activities help small
states to appear significant and provide them a role, however limited, in
world affairs. It seems that it is the development of the nation and a role
in the international system that is recognized by other states that is more
significant than the quest for security that membership may not actually
be able to provide.
Huldt has come with seven categories on the behaviour of small states
(Rogers, 2007). First, small states tend to behave in an anti-balance manner.
When the balance of power in international relations is threatened, the
major powers try to support the weaker side in conflict so as to maintain
the power balance. Small states, on the other hand, tend to side with what
they consider the stronger, winning side and often desert an ally who is
deemed weak, since they cannot afford to be on the losing side. Second,
the foreign policy of small states has a short-term and geographically
limited perspective in comparison to the major powers, whose foreign
policy decisions are global and long-term. Third, small states have a
legalistic-moralistic attitude towards international affairs and support the
use of international rule of law. Huldt states that a legalistic-moralistic
attitude in international relations not only is adopted for idealistic
reasons but also represents a realistic foreign policy alternative, since
small states cannot afford to behave immorally. Fourth, international
organizations, such as the League of Nations and the United Nations, are
very important for small states, since it is through these organizations
that acceptable international rules of law can be adopted. Fifth, small
states often function as mediators in international conflicts. Since small
states generally do not have direct interest in a crisis involving one or
more major powers, they make good arbitrators. Sixth, the foreign-policy
decisions of small states are more often not related to security questions.
Small states can choose to join defense alliance or remain neutral and,
seventh, a small state is more vulnerable and has fewer alternatives than
a major power.
The seven categories summarized by Huldt provide a rough idea
on how small states behave and lack validity. When we make closer
observations on the behaviour of small states we realize that several of
Huldt’s categories depend on the situation of a particular state and that the
idea can be contested. For instance, anti-balance behaviour, short-term and
geographically limited goals, a legalistic-moralistic attitude, and faith in
international organizations–depend on whether or not the state in question
perceives an external threat. If the state feels threatened then the immediate
goal would be to side with a partner who could provide protection. On the
other hand, if threat is not perceived, then the small state can afford to
adopt a legalistic or moral attitude and support long-term solutions offered
by international organizations. Whether vulnerable small states join an
alliance or remain neutral depends on the available military and economic
strategy options, but small states can have an aggressive and expansive
foreign policy too. Even vulnerability and alternatives for small states
depend on how they formulate their foreign policy options.
The buffer states are a case in point where the smaller states enjoy a
degree of independent decision-making, vis-à-vis, alignment with great
powers. This comes with a ‘reverse security dilemma’. This indicates that
the measured increase in security of a buffer state gives a sense of greater
security to the great power, which has helped the smaller state gain those
capabilities. The more vulnerable a buffer state is, the more vulnerable
the neighbouring great power feels. It could mean that the vulnerable
buffer state is at risk of being enticed by the rival great power. It also
increases the incentive for the rival power to either expand or intervene in
the buffer state. Ultimately, it becomes a contest between the two hostile
great powers over ‘who pays more’.
Since the power differential of both great powers, namely, the buffer
state is huge they do not consider such state as a direct security threat.
The buffer state is a cushion against the other great power and it can only
become a threat if it aligns with the rival power. Preventing any possible
alliance poses a dilemma for great powers; it cannot issue threats lest the
buffer state is pushed further to align with the rival power. An attack on a
buffer state, historically, has triggered a ‘great power’ war. Both the World
Wars started when the fragile balance was broken with one of the states
attacking the buffer between two alliances. The only way to reduce one’s
own security threats is to entice such a buffer state with benefits. These
benefits end up in satisfying some of the interests of increasing its power,
though never so much that it can challenge any of the two great powers.
The choices with the buffer state, on the contrary, are more. It has a choice
to align with any of the two great powers or remain neutral. As against
the balance of theory argument, neutrality can be a virtue. The historical
record suggests that neutrality has been a fairly successful strategy and has
paid rich dividends. While a buffer state is relatively secure from attack
from either side, neutrality allows it to benefit economically from both
sides. Such profit is not only about security but also economic. Buffer
states also play the rival powers against each other, effectively setting both
great powers into a constant race for winning over the buffer state. Nepal
can be taken as such an example.
Small and buffer states, thus, can influence international politics in a

much more profound manner than they are usually given credit for because
they can tilt the balance in great power rivalry. Not all buffer states have
realized this strategy, but those who have, have taken advantage of their
geographical positioning.
Foreign Policy of Small States

Most of the research about small states has highlighted their drawbacks in
international relations. Books by Benedict (1967), Plischke (1977), Jalan
(1982), Misra (1988) specifically use the word ‘problem’ in their titles
and other books by Blair (1967), Allen (1980), Diggines (1985), Harden
(1985) and Dommen and Hein (1985) also highlights their drawbacks.
There are few books and authors that have highlighted the positives of
being a small state and describe their advantages in international politics.
Obviously, there are problems that small states face as they have small-
skilled workforce, less wealth of the state, and many more (Swain, 1991) .
Small and buffer states have hardly been studied in International Relations.
Not a single book looks at these states from a broader theoretical perspective.
However, there is some theoretical literature on studying the behaviour of
small powers. Small powers and small buffer states are different conceptual
entities but they do have similarities. All buffer states are small powers in
international system and share common ground in terms of the ‘Lilliputian
dilemma’ (Keohane, 1969), they face. In one of the earliest systematic
studies on small power behaviour, Annente Baker Fox (1959) studied the
behaviour of five small power states during the Second World War. In The
Power of Small States, she inquired into how the governments of small and
militarily weak states resisted the pressure of great powers in the times of
crisis. While some of the smaller states could convince the great powers of
their neutrality others could not. Fox pegs the successes to diplomatic skills,
but recognizes that geo-strategic location affects the chances of small states
having an advantage or disadvantage in making use of diplomacy. However,
she does not extend this inquiry and explain how geographical positioning
structurally shapes a country’s response.
Neumann and Gstohl (2006) in Small States in International Relations
trace the literature on small states and argue that their behaviour has not
been studied much, because of the focus of the discipline of International

Relations, especially of the realist school, has been on Great Powers.
They argue that small states have their own dilemmas, which is manifest
in their essay ‘Lilliputians in the Gulliver’s World?’ in Small States in
International Relations. Robert Keohane (1969), in fact, uses the term
‘Lilliputians’ Dilemma’ and argues that small states face a dilemma
between balancing, band-wagoning, and neutrality. Similarly, Rothstein
(1968), David Vital (1967) and Lawrice Martin (1967) have tried to study
small power behaviour with respect to what was seen as an emerging
coalition of small powers during their times—Non-Alignment. All these
scholars agreed that it was an attempt by these states to move clear of
great power rivalry and increase their bargaining strength. While the
works broadly categorize non-aligned states in Third World, they offer
conceptual rather than geographical pointers to the dilemmas that these
small powers face.
Christene Ingerbristen (2006) offers a novel thesis. Based on her case
study of the Scandinavian countries, she argues that these states tend to be
‘norm entrepreneurs’, which gives them standing as well as security in the
international system. The larger applicability of this approach is doubtful,
since outside of the tranquil waters of Europe, this certainly does not seem
to be the case has a different take on the foreign policy of small states. He
argues that such states tend to rely on their perceptions of the past. While
bigger powers might pursue an adventurist or expansive policy and seek
goals other than security, smaller states have no other option but to ground
their perceptions of their security in the experience of their successes or
failures of the past. ‘The shadow of the past’ argument has relevance for
buffer states. This hypothesis could be interpreted and argued that buffer
states with relative foreign policy successes in past tend to consistently
stick to their alliance patterns of balancing, bandwagoning, or neutrality;
while states which have had failures tend to be inconsistent and keep
shifting their alliance patterns. This simplification is problematic since
many buffer states tend to shift alliances not because of preferences of the
past but keeping in sight possible profits in the future. A past relationship
may have been fruitful, but if the future seems brighter in alliance with
another power, the buffer state would tend to shift.
The theoretical stream that informs most of these studies is realism

and its theories of alliance behaviour of states. A problem with imputing
the structural variant of realism, epitomized by Kenneth Waltz (1979),
to analyze the foreign policy of a specific type of state, here the buffer
state, is that realist theory is agnostic about what foreign policies states
follow. Structural realism becomes all the more difficult to apply to a study
of geography as a factor in diplomacy. Nevertheless, within this broad
paradigm, various realists have made differing claims about the alliance
pattern of states. One can juxtapose them against each other and measure
how well they stand. Kenneth Waltz stands closer to the realist tradition of
balance of power epitomized by Morganthau (1949), though they differ on
the reasons for states pursuing balance. Waltz offers structural explanations
while Morganthau imputes domestic reasons of maximization of power.
Nonetheless, both make an argument that weak states tend to balance
against the strong for they fear the strong may prey on the weak. Waltz,
highlights exceptions, when small states bandwagon if they feel that
balancing against the strongest could imperil their existence. Nonetheless,
taking the broad logic of the balance of power theory, buffer states would
be expected to ally with the lesser of the two great powers. In practice, this
is rarely seen. Nepal and Myanmar are buffers between India and China,
but none of the two allies with Delhi to balance against Beijing, the more
powerful state. If at all, the buffers exhibit shifting patterns.
A reformulation of the balance of power argument is the ‘balance
against threat’ theory by Stephen Walt (1987). Walt argues that states
ally not against ‘power’ but against ‘threat’. He advances four variables
to determine the threat. These are as follows: aggregate capability,
geographical proximity, offense-defence balance, and perceptions. This
Theory is robbed of its structural intent by the highly subjective nature of
what constitutes the offense-defence balance and perceptions. The making
the argument reductionist and leading to post-facto rationalization. It is a
difficult proportion for a theorist to guess which side seems threatening. In
case of India and China, one can not really make a conclusive argument as
to which side looks more threatening to the buffer states.
A third stream, which emerged from historian Paul Schroeder’s (1994)
critique of Waltz, says that states often bandwagon and not balance. This
would suggest Nepal would ally with China to appease it. Finally, Randall
Schweller (2006) argues that states are often not status-quoists as defensive
realists argue. States seek not only security but also opportunities for
profit, and grab them whenever they exist. There are certain conceptual
problems too with this argument. It is important to delineate and define
the scope of what is meant as ‘profit’; else it could mean anything from
military power to gaining the normative high ground. Furthermore, when
Schweller talks about bandwagoning, his focus is on states that bandwagon
with the revisionist power. Apart from a strategy of appeasement, he does
not seem to say much about bandwagoning with the status-quoist power.
Schweller’s predicted behaviour appears compatible with the alliance
patterns of the South Asian buffer states, but it is hardly generalizable for
other buffer states.
Another stream of literature comes from the Innenpolitik School which
focuses on the domestic variables. Mainstream constructivists (Wendt,
1992; Ruggie 1998), cultural theorists (Lebow, 2009) and democratic peace
theorists (Doyle, 1997) focus on domestic features and questions of identity,
culture, and norms. However, domestic variables alone cannot explain
the alliance pattern of buffer states. They can explain differences but not
similarities. The approach of this research is to integrate both variables and
present a discernible pattern and explanation of how buffer states behave.
Relationship Between Small and Big States

There are problems in defining what a small state is. Researchers have
tried to define small states in terms of territorial size, population, resources
and wealth, government control, and the capacity to enter into relations
with other states. There are disagreements on the further division of small
states into micro-states, mini-territories, and small islands.
Rothstein has limited small states with the concept of small powers and
states that ‘.....feel that they are potentially or actually threatened by the
policies of the Great powers’ (Rothstein, 1968). He further mentions that
in a situation of threat the small powers, in contrast to great powers, must
rely on outside help as they have little time to correct mistakes, have a
narrow safety margin, and that the leaders of the state see their weakness
as essentially unalterable.
Rothstein’s definition of a small power seems outdated in today’s

globalized world as the majority of states would be considered as small
powers, as very few countries are able to maintain an effective deterrent
to external threat that does not require external assistance. Thus, such a
broad and vague definition does not clarify how small states have used
foreign policy in their survival, as the concept of insecurity is rather all-
encompassing and does not provide any form of distinguishing variable
between small states (Swain, 1991). Rather it is necessary to examine the
actual behaviour of states in the international environment and this has
been the purpose of this chapter.
In international relations, smaller or weaker powers can balance
against stronger powers primarily, in two ways. These are by an effective
mobilization of its internal resources so as to significantly increase its
power, or through external alliances with other, stronger, powers. Three
types of external alliances exist at the international level. The first is an
unequal bilateral alliance in which weak states ally with a more powerful
state, usually a great power. The second is an equal bilateral alliance,
where states of more or less equal strength form an alliance. The third,
mixed multi-lateral alliance has a number of weak states as well as great
or strong powers, like the Warsaw Pact.
Protection against military threat is not the only reason for weak states
seeking military ties with big powers. Some weak countries seek military
assistance for offensive reasons too (Singer, 1972). An example is Israel,
which sought and received military support for its aggressive designs on
Arab lands. Weaker states may seek alliance, as neo-liberals would argue,
for increasing their wealth. Nepal could be considered as such a nation. It
does not feel threatened by external forces, but it seeks partnerships for
economic benefits. Further, weak countries may prefer military ties with
more than one power to reduce their dependence on major powers. This
pattern is more visible in an international system that is loosely multi-polar.
But it is not always easy for a country to diversify its military suppliers.
If a weak state tries to build military ties with a new major power, there is
always the risk that its older patrons may retaliate by discontinuing support.
The logic of military ties between powerful and weak states lies in their
perception of a common enemy, against whom they require mutual or
collective protection. During the 1950s communist states saw international

capitalism or ‘neo-imperialism’ as a direct threat to the continued existence of
their regimes, and turned to the Soviet Union for military assistance. Multi-
lateral defence treaties against mutually perceived enemies such as the North
Atlantic Treaty Organization (NATO), the Warsaw Pact, and the South-East
Asian Treaty Organization (SEATO) (Lovell, 1970), were concluded under
the umbrella of ‘collective security’ against a common enemy. Here, the
major power provides military assistance to the weaker state and support the
regime in office against internal and external threats. Without the existence
of an effective military, the weaker countries would be threatened by their
neighbours. Faced with the rising cost of such assistance, older powers such
as France and Britain withdrew from stewarding such alliances, pushing
weaker countries towards the United States and the Soviet Union. Other
countries entered limited military agreements with both the United States
and the Soviet Union to avoid taking sides. India was a country that had long
followed this policy (Singer, 1972).
While realists and neo-liberals argue that weaker states benefit from
alliances or partnership with major states, Marxist and neo-Marxists of
the Dependency School claim that the weaker powers are exploited. The
relationship is extractive, with massive outflows of resources from weaker
countries. Stronger powers use political, military, economic, cultural and
normative tools to exploit weaker powers and perpetually keep them
underdeveloped.
Diplomacy can be used by stronger powers in numerous ways to coerce
or entice weaker powers. To rephrase Clausewitz, ‘Diplomacy is war
by other means.’ The diplomatic muscles of strong powers are enough
to discipline the behaviour of weaker states, and weaker powers can
manoeuvre space for themselves.
Big-power diplomacy often uses coercive means to impose on smaller
states. Other instruments of powers are also employed by big power
(Reynolds, 1971). The Truman administration used attractive rather than
coercive instruments of power in Yugoslavia to prevent that country from
being reabsorbed by the Soviet bloc (Singer, 1972). Truman’s alternatives
were to allow the Stalinists to topple the Tito government, or to provide
assistance to Tito on markets, supply of finished goods, and technical and
military assistance. In addition to this, language and ideology have been

extremely effectively used by countries like the Soviet Union and China
as ‘attractive’ instruments of power (Macridis, 1972). The Communist
ideology is followed in several weaker underdeveloped countries. There
are inherent dangers in using nationalism as an instrument of policy.
Nationalism can easily deteriorate into xenophobia and lead countries into
foreign adventures in the name of the nation, a path that is detrimental to
the well-being of the state. The case of Nazi Germany and of Hirohito’s
Japan can be cited in this regard.
Economic power is another instrument of foreign policy. Arguably, it is
the economic dominance of the United States that led to its rise as a global
hegemon (Rajamohan, 1982). The Chinese used aid as a first step towards
establishing diplomatic relations with several African and Asian countries.
Other countries like Canada, Australia, Sweden, and Switzerland also
utilized their economic aid to underdeveloped countries to open avenues
for foreign trade. The prestige value of modern military equipment for
many weak countries has also tied them to at least one of the major powers,
even though some have sought military assistance from multiple countries
to reduce their dependence on a single power.
The economic and military weakness of a small state and the potential
for political instability can be a source of bargaining power if a great power
perceives the territory of the small state to be of strategic importance.
As Nepal has occupied a strategic position between India and China, it
has been able to derive assistance from both neighbours. A small state
can sometimes act with impunity against a great power. The response of
the great power will be determined primarily by the type of threat, the
degree of its active involvement, and the risk that retaliatory action might
adversely affect relations with other states in the region. Barstson, 1971
For example, the conflict between the United States and Chile, Ecuador,
and Peru over the latter group’s claim to a 200-mile fisheries jurisdiction
did not spill over to other sides of United States relationships with those
countries. Small states can also use international organizations to mobilize
support for their policies by invoking debate and criticism.
The dangers of alliances with great powers were demonstrated by the
events of the 1940s, as the Soviet Union occupied eastern Europe and
forced treaties upon the Baltic states. In unequal treaties like these, issues
of maintaining the sovereignty, independence, and integrity of the weaker
states were secondary. Even formal treaties mean little during times of
imminent danger for the smaller power; declarations of support do not
necessarily guarantee support. During Cuban Missile crisis, for instance
Russian reduced the sugar quota it had promised Cuba. Thus, weak states
are at risk from opaque commitments promised from treaties with great
powers (Barstson, 1971).
Weak states also attempt to win over a great power to their side by
mobilizing public opinion in the stronger state. The weak states also try
to penetrate domestic system of great power. But it is easier for the great
power to penetrate the weak states than the other way around (Rosenau,
1971). This is a ‘weapon of the weak’. The Balkan Slavic states, especially
Serbia, continuously made efforts to harness the Pan-Slavic sentiments of
the Russian public. The Poles and the Czechs campaigned in the United
States and elsewhere during the First World War for support in establishing
the Polish and the Czech states.
There is also a great danger that the great powers would attempt
to secure a permanent presence in the territory of the weaker state
(Handel, 1981). Examples include South Korea, Taiwan, and South
Vietnam. Physical distance does not necessarily save a weak state from
encroachment by a great power as often the protector would not be able
to provide military assistance in case of an attack, as in the case of Cuba,
which was unable to gain Soviet assistance in times of crisis. The weak
state may face threats from great powers for allowing rivals establish
their bases. Many foreign troops on its soil pose a threat to the cultural
integrity of the state. During the Second World War, the troops of Great
Britain, and later of the United States, stationed in Iceland influenced the
local culture.
Hans Morganthau has warned that great powers do not allow a weak
ally to be involved in decision-making processes (Handel, 1981). Weak
states also manipulate a great power in the direction of their own interests.
Weak states are assured protection or material aid in time of need, but
have to render services which limit its freedom of action and decisions
on various international issues. In international situation, there are an
informal relations existing between patrons and clients. For example,

India has tried to exert political and economic pressure to make Nepal its
client, leveraging the fact that Nepal’s transit trade is through India and
90 per cent of its foreign trade is with India (Upreti, 2001). Therefore,
on several occasions, the Government of Nepal is forced to New Delhi’s
advice. Even on matters of establishing diplomatic relations with China,
Nepal has followed Indian advice and regulated its diplomatic relations
through the Indian Embassy (Khadka, 1997).
References
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Handel, Michael (1981), Weak states in International System, England: Frank Eass
and Company Ltd.
Hermann, Ricardo. K. (1984), “Perceptions and Foreign Policy Analysis”, in Donald
A. Sylvan and Steve Chan, Foreign Policy Decision Making, Perceptions,
Cognition and Artificial Intelligence, New York: Prager.
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Politics”, International Organization, 23: 291-310.
Khadka, Narayan (1997), Foreign Aid and Foreign Policy: Major Powers and Nepal,
New Delhi: Vikas Publishing House.
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Lal Agarwal and Company.
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Macmillan Ltd.
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and the Social Constructivist Challenge”, International Organization (CUP),
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of Power, Princeton: Princeton University Press.
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Press, Collier Macmillan Ltd.
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2
Strategic Autonomy: Nepal’s
Perpetual Quest for Change in the
Face of Continuity
Rohit Karki
Abstract
W ith the promulgation of the Constitution in September 2015, Nepal

confronted unprecedented challenges and opportunities for its
inclusive development, political stability, sovereignty, and territorial
integrity. This chapter presents that, despite Nepal being a sovereign nation,
Nepalese foreign policy remains primarily responsive and characterized
by relative caution. The chapter begins by considering how geo-strategic
location has constrained Nepal’s foreign policy choices. It particularly
examines Nepal’s unattained autonomy. Evaluating the constrains in
the conduction of Nepal’s foreign policy, it concludes that autonomy in
Nepal’s foreign policy has been severely undermined through the use
of combined tactics, that is, India’s coercive diplomatic efforts, regime
change and ensuing blockades. This should be constructed as imposing
foreign policy tool deployed by India to protect its strategic, security, and
political interests in Nepal. Nepal’s abilities to overcome such combined
foreign policy approach have been jeopardized due to the lack of its own
institutional and political capacities, thereby thrusting Nepal’s autonomy
at stake. The paper further provides that Nepal’s quest for change in
foreign policy is contingent on its ability to institutionalize autonomy in its
foreign policy. Ultimately, Nepal’s success will depend not just on coping
with the challenges in the regional and international environment, but on

developing ‘strategic autonomy’ in conduction of its foreign policy in the
twenty-first century world.
Introduction
The geo-strategic location of Nepal and its internal instabilities has led
it to be continuously exposed to external threats. Due to the lack of
infrastructural or coercive capacity to resist outside interference, Nepal,
since its unification as a nation-state has faced insurmountable pressure
to all the successive regimes for the conduction of its independent foreign
policy. When the British took over the Indian sub-continent, initially,
British East India Company had maintained comparatively aloof attitude
towards the trans-Himalayan region, and no serious efforts were intruded
into the forbidding terrain of Nepal during Shah reigns.1
By 1860, during the Rana Regime, however, there was a definite
revival of British interest in the area with the aim of creating a land route
for trade with western China via Tibet.2 Since that time, it was evident
that British East India Company directly or through its intermediaries
took a keen interest in Nepal’s domestic political issues, so keen, that
a trend of throwing, overthrowing, or ensuing threats to do so with the
Nepalese regimes thus began. All the successive regimes from Nepal as
nation state formation since the time of King Prithvi Narayan Shah, that
is, from 1768 to till date focused on the preservation of its territorial
integrity and political sovereignty, which had been articulated in his
Divya Updesh.3 S D Muni argued that Nepal’s primary objective remains
twofold: First, preservation of autonomy and independence in taking
and implementing foreign policy decisions; and Second, preservation of
territorial integrity. The first aim has a politico-diplomatic connotation
and its task may be described as one of counteracting undesirable
external pressures and influences.4 It will be discussed in this chapter
that Nepal, from the time of immediately after formation as nation-state
to the contemporary era, has continued to struggle for gaining ‘strategic
autonomy’ in the conduction of its foreign policy. On the other hand,
Nepal’s geo-strategic location importance has significantly increased
in the twenty-first century with the rise of India and China as a global
Strategic Autonomy... • 19
superpower. This location provides Nepal both with the opportunities

and challenges.
With the promulgation of the Constitution in 2015, Nepal confronted
unprecedented challenges and opportunities for its inclusive development,
political stability, sovereignty, and territorial integrity.5 This chapter
presents that, despite Nepal being a sovereign nation, Nepalese foreign
policy remains primarily responsive and characterized by relative
caution. The chapter begins by considering how geo-strategic location
has constrained Nepal’s foreign policy choices. It particularly examines
Nepal’s unattained autonomy. Evaluating the constrains in the conduction
of Nepal’s foreign policy, it concludes that autonomy in its foreign policy
has been severely undermined through the use of combined tactics, that is,
India’s coercive diplomatic efforts, regime change and ensuing blockades.
This should be constructed as imposing foreign policy tool deployed by
India to protect its strategic, security, and political interests in Nepal.
Nepal’s abilities to overcome such combined foreign policy approach
have been jeopardized due to the lack of its own institutional and political
capacities, thereby thrusting Nepal’s autonomy at stake. The paper further
provides that Nepal’s quest for change in foreign policy is contingent on
its ability to institutionalize autonomy in its foreign policy. Ultimately,
Nepal’s success will depend not just on coping with the challenges in
the regional and international environment, but on developing ‘strategic
autonomy’ in conduction of its foreign policy in the twenty-first century
world.
Nepal’s Elusive Autonomy

Nepalese regimes have pursued range of policies in different eras to manage
the evolving geo-strategic competition; whether using ‘isolationism’
during Rana period, or the policy of ‘equidistance’ as prominently relevant
during post-1990 multi-party democratic era. However, Nepal’s scope of
manoeuvrability and bargaining in its relations with India continued to be
limited. The legacies of the pattern of relations obtaining for about a century
between the Ranas of Nepal and the British rulers in India had prepared
a ground for establishment of such practice which has institutionalized
as unwanted norm.6 Nepal’s very intimate and ‘special relations’ with
independent India was further strengthened and given a new vigour by the
role played by the Government of India in bringing about the fall of the
Rana regime and subsequently India’s role in all the political changes in
Nepal post-1950.7
The Peace and Friendship Treaty of 1950 redefined Nepal’s political
relations in democratic era with independent India.8 However, India’s
thinking derived from British northern frontier policy continuously dictated
the Indian leaders’ mindsets, which are very much reflected in the Treaty
of 1950, and the Letters of Exchange associated with the Treaty. Nepalese
successive regimes were forced to collaborate with India in defence
measures; this was derived from the perceived and real threats emerging
from any kind of third power using Nepalese territory.9 The understanding
subjected Nepal’s freedom of importing arms and ammunition from any
country to the permission from, and the scrutiny by, New Delhi.10 These
provisions within the 1950 treaty and its Letters of Exchange virtually made
Nepal an informal ally of India in defence and foreign policy matters. This
informal ally situation was result of Nepal’s geo-strategic location which
had emerged out of the annexation of Tibet by China in 1949.11 Nepalese
politicians remained uncertain regarding Chinese intentions in the Himalayas
and had to wait till 1954, when India and China jointly signed the agreement
of peaceful co-existence commonly known as the Panchesheela Agreement,
to get any direction towards forming a China’s policy.12 The Agreement
under which India accepted China’s suzerainty over Tibet, provided Nepal
with a clear policy towards China and India subsequently guided Nepal to
devise policy accordingly. Then the external environment, particularly the
developments in China and Tibet and the Chinese attitudes of acquiescence
towards the Indo-Nepalese ties also contributed a great deal in the evolution
and perpetuation of ‘special relations’ between Nepal-India, which was
agreed in Nepal-India Peace and Friendship Treaty of 1950. In the fields of
foreign policy, defence and security, Nepal accepted India’s guidance and
dominance.13
Thus, an unspecified alliance existed between the two countries, driven
by geo-strategic necessity of that particular era.
Henceforth, in the post-1950 treaty scenario, it was difficult for any
Nepalese regime to develop autonomy. Nonetheless, King Mahendra’s
regime, amongst others, stood out in terms of practising some form of

autonomy in its foreign policy. For instance, under his regime, Nepal
demanded New Delhi to take further concession of the Trade and Transit
Treaty, to have provisions of unrestricted transit facilities from India
and many other favourable terms in the new treaty.14 Furthermore, he
demanded the Indian government to withdraw all its armed personnel
in 1970, and alternatively agreed to place military attaché at the Indian
Embassy in Kathmandu.15 During King Mahendra’s regime, Nepal
became the member of the United Nations and opened its embassies in
some European countries and the United States. During his China visit in
1961, a boundary treaty was signed with China. Furthermore, an economic
aid agreement providing for the construction of a road connecting
Kathmandu with Tibet was also signed. The Indians welcomed the border
agreement, which is generally accepted as the principle of Himalayas as
the boundary, but objected strongly to the road agreement. This potential
breaching of the Himalayan barrier (through road construction) would
undermine the entire Indian security system in the northern border area
of India, thereby affecting the basis for interstate interactions throughout
the region in several significant ways.16 King Mahendra also used Sino-
Indian War of 1962 to embolden its regime perpetuity and introduce land
reform programme in 1963-64. The more important goal for royal regime
was the replacement of Indian landowners and tenants in the important
Terai region with Nepalese from the hill areas,17 for which there was no
strong objection from New Delhi. This was another instance in which the
China factor in Nepal’s foreign policy indirectly influenced a domestic
economic programme that would never have been introduced in the pre-
1962 period.18 Nepal was also successful to internationalize hegemonic
attitudes of India; for instance, when India refused to accede to the terms
and conditions of a new Trade and Transit Treaty to be signed after the
expiry of the old one in October 1970, Nepal argued for ‘transit right’ for
landlocked countries.19
These are few instances that show that amongst all the regimes, King
Mahendra’s regime was one of the most successful in bringing certain
autonomy in the conduction of Nepal’s foreign policy, vis-à-vis, India.
But, what helped to bring greater autonomy during Mahendra’s era is not
related to his regime type, but rather the structural benefits he was able to
derive out of India-China War of 1962. Mahendra used the defeat of India
in the War as a means to achieve his aim of bringing autonomy in foreign
policy conduction and stability for his regime. However, other Nepalese
regimes were not that fortunate as India-China relations post-1962 started
to mature and remain stable. This provided India with a strategic leverage
to develop its hegemony in South Asia and thus undermine autonomy
of Nepal through regime change, with the aim of strategically securing
the northern Himalaya border and managing its security interests in
Nepal. Thus, the Indian policy has remained successful as the norm of
‘regime change’ that has been strategically used by New Delhi and has
institutionalized it as a core foreign policy practice towards Nepal.
Through such established norm, India has been an important ‘external’
factor in the political change in Nepal. The most striking evidence is
the recurrence of similar events in Nepalese politics whereby India is
implicitly or explicitly involved in the regime change; for instance, back in
1950, the Government of India was openly involved in King Tribhuvan’s
escape to the Indian Embassy in Kathmandu and flight to New Delhi.20 It
also exercised a quiet but coercive diplomatic pressure on the Ranas and
brought them to terms with the King and the political parties, which came
to be known as the ‘Delhi Settlement’.21 With the enactment of the interim
Government of Nepal Act (30 March 1951) the arrangements stipulated
under the Delhi Settlement were given a formal, institutional shape. All
the executive, legislative, and judicial powers were vested in the King
and his supremacy over the Prime Minster was clearly mentioned in the
Act, which came to be commonly known as the Interim Constitution.22
Noteworthy, a similar kind of ‘Delhi Settlement’ or commonly referred
to as ’12-point Agreement’ was enacted in 2005 between Maoist and
the Nepalese political parties, which provided an architecture of fall of
autocratic regime of King Gyanendra and beginning of the modality
of Nepal’s Peace process.23 Furthermore, it laid the foundation for the
establishment of Interim Constitution of 2007, integration of Maoist
combatants, and completion of the first Constituent Assembly election in
2008.24 Moreover, this change institutionalized Nepal to become a secular
federal democratic republic, thus bringing the demise of the institution
of monarchy, turning the only Hindu Kingdom of the world into secular
nation and laying the path towards creation of federal structure. The first
‘Delhi Settlement’ of 1950 and second of 2005 comparatively shows that
the norm of using ‘coercive diplomacy’ and ‘regime change’ has been
widely practised by India in different eras to achieve the same expected
result, that is, protecting its core interests in Nepal. Nepal, on the other
hand, is caught in the same vicious cycle and seems to have accepted
‘Indian interference’ as a norm in Nepalese politics. So, unless Nepalese
regimes can emerge out from the deeply entrenched insecurities, Nepal’s
autonomy will continue to be compromised under the pretext of coercive
diplomatic efforts leading to regime change.
Imposing Blockades: The Harshest of the Indian Foreign

Policy Tools Towards Nepal
As mentioned earlier, coercive diplomatic efforts and regime change have
at times, overlapped and been practised simultaneously, independently
of one another and at times gradually to achieve Indian foreign policy
goals in Nepal. But one of the extreme forms of measures applied to bring
downfall of strong, relatively promising, stable and successful regimes
in Nepal has been the tacit using of ‘economic blockade’ by India. The
significant blockades of 1962 and 1988-89 were imposed by India, as
means to achieve the goal of ‘regime change’ in Nepal and thus continue
preserving its core interests in Nepal. During both the blockades, King
Mahendra’s and King Birendra’s regimes wanted to bring autonomy in
Nepal’s foreign policy, vis-à-vis, India. While Mahendra’s government
succeeded partly in achieving the goals by using 1962 war as a pretext,
King Birendra’s regime fell ushering the new era of multi-party democracy
and constitutional monarchy in Nepal. The third blockade, on the other
hand, used by India in 2015-2016 to bring the downfall of the Prime
Minister Khadga Prasad Oli regime, proves that India does not want to
lose its ‘sphere of influence’ in Nepal.
The first blockade was imposed by India during Mahendra’s regime
with the aim of overthrowing his regime and preventing Nepal from
institutionalizing autonomy in its foreign policy. However, Mahendra’s
regime survived particularly due to the structural factors at that time
which helped him to diversify Nepal’s foreign policy to certain extent.

His regime primarily derived benefits from the external situation, that is,
India’s loss to victorious China in the 1962 war. India’s loss in this War
exposed its vulnerability of northern security even more, which Mahendra
sought to exploit. In return for protection of northern security, he secured
the Indian assurance that the Nepalese exiles would not be allowed to
organize themselves and operate against his regime.25 Furthermore, he
secured India’s acquiescence in his Panchayat system and his agreement
with China on the construction of the Kathmandu-Kodari road. Beside
economic support, he also made New Delhi agree to grant Nepal transit
facilities to the extent required, for its trade with third countries through
Indian land and sea routes.26 In return, Mahendra agreed not to allow the
Chinese to act against India’s vital interests in Nepal. This was evident
from acceding Delhi’s request not to allow the Chinese to undertake any
project in Nepal’s Terai territory. He then moved on to cancel the agreement
with China whereby the latter had undertaken to construct a portion of
Nepal’s East-West highway and entrusted it to India. He also assured to
check rising anti-India feelings in Nepal.27 This has been constructed as a
successful attempt by King Mahendra’s regime to thwart India’s extreme
tactics of blockade. It can also be perceived as one of the failed attempts of
India’s foreign policy goals in Nepal, even though India’ used blockade to
achieve its goal. Fortunately, Mahendra’s regime survived to bring certain
autonomy in conduction of Nepal’s foreign policy, benefit derived from
1962 war.
The second blockade was used by India to achieve the goal of curtailing
the regime of autocratic monarchy and help in establishing multi-party
democratic system in Nepal. India blocked the border during 1988-89 to
prevent Nepali goods transiting to and from the nearest Indian ports. This
created significant hurdles to Nepal due to its landlocked state to conduct
international trade. On the surface, the dispute of 1988-89 seemed to be
concerned with relatively straightforward trade and transit issues reflected
in the 1978 transit treaty with India, which was due to expire on 23 March
1988. 28 India used it as an excuse to discontinue trade and transit relations
with Nepal. In Nepal, this action on India’s part was characterized as
an ‘economic blockade’. However, in reality, India’s behaviour was
occasioned by Nepal’s decision to import weapons from China in June

1988 in violation of the terms of the 1950 treaty. In New Delhi’s view,
Nepal needed to have consulted India before purchasing weapons from
China.29 However, the Nepalese interpretation of the Treaty was different.
For Nepal, this provision meant that the Government of Nepal would have
to seek India’s agreement to import weapons only through Indian territory.
However, Delhi insisted that import of arms from China, even if it was not
through Indian territory, amounted to violation of the spirit of the 1950
treaty. Additionally, India was not happy with King Birendra’s regime,
due to his proposal of calling Nepal as a ‘Zone of Peace’. This concept
immediately got diplomatic recognition from 120 countries whereas India
became the only strong objector to this proposal. This was mainly due
to the fact that India saw it an attempt to repudiate the 1950 agreement
and thereby trying to exercise autonomy in foreign policy.30 This move by
India countered another effort by Nepal in quest for its autonomy. Nepal’s
right to exercise independent conduction of its trade, foreign policy, and
defense matters continued to be compromised as if it was not a sovereign
nation, the practical woes being aggravated by its landlocked status. This
second blockade not only proved that autonomy had to be compromised
to protect India’s interest in Nepal, it also eventually contributed to the
downfall of Monarchy regime in Nepal in favour of re-establishment of
multi-party system.31 It further helped to institutionalize the use of coercive
diplomatic measures and regime changes to achieve series of Indian goals
in Nepal, thus leading to political instability in Nepal post 1990.
The third major blockade was imposed by India after the promulgation
of the Constitution of Nepal in 2016. The blockade not only led to political,
economical, social crisis but also grave humanitarian crisis in Nepal.32 It
crippled the Nepalese economy, cutting out basic life supporting supplies,
such as food, medicines, petroleum and other daily essentials, all of
them daily imported from the Indian Border States.33 Mainly, it stalled
post-earthquake reconstruction works, schools and factories were shut,
transport services completely came to a halt, international airlines closed
their flights due to the shortage of aviation fuel, and the price of basic
necessities soared. The estimated losses almost reached US$ 1 billion to
the country’s economy and had a knock-on effect on potential investment
and growth.34 India used blockade as a means to establish its long-term

strategic and security goals in federal Nepal. India’s political support for
‘One Madhesh Two Provinces’ structure in Nepal was bluntly seen as a
direct interference of the internal matter. The lobbied for structure would
mean merging of 22 districts into 2 provinces of low-lying land of Terai-
Madhesh, which adjoin the border states of India. This desired structure
by India was analyzed to be helpful for achieving its goal of developing
‘inner buffer’ in Terai-Madhesh part of Nepal.35
Nepal’s autonomy concept can be constructed differently in two regimes
by comparing India’s imposed blockade during Oli’s administration with
the blockade of 1962 during Mahendra’s regime. Although, Mahendra’s
regime lasted from 1960 to 1972, it showed that Nepalese politics was
stabilized during his regime and strengthened in his later brought forth
Panchayat system of governance. He worked up foreign policy issues
to resolve the crises of legitimacy, identification, and stability of his
government with considerable success, at least during the years immediately
following the establishment of the Panchayat system.36 It is not to say that
his regime was totally immune from the Indian interferences. The then
Indian Prime Minister Jawaharlal Nehru openly criticized the overthrow
of democratically elected government of B P Koirala by Mahendra with
his statement that it was ‘a complete reversal of democracy’.37 To counter
India’s moves, Mahendra pursued raising of anti-Indian sentiments in
Nepal and further looked in the direction of North to construct strategic
Kathmandu-Kodari road linking China’s Tibet borders, thus making India’s
northern frontier vulnerable.38 With the blockade ensuing in this context,
had India-China war not broken out in 1962, the blockade would have
crippled the Nepalese economy and would have led to fall of Mahendra’s
regime, as was evident in the case of K P Oli’s regime.
Regime Overthrow: Recent Attempt for Autonomy, Same

Result
Prime Minister Oli put in efforts to act autonomously in Nepal’s foreign
policy conductions by signing ‘Transit Agreement’ with China.39 Oli
regime’s initiation to opt for China is driven out of Nepal’s strategic
necessity. Even though China has long been recognized as a ‘non-
interfering’ neighbour, but in the last few years, China, with its growing
powers, has shown consistent increased presence to be more involved in
protecting its legitimate interests in Nepal.40 The convergence of interests
of both Nepal and China helped to formalize the ‘transit agreement’ and
hosts of other agreements which have a potential to diversify Nepal’s
trade, businesses, networking accesses, etc.41 to pull Nepal out of India’s
complete hegemony. This Agreement, if implemented in due course of
time, has the potential to provide Nepal to institutionalize autonomy in
conduction of its foreign policy.
Indian interests, on the other hand, are firmly tied with preventing any
form of practice of autonomy in Nepal’s foreign policy. To achieve these
goals, India, first, wants to amend the proposed seven province federal
structure in the Nepalese Constitution. India is keen to establish ‘One
Madhesh Two Province’ model which would increase India’s leverage in
strategic and security concerns, as it would have to deal with, at most,
two adjoining provinces in its border region. It would also mean smoother
dealings with a maximum of two chief ministers, rather than a clutter of
more than a dozen. The similarity in cultural, language, and matrimonial
relationships between Terai’s people and the people of the Indian states of
Bihar and Uttar Pradesh could also be cultivated to influence the domestic
politics, governance, security, water resources management, border
management, and curtail Nepal’s any option of practising autonomy in
future.
Second, India believes that the Himalayas have been penetrated by China
through the proposed rail links from Lhasa to Kathmandu and its ‘One Belt
One Road’ strategy.42 Indian strategic community believes that Himalayas
no longer provides safe boundary for India against Chinese threats and
thus there is no relevance of Jawaharlal Nehru’s ‘Strategic Himalayan
Frontier’43 policy in contemporary era. Again after 1950, India’s strategic
thinking of Himalayas as natural barrier has been transgressed with rapid
infrastructure development on the Himalayan region—the proposed
construction of trans-Himalayan railways by China close to India’s
northern security framework and increased Chinese economic, cultural,
and political engagements in Nepal.44 Most importantly, China’s open
declaration of use of railway lines for strategic purpose further increased
the importance of Nepal. This railway would be used for dual purpose,
not only to facilitate people for tourism, trade and transportation but could
transport military personnel and equipments to the India border region. As
a result, most Indian strategic thinkers believe that the Himalayan region
seen as the first line of India’s defence could lose its relevance.45 Hence,
India has felt the pressing needs to further tighten its grip on Nepal; to
achieve the larger consistent goal, which is, to curtail Nepal from bringing
any change in its foreign policy goals.
The Oli government very much understood this strategic competition,
made an attempt to derive the benefit of India-China strategic rivalry,
and find a turning point to bring autonomy in its foreign policy, at least
something close to King Mahendra’s success. By attempting so, Oli regime
faced a big blow by the Indian interests. First, by refusing to accede to
restructuring the federal boundaries under ‘One Madhesh, Two Province’,
he envisioned protection of territorial integrity and keep the Nepalese
nationalism intact in the longer run. Second, by signing the ‘Transit
Agreement’ with China and host of other agreements, he endeavoured
to provide a significant departure from Nepal’s traditional conduction
of foreign policy. But, with the fall of Oli regime, Nepal has arrived in
a situation where questions of implementation of these agreements with
China will be challenging under the new political regime in Nepal and its
future successors. The ability of India to bring about the regime change,
evident with the fall of Oli regime, one more time, clearly depicts the extent
of entrenchment of India’s involvement in managing Nepal’s politics, as
was also observed in the mainstream Indian media coverage with their
tone of celebrative narrative that Oli’s regime change is in consonance
with India’s interests after all.46
In the Further Quest for Autonomy, Nepal’s Actual Choices

Nepal’s quest for strategic autonomy is directly linked with protecting
territorial integrity and political sovereignty in post-Constitution Nepal.
Essentially, India will continue to view Nepal as a security soft spot so
long as Sino-Indian rivalry persists. India-China relations have changed to
an extent and it has taken a new form of evolving cooperation in economic
areas and competition in strategic realm.47 Nevertheless, if both countries
want a stable and peaceful rise themselves, it is high time to realize that
a neighbourhood backyard country plunged in instabilities will surely not
help either of them. Federalism is going to be a new exercise in Nepal
with geo-political implications.48 For instance, the disintegration or its
threat of Terai-Madhes as a nation state will bring further instability in the
region and will not suit both the countries’ geo-political interests. Hence,
Nepal will need to be respected with more autonomy, be given a space
to strengthen its own internal security and defence capacity. At the same
time, Nepal will need to prove to both countries that it will not let its
territory to be used against either power. So long as India perceives China
as a security threat, it will continue to view the Himalayas as its de facto
northern strategic frontier and reinforce this on Nepal. India is unlikely to
alter the status quo. The onus rests upon Nepal to understand these geo-
strategic vulnerabilities and develop pragmatic foreign policy choices to
manage and benefit from such competition.
Nepal needs to strategically project that the Constitution clearly
provides the logic for the federating the provinces with substantial
devolution of power to federal parliament, including guaranteed
proportional representation of all groups including Madhesis and other
minorities in the state organs within the existing model. The principles
of protection of human rights as fundamental rights, gender equality, and
their inclusion in governance system should be implemented. This needs
to be strategically communicated to the international community through
diplomatic advances. If Nepal is unable to bring autonomy in its decision-
making, India, China and other international community members will
continue to look at Nepal with suspicion.
Nepal needs to devise a policy to prevent India from developing ‘inner
buffer’ within the federal restructuring. India’s view of Nepal as a ‘buffer’
since the 1950s under Nehru’s strategy has served its interest well. With
the changing geo-political dynamics and Nepal’s federal restructuring,
India believes that it needs to create an ‘inner buffer’ in Terai-Madhes. It
is evident that the ‘seven province’ model had not fulfilled India’s long-
term strategic and security interests, so India took a hardened stance on
Nepal by imposing blockade.49 India, by imposing an economic blockade
had seriously hampered long-standing special relations by openly
supporting the Madhesh-centric parties, who had reacted violently, using

non-democratic and unconstitutional means to address their demands.
Certain Terai-Madhesh-based political parties and armed groups as well
as intelligentsia have been openly talking about separating Terai-Madhes
from Nepal and merging it with the Indian states of Bihar and Uttar Pradesh
or, alternatively, forming an independent nation-state.50 India has been
pressuring Nepal’s government at various levels to address the demands
of the Terai-Madhes political parties, or face the consequences, resulting
in regime change. Nepal as a nation state could not be united again to
prevent regime change. The question remains, whether Nepal can exercise
autonomy in preventing to create ‘inner buffer’ considering the dynamics
of Nepal-India relations.
Nepal needs to advocate from an international law perspective to
further its autonomy in its foreign policy. As a land-locked country Nepal
is entitled to unrestricted trade and transit rights and India should not
violate these bedrock legal provisions by imposing any form of economic
blockade, obstruction or hindrances. Acting aggressively and resorting to
legal resolutions are not the routes Nepal seeks to take, on the basis that
such action will lead to a ‘trust deficit’ in its special bilateral relations. But,
Nepal through its diplomacy initiatives needs to inform the international
community that inability to maintaining reciprocal relations with Nepal
will test India’s ability to play a more engaged role on the global stage.
If India cannot ensure a modicum of stability in its relationships with its
sub-continental neighbours like Nepal, there will be doubts about India’s
ability to play a responsible global role in the management of regional
and international affairs. The use of international law in such crisis would
provide Nepal with further opportunity to internationalize the vulnerability
of land-locked countries and get concessions, vis-à-vis, India in the
international forums.
During Oli’s regime, Nepal has seen a paradigm shift as it has tried to
balance the two big foreign powers to ensure its survival. This balance
is something Nepal must strive for considering its difficult geo-political
location between India and China. The ‘balance of power’ approach is
what Nepal must institutionalize to manage the increasing India-China
strategic rivalry. India’s security-driven foreign policy and its coercive
diplomatic tools employed in Nepal had forced the Nepali regime to bring
China into the fold. But with the fall of the Oli regime, the Nepal-China
agreements, too, perhaps would be sidelined and bringing the autonomy
in Nepal’s foreign policy goals would be further delayed. It is true that
India’s dominant influence is felt across South Asia, lately, more so in
Nepal. India will probably look to renegotiate on certain treaties to further
entrench its hegemony in Nepal for the next 50 years. For instance, India
could pursue its strategic and security interests by pushing ‘One Madhesh
Two Provinces’ structure, which will ensure India’s hegemony in federal
Nepal for years to come. The problem with weak states like Nepal is that it
continues to witness direct external challenge to its regime, which in turn
damages political sovereignty and nationalism. Nepal must find a way to
delink the two concepts and develop better strategies to both protect its
regime as well as safeguard national sovereignty. Unless that happens,
Nepal as a nation-state will continue to be caught in a perpetual quest for
autonomy, at the loss of national sovereignty and over time even its own
territorial integrity.
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2. Ibid, 134-50.
3. Ludwig Stiller, Rise of the House of Gorkha, Ranchi: Patna Jesuit Society, 1968.
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15. Ibid, 102.
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17. Ibid, 103-04.
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20. Whelpton, A History of Nepal, 71-72.
21. Ibid, 72.
22. Ibid.
23. S D Muni, ‘Bringing the Maoists Down From the Hills: India’s Role’, in Sebastian
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24. Catina Slavu, ‘The 2008 CA Election: Social Inclusion for Peace’ in Sebastian
von Einsledel, David M. Malone, and Suman Pradha (eds), Nepal in Transition:
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25. Leo E Rose, ‘King Mahendra’s China Policy’, in S D Muni (ed) Nepal: An
Assertive Monarch, New Delhi: Chetna Publications, 1977, 225-28.
26. Ibid, 229.
27. Ibid, 230-35.
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39. There was a 10-point agreement between Nepal and China and in Point 1, it
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on 15 July 2017.
40. Jeffrey Reeves, ‘China’s Self-defeating Tactics in Nepal’, Contemporary South
Asia, 20, No. 4, 2012, 527-29.
41. For details see, ‘Joint Press Statement Between the People’s Republic of China
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42. For details of official text ‘One Belt and One Road’ initiative, see full text of an
action plan on the China-proposed Belt and Road Initiative issued by the National
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on 28 March.
43. Jawaharlal Nehru, ‘India’s Foreign Policy: Selected Speeches (September 1946–
April 1961)’, Government of India, Publication Division, New Delhi, 1971, 436.
44. Nihar Nayak, ‘Mutual Assured Security: India-Nepal Security Cooperation to
Mitigate Common Threats’, in S D Muni and Vivek Chadha (eds.) Asian Strategic
Review 2015: India as a Security Provider, Pentagon Press, 2015, 104-05.
45. Ibid, 115-16.
46. Prashant Jha, ‘HT Analysis: Nepal PM Oli’s Departure Marks an Indian Comeback’,
Hindustan Times, 24 July 2016, available at http://www.hindustantimes.com/
analysis/prime-minister-oli-s-departure-marks-indian-comeback-in-nepal/story-
SlfKmL3xkCWZDHO0IPDPwI.html, accessed on 15 July 2017.
47. Mohan Malik, China and India: Great Power Rivals, London: First Forum Press,
2011.
48. Jayanta Prasad, ‘Fedearlism: Nepal’s Final Frontier’, The Hindu, 15 September
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final-frontier/article7652362.ece, accessed on 15 July 2017.
49. S D Muni, ‘India’s Nepal Policy Needs Caution, Not Grandstanding’, The Wire,
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aim/manifesto/, accessed on; Akhilesh Pillalamarri, ‘Between Nepal and India:
Echoes of 1971 in South Asia’, The Diplomat, 25 September 2015, available at
http://thediplomat.com/2015/09/between-nepal-and-india-echoes-of-1971-in-
south-asia/, accessed on 15 July 2017.
3
Foreign Policy of Nepal Towards
India: A Small State Perspective
Nazia Khan
Abstract
T he foreign policy of small states requires a systematic study. There are

domestic as well as international issues which affects the foreign policy
of a small state. While the theories of international relations have focused
on the foreign policy of great powers, small state has been neglected in
the process. However, there are small states which influence the foreign
policy of great power by devising their policy strategically. This chapter
tries to understand the foreign policy of one such state—Nepal. Nepal,
though a small state, holds an important geo-strategic location. However,
it is not only the location of Nepal as a result of which it is considered
as a buffer state between two great powers which holds primacy in
determining its foreign policy. There are various factors which influence
and contribute in the making of foreign policy. The chapter analyzes not
only the determinants of foreign policy of Nepal, but also the challenges
it face being a small state. In addition, the recent transformation to
democracy and the adoption of constitution affect on it is also discussed
in this chapter. The study of Nepal will provide an analyses of the small
state issues and problems in determining its foreign and especially when
it is located in a geo-strategic location. The formulation of foreign policy,
vis-à-vis, in the presence of India and China is an engaging area of study.
Nepal has undergone a long struggle and suffered grave violence and
political turmoil to become a Democratic Republic today. The geographical
location of Nepal has strategic importance for India and China, which
made it a buffer state between the two. The experience of Nepal with the
establishment of democracy and the abolition of monarchy has seen a long
armed violent struggle. The Armed Revolution in 1951 against the Rana
Regime was waged to establish democracy. However, King Mahendra in
1960 captured democracy and formed a party less Panchayati regime which
continued till 1990. A multi-party democracy was reinstated in April 1990,
which was followed by parliamentary election in 1991, 1994, and 1999.
Local elections were held in 1992 and 1997. However, King Gyanendra
executed two royal coups in October 2002 and February 2005. This
transition affecting the democracy was challenged by the people of Nepal
who viewed King Gyanendra’s rule with suspicion. In all this, CPN-Maoist
gained legitimacy and other political parties also aligned with it ending
in Jana Andolan II. The people rallied for republicanism; they ‘wanted a
complete extirpation of the institution of monarchy’. The King was ousted
from power and democracy and was finally reinstated in 2008 after the
general election. It brought an end to monarchy and the Constitution of
Nepal was adopted on 20 September 2015 after a prolonged struggle and
debate around it. Nepal has adopted a secular republic constitution in spite
of being a former Hindu Kingdom.
Nepal being a small state, of total area 1,47,181 square kilometre
features among the least developed countries in the world.
Nepal has people from hills (Prabatiya) in majority while in Terai

there are Madhesis and Tharus who are minorities. The non-tribal
(caste organized) people who have lived in the Tarai are called
Madhesis and they are the cultural, kin, educational and political
links with Uttar Pradesh and Bihar.
The major differences between the people of hills and the terai region
is the discrimination by the majority towards the minority over the long
period of time. The major issue with the new constitution of Nepal for
Madhesis and Tharus is the structure of federalism that they have adopted
and the failure to recognize Madhesis as naturalized citizens.
Foreign Policy of Nepal Towards India: A Small State Perspective • 37
Nepal is a landlocked country, surrounded on three sides by India and

China in the north.
In the west, the south and the east and north-east, Nepal is surrounded
by Uttar Pradesh, Bihar, Bengal and Sikkim (states of India) and it
is separated by Bangladesh with a strip of Indian territory in West
Bengal. The border with India is not a natural one though long patches
of thick forests lie between the two nations. The border runs through
the inner periphery of the open and extensive Indo-Gangetic plain, and
constitutes what can be called a “zone of exposure” (Muni, 1973).
Topographically, Nepal can be divided into three regions: (1) “The

Himalayas; (2) the central hills and valleys; and (3) the Terai. The Terai
extends along the length of the country in the south and varies from 16 to 20
miles in breadth. The other zones comprise hills varying from 2,000 feet to
29,000 feet in height. The height increases as we move towards the north.
Except for the Terai region, the country is mountainous. This has created a
problem of transport and communication between the centre and other parts
of the country and also between the parts themselves” (Muni, 1973).
Small States Challenges to Foreign Policy

International theories have postulated the foreign policies of great powers
and the way they conduct themselves in the anarchic world. However,
small states have been largely ignored from this study. As Doeser (2011)
points out that even if there is a large body of literature in International
Relations (IR), the foreign policy of small states is seen as responsive to
the constraints and opportunities of the international system, rather than
to domestic politics (Fox, 1959; Wolfers, 1962; Rosenau, 1966; Waltz,
1979; Handel, 1981; Walt, 1987; Zahariadis, 1994; Mearsheimer, 2001;
Weiner, 2004; Galbreath, 2006; Ringsmose, 2009). The reason for this
seems to be the assumption made in previous research that small states are
typically faced with external threats to national security. This makes them
more attentive to the characteristics of the international environment, and
less constrained by the domestic political process. In contrast, domestic
politics are assumed to play a greater role in the study of the foreign policy
of great powers. Given this widespread consensus, the foreign policy
of small states can be seen as ‘a crucial test for domestic level theory’
(Elman, 1995). So the domestic politics of small state is considered to play
less crucial a role in determining its foreign policy than the international
politics.
The dominant view holds that small state determines its policies or
behaviour according to the international distribution of power or the balance
of threat. The changes in the foreign policy of small state are considered to
be ‘isomorphic to fluctuations in the structure of the international system
and/or the degree of threat posed by the great powers’. Walt in ‘explaining
the alliance patterns of small states, suggests that weak states are more
likely to bandwagon with an aggressive great power than balance against
it’ (Miriam, 1995). Bandwagoning is likely to be a preferred alliance
strategy when the threatening great power is geographically proximate
and has a strong offensive capacity as well as when alternative great power
allies are unavailable.1 Thus, mainstream IR theorists in general, and most
small state researchers in particular, explain small state foreign policy by
focusing on the prevailing features of the international system and small
state-great power interaction.
Contrary to this, liberal policies are constructed to allow for the
participation of both state and societal actors in policy formation.
Societal arguments, which view state behavior as a function of

pressures from domestic groups, often neglect the possibility that state
actors and institutions can hinder or facilitate the capacity of these
groups to influence policy outcomes. Moreover, such approaches
often neglect that state actors can have interests and goals of their
own, which may or may not coincide with societal preferences (Walt,
1987).
On the other hand, state-centred approaches, which view foreign policy

as the output of the administrative and decision-making apparatus of
the state’s executive branch, often neglect the fact that the successful
implementation of state policy requires the co-operation of powerful
societal groups (Gilpin, 1975; Krasner, 1978).
So what follows from this is that not only the international factors but
domestic politics also determines the foreign policy of the small states.
The factors which can be said to determine the foreign policy of a small
state are as follows:
1. The polarity of the international system, whether it is Unipolar,
Bipolar or Multipolar. The present system cannot be termed as a
pure Unipolar. It can be said that the world is neither Unipolar nor
a pure Multipolar but a Uni-Multipolar.
2. The presence of a strong neighbour in the region also plays a major
role as the small states in relation to each other may perceive a
threat.
3. The size of the country as well as the natural resources also plays
a vital role in determining the foreign policy. The structure of the
society not only influences the foreign policy milieu, but also
determines the foreign policy capability.
4. Another important factor is the structure of the society. A
homogenous society will have less effect on the foreign policy than
a heterogeneous society.
5. In an authoritarian system the power is concentrated in a few
hands and so the decision-making is supposed to be quick. On the
other hand, a democratic political system is supposed to give due
weightage to any opposition.
6. Last but not the least, the charismatic leadership is also an important
determinant of foreign policy.
Determinants of Foreign Policy

History, geography, and socio-cultural composition of the society are few
determinants of foreign policy that remain constant.
Geography
The geography (which is a constant) plays an important role in the foreign
policy of a nation. The geo-strategic location of the country determines
how its foreign policy will be constituted. However, national interest of
any nation is important while devising its foreign policy, but it largely
depends on the geography of the nation too. If the country is large in size,
its impact on its neighboring countries will be different than if the country
is small.
Nepal is a landlocked country between China and India with total area
of 1,47,181 square kilometre. ‘Despite being a small landlocked state,
Nepal has assumed a pivotal position in the South Asian geo-strategic
environment as its borders two of the biggest states in Asia, China and
India. It shares a border of 1236 kilometers with China and 1690 kilometers
with India’ (Pant: 2016). It is surrounded by India on three sides and China
on the north.
India and Nepal relations are based on common civilization and cultural
values with a deep and abiding friendship sustained by geographical
proximity and ethnic affinity. Owing to its geo-strategic location China
as well as India understands its importance. The geo-strategic location of
Nepal, increases its importance not only in South Asia but also Asia as it
acts a buffer zone between both these countries.
Economic Development
The other factor which determines the foreign policy of a country is its
economy. Nepal has Himalayas, which are source of energy and water
resources. Trade, economic issues, and aid have a direct bearing on the
execution and formulation of foreign policy. The economic relations are
also linked to the security. The trade and transit treaties signed between
Nepal and India give access to the former through India to trade with other
countries. However, due to estranged relationship, India is accused for
economic blockade. This has affected Nepal-India relations adversely. It
has also forged relations with China undermining the Treaty of Peace and
Friendship and security of India. Thus, economy of the country plays a
crucial in determining what kind of relation it shares with its neighbours
and at the international level.
Socio-cultural Composition
Nepal is multi-ethnic, multi-lingual, and multi-religious country. ‘Prithvi
Narayan Shah, the founder of modern Nepal, in his well-known and much
quoted Dibya Upadesh (noble injunctions), described Nepal as “a garden
of four castes and 36 ethnicities”’ (Lohani, 2011). Constitution of Nepal
has defined the federal structure based on ethnicity. The federal division
of the country was termed unfair for the Madhesis and they were not even
recognized as the naturalized citizen. The involvement of India was seen

in the unrest and violent eruption post adoption of Constitution on 20
September 2015. Thus, social composition plays a role in determining the
foreign policy of a country.
Objectives of Foreign Policy of Nepal

Nepal is a small state in the South Asian region which is Indo-centric.
There are many factors which have influenced its foreign policy objectives.
It holds a geo-strategic position in the region being a buffer zone between
India and China. Its foreign policy is influenced by these two great powers.
The great power exercises a greater economic and military strength,
unlike the small states. The small state deals with other countries in the
international arena through diplomacy. However post 1990, violence
erupted in Nepali politics that it ‘could neither forge consensus on
national interest nor strengthen institutions and empower individuals of
caliber in foreign policy.’ There is a lack of a coherent foreign policy, due
to internal turmoil and lack of stability. The foreign policy objective of
Nepal is to enhance its dignity by maintaining the sovereignty, integrity,
and independence of the country. The foreign policy objectives of Nepal
as described in the Ministry of Foreign Affairs of Nepal are as follows:
• To conduct Nepal’s foreign relations in consonance with the
policies and guidelines of the Government of Nepal;
• To project and protect Nepal’s independence, sovereignty, territorial
integrity, and national interest abroad;
• To promote bilateral, regional, and multilateral relations for the
socio-economic development of the country;
• To promote friendly relations with all the countries of the world
and particularly with its immediate neighbor[u]rs, on the basis
of sovereign equality, mutual respect, trust, goodwill, and
understanding;
• To play an active role in the United Nations and other international
organizations in order to promote international peace and security,
and development;
• To play a positive role and meaningful role in the Non-aligned
Movement in the context of a changed world;
• To play an active role in the promotion of regional cooperation

in South Asia under the South Asian Association for Regional
Cooperation;
• To act as the country’s a first point of contract for the outside world
and also serve as Nepal’s window to the world; and
• To play an increasingly active role in the conduct of Nepal’s
economic diplomacy, thereby promoting our trade , investment,
economic cooperation, tourism, and help tap and develop our
immense water resources potential.2
Part 4 (Directive Principles, Policies and Obligations of the State) of the
Constitution of Nepal 2015, clearly state that:
The state shall direct its international relations enhancing the dignity
of the nation in the world community by maintaining international
relations on the basis of sovereign equality, while safeguarding the
freedom, sovereignty, territorial integrity and independence and
national interest of Nepal (Clause 50.4).
The State shall pursue the following policies relating to international

relations:
• To conduct an independent foreign policy based on the Charter
of the United Nations, non-alignment, principles of Panchsheel,
international law and the norms of world peace, taking into
consideration of the overall interest of the nation, while remaining
active in safeguarding territorial integrity, independence and
national interest of Nepal.
• To review treaties concluded in the past, and make treaties,
agreements based on equality and mutual interest (Clause 51 [m 1
and 2]) (Ministry of Foreign Affairs of Nepal).
After analyzing the principles and clauses of foreign policy of Nepal, it
can be said that they are influenced by non-alignment and also by the
Treaty of Panchsheel. The non-alignment as a policy helps a small-state
like Nepal to forge alliances without undermining its own security issues.
Also being a landlocked country, between two superpowers it is necessary
for it maintain friendly relations and mutual respect in terms of territory,
sovereignty, and internal affairs of the nations. Nepal clearly wants to be
sovereign in terms of forging alliances in the international arena without

being dictated by any other country.
The two principles by which the foreign policy of Nepal has been
guided is Non-alignment and Panchsheel.
Non-Alignment
The Treaty of Non-alignment Movement gained importance against
the backdrop of ‘collapse of the colonial system and the independence
struggles of the peoples of Africa, Asia, Latin America and other regions of
the world at the height of the Cold War’. The fundamental objective of the
principle of non-alignment was self-determination, national independence,
and the sovereignty and integrity of the states. The countries that became
newly independent from the colonial rules were more concerned about
their internal and external security. They had to build their nation as well
as protect themselves from the threats emanating from external sources.
With the international structure being anarchic and Cold War the world
was divided into two power blocs, the United States and Soviet Union.
This made it important for the newly independent countries which could
not side with any one of the power, to devise a policy to maintain their
independence and sovereignty. On the political front non-alignment is
defined on this basis, but in security perspective it holds non-participation
in great power military alliances.
Nepal also opted for non-alignment to be its policy in the global
context. ‘The policy of non-alignment was outlined during 1952-54 by
King Tribhuwan, Prime Minister M P Koirala, Foreign Minister D R
Regmi and other Nepalese leaders in their various statements.’ Nepal has
seen political turmoil due to monarchy and the Maoists violence against
it through Jan Andolans. It has seen authoritarian rule of Rana Prime
Minister, establishment of the ‘new Constitution of Nepal’ (1958), and
first democratically elected government of B P Koirala. This was again
interrupted by King Mahendra on the charges of corruption and he went on
to establish his own party less Panchayat rule from 1960 to 1989.
Panchsheel
The principle of Panchsheel assured sovereignty and territory of each
country, and non-aggression; there would be friendly relations and peaceful
co-existence among the countries. The Five Principles of Peaceful Co-

existence signed between China and India on 29 April 1954 are as follows:
• Mutual respect for each other’s territorial integrity and sovereignty;
• Mutual non-aggression;
• Mutual non-interference;
• Equality and mutual benefit; and
• Peaceful co-existence.
The principles of Panchsheel were incorporated into the Ten Principles of
International Peace and Cooperation enunciated in the Declaration issued
by the April 1955 Bandung Conference of 29 Afro-Asian countries. Even
Nepal’s foreign policy is guided by these principles and it has always
sought for a mutual trust and integrity. It has itself undergone political
turmoil and now that it has emerged as a democracy it is trying hard to
cope with any internal differences, to bring about stability and develop
peacefully.
For Nepal more than abiding by the principles of the United Nations
Charter and international law, its foreign policy is not concerned with
protecting its influence internationally but preserving its own autonomy
and resolving its security and domestic issues.
Indo-Nepal Relation
India and Nepal signed the Treaty of Peace and Friendship in 1950,
laying foundation to a friendly bilateral relation between the religiously
and culturally similar countries. ‘The Treaty, was signed by Rana rulers
of Nepal, set the basic principles of bilateral relationship by awarding
substantial leverage to India in Nepal.’ As stated earlier, Nepal share close
socio-cultural ties with India. The Madhesis living in the Terai region of
Nepal trace their origin to Uttar Pradesh and Bihar in India.
India and Nepal share an open border. Nepal-India boundary was
demarcated and delimited after the Anglo-Nepal war of 1814-16. Treaty
of Sugauli shaped Indo-Nepal border in which Mahakali River formed
the western boundary, while the Mechi formed the boundary in the
east along the ridges in the Darjeeling hills and Sikkim. The southern
boundary of Nepal along the Tarai region borders Uttar Pradesh and
Bihar of India.
The Terai region of Nepal and the bordering area of India are similar,
and they share their religion, culture, and language. Many Madhesis who
live in the region have their relatives from India.
The Terai region and Madhesis which bore close association to India
are seen with suspicion by the Nepalese government. They are considered
as minority by the people of hills, and even the Constitution of 2015
failed to recognize them as naturalized citizen which prevented them from
applying for top government posts. The federal demarcation of Nepal has
also not done justice to the population and area where Madhesis reside.
Nepal is economically dependent on India for its overseas trade. Kolkata
(India) is the nearest seaport to Nepal. ‘India is not only Nepal’s major
transit provider, but also its top trading partner. Bilateral trade with India
accounts for almost 66.5 per cent of Nepal’s total trade with the world.’
India has helped Nepal in accessing other countries through transit trade.
India has also given 22 transit points to Nepal besides the port facilities
in Mumbai, Kolkata, and Kandala. However, it does not mean that Nepal
bends before India. If there has been any conflict between India and Nepal,
the latter has always looked towards China for help. In the 1980s when
King Birendra added to the Panchayat Constitution and made Nepal a Zone
of Peace, a negative response from India (Nepal’s growing relations with
China) made Nepal violate security interest of the neighbouring country
and receive arms from China. As a result Rajiv Gandhi’s government put
‘Economic Blockade’ on it. Similarly, the protests and violence which took
place after the adoption of Constitution in September 2015, again led to
blockade of fuel and petroleum. And again Nepal turned towards China to
sign Memorandum of Understanding (MoU) and trade and transit treaty.
The geo-strategic location of Nepal holds importance for security of
India. The former Indian Prime Minister Jawaharlal Nehru, explaining the
significance of the 1950 Treaty of Peace and Friendship between India and
Nepal to the Lok Sabha, clearly pointed out the Himalayan state’s strategic
significance:
Apart from our sympathetic interest in Nepal, we are also interested

in the security of our own country. From time immemorial, the
Himalayas have provided us with a magnificent frontier. Of course,
they are no longer as impassable as they used to be, but they are still
fairly effective. We cannot allow that barrier to be penetrated because

it is also the principle barrier to India (Dabhade and Pant, 2010).
India’s relation with Nepal may have deep linkages of culture, religion
and language, but security is one of the major concerns for India. Both
countries share a strong linkage of political, economic, and culture sphere.
The Treaty of Peace and Friendship between the two countries established
an ‘everlasting peace and friendship between the Government of India
and Government of Nepal’, and both concur to ‘acknowledge and respect
the complete sovereignty, territorial integrity and independence of each
other’. Article 2 of the Treaty states as follows:
The two governments hereby undertake to inform each other of any

serious friction or misunderstanding with any neighboring state likely
to cause any breach in the friendly relations subsisting between the
two governments.
The relation between Nepal and India is also effected by China. The
importance of Nepal for India is in the fact that it skirts 500 miles of
its northern border along the People’s Republic of China and on the
southern slopes of the Himalayas. Even though the two countries have
strong cultural, ethnic and religious relations to it, still both understand
each other’s importance. India is concerned that Nepal can be a source of
security concern to it, not only from the viewpoint of China, but also any
destabilization in Nepal will have a spillover effect on India on the ground
of shared border and the ‘possibility that Pakistan-trained militants could
move through Nepal’. It is thus important for India to have a friendly and
trusting relation with the former Hindu Kingdom. The cultural, ethnic, and
religious affinity which the both countries share is the reason why there is
an open border policy.
The democratic transition in 2008, led to the formation of constituent
assembly for the process of Constitution making in Nepal. Nepal
promulgated its new Constitution on 20 September 2015; the Madhesis–
the Nepalese of the plains–began protests blocking roads and access points
from India. The Madhesis, whose descendents came from India, were
denied access to tops positions of the republic and the division of federal
structure was unfair. The Madhesis protested against the discrimination
in the Constitution. The Indian response to the adoption of Constitution

was not positive, and demands to make changes in it made it look like a
bully. Nepal being a small state developed mistrust and looked towards
China for help. This in turn, created a major concern for India’s security,
as China is already investing in Silk Road and route. It also has strategic
plan of ‘string of pearls’ to encircle India which include Gwadar port in
Pakistan, naval bases in Burma, electronic intelligence–gathering facilities
islands in the Bay of Bengal, funding the construction of a canal across
the Kra Isthamus in Thailand, military agreement with Cambodia, and the
building-up of forces in the South China Sea. Even though these claims
are considered being exaggeration, China is strategically increasing its
presence in the Indian Ocean.
The largest trade partner and investor of Nepal, India ‘accounts for
44 percent of Nepal’s Foreign Direct Investment (FDI) and 60 per cent
of Nepal’s external trade’ (Nayak, 2014). Nepal being a landlocked
country the opening of the borders between the two countries has also
contributed a consistence relation between the two countries. India
has contributed in the development of Nepal’s economy since 1951
and ‘up to August 2011, it has provided economic assistance for 411
development projects in Nepal, including NPR 6,300 crore in 2010-
11 alone’ (Nayak, 2014). The global trade share of India in Nepal has
increased from 29.8 per cent in 1995-96 to 63.7 per cent in 2014-15
(The Economic Times, 2016).
Nepal’s Foreign Policy Towards India

Nepal, as such never had a coherent foreign policy. The monarchy rule and
then the rise of Maoists to establish a ‘people’s republic’ made the domestic
politics unstable. However, it maintained neutral and non-aligned abiding
by the principles of Panchsheel. The foreign policy is majorly guided by
the Treaty of Peace and Friendship between the two countries. India’s
concern is with its security in relation to Nepal. The basic elements to
modify the relation with India is to:
…balance Indian influence in Nepal by establishing an equitable

relationship with China; to expand Nepal’s diplomatic activities
beyond the region by actively participating in international forums
to enhance national prestige; and to make efforts to diversify Nepal’s

economic interactions that previously were solely dependent on
India.
The economic blockade imposed in 1989 on Nepal by India, compelling

the former to accept its terms and condition made the relation inimical
between the two. Also, the rise of Maoists movement and indirect support
and sympathy by India had further strained the relation. Nepal became
a democracy after monarchy came to an end in 2008. The Constitution
of Nepal was finally adopted on 20 September 2015 and it adopted a
democratic secular republic. The Indian government displeasure with the
Constitution of Nepal was reflected in its response to the countries adoption
of its constitution. And immediately after the adoption of Constitution, the
Madhesis revolted and this resulted in blockade of trade between India and
Nepal. This affected the relation between the two countries temporarily.
Despite democracy within Nepal, there is lack of political stability
with total of nine Prime Minster from 2006 to 2016. Though finally the
Constitution has been adopted, Prime Minister Oli had to leave his office
because the Maoists withdrew support to him after the violent protest
against it. Still Nepal’s stand towards India during the Madhesis protest
was not cordial There is a need to understand that dealing with Nepal
in a ‘big brother approach’ will not work. It was clearly reflected that
when Oli visited China he described the latter as ‘All Weather Friend’. He
also signed the free trade agreement with China and committed Nepal to
participate actively in ‘One Belt, One Road’ initiative’ (Jha, 2016). Even
though India is the largest trading partner of Nepal, still there is lack of
understanding and trust when it comes to internal matters of Nepal and
security of India. As Nepal has time and again undermined the Treaty of
Peace and Friendship by treating India’s security in a most dismissive
manner, latter too need to realize that it cannot deal with it with an iron
hand. Nepal being a landlocked country is dependent on India for transit
facilities which have given rise to a fear and from time-to-time the
Nepalese political elite have challenged the role of India’s policy. Lack
of confidence has affected both the countries time and again, however,
the issues have always been resolved through mutual co-operation and
understanding.
The foreign policy of any country is guided by its national interest. Nepal
is no different; however, it has failed to have a consistent and coherent
foreign policy when it comes to India. Both countries share deep cultural
and religious linkages and India is the largest country as democracy in
South Asia, and following are the concern of Nepal in relation to it:
Protecting Sovereignty
Nepal being a small and poor state, it’s major concern is with territoriality,
integrity, and economy. The history of Nepal, from being a Hindu
Kingdom to secular democratic republic has seen and suffered violent
domestic politics. Being located between India and China can instill a
fear psychosis, but looking at Nepal’s history it has always maintained
its sovereignty as a Kingdom under a monarch as well as a nation state.
With India it shares a cultural, ethnic, and religious links. It also has open
border with India which reflects the mutual trust the two countries enjoy.
However, now that Nepal has become a democratic republic it will not
appreciate India’s interference in its domestic politics or try to create an
environment of instability and distrust.
It is the involvement of India in the politics of Nepal that concerns
it. South Asia is Indo-centric and Nepal being a small state suffers from
‘small state syndrome’. More than being concerned about the polarity of
the international system, the major concern here is the sovereignty and
integrity of its own state. Also, the fact that the ethnic Madhesis have
cultural linkages with India has created suspicion. Even the leaders of
Nepal (Krishna Prasad Bhattarai, Ganesh Man Singh, the Koirala brothers,
and Man Mohan Adhikari) were involved in freedom movement of India.
Thus, India has close political links in Nepal and this can be a source of
disturbance between the relations of the two countries. Nepal, not being a
homogeneous society creates internal tensions and involvement of external
players complicates the matters further.
Economic Development
India has been Nepal’s trading partner since the very beginning and it
is also the biggest aid donor. Economy plays a major role in the foreign
policy of both the countries. Economic interest involves promotion of
trade, utilization of water resources, and promotion of capital investment

and development of joint ventures. The Trade and Transit Treaty (1950)
expired in 1990. The Treaty was revised in December 1991 when G P
Koirala visited India and the latter accommodated Nepal’s economic
interest. Nepal would want India, which is its major trading partner, to
maintain cordial relations. However, the blockade by Madhesis at Indo-
Nepal border after the promulgation of new Constitution, made Nepal
realize that it cannot trade and transit solely with India. So, the former
Prime Minister Oli signed a Treaty of Trade and Transit with China. Even
earlier, during Rajiv Gandhi’s era, a blockade was imposed. This can lead
to estranged relation with India leading to security concerns for the latter.
Even though the Treaty of Peace and Friendship exists till date, when it
comes to national integrity and welfare, Nepal has taken help from China.
China Factor
China does not hold a recent relevance in the politics of Nepal. Even in
history, China has played limited role in the Kingdom of Nepal as it has
proximity and ties with the Tibet region. It strategically holds an important
position, both from Tibet and India perspectives. Nepal’s relation with
China has been reassuring, ‘compatibility of interest has led China to
respond generously to Nepalese development efforts’. The protests erupted
against the Constitution which was adopted in 20 September 2015 by the
Madhesis of Nepal by blocking roads and access point to India. The Indian
response to Constitution of Nepal was not positive so India’s role was seen
in the blockade carried out by the Madhesis. The ‘blockade’ that followed
post adoption of Constitution had ‘deleterious impact on all parts of the
country’s economy’. In March 2016, Nepal signed ten Memorandums of
Understanding (MoU), including the Transit and Transportation Treaty
with China. China has agreed to the request of the then Prime Minister K
P Oli to ‘build a strategic railway link between the two countries through
Tibet to reduce land-locked Nepal’s total dependence on India’. The
Transit and Transportation Treaty will end the dependence of Nepal on an
Indian sea port for third-country trade links. The Agreement and MoU was
signed after the meeting between Oli and Li in Beijing.
Conclusion
Nepal being a small-state due to its geographical positioning has to maintain
cordial relations with both India and China. It is in the best interest of
Nepal to nurture a relationship of trust and confidence with both India
and China. Similarly, these two countries have to deal in such a way that
they don’t undermine the sovereignty and territory of Nepal. The security
perception of India is guided mostly by the Treaty of Peace and Friendship
of 1950 towards Nepal. But this Treaty has been under criticism in Nepal
and it has violated the Treaty earlier to buy arms and ammunition from
China, putting India’s security at stake. Thus, it is important for India not
to treat Nepal from a ‘big brother syndrome’ but try to forge more cultural
and religious linkages and provide a relation of mutual trust and respect
without undermining the sovereignty and integrity of the latter. It also
emerges from the analysis that though Nepal is a small state, it also lacks
an established foreign policy. It has failed to strike a balance and form a
foreign policy which can guide it while dealing with its neighbours and the
other states. Nepal has also lacked a visionary leader as it was under a rule
of monarchy for long. A stable foreign policy failed to emerge with short
stint on democracy.
References
S Avatar Bhasin, India’s Foreign Relations: 2012 Documents, New Delhi: Geetika
Publishers, 2012.
Manish Dabhade and Harsh Pant, ‘Coping With Challenges to Sovereignty: Sino-
Indian Rivalry and Nepal’s Foreign Policy’, Contemporary South Asia, 13(2),
2004, 157-69.
F Miriam Elman, ’The Foreign Policies of Small States: Challenging Neorealism in
Its Own Backyard’, British Journal of Political Science, 25(2), 1995, 171-217.
E T Bureau, ’Are Current India-Nepal Relations on Low or High?’, Economic Times, 17
May 2016, available at http://economictimes.indiatimes.com/news/politics-and-
nation/are-current-india-nepal-relations-on-a-low-or-high/articleshow/52302129.
cms, accessed on 29 August 2016.
Doeser Fredrik, ‘International Constraints, Domestic Politics and Foreign Policy
Change in Small States: The Fall of Danish “Footnote Policy”’, Cooperation and
Conflict, 46 (2), 2011, 222-41.
Helen Milner, Resisting Protectionism: Global Industries and the Politics of
International Trade, New Jersey: Princeton University Press, 1988.
S Prem Jha, ‘India’s Big Brother Approach Will Not Work With Nepal Anymore’,
The Wire, 14 April 2016, available at URL:https://thewire.in/29462/indias-big-
brother-approach-will-not-work-with-nepal-anymore, accessed on 12 August
2016.
Rohit Karki and Lekhnath Paudel, ‘Challenges to the Revision of the Nepal-India
1950 Peace and Friendship Treaty’, Strategic Analysis, 39 (4), 2015, 402-16.
S D Muni, Foreign Policy of Nepal, Delhi: National Publishing House, 1973, 36-37.
S D Muni, India and Nepal: A Changing Relationship, Delhi: Konark Publishers,
1992.
Nihar R Nayak, ‘Strategic Himalayas: Republican Nepal and External Powers’, New
Delhi: Pentagon Press, 2014.
‘Nepal Adopts First Democratic Constitution’, The Hindu, 20 September 2015,
available at URL:http://www.thehindu.com/news/international/nepal-adopts-
historic-constitution-amid-protests/article7671003.ece, accessed on 1 September
2016.
Dharmesh Patel, ‘The Entangled Triangle of Nepal, India and China’, The Bulletin
of the Centre for East-West Cultural and Economic Studies, 10 (2), 2013, 41-44.
PTI, ‘Nepal in Fresh Political Turmoil as PM Oli Resigns’, The Indian Express, 24
July 2016, available at http://indianexpress.com/article/world/world-news/nepal-
in-fresh-political-turmoil-as-pm-oli-resigns-2933385, accessed on 12 August
2016.
Stephen M Walt The Origins of Alliances, Ithaca: Cornell University Press, 1987.
Sangeeta Thapliyal, ’India and Nepal Treaty of 1950: The Continuing Discourse’,
India Quarterly, 68(2), 2012, 119-33.
Zha Wen, ’Personalized Foreign Policy Decision-making and Economic Dependence:
A Comparative Study of Thailand and the Philippines’ China Policies’,
Contemporary Southeast Asia, 37 (2).
4
Relations Between British India and
Monarchial Nepal: Treaty of Sugauli
Palu Joshi
Abstract
I ndia and Nepal are two such neighbours that have identities interwoven
in culture, religion, and history. This chapter attempts to trace the
historical affinities between the two countries. The ties date back to the
age of the Buddha and Ashoka the great. The connection was further
strengthened during the Gupta and the Rajput eras. The advent of Muslim
invaders to India drove out many Rajput chiefs who took refuge in Nepal
and the descendants of one such rulers, Prithvinarayan Shah founded the
ruling House of Nepal, the Gorakhas. The first contact between the British
India and Nepal took place through the commercial relations between the
Newar traders and the Britain East India Company in Bengal. However,
the political relations did not develop until 1767, when Malla rulers sought
British help against Prithvinarayan Shah. The victory of Prithvinarayan
Shah, forced the British to view Nepal from a different angle. Prithvinarayan
Shah on his part advocated the policy of keeping British and the Chinese
forces at peace. When Nepal invaded Tibet in 1788, both the Gorakhas and
the Chinese sought British help and they offered mediation between the two
parties which was not received warmly by the Nepalese. The opportunity
for British came in form of Maharaja Ran Bahadur Shah who abdicated
the throne in favour of his infant son, Girvana Yuddha and came to Banaras
with his wife. The two sides signed a political treaty in 1801. The bonhomie
in the bilateral relations came to an end with the War of 1814. The War was
a one-sided affair and British forces easily defeated the Nepali army. The
War was put to an end through a treaty at Sugauli. The British made some
major territorial gains through this Treaty and they also got the strategic
Gorkha points under their control. Nepal became circumscribed, and any
future military threat from Gorkhas was eliminated for good. The Treaty
also paved the way for recruiting a fierce ‘Gorkha Battalion’ in the British
Indian forces. Lastly, the British got a hold in Nepali politics through the
provision of sending their representative to the Darbar in Kathmandu. With
this the era of uncertainty in the bilateral relations of Nepal and India ended.
Introduction
Nepal is situated on the southern slope of Himalaya to the north-east
of India and is separated from the Tibetan region of China by the main
Himalayan range and the Tibetan border mountains in the north. Nepal is
surrounded by the Indian territory on all three sides. Geographically, the
territory of Nepal may be characterized as a transitional mountain area that
separates the arid Tibetan highland from the fertile Ganga plain.1 From an
ethnic, cultural and socio-psychological view, the midland and northern
regions of Nepal represent an intermediate zone between South Asia on
one hand, and East and Central Asia on the other.2
The structure of Nepal has been determined by its long history,
particularly that of the nineteenth century.3 The Himalaya demarcates
Nepal and Indian sub-continent as a separate social and cultural unit
from the rest of the northern Asia and the two countries have established
close ties since time immemorial. The earliest authentic record of contact
between India and Nepal is found in sixth century BC. After the Buddha
attained enlightenment, he returned to Kapilvastu, the event marking the
advent of Buddhism in Nepal. Later, in the twentieth year of his reign the
great Mauryan Emperor, Ashoka made a pilgrimage to the sacred place
of Lumbini. He married his daughter Charumati to the Nepalese Prince
Devpala and recorded his visit on a pillar.
Apart from these religious connections, there were military and political
missions that went from India to Nepal especially during the Gupta and the
Relations Between British India and Monarchial Nepal... • 55
Rajput eras.4 The advent of Muslims to India drove out many ruling houses
out of India, who turned to Nepal for refuge. In 1322 Hari Singh Deo, a Sarju
Bansi Prince of Oudh, took refuge in Nepal and established his control over
the valley. His descendents, called the Mallas, ruled till their fall at the hand
of Gorkhas (1767-68). When Allauddin Khalji attacked Chittor in 1303, a
large exodus of refuges took place from Rajputana to the Himalayan hills.
They settled in Palpa and eventually organized their small domain around a
village called Gorkha, from which they drew the title of their race.
The First Contact

The first contact between the British India and Nepal happened through
the commercial relations between the Newar traders5 and the Britain East
India company in Bengal. An era of promising trade between the East
India Company and Nepal flourished under the reign of Newar rulers of
Kathmandu valley. British also harboured an ambition of linking Nepalese
trade with Tibet and China.
Politically, Nepal had no desire to develop close relation and it remained
indifferent to the European expansion in India. However, Gorkha military
expedition to the valley, provided the first opportunity to the British for
making a political contact. During the 1740s, Gorkhas found a dynamic
leader in Prithvi Narayan Shah. After facing defeat in his initial attempts to
conquer the valley, he later changed his strategy. Instead of direct frontal
attacks, he first gradually occupied the strategic points around the valley
and made maximum out of the prevailing dissensions among the three
main principalities (Kathmandu, Bhadgaon, and Patan). He took recourse
to every act of bribery and treachery. The Brahmans of the valley secretly
cooperated with him. In 1765, he again attacked Kirtipur, which was a part
of Patan, and after repeated attempts captured in 1767. All other Newar
Rajas then tried to form a joint front against him, but it was too late, and
one by one the Gorkhas conquered the whole valley.6
The Kinloch Mission

In the beginning of 1767, during the last siege of Kirtipur, Raja of
Kathmandu, Jay Prakash Malla,7 solicited British aid against the Gorkha
invaders.8 Britishers’ natural sympathies were with Newar rulers, and their
commercial interests in Nepal and their ambition to expand their trade

beyond Nepal, i.e. in Tibet and China compelled them to send a military
mission under Captain G Kinloch to Nepal, during the rainy season of
1767. He was forced to retreat owing to sickness and want of provisions.
By September 1768, Prithvi Narayan Shah defeated the remaining Newar
rulers and completed the conquest of valley, thus ushering in a new era in
the history of Nepal.
The failure of Kinloch mission made the British realize that they had
backed the wrong horse and in June 1770, the British send a mission under
James Logan to Nepal. They now decided to appease the Gorkha ruler.
The purpose of James Logan visit was to convince Prithvi Narayan Shah
of the friendly attitude of the Company and persuade him to restore the
old trade relations between the two countries. This was essential because
of the need to find more markets for their goods and the deteriorating
financial condition of the East India Company in Bengal.9 As a gesture
of friendliness the Mackwanpur Terai, which was captured by Kinloch,
was restored to the Gorkhas.10 In January 1784, again a mission under
Foxcroft was sent to Nepal with presents and Governor General’s letter
to the Maharaja of Nepal.11 However, the Gorkhas continued with their
policy of suspicion and the bilateral trade dived.
Even after the subjugation of Kathmandu valley, the Gorkhas continued
their mission of military expansions. This led to cropping up of border
disputes between Nepal and the British. Yet, it was remarkable, that in spite
of these misunderstandings the two governments always tried to follow a
policy of avoiding hostilities.12 This policy of expansion also brought the
Gorkhas in serious clash with the Chinese. King Prithvi Narayan Shah
believed in keeping on good terms with both the neighbours, though he
considered the British more dangerous than the Chinese. According to
King Prithvi Narayan Shah:
The kingdom is like a yam between two stones. Maintain friendly

relations with the Emperor of China. Great friendship should also be
maintained with Emperor beyond the southern seas (i.e. the British),
but he is clever. He has kept India suppressed, and is entrenching
himself on the plains. One day the army will come. Do not engage in
offensive acts. Fightings should be conducted on defensive basis.13
The Gorkhas resorted to war with Tibet over the issue of currency in 1788.
When in 1791, the Nepalese occupied the famous Kuti pass and plundered
the rich temples of Digarchy, the Chinese intervened in the War with 70,000
soldiers. This move of the Chinese compelled the Nepalese to sign a treaty
with the British on 1 March 1792. Though it was commercial treaty, the
Gorkhas had no desire to improve trade with the British, but to deter the
Chinese forces and also to secure the British neutrality in the forthcoming
war. Consequently, soon after the conclusion of the Treaty, both Nepal
and China asked for military aid from the British in the on-going war. As
the British wanted to protect their trade interest with Nepal, Tibet along
with China, Lord Cornwallis, the then Governor General offered British
mediation to both the parties.14
The Kirkpatrick Mission

The offer was accepted by Nepalese and Colonel W Kirkpatrick was
directed to proceed to Kathmandu. But even before he could leave Patna,
a peace treaty was concluded between Nepal and China. Lord Cornwallis,
however, was anxious that he should proceed to Nepal for setting sundry
matters between the two states and to know more about that country.
Kirkpatrick was asked to induce the Nepalese government to act up to
the commercial treaty of 1792. The Company wanted Nepal to encourage
Indo-Nepalese trade and establish permanent mutual legations to protect
trade and promote friendship.15
On his arrival, Kirkpatrick was courteously treated, but as soon as
his purpose was known, he was treated as an unwelcomed guest, and
had to face the Gorkhali objection and evasion.16 Ultimately, Kirkpatrick
returned with a mere treaty, which was confined to the letters without
a British agent on the spot to preside over its proper implementation.
Since then the Treaty was only unilaterally observed by the Company.
The Nepalese always levied more than 2.5 per cent of duties as against
the provision of treaties. Thus, one more effort of the British to open
the gates of Nepal for trade and political relations failed utterly and
miserably.
From 1793 to 1800, the India-Nepal relations were merely of former
nature. The British sent a trade mission under Maulvi Qadir Ali to Nepal
in 1795,17 which failed to achieve anything. Thereafter, Nepali politics was

largely entangled in its internal discords and palace conspiracies.
However, the ‘opportunity’ for which the British were on a look out
came in 1800 in form of Maharaja Ran Bahadur Shah who abdicated the
throne in favour of his infant son, Girvana Yuddha18 and came to Banaras
with his wife. The hospitality showered by the British on ex-Maharaja
compelled his rivals to think that he was trying to re-capture the throne.
Negotiations were held between the two governments the British and the
Maharaja’s Junior Queen and a Treaty of Commerce and Alliance was
concluded on 26 October 1801.19 The Treaty, which was of purely political
nature, provided that in exchange of the honourable custody of the former
Maharaja by the British, the two governments had agreed for the mutual
extradition of the criminals taking refuge in each other’s territories. This
Treaty also provided for the annulment of the arrangement concluded in
1772, by which Nepal gave an elephant to the Indian government annually
for the cultivation of Makwanpur lowlands, and for peaceful settlements
of the future border disputes. Besides, a separate article was added to the
Treaty at Dinapur on the 26 October 1801 about the settlement of financial
provisions for the maintenance of the ex-king.20
Accordingly, Captain Knox was appointed the British representative at
the Court of Nepal and he arrived at Kathmandu in April 1802. However,
due to internal political tussles and changing power equations, Captain Knox
soon became a persona non grata and left Nepal in 1803, without achieving
anything. Yet again, the bilateral relations suffered a great set back.
The War of 1814

The rise of Prime Minister Bhim Sen Thapa to power marked the beginning
of an era where in the India-Nepal relations hit the lowest ebb that
ultimately led to a war in 1814. Though, the Gorkhas followed the policy
of military expansionism right from 1768, but it was Bhim Sen Thapa
who followed it systematically. Besides Nepal had the natural desire to
bring the fertile lands of Terai, which formed the southern frontier of the
country, under its control.
On the Indian side, the internal unrest against the British government
and the passive policy followed by Sir J Barlow (1805-06) and Sir John
Shore (1806-13) after Lord Wellesley, further encouraged Bhim Sen Thapa.
At the same time, Thapa was aware of British might and diplomacy. The
main purposes of his foreign policy were to save Nepal from the grasps of
British imperialism, along with keeping the war-loving Gorkhas satisfied.
As a way out, Bhim Sen adopted a policy of slow but steady encroachment
along the Indian boundary, so as to keep the forces busy and yet not openly
challenging the British power.
On the other hand, the British had their own reasons of going to war
with Nepal. They had their own ambition of bringing the Himalayan states
under their influence. Additionally, East Asia and particularly China could
prove a big market for British goods. Every diplomatic attempt was made,
but nothing substantial was achieved, so the only option that remained left
was that of armed struggle.
There was another temptation which induced the British to go on
war against Nepal. Kumaon and Garhwal were famous for their mineral
resources and through Kumaon direct communication could have also
been established with Tibet.21 In both territories anti-Gorkha movements
were in offing and various schemes were prepared by the British in concert
with the disaffected element to overthrow the Nepalese rule.22 According
to Lord Hastings one of the main purposes of the war was the expulsion
of Gorkha powers from Kumaon and its immediate annexation. Above all,
the British wanted to tame the Gorkhas who had within 50 years grown
into a strong kingdom and whom the Lord Hasting found ‘unyielding and
refusing to deal with the British power’.23
In addition to these ‘building up’ factors, the immediate cause of
the outbreak of armed clashes was border disputes on the Gorkhapur
and Sarun frontier. The Terai area was divided into small principalities
under the Hindu kings who had been tributary to Mughals. The Nawab
Vazir of Oudh, the nominal representative of the Mughal Emperor,
ceded the district of Gorakhpur and other contiguous areas to the East
India Company in lieu of large sums of money.24 Going according to the
precedence of its predecessors, the Company too followed the policy of
receiving monetary tributes in return of political non-interference. On the
other hand, the Gorkhas in the expansionist drive exterminated these local
kings. This brought the Nepalese in contact with the Indian zamindars,
who in turn also gradually came to be subjected to Bhim Sen’s policy

of expansion. By this time, Lord Hastings became the Governor General
who had a very different perception of growing Nepalese power. He was
determined to cripple this power and so, he assumed a very rigid attribute
towards the Terai issue. He addressed a letter to the Maharaja of Nepal
in April 1814 demanding a peremptory evacuation of both the disputed
territories on Gorkhapur and Sarun frontier within 25 days and ordered the
Magistrate of Gorkhpur to occupy them if the order of the Maharaja did
not arrive in time.25 The Nepalese evacuated the disputed territories which
were occupied by the British in the blink of an eye.
The letter of Warren Hastings produced a heated debate in favour or
against a war. Those against the war, were the chiefs of older generation
like Bum Shah Chautariea, Rajo Guro Rang Nath Pandit, Kazi Dalbhanjan
Pande and General Amar Singh, while those in favour of the war were
the younger generation, led by the Prime Minister Bhim Sen Thapa.
Ultimately, the die was cast in the favour of the younger generation.
However, the Nepalese made no reference to war disputed or the areas
in their written reply to the British. They only asserted their peaceful
intentions. The Nepalese struck suddenly on the morning of 29 May 1814
at Butwal and overpowered local police. Lord Hastings planned a befitting
reply to the Nepalese, so it took him a considerable time to declare a war
against Nepal. Lord Hastings declared war on Nepal on 2 November 1814
and assumed the charge of military operations.
After initial success, Nepalese forces were soon defeated by the
British military. The victory had an immediate effect both on the Indian
government and the Nepalese Darbar. The Governor General decided
to include in the terms of the treaty many of those important provisions
which he had earlier decided to drop.26 On the other hand, in Nepal, defeat
and loss of more than one-third of their territory convinced the Darbar of
the hopelessness of the contest and a desire of peace was expressed.
The Treaty of Sugauli

Guru Gajraj Missur and Chandra Shekhar Upadhyaya were sent as
representatives to negotiate all the differences with the British political
agent Lieutenant Colonel P Bradshaw. The British demanded the cession
of all the territory west of Kali to Teesa, the recognition of all the treaties
contracted by the Indian government with the ruler of Sikkim and other
chiefs of western Nepal and finally, the installment of a British Resident
at Kathmandu. However, the complete cession of Terai was grossly
unacceptable to the Darbar.
The Gorkha repugnance to cede whole of the Terai was due to the high
estimate of the pecuniary value of that territory entertained by the chiefs.
The British demand for its cession originated in a desire to exclude the
Nepalese from any interest in the lowlands so as to remove the source
of future conflicts forever. Against this consideration was the pressing
expediency of bringing an early termination of this arduous war, which
if prolonged might have created dangerous situation in central India and
north-west. The experience of a few months of the administration of the
Terai also proved troublesome and expensive due to its ultimate weighing
all the considerations the Governor General modified his terms.27 Finally,
the British decided to renounce the demands of even those parts of the
Terai between Kosi and Gandak where the British authority had been
introduced, except those positions which were essential for maintaining
a good boundary.
Ultimately, the treaty was signed between the representatives of the
two sides, Guru and Bradshaw on 2 December 1815 at Sagauli. Guru
promised to get it ratified within 15 days, while the Indian government
ratified it on 8 December 1815. The Treaty, however, could not be
ratified by the Maharaja of Nepal within the prescribed time because of
differences over its provisions between various factions of his Darbar.
Consequently, the armed hostilities commenced again, but they did not
last long. The first defeat at Makwanpur brought the Nepalese to their
knees. Guru Gajraj Missur was sent again with the formal acceptance,
of the Treaty along with Chandra Shekhar Upadhyaya, to sue for peace.
Major General Ochterlony (now the negotiator) initially refused for
peace on former terms, but later accepted the Treaty on 4 March 1816.
Thus, the Treaty of Sagauli now formed the basis of future relationship
of British India and Nepal.
Implications
The British gained a lot from this Treaty. To begin, with the expulsion
of Gorkha power rest of Jamuna and the restoration of the former hill
chiefs therein on terms of fudal alliance with the Company an important
barrier had been interposed against Ranjit Singh (Maharaja of Patiala)
ever getting on the flank of British possessions.28 This Treaty also reduced
the chances of further tie-up of the two Indian powers–the Sikhs and the
Gorkhas. Besides, the restoration of hill chiefs gave the Indian government
the role of an arbitrator among them. Also the chances of any one of them
becoming dominant were reduced and Company got the authority of
maintaining peace, which was essential for the commercial interests of
the British.
The British possession of Kumaon, Dehradun, Kyarda, Nahan,
Sabathoo, Malown, and the passages of Ganga granted them an unbroken
chain of communication in the hills from river Kali to Sutlej, and the whole
of the country beyond it up to the snowy mountains came under the control
of feudatory chiefs who were dependent on the British. British also got the
strategic Gorkha points under their control. Besides, Kumaon offered an
easy point of entry into Nepal and an easy road to Tibet. It opened new
route for trade with China to the British merchants. Also, in Kumaon, the
Company secured rich mines of iron, copper, lead and hemp and in Terai
they secured valuable timber and a variety of herbs.
While Sikkim was a protectorate of the Company on the east, British
territories came to touch Nepal on the south and west, and China on the
north. Nepal then became circumscribed, and any future military threat
from Gorkhas was eliminated for good.
This Treaty also paved the way for recruiting a fierce ‘Gorkha Battalion’
in the British Indian forces.
Lastly, the British got a hold in Nepali politics through the provision of
sending their representative to the Darbar in Kathmandu.
With this ended the era of uncertainty in the bilateral relations of Nepal
and India. The Treaty of Sugauli not only laid the foundation of the new
India-Nepal relations, but also continues to serve the cornerstone of the
two traditional Himalayan neighbours.
References
1. Ramakant, Nepal-China and India, New Delhi: Abhinav Publications, 1976, 30.
2. Rishikesh Shaha, An Introduction to Nepal, 2001, Kathmandu: Ratna Pustak
Bhandar, 1.
3. Ibid; Leo E Rose and Margaret W Feshier, The Politics of Nepal: Persistance
and Change in an Asian Monarchy, Ithaca and London, Comell University Press,
1970, 15-20.
4. S Levi, Le Nepal (3 Vols.) Paris: Ernest Lerouse, 1905, 1908 (references to this
Book have been given from a typed copy of its English translation, which is
available in the Library of the Indian School of International Studies, New Delhi),
Vol. II, 67.
5. Newars are supposed to be the aborigmals of Nepal. They are the main section of
the population that is engaged in trade and commerce.
6. Ramakant, Indo-Nepalese Relations: 1816 to 1877, New Delhi: S Chand & Co.,
1968, 4.
7. Mallas ruled the valley from the beginning of thirteenth century till the rise to
Prithvi Narayan Shah. For details see Rishikesh Shaha, An Introduction to Nepal:
2001, Nepal: Ratna Pustak Bhandar, 46-54.
8. H A Oldfierd, Sketches From Nepal, Vol. I, London, 1818, 267-68.
9. K C Chaudhari, n. 4, 37-38.
10. Oldfield, n. 5, 265.
11. K C Chaudhari, Anglo-Nepalese Relations, Calcutta, 1960, 37-38.
12. Ibid, 51.
13. Yogi Naraharinath and Acharya Baburam (eds.) Shri Panch Bada Maharaj
Prithvinarayan Shah Ko Durja Upadesh, Kathmandu: Prithvi Jayanti Samaroha
Samiti, 1951, 15-16.
14. Rishikesh Shaha, Modern Nepal: A Por-History 1769 to 1885 (Vol. I), Kathmandu,
Nepal, 53-71.
15. Ibid, No. 6, 11-12.
16. Report of 1837, ‘Cursory Notice of the Connections and Transactions Between
the British Indian Government and Nepal From 1793 to 1812, P C, 18 September
1837, No. 71, 20 July 1837.
17. A full and authoritative account of Maulvi Qadir Ali’s mission is given by K C
Chaudhari, N. 4, 76-97.
18. It is said that Ran Bahadur Shah had married a Brahman widow of bewitching
beauty and gave her the status of the First Queen much against the traditions and
sentiments of the chiefs. The new Queen, having mortally fallen ill, expressed her
deep concern about the security of her newborn son. There upon, the Maharaja
decided to abdicate. See K C Chaudhari, N. 4, 104-05.
19. C V Aitchison, ‘A Collection of Treaties, Engagements and Sanads’, Calcutta,
1906, Vol. II, 105-08. Also see Appendix No. 2.
20. Ibid, 109.
21 Papers respecting Nepal War, London, 1824, 50.
22. B P Saxena, (ed), Historical Records Relating to Kumaon, 1809-1842, Allahabad,
1956, 7.
23. Op cit n,o. 21, 22.
24. Ross of Blandenburg, The Marques of Hastlings (Rulers of Indian Series), Oxford,
1893, 57.
25. T H Princep, Nepal War: In History of the Political and Military Transactions in
India During the Administration of the Marques of Hastings, 1813-1823 (2 Vols.),
Vol. I, London, 1825, 75.
26. Op cit no. 21, 100-01.
27. Op cit no. 22, 821.
28. Ibid, 673.
5
The 1950 Indo-Nepal Treaty of Peace
and Friendship: Road to Review
Mahesh Acharya
Abstract
A fter wrangling for decades, Nepal and India have finally spearheaded
in the direction to revise officially perhaps the most controversial
treaty between them. Kathmandu and New Delhi have constituted a joint
Eminent Persons Group (EPG) in early 2016 to review the past treaties and
agreements and submit recommendations to the respective governments so
that they befit the current realities. The Indo-Nepalese Treaty of Peace
and Friendship signed in 1950 which has been a perennial irritant from
the early years of its inception, is undoubtedly the major agenda. There
would be hardly disagreement that it could be a good starting point in
the direction to quell the deeply ingrained mutual distrust but much will
depend on the political will of both the capitals as the recommendations of
EPG will not be obligatory. The chapter will examine the different facets of
the Treaty which both the parties consider essential to review, and explore
the reasons which held New Delhi and Kathmandu back for whopping 67
years to traverse the road to the review.
Introduction
Nepal and India, both were in extremely difficult situation when the idea for
a crucial treaty that would define the bilateral relationship to suit the new
realities, was being floated. In the north, Communist China was tightening
its grip over Tibet close to the borders with both countries. India which
had just gained independence from British, was trying to set its own course
in newly chartered waters of diplomacy and foreign affairs. But much to
the chagrin of the smaller neighbours, independent India too sustained the
British Raj legacy as the provider of security in its neighborhood (Raja
Mohan, 2013). Nepal ruled by the Rana oligarchs for over a century, did
not have military capability to avert any foreign invasion, be it from the
north or south. The democratic movement to overthrow Ranas was also
gaining momentum. The aforementioned developments seemed to have
given impetus to formalize a treaty of friendship and peace at the earliest
possible time.
However, there are different interpretations on how the Treaty came
into existence. The fear emanating from the north was palpable in Indian
establishment. On 1 March 1950, the first Prime Minister of independent
India, Jawaharlal Nehru, in his letter to the chief ministers of the Indian
states had explained India’s view while the discussions for the Treaty were
approaching the final stages. Nehru said:
We have no formal military commitments in regard to Nepal nor

do we desire any. But it is perfectly clear that in the event of any
aggressor attacking Nepal, we cannot remain indifferent. From that
point of view, defense of Nepal becomes defense of India. (Bhasin,
2005)
It was not difficult to understand Nehru’s indication towards China as

possible ‘aggressor’. The Treaty of Peace and Friendship was signed on
31 July 1950. Indian analyst C Raja Mohan has argued in Modi’s World:
Expanding India’s Sphere of Influence that the Treaty was signed at the
request of Nepal, ‘whose rulers were frightened by communist China’s
advance into Tibet’ (Raja Mohan, 2015).
But did Nepal really propose first or it was the other way round? This
question still seems to create divergent views. Some in Nepal argue that,
‘India pressurized Nepal though it was not willing to sign the treaty.’ (Pant,
2006) Others are of the opinion that India took advantage of the weak
position of Rana rulers who were on the verge of downfall. The former
The 1950 Indo-Nepal Treaty of Peace and Friendship: Road to Review • 67
Nepalese Foreign Minister Ramesh Nath Pandey, in his autobiography

Kutniti ra Rajniti (Diplomacy and Politics), while quoting a report
submitted to the erstwhile government in 1987 mentioned the following:
The provisions in the agreement were agreed by Ranas with the

intention to take their property to India and live there, rather than
serving the national interest (Pandey, 2015).
Despite these kinds of differing views, the Treaty continued to be the

bedrock of Indo-Nepalese relationship for many years. There are ten
articles in the Treaty. Article I talks about the peace and friendship
between the two countries and the recognition as well as respect of each
other’s sovereignty, territorial integrity, and independence. Article II
envisages that the two governments inform each other in case of any
serious friction or misunderstanding with any neighbouring state that
could probably be detrimental to Indo-Nepalese friendship. Article
III is about the continuation of diplomatic relations while Article IV
mentions about the appointment of consul officials. Article V is about
the import of arms. Article VI has the provision of national treatment
to be bestowed upon each others’ citizens who participate in industrial
and economic development. In the similar tone, Article VII calls for
the reciprocity in the privileges to each others’ citizens in movement,
residence, and ownership of property among others. Article VIII annuls
all the past agreements entered by the British India with Nepal. Article
IX says the Treaty becomes effective from date of signature by both the
parties. Article X has the provision of termination and it provides that if
either side wants to terminate the Treaty, the other party should be given
a year’s prior-notice.
Some of the provisions opened doors of opportunities for the citizens
of both countries while some created controversy from the early years
since the Treaty came into existence. Kathmandu continued to portray the
Treaty as unequal while Indian side, though, showed readiness to review
and update the Treaty on papers, seemed to see any step to do so as the
effort of Nepal to go away from the Indian embrace. The letters which
were exchanged along with the Treaty, but was revealed almost a decade
later, would become the major bone of contention between Kathmandu
and New Delhi in coming years. The controversy about the Treaty and the
Letters of Exchange will be discussed at length in the next section.
Dissonance
The Letters of Exchange consist of five clauses which basically further
explain the provisions of the Treaty. Clause 1 explicitly states that
‘neither government shall tolerate any threat to the security of the other
by a foreign aggressor.’ It further mentions about the need of consultation
with each other and come up with counter measures to tackle with such
threat. This Clause is clearly linked with the Article 2 of the main Treaty
which envisages each side to inform one another in case of serious
friction with the third neighbouring state. Many in Nepal object to this
provision in the Letters of Exchange as they think it intends to bring
Kathmandu under Delhi’s defense perimeter. Professor Surya Subedi,
expert on International Law who shares that opinion has even argued
that the Article 2 of the main Treaty should be amended and the Letters
of Exchange should be annulled (Acharya, 2014). Some in Nepal even
accuse India of acting unilaterally and that it breached, time and again,
Clause 1 of Letters of Exchange and Article 2 of the Treaty. They argued
that as India did not inform Nepal when it had wars with China (1962)
and with Pakistan (1965, 1971, and 1999), ‘the Treaty has been made
invalid according to the international theory’ (Hamal, 2002). A section
even accuses Delhi to the extent that they see some sinister intention
of India behind the Treaty. Let’s look at one of the instances. Veteran
journalist Sanjay Upadhya in The Raj Lives: India in Nepal observes as
follows:
Nepalis have perceived this [T]reaty as a symbol of New Delhi’s

definition of South Asia as an integral unit of its security umbrella.
Most Nepalis resent this interpretation and accuse India of being
insensitive to their independence (Upadhya, 2008).
Indian side is, however, been seen trying time and again to allay these
fears. Be it the first Indian Prime Minister Nehru who is much credited
to set the foreign policy of independent India or the incumbent Narendra
Modi, they had not shied away from assuaging Nepali side about Delhi’s
intentions. During his visit to Kathmandu on 14 June 1951, Nehru while

addressing a public meeting said the following:
Nepal has been a free nation since a very long time, and it has been
our desire that the country should continue to exist as an independent
nation. The disturbed conditions in the world have strengthened our
resolve to help you maintain your freedom, because you have been
our traditional friend. If some of you feel that India wishes to interfere
in your affairs, then that would be a wrong notion. Firstly, because
this would be contrary to the fundamentals of our national policy, and
secondly, because it is in our own interest to honor your independent
status (Bhasin, 2005).
The current Indian Prime Minister Narendra Modi while addressing the
Nepalese Constituent Assembly in 2014 also reiterated Delhi’s similar
message but in different context and tone. But many in Nepal think
that oft-stated message as something only on papers, but never realized
in practice. In September 2015 when Nepal was about to promulgate
the Constitution, Indian Foreign Secretary and Modi’s special envoy
‘pressurized the Nepalese side to address the concerns of the parties
which had base on the southern plains bordering India and postpone
the promulgation date’ (Acharya, 2015). The major parties in Nepal
did not accept the Indian suggestion and promulgated the Constitution
with the approval of majority of the assembly (over 90 per cent) but
India explicitly expressed its displeasure just ‘noting’ the Enactment
of Constitution (Ministry of External Affairs, 2015). Later, the India
Express published a story in which Delhi reportedly asked Nepal to
amend the provisions of the Constitution on seven different fronts
(Roy, 2015). There is a long list of such incidents but even a few are
enough to illustrate the deep distrust still prevailing between Delhi and
Kathmandu.
The suspicions with the Treaty and the related Letters of Exchange
seemed to have grown when the latter, assumed secret, were revealed
after almost 10 years the agreement came into existence. There are
historical evidences of interesting exchange of words between the then
towering personalities of India and Nepal regarding the interpretation
of the Treaty. In November 1959, the then Indian Prime Minister while
giving speech in context of India-China hostilities in the Parliament

argued that any aggression on Nepal or Bhutan would tantamount to
the aggression on India. Two days later, Nepalese Prime Minister B P
Koirala in his statement, said that even if there was aggression, India
could not take action unless Nepal request for help. A few days later on
3 December 1959 during a press conference Nehru accepted Koirala’s
interpretation but revealed that secret letters had been exchanged
(Bhasin, 2005).
Time and again, another bone of contention has been the interpretation
of Clause 2 of the Letters of Exchange. It further explains about the
provision of arms import mentioned in Article V of the Treaty. Clause 2
mentions that:
Any arms, ammunition or warlike material and equipment necessary

for the security of Nepal that the Government of Nepal may import
through the territory of India shall be so imported with the assistance
and agreement of the Government of India. The Government of India
will take steps for the smooth and the expeditious transport of such
arms and ammunition through India (Bhasin, 2005).
Though this Clause explicitly mentions about the need of Indian

involvement in case of arms imported via Indian route only, Delhi seemed
to have been concerned even when such materials are imported from other
routes.
The year 1988 was one of such instances when Indian government
expressed its displeasure with Nepal for reportedly buying arms from
China and the dispute was later seen as one of the reasons behind the
1989 blockade by India. The writer D N in ‘Nepal: India Objects to Arms
Purchases’ in the Economic and Political Weekly observed as follows:
While the unequal 1950 Indo-Nepal (Nepalese) Treaty gives India

a veto over Nepal’s purchases of arms through India, the Indian
government has tried to broaden the veto to include any purchases of
arms by Nepal. By its recent purchase of arms from China, the Nepali
government has signified its rejection of this attempt (D N, 1988).
At that point, many including the people in Indian side thought India raised
the issue of arms import rather to serve another purpose. In ‘India-Nepal
Discord’ published in the Economic and Political Weekly, writer Anirudha

Gupta mentioned as follows:
…Nepal’s purchase of a few assault rifles, missiles and anti-aircraft

guns from China is highlighted to create an acute phobia about Indian
security. It is not clear which of the items cited above has any bearing
on the issues pertaining to the two treaties on trade and transit which
lapsed on March 23. If security is the upper-most concern then why
has it not come out with an authoritative statement on this particular
purchase of a few arms from China? (Gupta, 1989)
There has been deep resentment and suspicion among Nepali populace
with the provision incorporated in Articles VI and VII of the Treaty,
which envisage the national treatment be given to each others’ citizens.
Nepal is a very small and weak country in comparison to India, be it
the population, size, strength (military capability, human resources, etc)
or other resources. An influx from Nepal to India may not have much
impact but if that happens the other way around, it would have bigger
impact in Nepal. Many in Nepal think these provisions in the Treaty could
‘eventually result in more influence of Indian population or Indian origin
Nepalis that could have repercussions for Nepal’s national interests’
(Acharya, 2016). There is also a section in India which thinks that these
provisions favour India more than Nepal. In ‘Nepal: India Objects to
Arms Purchases’ written by D N in the Economic and Political Weekly
it was observed that:
The granting of formally equal rights only legitimizes inequality, as

the Indian migrants to Nepal are essentially businessmen of various
hues, while the Nepali migrants to India are Gorkha soldiers and
low-paid labourers working in hotels, restaurants, as domestic help,
watchmen, etc. Indian businessmen in Nepal are there to monopolize
its trade and industry and, through that, to subvert Nepal’s
independent existence. Nepali migrants in India are here as cheap
labour and cannon-fodder for the same expansionism that threatens
their nation’s existence.
However, low-paid workers from Indian side, especially from the border
areas, also come to Nepal in large number. There are many Indians who
are working as vegetable and fruit vendors, masons and labourers in

construction, and barbers and electricians in different areas of Nepal. They
can work freely in Nepal. They send money back home for their families
whatever they are able to save from their earnings.
But a larger section in India feels that Nepal has not been implementing
the provisions pertaining national treatment. The former Indian ambassador
to Nepal K V Rajan in ‘Should the 1950 Treaty be Scrapped?’ The Hindu,
wrote as follows:
The treaty is already respected more in the breach than observance.

Indian nationals in Nepal had long ago lost any entitlement under the
‘national treatment’ clause; they can still travel to Nepal without a
visa, and the Indian rupee is legal in Nepal, but permission to work,
purchase property, and engage in activities on a par with the Nepalese
is usually not available (Rajan, 2008).
Clause 4 of the Letters of Exchange has been another reason of

resentment among Nepali populace. It envisages to accord preference
to the Government of India and its nationals in case Nepal plans to
develop its natural resources and industrial projects. There is no such
provision in the main Treaty. Many Nepalis share the argument that
this provision should be either scrapped or revised as they think that
the preference could lead to India’s monopoly in Nepal and especially,
in the sector of natural resources like the development of hydropower
(Acharya, 2016).
The aforementioned clauses of Letters of Exchange and articles of the
Treaty are seen as major reasons behind the Nepalese demand to review
and many a time, demand to scrap the Treaty. The level at which the
Treaty was signed also seems to have triggered discontent in Nepalese
side. The Treaty was signed between the then Indian Ambassador to Nepal
Chandreshwar Prasad Narain Singh and the erstwhile Prime Minister
of Nepal Mohun Shamsher Jang Bahadur Rana. This was completely a
mismatch of protocol. The reasons behind the mismatch were not clear,
but it seems to have strengthened Nepal’s perception of this Treaty being
‘unequal’ (Hamal, 2002).
India, however has been maintaining that the Treaty has benefitted
Nepal more than India. The Indian Ministry of External Affairs has
mentioned that:
Under the provisions of this Treaty, the Nepalese citizens have enjoyed
unparalleled advantages in India, availing facilities and opportunities
at par with the Indian citizens (Indian Ministry of External Affairs,
2015).
Opinion that the Treaty is ‘unequal for India’ seems to have been
deeply ingrained in larger section of India (Prasad, 2014).
These views clearly indicate the serious differences prevalent between

Nepal and India apropos the Indo-Nepalese Treaty of Peace and Friendship.
And, probably due to these kinds of differing views between Nepal and
India, it took whopping 67 years before the official efforts to review
bilateral treaties began until recently.
Road to Review
Though there have been demands for the review of the Treaty time and
again, there is no provision for that purpose. Article 10 of the Treaty
only says that if either party wishes to terminate it can do so by giving a
year’s prior-notice. Hence, it could be concluded that even if the Treaty
is reviewed, a new treaty should be brought altogether. However, the
elements of the old treaty which both parties agree to continue and the
name could come de novo. Nepalese side has already ‘agreed to keep
the title of the treaty intact’ as it thinks ‘the tone of the title [is] very
positive’ (Pandey L, 2016). There is no much evidence when the issue
of reviewing or scrapping the Treaty began to emerge officially. But
many believe Nepal expressed its resentment from the ‘very outset’ the
Treaty came into existence (Thapa, 2016). The country saw four kings
after the Treaty but King Mahendra who ruled from 1955 to 1972 was
the ‘only monarch to raise the issue of 1950 treaty with India’ (Nayak,
2014). However, Kirti Nidhi Bista was ‘the first prime minister who
questioned the validity of the treaty in 1969’ and he ‘called the Treaty
to be outdated and non-operative and did not consider it essential to
inform each other while developing relations with any third country’
(Thapaliyal, 2012). Different political parties, especially the communists
continued to demand the abrogation of the Treaty during the Panchayat

or after the restoration of democracy in 1990. In 1995, the issue of
review of the Treaty was raised officially with India for the first time.
During the official visit to the southern neighbour by the first communist
Prime Minister of the country and the leader of CPN (UML) Manmohan
Adhikari, the matter of review of the Treaty found place in the joint
statement. Upon his return to Nepal, Adhikari even told the media that
‘India had agreed to review the existing 1950 India-Nepal Treaty…’
(Bhasin, 2005).
After this it became a routine topic during the high level visits but to
the chagrin, only on papers. It was in 1997 when Nepal, for the first time,
officially gave a proposal of a new treaty that it sought to replace 1950
Treaty with. The details of the proposal were not officially made public but
according to the press reports, in the proposal given by the then Foreign
Minister Kamal Thapa:
Nepal showed its keenness to accommodate in the new treaty what

she described as the legitimate security concerns of her neighbor,
while expecting that current status of non-reciprocity in offering
national treatment to each others’ citizens continued (Bhasin, 2005).
The Indian analysts and retired diplomats however described Thapa’s

proposal as a ‘non-paper’ which ‘for the first time set out Nepalese
ideas for a revision of the treaty’ (Rajan, 2008). During that period,
Inder Kumar Gujral was the prime minister of India who was famous
for his ‘Gujral doctrine’ which advocated the non-reciprocity in favour
of smaller neighbours like Nepal. Though India expressed its readiness
to review the Treaty during his tenure, things could not move ahead
in reality. Some argue that it was not the first time India expressed
its explicit readiness to review the Treaty upon Nepal’s request. Such
views are in Nepal too. Nepalese former Foreign Minister Ramesh
Nath Pandey in his autobiography Kutniti ra Rajniti had written the
following:
According to the record, during a meeting with erstwhile Nepalese

Foreign Minister Dilli Raman Regmi on May 6, 1954, the then Indian
Prime Minister said that Ranas raised the issue to make changes in
1950 Treaty. Along with this, the note sent to foreign ministry by
the erstwhile Nepalese ambassador to India on November 17, 1954,
showed that Nehru had given written directive to his foreign secretary
to update the Treaty (Pandey R N, 2015).
In 2008, these two countries agreed to form a high level committee at

foreign secretary level to ‘review, adjust and update the 1950 Treaty of
Peace and Friendship and other agreements’ during the then Prime Minister
Pushpa Kamal Dahal’s official visit to India. (Indian Ministry of External
Affairs, 2008) It was perhaps not much an achievement for Dahal who led
the armed struggle that had the abrogation of 1950 treaty as its one of the
major demands. But there was something to show in hands of Dahal to the
Nepalese public that at least a high level committee would be formed to
review, adjust, and update the Treaty. But nothing moved ahead later on.
However in 2011, during Prime Minister’s Baburam Bhattarai’s visit to
India, both sides agreed to form EPG to:
[L]ook into totality of India-Nepal relations and suggest measures

to further expand and consolidate the close, multi-faceted relations
between the two countries (Indian Ministry of External Affairs, 2011).
But it took almost 3 years for the Terms of Reference of EPG to be

finalized during the third Joint Commission meeting at the level of
Foreign Ministers in 2014 and, 2 more years to finally constitute the
EPG which consists of prominent personalities from Nepal and India
having extensive diplomatic, academic, and political experience. In the
first meeting held in July 2016 in Kathmandu, the EPG figured out the
bilateral agendas to be discussed. EPG categorized the agendas into five
different areas—‘political issues, government-to-government relation,
social and cultural relation, economic exchange, and developmental
cooperation’ (The Himalayan Times, 2016). Its second meeting was held
in Delhi in October 2016. In its 2 years tenure, EPG will come up with
recommendations in whole gamut of bilateral relations—the 1950 Treaty
being the prominent one.
Conclusion
There is a sense of optimism in both the capitals that EPG could
be an important step in sorting out deep-rooted misgivings and
misunderstandings. However, the future of trust and strength in bilateral
relations will squarely depend on the political will of Delhi and Kathmandu
as the recommendations of this Committee are not obligatory. There is
glimmer of hope though that the governments will be morally bound by
the recommendations of the Committee they formed themselves. The hope
looks further strengthened as the voices to review the Treaty are becoming
louder even in India. Former Indian Ambassador to Nepal, Rakesh Sood
observed that:
Modi government should declare its readiness to have open and

transparent discussions with Nepal on this (Treaty) so that (Nepali)
political leaders stop using it as a stick to beat India with (Sood,
2014).
In the similar tone, Indian foremost analyst C Raja Mohan had put forth
the view that:
Whether Kathmandu wants it or not, it is in Delhi’s interest to revise

the treaty with Nepal. Delhi certainly needs a new compact with
Kathmandu that has strong political support in Nepal and provides
a sensible basis for mutually beneficial engagement in the new 21st
century (Raja Mohan, 2015).
India, in 2007, updated its treaty with Bhutan and its seems to have
had positive impact on bilateral relations. Indian writer Shashi Tharoor
observed:
The previous client-state relationship reflected in India-Bhutan

friendship treaty of 1950 was altered when the treaty was updated
in 2007; it now not only reflects the contemporary nature of the two
countries’ bilateral relationship but also lays the foundation for their
future development in the twenty-first century (Tharoor 2012).
Nepal, is of course, a totally different country than Bhutan, in terms of its

nature and perspective towards India; however, the review of the Treaty
could glean the similar positivity in bilateral relationship. But for that, some
argue, the most essential precondition would be ‘India’s magnanimity as a
bigger neighbor to allow non-reciprocity in favor of Nepal’ (Karki R, 2016).
The big question is—Will that happen? We should wait at least for 2 years
till the EPG come up with its recommendations for the clear-cut answers.
References
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at http://kathmandupost.ekantipur.com/news/2016-02-01/india-wants-to-keep-
nepal-confined-to-1950-treaty.html, accessed on 01/12/2016
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available at http://mea.gov.in/bilateral-documents.htm?dtl/5231/Joint_Press_
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6
Nepal-India Diplomatic Relations in a
Historical Context
Kalpana Khanal
Abstract
N epal is a small country land-locked between two emerging economic

powers India and China. The southern, eastern, and western borders
of Nepal are surrounded by India and one special aspect of Nepal-India
relationship is the open border shared by both. This allows citizens of both
countries to cross the border without a visa, and allows the transport of
goods for everyday usage across the border. Besides the economic relations
across the border, the populations of Nepal and India are closely linked
with cultural and social ties. So the open border gives the opportunity for
people to live their social life unrestricted by the frontier.
Recently, Nepal promulgated its new constitution, which had been
in the making for past several years. Nepal’s adoption of a new federal
constitution has led to a souring of ties with India. India showed its
displeasure publicly by discontinuing essential supplies on which all
Nepalese are dependent. India’s trade embargo/blockade over the months
stagnated Nepal’s economy causing genuine hardship to Nepalese people.
The first section of this chapter sheds some light on India-Nepal
diplomatic relation in a historical context. The second section delves
into various treaties between Nepal-India and the ups and downs in the
diplomatic relation between these two neighbours. The third section looks
closely at the Indian trade blockade of 1989 and 2015. The fourth section
offers some insight on what Nepal could do going forward.
Nepal-India Diplomatic Relationship in a Historical

Context
Nepal is a small country landlocked between two neighbouring giants—
India and China. It shares open border with India in the east, west and
south, and is closed off from its northern neighbour China by the
Himalayan frontier. For the same reason, King Prithvi Narayan Shah
described the position of Nepal with an analogy ‘a yam between two big
boulders’. Nepal’s foreign policy and the dynamics of its relationship
with its neighbours have been shaped by a complex set of factors. Among
others, geographical location is one of the main reasons that contribute to
its international relations. The foreign policy of Nepal provides a useful
case study of the complexities that a small state in a difficult geo-political
situation faces because of the intrusions and policy directives of the major
powers.
Nepal and India are not only linked due to the proximity of land, but
they are bound together by cultural affinity, common linguistic and ethnic
identities, religious practices, affinity for food, etc. Some experts view
this as something created systematically as a result of Indian political
domination to Nepal since Indian independence. While other people
consider it as historical civilizational inter-linkages. No matter with what
lens one looks at it, the relationship between India and Nepal is an age-
old deeply inter-connected relationship (Kochhar, 2013). In the historical
context by sharing borders countries also share culture, religion, and other
intricacies of day-to-day life and such bond also exists between people of
Nepal and India (Shah, 1975).
History is inseparable from its geographic setting. History is
not only a function of natural conditions, but also of a man’s faith,
ideas and morals. There are always limits set by climate, history,
economics, and culture on a nation. These material facts, together with
the psychological and objective factors in the make-up of the people,
inspire its hopes and fears from generation-to-generation. Time and
men themselves cannot altogether change these factors; nevertheless
Nepal-India Diplomatic Relations in a Historical Context • 81
they must be understood and appreciated if one is to grasp the roots of

a nation’s foreign policy.
Although Nepal maintained its political independence throughout
this period, its history is intertwined with that of India. When the British
colonized India, Nepal was spared not because it was politically strong but
because the British got everything they wanted from Nepal without having
to occupy Nepalese territory. While anti-British movement was at the
forefront in India during the mid-nineteenth century, the Rana rulers were
convinced that the revolt had little chance for success and that Nepal’s
interests could best be served by aiding the restoration and preservation
of British rule in India. Rana rulers of Nepal acted as allies to the British
rulers and served their vested interests. Gorkha troops (Nepal) provided
military strength to the British. The negotiations between General Henry
Ramsey and Nepal government, led to the dispatch of Nepali arm force
to India. The Nepal government wrote the following statement to General
Ramsey:
There is no probability that this Government will receive any orders

from the British Government on such a trifling occasion, yet in
consideration of the friendship which subsists between the two states
it would not be consistent with the rules of friendship to keep silent
on hearing such intelligence. I, therefore, desire to say that we are
ready to execute any orders that may be given to this Government by
the Right Honourable Governor-General (Rose, 1971).
Nepal finally obtained an ‘unequivocal’ recognition of its independence

in the Sugauli treaty signed on 21 December 1923. The 1916 treaty was
also concluded at Sagauli. In the first clause, both governments agreed,
‘mutually to acknowledge and respect each other’s independence, both
internal and external.’ The scope of Nepal’s independence, however, was
limited somewhat by the third clause, which obligated each government
‘to exert its good offices’ to remove causes of ‘any serious friction or
misunderstanding with neighboring states whose frontiers adjoin theirs’
(Rose, 1971). Although defined in terms of mutual obligation, in fact this
meant that Nepal would continue to ‘consult’ the Government of India on
relations with Tibet, Sikkim, Bhutan, and China.
Later during World War I, the Rana government loaned the Indian
government ten battalions of Nepal state army and also facilitated
recruitment for the Gurkha battalions in the British Indian army.
Approximately 55,000 Nepalese were recruited into those units during the
War. The Ranas had foreseen British withdrawal from India as antagonistic
to Nepal. India was led by the Congress party in the aftermath of British
withdrawal. It came as a pleasant surprise to the Ranas that the Congress
led government was quite friendly to Nepal. Nepal and India winded
with a ‘standstill agreement’ under which India’s status as the successor
power to the British was recognized and the terms of relationship between
Nepal and India as they existed prior to independence were retained.
India implicitly accepted the 1923 treaty in which Nepal’s internal and
external sovereignty had been recognized. The Ranas were assured that
the relations with the Congress government in India would be established
on the same basis as those with British India. This included retention of
Gurkha recruitment programme and Nepali military assistance to India in
crisis situations (Rose, 1971). In the aftermath of British withdrawal from
India the Rana government signed treaties of ‘peace and friendship’ and of
‘trade and commerce’ with India in 1950. Significant clauses in the Treaty
of Peace and Friendship are articles 2, 5, 6, and 7 (Ministry of Foreign
Affairs of India, 2015). Article 2 obligates both governments ‘to inform
each other of any serious friction or misunderstanding with any neighboring
state likely to cause any breach in the friendly relations subsisting between
the two governments.’ This Article leaves a big room for interpretations
of the clause ‘breach of friendly relations’ and has further granted India
the pretext to question Nepal’s dealings with any neighbouring state, most
importantly China. Article 5 grants Nepal to import arms and ammunition
from or through the territory of India. Articles 6 and 7 ensures reciprocal
rights to citizens of each country to participate in industrial, economic
development, residence, ownership of property, trade and commerce,
movement and other similar privileges.
Meanwhile, Chinese occupation of Tibet was looming in the horizon. On
7 October 1950, the Chinese government launched an attack against Tibet.
The Indian government felt threatened by the sudden presence of Chinese
troops along the Himalayan frontier. Exactly around the same time anti-
Rana movement was underway in Nepal. Indian role in the Movement

was a very contentious issue. The then Prime Minister Jawaharlal Nehru’s
speech in the Lok Sabha on 6 December 1950 reflected his concern for the
situation in Nepal at the time.
Our interest in the internal conditions of Nepal has become still

more acute and personal, because of the developments across our
borders, to be frank, especially those in China and Tibet. Besides our
sympathetic interest in Nepal, we were also interested in the security
of our own country. From time immemorial, the Himalayas have
provided us with a magnificent frontier. Of course, they are no longer
as impassable as they used to be but they are still fairly effective. The
Himalayas lie mostly on the northern border of Nepal. We cannot
allow the barrier to be penetrated because it is also the principal
barrier to India. Therefore much as we appreciate the independence
of Nepal, we cannot allow anything to go wrong in Nepal or permit
that barrier to be crossed or weakened, because that would be a risk
to our own security (Ministry of Information and Broadcasting, India
1954).
Nehru was a champion of freedom and independence of all nations, but

he found it difficult to resolve the dilemma in a practical and expeditious
manner when it came to the foreign relation with bordering states like
Nepal, Bhutan, Sikkim, etc. Indian influence in Nepali foreign policy
after 1950 was very dominant and pervasive, strong enough to have
Nepal’s independent policy redundant. As articulated by Rose (1971),
Indian version of ‘Nepal’s interests’ was accepted almost automatically in
Kathmandu and in some cases ‘Nepali leaders tended to be over responsive
in this respect, interpreting even casual suggestions by the Indians as
advice to be acted upon.’ In many instances the Nepal government not
only followed New Delhi’s guidance but actually took the initiative in
seeking it. The tendency of Nepali high officials to visit New Delhi for
advice during critical times in Nepal was informally established as a norm.
India started assistance programs to Nepal after 1950. Some of the
programs such as the Koshi which was funded with the goals of flood
control, electricity, and irrigation became controversial. Even though it
came as a very generous act from India there were several caveats in the
deal. India benefited more from this project than Nepal; actually the water-
storage facility would prevent excessive flooding in India while ruining
some of the most fertile agricultural land in the eastern Nepal (Rose,
1971). Anti-Indian sentiment became prevalent in Nepal from 1953.
India’s influence has been so dominant in all spheres of Nepali life that the
Nepali people feel obliged to appear different from the Indians at every
possible opportunity. Differentiation from India in cultural as well as
political terms today is considered essential for viable and distinct Nepali
national identity.
Nepal-India Trade Relationship and the Repeating Instance

of Trade Blockades
In 1960, the Treaty of Peace and Friendship (1950) between Nepal and
India was revised and in addition to that Nepal also signed Gandak river
agreement. The Gandak agreement allowed India to use the Gandak river,
with its head-waters in Nepal, for irrigation of Bihar and UP despite
Nepal’s riverine rights, the benefits to Nepal was less than 5 per cent of
those expected to accrue to India.
The political atmosphere between the two neighbours deteriorated in
the early 1960s. The main reason was that India was trying to misuse
the general nature of the articles in the Treaty of Peace and Friendship
for its own benefits and in many instances putting Nepal at a stake. This
period also reflected that aid agreements and their implementation could
be quite different. Indian aid projects went into slow gear. Furthermore,
deliberately exploiting the loopholes in 1960 treaty, India also informally
promoted a stricter control over Nepal’s imports and exports. The
culmination of these events was the ‘Raxual blockade’ which went for
several weeks in 1962. The Indian authorities stopped all Indian goods
from moving to Nepal.
There was a war between China and India in 1962. The China-India
war of 1962 commonly known as the Sino-Indian war enhanced the
importance of Nepal for both India and China. Previously, Nepal had
refused to consider itself a buffer state in the military sense, but after 1962
it found itself in the role of an ideological buffer (Shah, 1975). Lidarev
(2012) mentioned that ‘The rivalry has also led both sides to compete for
influence in their peripheries, especially in Burma and Nepal, and to resent

the spread of the other’s influence close to their borders.’
Nepal initiated some revisions as it faced some bitter experiences in the
late 1960s due to the 1960 treaty. Based on Shah (1975), the main goals
Nepal envisioned to achieve during the course of negotiation of 1971
treaty are as follows:
1. Separate treaties covering trade and transit;
2. Trade route to East Pakistan (now Bangladesh) thorough the Indian
territory of Radhikapur in the Dinajpur district of West Bengal;
3. The qualitative and quantitative restrictions on Nepal’s imports
from third countries and its exports to India should be removed;
4. The customs procedures should be simplified;
5. The additional warehouse space in the port of Calcutta should
be treated as a free port zone and should be placed under Nepali
supervision;
6. Provision for operating barges in the Calcutta port and for
transporting commercial goods from the Calcutta port to their
destination in Nepal by sealed container trucks; and
7. Ships bearing Nepali flags in Indian ports should receive same
treatment as that given to Indian ships.
However, all of these proposals were not manifested as Nepal had to
compromise based on India’s will. Nepal had to agree on a single treaty on
trade and transit. The discussion of overland trade route to east Pakistan
via Radhikapur was also not settled. Nepal also had to abide by qualitative
and quantitative restrictions on both its imports to and exports from India
and other countries. Under the 1971 treaty, India was allowed to refuge
entry of Nepali goods into India on several grounds. India could always
exploit the vague meaning and scope of the expression ‘goods of Nepali
origin’. The two important provisions Nepal was able to manifest in the
1971 treaty were, increased warehouse space under Indian supervision in
the Calcutta (Kolkata) port, the facility for operating barges in the port and
for trucking commercial goods from the port area to their destination in
Nepal in sealed container trucks.
India’s Vested Interest and the Trade Blockades of 1989

and 2015
Because of Nepal’s landlocked geo-political situation it has to rely heavily
on India for trade and transit facilities. However, due to the lack of modus
vivendi Nepal has to repeatedly face difficulty in trade relationships with
India. In the late 1980s, India-Nepal relation reached its lowest point
when India closed 19 of the 21 trade routes and 13 of the 15 transit routes
through India. Additionally, the links to the Kolkata port, which served as
the only sea outlet to land-locked Nepal, was also cut off.
On the face of the blockade the reason given by Delhi was related to
renewal of the trade and transit treaty; however, the underlying cause was
quite different. Many Nepali diplomats saw it as a step taken by India
to punish Nepal for its closeness with China. There were sequences of
events happening on the Nepali side around that time. In 1987, Nepal tried
to introduce a system of work permits for Indian nationals working in
Nepal. In 1988, Nepal purchased arms from China, and both these moves
offended India. India asserted that under the 1950 treaty, Nepal should
have consulted India before purchasing the arms. To this, Nepal insisted
that the provisions of the Treaty only required consultation if the arms were
imported through India. The 13-month long blockade had a devastating
effect on Nepal’s economy.
Nepal faced another trade blockade by India in 2015. It was one of the
worst blockades in Nepali history because of its timing. This blockade
happened couple of months after a 7.8 magnitude earthquake struck central
Nepal on 25 April 2015 that killed 9,000 people. Nepal’s emergency got
even worse when the vulnerable country and its people were confronted
with another humanitarian crisis, that is, trade blockade by India. Because
of the blockade landlocked Nepal’s border checkpoints with India were
blocked and imports of petroleum, medicines, and earthquake relief
material had been choked. The impact of the Indian blockade on Nepal’s
economy outstripped damage from the earthquake.
The blockade immediately followed the promulgation of a new
constitution by Nepal on 20 September 2015. The Indian government
under the current Prime Minister Narendra Modi expressed its displeasure
at Nepal’s constitution. His position was made clear in a series of
statements issued by the Ministry of External Affairs (MEA) in New Delhi.

Citing MEA sources, Indian Express circulated a seven-point demand
for amendments to the Constitution, within days of its promulgation.
The differences between India and Nepal grew more noticeable when
Kathmandu began to act independently. After the Constituent Assembly
election in 2008, the perception emerged among the Nepalese that India
was bullying Nepal to secure its own interests over hydropower energy,
development projects, business, and trade. Tensions then reached its peak
in June, when Nepal promulgated the new Constitution, after 5 years of
delay, without consulting India.
India felt that it was not given due gratification when Nepal finally reached
its momentous decision. India expressed its specific concerns indicating the
ongoing protests in the Nepal-India border. While a discontented Madhesh
unrest in southern Nepal bordering India could potentially destabilize the
Indian side of the border, Modi and the Bharatiya Janata Party (BJP) had
additional reason to be discontent with Nepal. Modi and other BJP cadres
tried to invoke religious narratives on several occasions to redefine Nepal-
India relationship. Regardless of India’s paternalistic behaviour towards
Nepal and the country’s overwhelming Hindu majority Nepal’s political
parties adopted secularism.
There were several economic and social consequences of the 2015
Indian trade blockade. The health consequences include limited provision
of basic health and emergency services. Nepal also faced perverse
impact on transportation and cold chain of essential vaccines and drugs
were broken. Fuel crisis took its toll. Construction work at five different
hydroelectric projects in Nepal had to be discontinued because of lack
of fuel. Black market for fuels, cooking gas and petroleum, mushroomed
and only a handful of urban and rural elites had access to fuel, the general
public was pushed back to firewood. The reconstruction effort after the
earthquake almost came to a halt. Service sectors including hospitality
industry, tourism, and banking were also marred.
By imposing informal trade blockade in Nepal, India has time and
often violated the international conventions and multilateral agreements
that both Nepal and India have agreed upon. India’s action violates the
United Nations Convention on the Law of the Sea 1982, Provisions of
World Trade Organization, and Nepal-India Transit Treaty and Agreement

on South Asia Free Trade Area Agreement (SAFTA).
Article 125, Right of access to and from the sea and freedom of transit
of United Nations Convention on the Law of the Sea 1982 states as
follows:
Land-locked states shall have the right of access to and from the
sea for the purpose of exercising the rights provided for in this
Convention including those relating to the freedom of the high seas
and the common heritage of mankind. To this end, land-locked states
shall enjoy freedom of transit through the territory of transit states by
all means of transport.
Similarly Article 130 Clause I of the same Convention mentions that:
Transit states shall take all appropriate measures to avoid delays or

other difficulties of a technical nature in traffic in transit.
Clause II further states that:
Should such delays or difficulties occur, the competent authorities

of the transit states and land-locked states concerned shall cooperate
towards their expeditious elimination (United Nations, 2016).
Article 8 of SAFTA agreement also provides a special trade and transit

provision for land-locked nations, which states that contracting states
should agree to consider ‘transit facilities for efficient intra-SAARC trade,
especially for the land-locked Contracting State’.
Way Forward
Nepal promulgated its new constitution, which had been in the making
for past several years. Nepal’s adoption of a new federal constitution
led to a souring of ties with India. The unofficial 2015 India-Nepal
trade blockade was a consequence of India trying to establish its active
role in shaping Nepal’s new constitution. While on the one hand, it is
correct on Nepali side to raise voice against Indian ‘unilateral coercive
measure’ to compel Nepal to amend its newly promulgated constitution
according to India’s recommendations. On the other hand, it is important
to consider the internal ethnic dimension in Nepali constitution making

process. It is vital to recognize the fact that the geo-political crisis
around the Nepali Constitution arose not simply because India wanted
more of its role in Nepal. Majority of Nepali political leaders and
lawmakers dominated by hill Brahmin, Chhetris and Newars failed to
fully protect the rights, interests and genuine concerns of Tharu and
Madheshi (terai origin people) while making major decisions about
the Constitution, especially delineating the provinces of the new Nepal
(Ojha, 2015; Rai 2015).
As Koirala and Macdonald (2015) eloquently puts it:
This feud is only the most recent manifestation of a complex and

often tense relationship between the two countries, which shapes
Nepal’s domestic politics. Since Nepal’s democratization began in
2008, the key points of contention for its Constitution have centered
around rights and special provisions for ethnic minorities, including
the Madhesis.
Current political rhetoric has focused not on reconciling legitimate ethnic

demands, but instead on nationalistic calls for greater distance between
Nepal and India. Nepali people, by way of reaction, feel exercised to
appear different from the Indians at every possible opportunity. This is
seen as almost essential for the purpose of national identity. To resolve this
internal issue Nepali politicians should address the valid and significant
concerns of the Madhesis and other ethnic minorities.
Instead of using ultra-nationalistic anti-India rhetoric whenever
Nepali politicians cannot solve their internal crisis such as addressing
the demands of agitated minority groups, the politicians should try to tap
the economic opportunities from the double-digit growth in India. With
a steady economic growth in India over past two decades, a world-class
highway network expands all over India. The upgrading and expansion of
the highway networks is accelerating development activities in the Indian
states. The cost of transportation is decreasing. If Nepali politicians and
diplomats are wise enough this could also mean enormous opportunities
for the Nepalese goods in India. Many international scholars have
also argued that India’s high and steady growth will have positive and
important implication to global growth, inequality, and poverty. As a next-

door neighbour there is a lot Nepal can gain from India as well as China’s
economic transformation. This is only possible if Nepal’s political
leadership, diplomats, and bureaucrats are capable enough to view the
ongoing positive changes happening in the Indian as well as Chinese
sides.
In addition to trying to tap economic and trade benefits from India,
Nepal can learn from various public policies in India. First, employment
generation policies can play significant role in transformation of Nepali
economy and there is a lot Nepal can learn from India in this regard.
In 2005, India passed the National Rural Employment Guarantee
Act (2005) that commits the government to providing employment
in a public works project to any adult living in a rural area. The job
must be provided within 15 days of registration, and must provide
employment for a minimum of 100 days per year (Hirway, 2006). The
programme intends to provide jobs to create durable assets for the rural
poor, in areas such as water conservation, irrigation canals, drought
proofing, and so on (Dasgupta, 2013). In the past, public employment
programmes in India targeted at the poor were generally identified with
the poverty alleviation. National Rural Employment Guarantee Act
2005 goes beyond poverty alleviation and recognizes employment as a
legal right (Chakraborty, 2007). Nepal can design its own employment
generation policy which can be the first initiative in terms of making
Nepali people self-sufficient.
Second, in Nepal, one of the factors that have limited the use of
monetary policy for domestic purposes has been the fixed exchange
rate. The fundamental problem with a fixed exchange rate is that the
government must be prepared to forgo completely the use of monetary
policy for domestic purposes, and it simply installs structural adjustment
as a permanent start of affairs. Therefore, flexible exchange rates is
essential to allow domestic resource mobilization, that is mobilization of
unemployed labour force.
On the Indian side, the most important thing needed is to provide an
assurance that it will never again use its geographical advantage to bully
its Himalayan neighbour Nepal. The Government of India should treat
Nepal as an independent nation with its own diplomatic policies rather

than treating Nepal as India’s younger sister. Diplomats and lawyers
need to find ways in which Nepal is guaranteed unhindered access to
the sea and an uninterrupted flow of its goods (Editorial, Economic and
Political Weekly, 2015). India should proactively encourage reform in
Nepal through diplomatic channels rather than public admonishments and
economic punishment reactively. For the given cultural-political dynamics
in Kathmandu, India has significant leverage to sway Nepali politics but
India needs to demonstrate sensitivity, caution, and astuteness at a moment
that will inevitably be transformative for Nepal (Koirala and Macdonald,
2015).
References
Chakraborty, Pinaki (2007), “Implementation of the National Rural Employment
Guarantee Act in India: Spatial Dimensions and Fiscal Implications,” The Levy
Economics Institute, Working Paper No. 505, July.
Dasgupta, Poulomi. (2013), “Employment Generation Schemes and Long Term
Development: A Case Study of the NREGA in India,” in Michael J. Murray
and Mathew Forstater (eds) Employment Guarantee Schemes: Job Creation and
Policy in Developing Countries and Emerging Markets, p.103-125
Economic and Political Weekly.(2015), “Editorial,” Vol l, No. 51, December 19.
Hirway, Indira. (2006), “Enhancing Livelihood Security through the National
Employment Guarantee Act: Toward effective implementation of the Act”, The
Levy Economics Institute, Working Paper No. 437, January, www.levy.org,
accessed on 1 June 2016
Kochhar, Geeta. “Nepal-China Closeness: What India Loses?” Chennai Centre for
China Studies, aper No:1135 dated April 24, 2013, accessed on April 2, 2016:
http://www.c3sindia.org/china-internal/3556
Koirala and Macdonald (2015). “India in the Madhesi Movement,” Economic and
Political Weekly, Vol L, No. 45, November 7.
Lidarev, Ivan. 2012. “History’s Hostage: China, India and the War of 1962,” The
Diplomat. Accessed July 18 2016 : http://thediplomat.com/2012/08/historys-
hostage-china-india-and-the-war-of-1962/1/
Ministry of Foreign Affairs India. 2015. Treaty of peace and friendship, accessed
on July 25, 2015: http://mea.gov.in/bilateral-documents.htm?dtl/6295/
Treaty+of+Peace+and+Friendship
Ministry of Information and Broadcasting, India,1954. Jawaharlal Nehru’s Speeches,
Vol II, p. 257.
Ojha, Hemant. 2015. “India Nepal Crisis,” The Diplomat, November 27, accessed
July 15, 2016 http://thediplomat.com/2015/11/the-india-nepal-crisis/
Rai, Dovan. 2015. “Madhesis among US,” The Record, October 05, accessed July 20,
2016 http://recordnepal.com/perspective/madhesis-among-us
Rose. Leo E. (1971), Nepal: Strategy for Survival, Mandala Book Point, Kathmandu
Nepal.
Shah, Rishikesh.(1975),Nepali Politics: Retrospect and Prospect, New Delhi: Oxford
University Press.
United Nations. (2016), United Nations Convention on the Law of the Sea, accessed
on July 25, 2016 http://www.un.org/depts/los/convention_agreements/texts/
unclos/unclos_e.pdf
7
Rapprochement of India-Nepal
Relations Since 2015
Aparna
Abstract
T his paper shall focus on the major changes which have taken place
between India and Nepal since 2015. Historically, India-Nepal relations
are bound by culture, religion, tradition, language, marriage, mythology
and people-to-people contacts of kinship. Year 2015 has witnessed so many
changes in their relationship e.g. Nepal faced a devastating earthquake,
contentious issue of federalism, Madhesis agitation on issues of rights
and citizenship, an economic blockade which affected the India-Nepal
relations, and others. In this context, this paper will critically analyze
India’s role in Nepal since 2015 and in the Madhesi movement and will try
to find it’s deepen roots in history. An overview of China-Nepal relations
will also be taken; especially in context of China’s is investment in Nepal’s
rail, road and energy sector.
Introduction
Historically, India-Nepal relations are bound by culture, religion, tradition,
language, marriage, mythology, and people-to-people contacts of kinship.
India and Nepal are like ‘a family’ than ‘a friend’ only. The year 2015
witnessed many changes in their relationship like Nepal faced a devastating
earthquake, contentious issue of federalism, Madhesis agitation on issues
of rights and citizenship, an economic blockade which affected the India-

Nepal relations, and others.
In context of bilateral relations between the two countries, the year
2015 started positively in the backdrop of the visits which the current
Indian Prime Minister Narendra Modi has paid to Nepal (twice in a
year—the first occasion was a state visit and the second was to attain
the SAARC Summit). Print and electronic medias of both the countries
marked the visits as ‘historic’ and ‘a new beginning’ between India
and Nepal relationship. Different agreements and Memorandum of
Understandings (MoUs) were signed on this occasion. The Indian Prime
Minister Narendra Modi has dreamed for a future which would be guided
by the 4Cs (cooperation, connectivity, culture, and constitution), and
followed by the HIT Formula—Highways, Information Infrastructure,
and Transmission lines.
Things were going on the track but the promulgation of a new
constitution in Nepal on 20 September 2015, has led to a violent protest in
the Terai region. The new constitution has failed to satisfy the Madheshis
and Tharus who constitute 70 per cent of the Terai population.
Devastating Earthquake
Nepal was hit by a widespread devastating earthquake of 7.8 magnitude on
25 April 2015. Due to this, directly or indirectly, approximately 8 million
Nepalese were affected. At the need of hour, India rushed up with every
possible support and immediately sent disaster-relief personals, medical
personals, and humanitarian relief equipments (like food, water, blankets,
tents, etc). For the reconstruction of Nepal, an International Donor
Conference was held on 25 July 2015, and India pledged to donate US$
1 billion whereas other donors like China, the Asian Development Bank,
Japan, United States, European Union, etc, collectively pledged for US$
2 billion.
Biswas Baral depicted a picture of the corruption and delay in the
reconstruction work in Nepal. According to him:
For the longest time, the political parties fought over the control
of the reconstruction authority and institutions. At the time of its
formation, the authority decided to start everything anew, this added
Rapprochement of India-Nepal Relations Since 2015 • 95
to the delay. Hence, a year into the earthquakes, even the first phase
of reconstruction—the detailed survey of all destroyed homes—is as
yet incomplete.
Baral hoped that India can help Nepal to accelerate the reconstruction
work. India can also promote its corporate houses who are willing to help
Nepal in reconstruction work. The Times of India mentions as follows:
A number of corporate houses such as the RPG Group, Mahindra

Group, Bajaj, Videocon, India Bulls, have expressed their willingness
to contribute financially towards the rehabilitation in Nepal.
According to Ravi Pandalali:
Though China has both the economic might as well as expertise

in large scale infrastructure construction; India should use this
opportunity to play a major role in Nepal’s reconstruction.
For India a big but very sensitive opportunity is calling in Nepal; where
not only her quantitative but qualitative performance is required.
Issue on Federalism and Madheshi Agitation

On 9 August 2015, Nepal’s top three political parties–Nepali Congress,
Communist Party of Nepal (Unified Marxist Leninist), and the UCPN
(Maoists) decided decided to demarcate the country into six provinces
(each shares its border with India). Professor S D Muni states, ‘but this
Constitution ignores the aspirations and sensitivities of the Madhesis,
the janjatis (tribal groups), dalits and women.’ According to Hari Bansh
Jha,
‘consequently, none of the major Madhesh-based parties signed the

Constitution, which has serious flaws. The new Constitution has
a provision for a 165-member Parliament, but the constituencies
have been demarcated in such a way that the people of the hill and
mountain region would get 100 seats, despite the fact that their share
in Nepal’s total population is less than 50 per cent. On the other hand,
the Terai region constituting over half of the country’s population has
been allocated only 65 seats.
The United States Agency for International Development (USAID) Nepal

in a report defines Madhesis as follows:
An indigenous population located in the Terai region bordering India,

constitute about 40 per cent of the population in Nepal and have been
historically marginalized from the political, economic and social
sectors of the country.
Further, this Report refers to Dr Harka Gurung’s article:
Basically, there are three main social groups in Nepal that have been
marginalized by the state’s monopolistic policy. They are Janjati
(ethnic groups) on the basis of culture, the Dalits (untouchables)
on the basis of caste, and the Madheshi (T[e]rai) on the basis of
geography.
Madhesis have always got a second class treatment by the Kathmandu

based upper caste establishments and this is not their first attempt. Nepal
suffered for 3 weeks in 2007 on Madhesh issue. In massive protest and
demonstration many people were killed, hundreds got wounded, and
national property worth few millions was destroyed. Ironically, the
ruling party has blamed this movement as ‘pro-palace’ agitator, ‘Hindu
fundamentalist elements’ and ‘communal violence’ (UNAID Nepal Report,
2007). Hari Bansh Jha says situation came under control only when:
[T]he government made a formal agreement with the Madheshi

leaders for the formation of a single autonomous Madhesh Pradesh
with the right to self-determination.
Nepal has adopted a new constitution on 20 September 2015. Because

of the discriminatory constitutional provisions, terai region has burnt for
months again. Professor S D Muni states as follows:
The use of force by the government to suppress the agitation has

resulted in the loss of more than 40 lives, with many more injured. Life
has come to a standstill in nearly 20 of the 22 Terai districts of Nepal.
In response to the ‘hard measures’ of the Nepalese government, the

unofficial border-blockade (India is accused for keeping this blockade)
was kept for four-and-a-half-months which ended in the first week of

February 2016. This border blockade has led to the shortage of petrol
and other essential commodities in Nepal. The Dawn reported from the
account of CPI-M weekly editorial: Nepal was compelled to approach
China and an agreement was arrived at whereby 1,000 metric tonnes
of petrol are being supplied by China through the land route from
Tibet. The Foreign Minister of Nepal has gone to the United Nations
to complain about the Indian-inspired blockade. Most of the SAARC
countries have expressed concern about the blockade faced by the
Nepali people.
This blockade affected Nepal badly. Professor S D Muni talks about this
flaw and states as follows:
To punish a whole population in order to put pressure on a powerful

ruling coterie is counter-productive. A huge new constituency of
India haters has been created in Nepal as a consequence of India’s
coercive diplomacy.
Madheshi people have a long history of discriminated treatment.

The foremost reason is internal lack of coherence and trust among the
Madhesh leaders. Professor S D Muni also talks about the fragmented
Terai leadership. He states as follows:
Many of the Madhesi, janajati and women members of the Constituent

Assembly have also voted for the new constitution–though under the
pressure of their political bosses.
Insufficient representation in the Constitutional Assembly is also a big

reason. Hari Bansh Jha says that, ‘Despite the overwhelming size of
population of the Madheshis and Tharus in Terai, they could get only 10
per cent seats in the 601-member Constituent Assembly II in the December
2013 elections’. He continues, ‘Madhesh leaders lost the elections because
their votes were divided, making it easier for non-Madheshi leaders to
win.’ Other big actors like the United States, China, and the European
Union has welcomed the Constitution and kept silence during unrest in the
terai region. All these reasons have given fair space to the discriminatory
constitution.
The character of terai people is changing. The new generation of terai

is very sensitive and aware of their rights; they want to be treated equally
and have equal share in the power structure. Professor S D Muni gives
some suggestions to the Nepali government over Madhesh issue. These
are as follows:
The sharpening of the ethnic divide is not in the interest of Nepal’s

unity, stability and progress, now or ever. There are instances to draw
lessons from the neighbourhood and elsewhere for Nepal in this
respect.
India’s frustration as well as strategic and emotional concern for

Madhesi people is completely understandable. The Indian government
has conveyed the importance of an inclusive government repeatedly
to Nepal, but every time it was neglected. In the last minute effort
the current Indian Prime Minister Narendra Modi has send a special
envoy, Foreign Secretary S Jaishankar to Nepal but this effort went
in vain.
Prime Minister Oli’s Visit to India and China

For improving bilateral relationship and clearing misunderstandings
(which got strained because of Madhesi agitation over discriminatory
constitution) Nepalese Prime Minister K P Oli paid visit to India in February
2016. Nine agreements got inked during this visit including energy trade,
transit facilities, cultural exchanges as well as road construction and post-
earthquake reconstruction support. Nepalese Prime Minister K P Oli
remarked as follows:
The misunderstanding that persisted in the last few months is no

longer there. I believe our relationship will greatly benefit from our
discussions. It is high time to look at India-Nepal relations with a
forward-looking approach in the interest of the two countries and
their people (The Indian Express, 21 February 2016).
The Indian Prime Minister Narendra Modi once again reiterated the
importance of an inclusive constitution and peace through consensus
and dialogue. This is noteworthy that this bilateral visit has come on the
backdrop of the two constitutional amendments passed by the Nepal’s
parliament, which are expected to address the grievances of the Madhesis

and other minorities.
The Madhesh movement is getting weaker, and the mysterious blockade
has also ended. But it has left many questions and due expectations from
the Government of Nepal. Now the development of Madhesh region will
depend on the qualitative delivery of the Nepalese government promises
made to India.
China: A Permanent Alternative?

A month after India visit, the Nepalese Prime Minister K P Sharma Oli
paid an official visit (20-27 March 2016) to China. Media of both the
sides has hyped and praised this visit as historic and successful. Ten
agreements and MoUs got signed, especially the much awaited transit
transportation agreement. Professor S D Muni gives a complete picture
and states as follows:
Mr. Oli concluded 10 important agreements and memoranda of

understanding (MoUs) during this visit to China. They cover the
fields of transit and trade, connectivity and infrastructure, energy
exploration and storage, banking, scholarships and training. Some
of these agreements are projected as historic and unprecedented,
particularly those related to transit through China and rail and road
connectivity between Nepal and China.
During this visit, the Nepalese Prime Minister K P Sharma Oli addressed
at Renmin University and the Chinese business community and said the
following:
China has respected our sovereignty and supported our development

endeavours. Our two nations have been all-weather friends, friends at
times of distress as well as at the time of comfort.
He continued about Nepal-China relationship:
Higher than the Mount Everest, and superior than the Great Wall.
Nepalese Prime Minister has also shown his keen interest in China’s
ambitious ‘Belt and Road initiative’.
In Nepal, anti-India sentiment seems to an essential and fertile element

for being a Nationalist. This is a popular fashion but not a new trend in
Nepal. From 1960, King Mahendra and his successors King Birendra and
King Gyanendra opted for the similar policies, what K P Sharma Oli’s
government has opted for. Media has hyped Nepalese Prime Minister’s
visit to China as a milestone. But, Professor S D Muni says, ‘On close look,
these agreements appear to be higher on symbolism than on substantial
commitments for delivery.’ Later he concludes as follows:
India need not press the panic button or employ ill-conceived

diplomatic moves in response to Nepal’s so-called flashing of the
China card. Nor should it make an unethical compromise with
Kathmandu on the legitimate interests of Madhesis and other
marginalized groups.
Before opting for any radical or aggressive policy for India, Nepal has to
understand her geographical compulsions. Nepal can maintain good and
friendly relationship with China but it should not be on the cost of India.
India’s Policy Shift

For the first time in history, India has discussed its bilateral relations with
Nepal in the United Nations or elsewhere. This is an important and critical
shift in India’s foreign policy. India believes firmly in bilateral solutions
and it never appreciated external intervention in its backyard. At the
United Nations Human Rights Council in Geneva, India criticized Nepal’s
human rights record, especially in dealing with the Madhesi agitation. The
Statesman reported:
The Indian representative said in Geneva that Nepal should ensure the
effective functioning of the Truth and Reconciliation Commission and
full implementation of its recommendations, including prosecution
of those responsible for violent insurgency.
In response to this the Nepalese Prime Minister K P Sharma Oli accused

India for, ‘digging out a decade-old-issue’ and said ‘It’s a political ploy.
I don’t understand why India is unhappy with Nepal.’ Further he asked,
‘Is it (India) not aware of the completion of the peace process with the
United Nations’ involvement?’In a second move, in a joint statement

during India’s Prime Minister Narendra Modi’s visit to the United
Kingdom, India and the United Kingdom advised Nepal to address the
prevailing grievances of different sections of the people. Republica
reported about the India-United Kingdom joint statement, ‘stressed the
importance of a lasting and inclusive constitutional settlement in Nepal
that will address the remaining areas of concern and promote political
stability and economic growth’. During this visit, Prime Minister
Narendra Modi witnessed outraged slogans from the Nepalese people
saying, ‘Back Off India’. Certainly this shift in India’s foreign policy is
not a good sign for Indo-Nepal relations. As a responsible regional actor
India should not lose temper and should wait for an appropriate time for
action. Any coercive diplomacy will again fuel anti-India sentiment in
Nepal.
Gentleman’s Understanding
In Nepal, in 2015, ‘Gentleman’s Understanding’ has become one of the
most controversial national issues. Controversy says, an understanding
was made between CPN (M-C), CPN (UML) and the Nepali Congress to
share the power alternatively or rotationally. The post of Prime Minister
was bargained by these political parties.
Problems started within the coalition partners, when Prime Minister
K P Sharma Oli refused such deal or agreement. Ultimately, this led to
the fall of the government and Nepal’s Prime Minister K P Sharma Oli
stepped down and paved the way for CPN (M-C) and NC alliance-led
government once again. Over the no-confidence motion in the Parliament,
Prachanda accepted:
PM Oli monopolized the government functioning and he did not

pay attention to implement the agreement reached with us, including
a gentleman’s agreement to hand over the leadership to us’ (The
Diplomat, 26 July 2016).
In the last 8 years, government has changed in Nepal nine times and
still there is no hope for political stability. These frequent changes in
the government have given very negative and bad impact to the socio-
economic growth and development of the country. Nepal’s national politics

is witnessing pitiful politics every day.
Conclusion
After the Maoists insurgency in 1996, two decades has passed but still Nepal
is searching for political stability which has lost in the power struggle of the
greedy political party leaders. If this situation continues for long, definitely
the upcoming elections will badly affect the constitutional crisis in Nepal.
Therefore, this is for the Nepalese people and the political party leaders to
work together with the spirit of togetherness and nationalism. India is also
looking forward in this way. The Indian Prime Minister Narendra Modi
repeated the importance of peace and stability in neighbourhood and said
that, ‘It is clear that Nepal’s stability is linked to India’s security.’ India
should also focus on the ongoing reconstruction work in Nepal rather
than getting indulged in tong-war. Anti-Indian nationalism feeling is not
healthy and good for the Indo-Nepal relation in particular and South Asian
region in general.
Indo-Nepal relation is multi-dimensional and multi-faceted, and it goes
beyond the economic and security issues. Like other families, both the
countries also have few contentious issues but no two countries in this
world maintains so deep geographical, historical, cultural, economic, and
strategic relations with each other as India and Nepal.
References
Acharya, Prakash (2016), “Oli draws flak for his take on the constitution”, The
Himalayan Times, Kathmandu, July 24, 2016
Baral , Biswas (2016), “A Year On, Nepal Earthquake Victims Are Still Struggling”,
[Online: web], accessed August 7, 2016 URL: http://thewire.in/2016/04/23/a-
year-on-nepal-earthquake-victims-are-still-struggling-31045/
Bhatacharjee, Kallol (2016), “After Oli, Nepal’s Army Chief to visit China”, The
Hindu, International, March 24, 2016.
Bhattarai, Kamal Dev (2016), “Nepal’s Unending Political Instability”, The Diplomat,
July 26, 2016.
Ghimire, Yubaraj (2016), “Nepal: KP Oli steps down, Prachanda set to be new PM”,
The Indian Express, New Delhi, July 25, 2016
Ghimire, Yubaraj (2016), “Next Door Nepal: Chinese checkers”, The Indian Express,
New Delhi, July 25, 2016.
Jha, Prashant (2015), “How India was both right and wrong both in Nepal”, Hindustan
Times, New Delhi, September 20, 2015.
Jha, Prashant (2015), “Nepal crisis deepens as Madhes movement marks 100 days”,
Hindustan Times, New Delhi, November 23, 2015.
Jha, Prashant (2015), “Welcome PM Oli, but don’t forget what India wants from
Nepal”, Hindustan Times, New Delhi, February 19, 2016.
Kumar, Amit (2016), “Nepal PM K P Oli’s Visit to China”, [Online: web], accessed
on July 28, 2016 URL: http://thewire.in/2016/03/02/indias-blockade-has-opened-
the-door-for-china-in-nepal-23042/
Muni, S. D. (2012), “Maoists and India, India’s Role”, [Online: web], accessed
July 8, 2016 URL: http://www.himalini.com/himalininews/maoists-and-india-
india%E2%80%99s-role-by-sd-muni.html
Muni, S. D. (2015), “Indias Nepal Policy Needs Caution, Not Grandstanding”,
[Online: web], accessed on August 4, 2016 URL: http://thewire.in/2015/09/23/
indias-nepal-policy-needs-caution-not-grandstanding-11430/
Pandey, Lekhanath (2016), “Nepal, India seal nine agreements in New Delhi”, The
Himalayan Times, New Delhi, February 21, 2016.
Roy, Shubhajit (2015), “Violence, discrimination: In a first, India takes Nepal to the
UN Human Rights Council”, The Indian Express, New Delhi, November 5, 2015.
The Organization of World Peace (2015), India Attacks Nepal’s Human Rights Record,
Asia.
USAID Nepal (2007), Support Nepal, First Edition, SUPPORT Nepal, Nepal.
8
Assertion or Abjuration: India-Nepal
Water Relations
Shaista Tabassum
Abstract
N epal and India are neighbours with unequal level of power in the
region. This unequal standard is visible in their mutual relations as
well. Nepal is a landlocked state; four rivers flow from Nepal to India.
This chapter is an attempt to see how river water sharing was politically
settled. How the lower riparian (India) diplomatically protected its rights
from a weak upper riparian state (Nepal). But the other side of the research
is how the weak party to the treaty attempted to protect its interest. To
understand the water sharing at different occasion we need to look in the
developments leading to the conclusion of different water sharing treaties
between the two nations.
River water is one of unavoided areas of foreign policy for both India
and Nepal especially in their bilateral relations. The two nations have
signed various agreements on water sharing. These are on the Koshi, the
Gandaki, the Mahakali, and the Karnali rivers. The water relations began
when the two sides signed an agreement in 1954 for the dam construction
on the Koshi river.1 Koshi is one of the longest rivers in Nepal. It was
essentially on the Indian proposal ‘to meet its requirements or to solve its
problems, with some benefit to Nepal included’.2 Calculation shows that
had the dam been constructed in the north of the present site Nepal would
Assertion or Abjuration: India-Nepal Water Relations • 105
have benefited more than the present location, because nearly 95 per cent
of the water went to India and only 5 per cent to Nepal.
These projects, though built on Nepalese territory gave Nepal few

palpable benefits. Nepal had entered into these project agreements at a
time when it was extremely ill-equipped in terms of its administrative
setup, technical expertise, international exposure, negotiating
experience, and above all, awareness of the country’s resources and
their utility.’3
Koshi is known as the Sorrow of Bihar. The River has constantly changed
its course.4 Since the construction of embankment after the treaty the
process of shifting is extremely controlled. The dam also changed the
situation in Bihar in the early phase. Previously, Bihar was usually hit by
flood due to the River overflowing. In post 2008, both India and Nepal
have to bear the worst disaster in their histories when Koshi river breached
the embankment and ran over the vast area of both the nations. It is roughly
estimated that more than 50,000 Nepalese and around 3.5 million Indians
were affected. The project had many flaws; it also suffered from poor
design, bad maintenance, and insufficient implementation.5
The Koshi agreement was the first major incidence after the independence
which created the feeling of mistrust along with the feeling that India tried
to hijack the relationship. Thus, Koshi agreement did not get acceptance;
it rather got serious resentment in Nepal. Nepalese politicians therefore,
were reluctant to conclude any new agreement with India. Due to the
opposition at home no further progress could be made in the discussions on
the other projects, viz., Karnali, Pancheshwar and Sapta Koshi, although
the discussion on the projects were already going on between the two
nations for more than two decades. Situation became further grim in Nepal
when mostly nationalist successfully blocked any unilateral pro India
decision of politicians and introduced new constitutional amendment.
The new amendment made two-third majority parliamentary ratification
obligatory for any treaty or agreement relating to natural resources, which
‘affect the country in a pervasively grave manner or on a long-term basis’.6
Obviously such two-third majority was possible by keeping all the parties
in the Parliament on board.
Meanwhile, Nepal demanded more water and electricity from

the Project. On the Nepalese insistence talks were held to revise the
Agreement to incorporate Nepal’s concerns, but despite this a deep sense
of grievance remained among the people of Nepal. In 1966, the Agreement
was amended and some new clauses were added. Finally, India came up
with the idea of an alternative to the Koshi barrage.7
In 1983, India started the construction of the Tanakpur project. It was a
unilateral act from the Indian side without involving Nepal.
It was a very minor matter of a small piece of land nearly 2.9 hectors
being used by India for building the eastern afflux for the protection
of Nepalese territory from possible backwater effects from the
Tanakpur barrage (which itself was wholly in Indian territory and did
not involve the consumptive use of water).8
The Project was almost completed by 1988; it was realized that the Project
will remain ineffective without the left afflux bund which it needed to
tie the barrage to the high ground on the left bank in Nepal. Thus, India
requested 577 metre Nepali land for this purpose.9
Many in Nepal did not like the Tanakpur Treaty agreement as is gave
2.9 hectares of Nepali territory to India for hydroelectric project.
In the early 1989 political relations between the two nations were tensed
when India imposed peacetime economic blockade on Nepal in reaction to
growing Nepal-China relations. Because of these political developments
India’s request of left afflux bund was pushed aside. But the diplomatic
pressure from India remained and when the foreign ministers of India
and Nepal met in 1990 at New Delhi, India presented a draft proposal
for mutual cooperation. Since Indian project was half complete therefore,
water issue was included on the Indian desire in the draft proposal. One of
the articles of the proposed treaty declared as follows:
The two contracting parties being equally desirous of attending

complete and satisfactory utilization of the waters of the commonly
shared rivers, under take to: (i) plan new uses or projects subject to
the protection of the existing uses on the rivers; and (ii) cooperate
with each other to formulate and modify the planned new uses project
taking into consideration the water requirement of the parties.10
To continue the project, the Indian Prime Minister came up with a proposal
with some incentives for Nepal. The former Indian Prime Minister
Chander Shekar, wrote a letter to his counterpart in Nepal on 17 May
1991 asking for permission to build the afflux bund and in return to that
India would supply 25,000 cusecs of water by constructing a regulator
near Tanakpur instead of Banbasa barrage, to link the Kohalpur Banbasa
road with Tanakpur barrage and supply 25 MW electricity to Nepal. The
Nepali side demanded 50:59 shares in water and electricity.11 It was due
to tremendous domestic pressure that the previous Prime Minister Koirala
replied to the Indian Prime Minister that a new agreement between the two
nations would only be possible after a detailed study. He later visited India
from 5 to 10 December 1991, on the invitation of the new Indian Prime
Minister Narasimha Rao, to conclude an agreement.12
During the Nepali Premier’s visit, India and Nepal concluded a treaty
on Tanakpur project, which was not a treaty but an understanding to bypass
the Nepal’s constitutional hinder of two-third majority approval. Under the
new understanding, the Government of Nepal allowed the construction of
577 metre left afflux bund on its territory, to prevent a recurrence and ensure
greater poundage of water at the dam site. India, in return, as a gesture of
good will agreed to provide to Nepal 10 million units of electricity and
1,000 cusecs of water initially every year. Unfortunately for the Koirala
government the understanding also didn’t receive much support at home
as the memories of the unilateral initiation of the Tanakpur project by
India were still fresh. The definition of the agreement as treaty or simply
an understanding developed into a political issue between the government
and opposition in Nepal.13 An advocate filed a case against the Treaty
(understanding) in the Nepalese Supreme Court stating that the Treaty
must be ratified by the Parliament. The Indian Prime Minister visited
Nepal in October 1992 in the midst of a crisis in Nepal. On the other hand,
since the Indian side was adamant to continue the deal so new offers were
given to Nepal. The MoU was renegotiated; under the new concession
the electricity quantum was increased from 10 to 20 million units. Future
upstream water development such as Pancheshwar multipurpose projects
was de-linked from the Tanakpur project.14 Meanwhile the Supreme Court
gave its verdict that the MoU between the two governments was indeed
in the nature of a treaty or agreement, but left it to the government and

Parliament to decide whether it required a two-third majority or a simple
majority.15 The Tanakpur treaty remained a hot issue between the Koirala
government and the opposition. Eventually, it resulted in the dissolution
of the Parliament. In the fresh polls, held in 1994, no party received
clear mandate to form a government. The Communist UML formed the
government as the majority party. The new government initiated talks with
India on all important issues including the issue of Mahakali river.
The Mahakali river flows through the districts of Danchula, Baitadi and
Dadeldhura, reach the plains of Kanchanpur district where it turns into a
border between India and Nepal. In 1920, the British Indian government
decided to build Sarada barrage to irrigate the United Province. It concluded
a treaty with the Nepali government of that time. It was agreed that Nepal
would transfer 4,000 acre of the eastern banks of the Mahakali to India to
build Sarada barrage and in exchange would receive 4,000 acre of forested
land in areas to the east as well as Rs 50,000. After a major flood in 1953
in the Mahakali area, India extended the left afflux bund of the Sarada
barrage about 100 metre into Nepali territory. No public declaration was
issued from either side about India seeking permission from Nepal nor is
there any record of protest by the then Nepali government. In 1971, Nepal,
with the World Bank assistance, began its Mahakali Irrigation Project to
utilize its share of the waters of the River, which it was allowed under the
1920 Sarada Agreement. Earlier, the World Bank had withdrawn from the
project in 1955 because of excessive cost.16
In January 1996, a consensus agreement was concluded by the members
of the three parties and the Mahakali treaty was ratified by more than two-
third majority of the two houses of the Nepalese parliament. But before
the Treaty was ratified, the Parliament unanimously passed a ‘stricture’ on
the Treaty. The stricture redefines water rights. The main features of the
stricture are as follows:
1. Nepal’s electricity to be bought by India will be sold as per the
avoided cost principle.
2. When the Mahakali commission is constituted, it will be done only
upon agreement with the main opposition party in the parliament
as well as parties recognized as national parties.
3. Equal entitlement in the utilization of the waters of the Mahakali

river without prejudice to their respective existing consumptive
uses of the Mahakali river means equal rights to all the waters of
the Mahakali river.
4. Saying that Mahakali is a boundary river on major stretches
between the two countries’ is the same as saying it is basically a
border river.17
The Mahakali Integrated Development Treaty signed in February 1996 by
the two prime ministers had divided water and electricity between India
and Nepal. The dams would provide electricity and water and the estimated
cost of building them would be US$ 12 billion. The dams were to be built
within 10 years. But due to some serious differences these projects could
not be completed even after two decades.18
The Agreement covers power generation, flood management, and
irrigation aspects of the Mahakali river which flows through India and
Nepal before flowing as Sarada river through Uttar Pradesh. 19
The Preamble describes the River as a ‘boundary river on major
stretches between the two countries’ and the Treaty as a ‘treaty on the basis
of equal partnership’. The Treaty covers the Sarada barrage, the Tanakpur
barrage, and the proposed Pancheshwar barrage.
The Treaty is a well-drafted and balanced in many ways and at some
points it gives weightage to Nepal like Article 5 of the Treaty is considered
as the most controversial since it gives significance to Nepal for using
water. But at the same time the Treaty ensures the Indian claim over the
unused water in Nepal’s share. At another point, it balances and upheld
Indian benefits which are ultimately the concerns of Nepal.
Nepal had some serious concerns about the Treaty. The main concern
was on the unequal distribution of water under the terms of the Treaty.
India receives 9,000 cusecs of water from the Sarada and Tanakpur barrage
compared to Nepal, which receives 1,000 cusecs. The total water available
at Mahakali is 24,000 cusecs, so the remaining 14,000 cusecs is available
for redistribution between the two countries (which means both will get
7,000 each) so the total water India receives will be 16,000 cusecs and
Nepalese share would be 8,000 cusecs. Another concern of Nepal was on
its right of share of the excessive water. Nepal actually requires only 4,000
cusecs of water for irrigation. So it has three options for the excessive
water, either to leave it in the river, or lease it on a royalty, or let India use
the water in return for investing on the project more than it is doing at the
moment. There are no provisions in the Treaty for the last two options. The
Treaty also provides that the cost of the project shall be borne by both the
parties equally, but for equal share of the cost there is unequal distribution
of water. The total cost of the Pancheshwar project is estimated to be
Rs 60 to Rs 70 billion, which is to be shared by both equally. Although
Nepal has the potential of generating huge amount of electricity but it
could not achieve this level only due to financial constraints, on the other
hand Nepal is forced to generate power equal to the level of India. Article
3 states as follows:
The Project shall be implemented or caused to be implemented as an

integrated project including power station of equal capacity on each
sides of the Mahakali river. The two power stations shall be operated
in an integrated manner the total energy generated shall be shared
equally between the parties.20
The Treaty also talked about the denial for the unilateral use of river for
any projects, and the possibility of involvement of the third party. This was
provided in Article 11 of the Treaty. This article provides for Arbitration as
the dispute settlement mechanism.21
The implementation of the Pancheshwar multipurpose project was
the focus of the Treaty. The two nations were to reach an understanding
on the Detailed Project Report (DPR). But due to some differences on
certain contentious issues, like the location of re-regulating downstream
structure of the dam.22 Also before the meeting, India demanded additional
water for its lower Sarada canal, which was built 160 kilometre inside the
Indian territory. Nepal did not agree to the Indian demand for additional
201 cusecs of water from the Mahakali river for the lower Sarada canal as
‘prior use right’. The failure to reach an understanding on the Pancheswar
project had delayed the implementation of the Mahakali treaty in sole and
spirit. After 18 years the two sides attempted to reactivate the treaty and
agreed to signa MoU related to the Terms of Reference of the Pancheshwar
Multipurpose Projects on the river Mahakail. It was on the occasion of the
Indian PM Modi visited Kathmandu. Under the MoU both sides agreed
to move forward on the work relating to Pancheshwar Development
Authority by declaring Pancheshwar Authority regulations. It was the
part of integrated treaty on Mahakli River. It could not be developed
earlier as the two countries could not decide on the terms of reference.23
The implementation bodies provided for under the Kosi Treaty and the
Mahakali Treaty have not been set up.24
Nepali rejection of Indian pressure and influence is on the basis of
International law principles although conventional in nature even then
protects the rights of both the riparian states sharing one international
river.
Conclusion
The Indo-Nepal water relation is a story of weak upper riparian (Nepal)
fighting diplomatically to protect its interest against the powerful lower
riparian, that is India. Although many Indian writers are of the view that
‘there is a perception in certain quarters that Nepal was not given due
share in the three major water deals between Nepal and India, namely, the
Koshi Agreement, the Gandak Treaty, and the Mahakali Treaty.’ However,
these projects were found to be mutually advantageous to both Nepal and
India. If there was any shortcoming in the Koshi Agreement or the Gandak
Treaty, it was due to the lack of experience on the part of India. As and
when the need was felt, India reciprocated the Nepalese sentiments by
way of making revisions in the Treaty/Agreement. It is a pity, however,
that the positive dimensions of the water deal between Nepal and India
have not been properly understood because of over-politicization of the
issue.25 While the Nepalese scholars like Ajay Dixit and Deepak Gayawali
criticized the treaties as it had undervalued Nepal.
The issue was resolved politically after applying the principles of
Conventional International Law which protect the rights of the lower
riparian state. Principles on water sharing and distribution are relatively
a weak area of international law. Most of principles are conventional
in nature or they are created by bilateral treaties or are specific to case.
In most of the cases, the upper riparian has successfully protected their
interests through the legal agreement. Like in South Asia, the Indus
Waters Treaty (between India and Pakistan) and the Farrakha Barrage
Agreement (between India and Bangladesh) India well-protected it’s legal
and political interest although a lower riparian. In the Mahakali treaty,
unlike Bangladesh, Nepal relatively weak and more dependent on India,
resisted the Indian diplomacy and thus, was able to include the third party
arbitrational in case of any dispute, which Bangladesh could not make to
include in the Farrakha Barrage Agreement with India. The third party
involvement is also present in the Indus Water Treaty.
The earlier agreements between the two countries had created feeling
of mistrust and ultimately converted to the domestic pressure in Nepal.
The last treaty, the Mahakali, is more balanced and well-negotiated on
part of Nepal. The delay and failure to progress has practically halted
development on the Treaty implementation. This could be interpreted as
successful Nepali diplomacy for protecting its national interest.
References
1. Whereas the Union is desirous of constructing a barrage, head-works, and other
appurtenant work about 3 miles upstream of Hanuman Nagar town on the Koshi
River with afflux and flood banks, and canals and protective works, on land
lying within the territories of Nepal, for the purpose of flood control, irrigation,
generation of hydroelectric power and prevention of erosion of Nepal areas on the
right side of the river, upstream of the barrage... And whereas the Government has
agreed to the construction of the said barrage, head-works and other connected
works by and at the cost of the Union. Agreement between the Government of
India and the Government of Nepal on the Koshi Project, International Water
Law Project, available at http://www.internationalwaterlaw.org/documents/
regionaldocs/Koshi-river1.html, accessed on 26 August 2016.
2. Ramaswamy R Iyer, ‘The Three Rivers’, Economic and Political Weekly, Vol. 34,
No. 24 (12-18 June 1999), 1510, available at http://www.jstor.org/stable/4408076,
accessed on 26 August 2016.
3. ‘Nepal’s Portion of Power, SB Pun’, Hydro Nepal issue # 6, January 2010,
available at http://www.nepjol.info/index.php/HN/article/viewFile/4186/3560,
4. Dr A B Thapa, ‘Koshi River had Shifted From East to West Over 70 Miles Within
the Period of 200 Years’, Nepal’s Constitution Making and Water Resources,
available at http:/www.spotlightnepal.com, accessed 20 June 2016.
5. Nick Langton and Sagar Prasai, ‘Will Conflict Over Water Scarcity Shape
South Asia’s Future?’, The Asia Foundation, 21 March 2010, available athttp://
asiafoundation.org/2012/03/21/will-conflicts-over-water-scarcity-shape-south-
asias-future/, accessed on 26 August 2016.
6. Constitution of Nepal 1990, Article 126(2(d), available at http://www.concourt.
am/armenian/legal_resources/world_constitutions/constit/nepal/nepal--ehtml,
7. Medha Bisht, ‘Revisiting the Koshi Agreement: Lessons for Indo-Nepal Water
Diplomacy’, IDSA, New Delhi, 22 September 2008, available at http://www.
idsa.in/idsastrategiccomments/RevisitingtheKoshiAgreement_Medha%20
Bisht_220908, accessed on 26 August 2016.
8. Ramaswamy R. Iyer, op.cit.
9. Dipak Gyawali and Ajay Dixit, ‘Mahakali Impasse and Indo Nepal Water
Conflict’, EPR Special Articles, 27 February-5 March 1999, available at http://
www.waterbeyondborders.net/files/other_docs/Mahakali%20Impasse%20
and%20Indo-Nepal%20Water%20Conflict.pdf, accessed on 26 August 2016.
10. Ibid.
11. The Statesman (Delhi), 4 January1996.
12. Dipak Gyawali and Ajay Dixit, op. cit.
13. Annexure 2, op.cit.
15. Ramaswamy R Iyer, op. cit.
17. Ibid.
18. ‘Nepal India Sign Deal to Build World’s Highest Dam’, US Water News Online,
available at http://www.irn.org/pabs/wrr/9609/high.html, December 1996,
19. Subha Singh, ‘India, Nepal Sign Treaty on Developing Mahakali Basin’, The
Pioneer, New Delhi, 30 January 1996.
20. Arun Kumar, ‘The Mahakali Treaty: Nepal’s Concern’, The Pioneer, New Delhi,
11 October 1996.
21. If the Commission fails under Article 9 of this Treaty to recommend its opinion
after examining the differences of the parties within three months of such
reference to the Commission or either party disagrees with the recommendation of
the Commission, then a dispute shall be deemed to have been arisen which shall
be submitted to arbitration for decision in so doing either party shall give three
months prior notice to the other party. For detail of the article please see Annex 2,
op. cit., p 13 of 20.
22. Ramaswamy R Iyer, op. cit., 4.
23. India, Nepal Ink Three Pacts; Work on Pancheshwar Dam to Start Soon, NDTV,
4 Aug, 2014, http://www.ndtv.com/india-news/india-nepal-ink-three-pacts-work-
on-pancheshwar-dam-to-start-soon-608593. Last accessed on 29 June 2017.
24. Status and Implementation of Transboundary River Agreements on the Kosi
and Sharda Rivers in India, Issue Brief, April 2015, https://asiafoundation.org/
resources/pdfs/INStatusTRAbrief.pdf. Last accessed on 28 June 2017
25. Hari Bansh Jha, Nepal-India Cooperation in River Water Management, 37:2,
March 2013.
9
Democratic Trails and the Waterways:
A Case Study of Water Sharing
Between India and Nepal
Piyali Dutta
Abstract
T here is no denying the fact that good fences create good neighbours.
Good neighbours notably may produce good relations that may
enhance each other’s potentials and supplement the shortcomings leading
to regional aspirations of progress and development. These being some
rather logical calculations, what needs to be understood is that, in case
of nature and its resources the concept of shared benefits does play the
dominant role, but natural resources like water does not bind itself within
physical boundaries or fences. Rather it is political and geographical
boundaries that are the ultimate divisions that try to equally allocate the
resources within nations so that it results in mutual benefits. The focal
point of this chapter is therefore water sharing, one of the basic existential
necessities and how this existential necessity builds the relationship
between the two neighbouring countries—India and Nepal. As the title
suggests, this chapter aims to study the key role played by democracy and
its wave, a recent trend of the contemporary era that recognizes people’s
mandate, the power of the ballot, and basic human rights. Water being
considered as a basic human right, the stakeholders of water sharing
between the newly democratic country of Nepal and the world’s largest
democracy, India under the rising trend of democratic sweep is largely
Democratic Trails and the Waterways... • 115
the research area of this chapter. After studying water as a basic human
right, the three prominent agreements on water sharing, that is the Kosi,
Gandak, and Mahakali agreements are studied here and how both the
democracies may fill the bridging gaps.
Water: A Basic Human Right

Increasing global warming and its existence since the 1980s is not the
only concern for countries these days. Environmental concerns regarding
natural resources have accelerated with the growth of global population,
mass consumption, and the increase of average atmospheric temperature.
The World Health Organization suggests that 100 litre per person per day
is a minimum requirement for every human being on the planet.1 With the
United Nation’s Water for Life Decade ending in the year 2015, this chapter
finds it essential to talk about the issue of water and water sharing, the case
study of water sharing between India and Nepal being the prime focus of
this chapter. The two neighbouring countries with Nepal recognized as
one of the most peace loving countries and India being one of the prime
South Asian major, it becomes quiet crucial as well as interesting to talk
about water and the neighbourly relations between these two countries
on the issue of water and water sharing. Nepal, a landlocked country in
South Asia, bordered by China to north and India to the south, east, and
west is located between latitudes 26°22’N—30°27’N and longitudes
80°4’E—88°12’E. Nepal extends 885 kilometre along the east-west with
an average width of 193 kilometre along the north-south.2 The country,
covering a total area of 1,47,480 square kilometre, has diverse physical
characteristics in its topography, climate, geology, and land use system.
Nepal being predominantly a mountainous country can be broadly classified
as having three ecological zones—the Terai plains, the Churia Hills, and
High Mountains (Middle and Greater Himalayas). The Terai region is of
vital importance in the case of water sharing as it is an extension of the Indo-
Gangetic plains which is underlain by fertile soil mantle. Good neighbourly
relations on the basis of water sharing are a probability as well as a difficult,
an expectation as well as a demand on the other hand. It can lead to both
negative and positive relationship between these two countries. Pre-historic
Indian Hindu laws encouraged the building of water bodies as boundaries
between villages. It serves two purposes—the first being a large supply

of water for the entire village, and second acting as a barrier obstructing
enemies from pondering inside the village. Interestingly, as we delve into
the issue of water as a basic right, we also see on the contrary that under the
laws of war, water bodies of enemies could be destroyed in times of war.
Coming back to the United Nations, the chief international organization
governing state and their actions, guaranteeing individuals their basic rights,
water is also considered as a right together with the relevance of its scarcity
or availability in daily life has been given a new dimension. The goals set
during the Water for Life Decade was to promote efforts to fulfil international
commitments in the water sphere by 2015, raise the profile of water in the
global agenda, and focus the world’s attention on the ground breaking,
lifesaving, empowering work done by those implementing water programmes
and projects. On 19 December 2014, the United Nations General Assembly
adopted the resolution (A/RES/69/215) for the International Decade for
Action, after the Decade for Water for Life would come to an end in the year
2015. However, after it has come to an end, the United Nations General
Assembly as its second economic and financial committee act that approved
one of the five draft resolution (A/C.2/71/L.12/Rev.1) is all set to adopt the
International Decade for Action , “Water for Sustainable Development”
(2018-2028) due to start from 22nd March 2018.3 The International Decade
for Action would be calling to evaluate progress achieved in the
implementation of the Decade and continue taking steps for achieving
internationally agreed water-related goals. The International Decade for
Action “Water for Sustainable Development” would also aim to focus on the
integrated management of water resources that would also help in visualizing
and institutionalizing the 2030 Agenda for Sustainable Development. The
International Decade for Action would be calling to evaluate progress
achieved in the implementation of the Decade and continue taking steps for
achieving internationally agreed water-related goals. In the past century, the
global demand for water has increased to sixfold whereas the world
population has tripled (UNFPA, Population Issues 1999). Although there is
no expressed mention of water in the Charter of the United Nations, the
contemporary challenges of the twentieth century can be met with water as
a tool. In case of countries positioned in the ladder of developing countries
or less developing countries (LDCs) globalization needs to act as vector of

green growth and not an impediment towards the path of growth, progress,
and development. For an agricultural country much of the growth depends
on the harvest, the level of produce as well as the failure of which is often
directly related to the Gross Domestic Product (GDP) of the country. For
such countries, water, its sharing and scarcity is not only a matter requiring
high concern, but it is also an issue that has the potential to lead to other
complexities and problems such as tumultuous neighbourly relations
concerning the sharing of water, river courses, building of dam, etc, on one
hand as well as salinization, drought, need for technologically upgraded and
developed methods of agriculture, on the other hand. In India, about 90.41
percent of the available water as the last available data researched by the
Food and Agricultural Organization (FAO Aquastats 2010) is used for
agricultural purposes alone. Similarly, 2.23 per cent of the total water use is
for industrial purposes and 7.35 per cent for domestic purposes.4 The quality
of any body of surface or groundwater is a function of both natural influences
and human influences. Right to water must rightly be recognized as right to
sufficient amount of water, emphasizing both on quantity and quality. The
weathering of bedrock material by atmospheric processes of evaporation,
deposition of dust and salt by wind, the process of natural leaching of organic
matter and nutrients from soil, by hydrological factors leading to runoff are
things that can alter the chemical and physical components of water.
Changing public policy and social behavior towards something as basic as
water is complicated. Sometimes it seems impossible, though human actions
relating to water and its use have required regulation ever since agriculture
began. Earliest human civilization has always ensured that ruling authority,
be it a monarch or a dictator, gave its subjects/citizens nothing but a regular
source of clean, pure, and hygienic water. Tracing back to the times of the
Indus Valley Civilization that emerged on the banks of the River Indus
shows the importance of water that men felt since time immemorial. Not to
forget that one of the most important structures in the city of Mohenjodaro
was the Great Bath. At such a time trees, meadows, and water bodies were
seen as sacred. One of the greatest epics of the Hindu mythology, the
Mahabharata even speaks of water as a divine being and hence, worshipped.
Varuna, was the God of water and Indra, the God of thunder and rain. In the
Hindu religion, the Laws of Manu dating from 200 to 100 bc provides
indications for water law of that time, defining water as indispensable. Apart
from food, shelter and clothing as basic needs of human being, water is
definitely considered one of the most essential needs of humans, considered
even as a basic right at some places across the world. Like the present times,
where citizens have their own expectations of basic need to be safeguarded
by their respective governmental heads, the Indian history too shows how
kings and ruler always ensure the supply of water for their subjects. Be it
Gautama Buddha who kept on encouraging the building of embankments in
his kingdom, or Asoka, the great who called his officers to build reservoirs.
Even Kautilya’s Arthashastra discusses the use of water for the development
of irrigation and transport and prohibits the release of water from dams
without a legitimate reason. Damages caused in case of overflow of water
were also talked about and also the compensation that needs to be paid by
the ruler to its subjects if such a damage takes place. The destruction of
natural sources of water and embankments were considered as illegal. The
United Nations Development Programme (UNDP) thinks that water
considered as a human right might be useful in dealing with some of the
major failures of the twentieth century. In 2008, the Human Rights Council
created the mandate of the ‘independent expert on the issue of human rights
obligations related to access to safe drinking water and sanitation’ to help
clarify the scope and content of these obligations.5 The World Summit on
Sustainable Development held in Johannesburg in the year 2002 recognized
the key role of water in areas of agriculture, energy, health, biodiversity and
ecosystem as well as in combating poverty. Availability of fresh, pure, and
clean water has much to do when social well-being is concerned. Water that
is scarce may be but also a source of conflict for some. It is said that every
year more people die of unsafe water than out of violence occurring,
including war.6 It is estimated that by the year 2025 about two-third of the
world’s population roughly 5.5 billion people could be living in areas facing
moderate to severe water stress.7 The international legal instrument
governing the right to water as a right includes the United Nations Charter,
the Universal Declaration of Human Rights, the Geneva Conventions and
Protocols, the 1966 Covenants, Declaration on the Right to Development,
Convention on Elimination of all Forms of Discrimination Against Women
(CEDAW) and the Convention on the Rights of the Child. Both the United
Nations Charter and the Universal Declaration of Human Rights speaks
about the relevance of the right to water as they speak about the rights to
higher standards of living, full employment, conditions of economic, social
progress, and development. Unlike the United Nations Charter and also the
Universal Declaration of Human Rights, the Geneva Protocols very
comprehensibly speaks about ‘a right to drinking water’ as mentioned in
Articles 20, 26, 29, and 46 (Geneva Convention III, 1949), Articles 85, 89,
and 127 (Geneva Convention IV, 1949), Articles 54 and 55 (Additional
Protocol I, 1977), Articles 5 and 14 (Additional Protocol II, 1977).8 Similarly,
under the 1966 Covenants, the International Covenant on Civil and Political
Rights, and the International Covenant on Economic, Social and Cultural
Rights implicitly recognize the right to water. The CEDAW, on the other
hand, obliges State Parties to eliminate discrimination against women,
particularly in rural areas to ensure that ‘women enjoy adequate living
conditions, particularly in relation to housing, sanitation, electricity and
water supply, transport and communications.’9 It was only in November
2002, the Committee on Economic, Social and Cultural Rights adopted its
General Comment No 15 on the right to water, defined as the right of
everyone to sufficient, safe, acceptable and physically accessible, and
affordable water for personal and domestic uses.10 Declining water quality
and quantity has become a global issue of concern as human populations are
growing, industrial and agricultural activities expanding, and climate change
acting as a threaten causing major alterations to the hydrological cycle. In
2010, the World Water Day for ‘Clean Water for a Healthy World’ was held.
This is the United Nation initiative that is helping to raise the issue. World
Water Day is held annually on 22 March as a means of focusing attention on
the importance of freshwater and advocating for the sustainable management
of freshwater resources. Each year, the World Water Day highlights a specific
aspect of freshwater. In 2010, World Water Day was dedicated to the theme
of water quality. Also, there is the UN-Water Thematic Priority Area on
Water Quality. The UN-Water Thematic Priority Area on Water Quality was
established in September 2010 to enhance interagency collaboration and
coordination on water quality and support governments and other
stakeholders to address water quality challenges. There is also the UN-Water
Taskforce on Wastewater Management created in 2009. The UN-Water

Taskforce on Wastewater Management was established to highlight issues
surrounding wastewater management, increase awareness by governments,
and strengthen the UN-System collaboration on activities related to
wastewater management. Further, the World Health Organization (WHO)
sets out the strategy adopted for the period 2013-20 to manage water quality
with a view to protecting and promoting human health. The strategy is
centred on primary prevention of waterborne and water-related diseases.
The Right to Water can also be seen as a link to enjoy other human rights. In
the Sardar Sarovar case, the Supreme Court of India, deriving the Right to
Water directly from Article 21 of the India Constitution, stating that water is
the basic need for the survival of the human beings and is part of the right of
life and human rights. (Narmada Bachao Andolan vs. Union of India 2000).11
In fact one of the major actors in water sharing with India due to be discussed
in this chapter, that is Nepal had hosted the fifth South Asian Conference on
Sanitation hosted from 22 to 24 October in 2013 in Kathmandu with the
theme ‘Sanitation for All: All for Sanitation’. It was a Conference attended
by all the South Asian countries like Afghanistan, Bangladesh, Bhutan,
India, Maldives, Nepal, Pakistan, and Sri Lanka apart from the United
Nations agencies, civil society members, and the private sector.
Water Sharing: A Comparative Analysis Between the

Democracies of India and Nepal
Historical, geographical, cultural, linguistic, ethnic, social, and family links
tie the people of India and Nepal. India’s ever increasing energy needs is
also a potential area that can either make or break the relationship of India
with its neighbouring country, Nepal. India ranks sixth in the world in total
energy consumption and needs to accelerate the development of the sector to
meet its growth aspirations.12 Historical experiences of instability and unrest
in the Indian subcontinent has on the other hand acted as a cohesive force
in keeping countries of this region attached to each other. India’s support
for the independence of Nepal ending a decade long Maoist rule in 2006,
culminated into the secular republic of Nepal to become both democratic
and federal. Interests of these two democracies and neighbouring countries,
that is India and Nepal pivoting around the goals of energy production and
hence, their relationship in this concern is the primary focus here. India is
one of the first countries to have welcomed the restoration of democracy
in Nepal. Nepal has an area of 147,181 square kilometres and a population
of 29 million. It shares a border of over 1,850 kilometre in the east, south,
and west with five Indian states–Sikkim, West Bengal, Bihar, Uttar Pradesh,
and Uttarakhand–and in the north with the Tibet Autonomous Region of the
People’s Republic of China.13 Bordering along the Himalayan region, Nepal
is seen by many scholars and academicians as having nature’s bounteous
gift where water resource is concerned. India and Nepal’s relationship in
terms of water sharing depends much on optimum utilization of Nepal’s
water resources benefiting India and also Nepal’s overall development. The
India-Nepal Treaty of Peace and Friendship of 1950 forms the foundation of
the special relations that exist between India and Nepal. It also provides the
limelight under which most other bilateral projects between the two countries
can be understood. After signing of the Comprehensive Peace Agreement of
November 2006, the Government of India while laying down the roadmap
for political stabilization in Nepal through peaceful reconciliation and
inclusive democratic processes ensured the exchange of a lot of things in
various political and economic areas including a Rs 200 million assistance
for Koshi breach relief.
The fulfilment of each other needs and necessities have not only led
countries to engage in deals or pact for the respective concerns, but
have also led to the growth of support from each other at times of need.
Contemporary needs of a globalized world have led to the rising needs for
energy, hydro as well as electrical sources of power. This energy demand
will not only affect the power players but those caught in the middle.
Nepal is one such country. Located in the geo-strategically sensitive
Himalayan region bordering Tibet and China, Nepal is a key part of India’s
periphery and a key player in Indian foreign relations with its South Asian
neighbours. The shared open border, interconnected populations, and
common waterways keep India on its toes regarding any domestic Nepali
political and socio-economic changes. Where water is considered as a
basic human right, it gets quiet intriguing to find out how politics and
diplomacy takes shape around the issue of water and its share. For water
is one such indispensible right of each and that which cannot be denied to
anybody, countries can and do make use of water to build their relations.
This is where diplomacy comes into play, this is where international peace
and security also comes to foreground. As Brahma Chellaney in Water,
Peace and War: Confronting the Global Crisis (2013) highlights that
water has no substitute; hence, the possibility for water to become the
flashpoint for next global level of conflict is high on list. In this book,
Brahma Chellaney draws on a wide range of research from scientific and
policy fields to examine the different global linkages between water and
peace. The Indian subcontinent bordering around the Himalayan region
can be the prolific source of energy pool that can be developed for long-
term development of the region as well as for regional integration. Nepal’s
hydropower has been estimated at over 40,000 megawatt annually, that
which is economically feasible14 whereas its total hydro power capacity
has been estimated at around 83,000 megawatt of hydro power.15 Nepal,
still a net importer of hydro power, finds it compelling to engage into
major hydro power projects as well as multipurpose projects with India.
Not only for the beneficial purposes of India, but also if alongside India,
Nepal too realizes its immense potential for hydropower development
then its dependency for energy on electricity will help reduce the Green
House Gas (GHG) emissions and import of fossil fuel. The major projects
undertaken by India and Nepal, includes the Koshi and Gandak project,
entered into in the late 1950s, the Mahakali Treaty project entered into
in 1996 that includes the Sarada Barrage, Tanakpur Barrage, and the
Pancheswar Project. Apart from these, the present Indian Prime Minister
Narendra Modi signed an agreement for the 900 megawatt Arun III dam that
was entered into through a Memorandum of Understanding between India
and Nepal in the year 2008. At that juncture a three tier mechanism was
established in 2008 to discuss all bilateral issues relating to cooperation in
water resources and hydropower. Since 2008, in the field of embankment
construction, the Government of India along with providing assistance for
rebuilding embankments along Lalbakeya, Bagmati, and Kamla rivers has
also disbursed an amount of Rs 3,670.66 million.
An Overview of the Major Hydro Electric Power Projects

Between India and Nepal
The Koshi River Project

The history of several severe floods and cyclones arising from the Koshi
river (also known as the Sapta Koshi river due to it having seven tributaries)
compelled both sides of the government to come up with the construction
of several dams and embankments to be over the Koshi river in Nepal.
The Koshi river has seven tributaries that runs through an area of 92,538
kilometre (9.253.800 hectare). The Sapta Koshi high dam multipurpose
project is located in the Sagarmatha Zone in Nepal. Commenced in the
year 1955, it is a concrete dam 269-metre high (883 feet) with a capacity
of 3,300 megawatt at a 50 per cent load factor.16 The following figure
describing the course of the Koshi river shows where the dams are going
to be built and how the districts on the Indian state of Bihar is going to be
benefitted (Map 1).
Map 1: Koshi-Mechi Link Project

Source: Available at http://india-wris.nrsc.gov.in/wrpinfo/index.php?title=Kosi-Mechi_
Link, accessed on July 10, 2016.
Even in the year as recent as 2015, the World Bank has been reported to
have approved a US$ 250 million credit for the Bihar Koshi Development
Project. Not only has the World Bank, but partner country India too felt that
it is a project that has high potentials. It has the potential to prevent severe
floods that took place like in the year 2008 in the Indian state of Bihar
and in Nepal where around 50,000 people have been affected in Sunsari
district of Nepal.17 When completed, long-term challenges of enhancing
flood management capacity as well as making the Koshi river basin more
agriculturally productive are some of the high incentives that are presented
before the Koshi river project especially after the reconstruction started.
The Koshi project which is an outcome of the joint agreement that took
place in 1954 was proposed to be constructed in three stages. The first was
the stage in the 1950s when the Koshi agreement was signed. The second
stage began in 1965 with the then Indian Prime Minister Lal Bahadur
Shastri and included the construction of a 1,140 metre-long concrete made
dam across the Koshi river near Hanumannagar (Nepal) and about 270
kilometre-long embankment along both the banks of the river to control
floods. Eastern Koshi canal was planned to irrigate about 5,00,000 hectare
of land in Nepal and Purnea and Saharsa districts of Bihar, benefitting the
districts of Araria, Madhepura, Purnea, Saharsa, and Supaul, especially
the marginal and landless farmers and an all round development of the
Darbhanga and Muzaffarpur districts of Bihar. The third stage of the Koshi
project began in the late 1980s and involved the construction of: (1) the
Koshi power house with installed capacity of 20 megawatt on the eastern
Koshi canal and related transmission lines; (2) 112 kilometre-long western
Koshi canal to irrigate about 3,25,000 hectares of land in Darbhanga district
of Bihar, and 12,120 hectare in Saptari district of Nepal; (3) 9.6 kilometre-
long Rajpur canal taking off from the eastern Koshi main canal to irrigate
1,60,000 hectare of area in Saharsa and Munger districts of Bihar; and (4)
extension of the eastern flood embankment by 25.76 kilometre and of the
western embankment by 4 kilometre to protect an area of 15,190 hectare
from floods. In short, it involved the building of an alternative project
to protect the Koshi barrage itself. While both areas in Nepal and India
are highly under the radar to be benefitting from the Koshi river project,
yet environmentalists are quiet critical about the effects that it will leave
behind including not only a loss of biodiversity as well as wildlife and

agricultural productivity raising food insecurity that is already a matter of
concern for the country of Nepal, but also other problems leading to global
warming, displacement, migration, loss of job and livelihood, etc. Apart
from these, one of the major arguments rests on the view that the Koshi
river project undermines the sovereign status of the country of Nepal. The
1966 revised Agreement delineates quite clearly the responsibilities of
India and Nepal in the execution of the Koshi project. It takes an effort
for the continuity of the Coordination Committee for the Koshi project.
Contrarily, a major donor agency the World Bank’s views are expressed
as Deepak Singh, Senior Disaster Risk Management Specialist and World
Bank’s Task Team Leader for the project says:
Flood risk management, improved irrigation, improved connectivity

to markets, and increased agricultural productivity will build on each
other to help increase output in the five districts of the Koshi River
basin. In addition, several activities under the project will leverage
each other. For example, rural roads will also be used for evacuation
in case of floods.18
The Gandak River Project

Like the Kosi river project and along with the Mahakali project, the
Gandak river project has also been criticized for favouring the Indian side
while neglecting Nepal. River Gandak originates at an altitude of 7,620
metre above sea level in the north of Dhaulagiri in Tibet near Nepal border
in the snowy peaks of the Himalayas. The river enters the Indian territory
Tribeni town in Nepal which is situated on the right bank opposite to its
confluence with the Sonha and Panchanad rivers. The total length of the
river is 640 kilometre out of which 360 kilometre lies in Tibet and Nepal
and 260 kilometre in India. The River Gandak drains a total catchment
area of 40,553 square kilometre; from this, 5,083 square kilometre lies in
India and the rest in Tibet and Nepal. As a major part of the downstream
discharge of the River Ganges, the Kosi, Gandak and the Karnali river
systems originating in Nepal or transiting in Nepal provides the best
location for flood control of the downstream. Map 2 depicts the flow of the
Gandak river and also the site locations of the built dam.
Map 2: Gandak-Ganga Link Project

Source: Available at http://india-wris.nrsc.gov.in/wrpinfo/index.php?title=Gandak-
Ganga_Link, accessed July 15, 2016.
The agreement on Gandak Irrigation and Power Project was signed

between India and Nepal on 4 December 1959 and revised on 30 April
1964. This Project was meant for the purpose of interest of both the
countries—Nepal and India. The plan was to construct a barrage, canal
head regulators for the purposes of irrigation, and development of
power for both Nepal and India. The barrage situated half in Nepal and
half in India at Valmikinagar, about 1,000 feet downstream of Tribeni, a
confluence point of three rivers is of a total length of 2,425 feet with 36
gates of 60 feet span consisting of two head regulators. Under this Project,
the Government of India will construct a Western and Eastern Nepal Canal
with ‘a minimum discharge of 20 cusecs for providing flow irrigation in
the gross commanded area estimated to be about 40,000 acres’ and ‘a
minimum discharge of 20 cusecs at their own cost for providing flow
irrigation in Nepal for the gross commanded area estimated to be 1,03,500
acres’.19 From the standpoint of bilateral relations between India and
Nepal, the pre democratic Nepal had seen worse days of mutual suspicion
and distrust. For example, India’s denial of independent assessment of
downstream benefits has raised concerns in many quarters in Nepal. As
a result slow implementation of the project work took place. What took
place was mutual suspicion and mistrust throughout the three decades
starting from the 1950s to the 1980s.
The Mahakali Project

The Mahakali dam, much apt to its name and on conclusion was supposed
to be the second largest dam in the world with a capacity of 6,720 megawatt
power production. Like the other two projects, Kosi and Gandak river projects
dealt previously, the Mahakali project has also been built with the strategy
of flood control in mind especially to regulate and control the free flow of
Karnali and Mohana rivers which cause floods in Kheri, Pilibhit of Uttar
Pradesh, and other terai districts of northern India. A Development Authority
was set up in September 2014 to carry out the Pancheshwar Multipurpose
Project which is also a major part of the Mahakali treaty (Map 3).
Map 3: Mahakali-Pancheshwar Multipurpose Project

Source: https://completenepal.wordpress.com/2011/06/17/mahakali-treaty-pancheshwar-
multipurpose-project/ accessed June 26, 2017.
The Mahakali treaty is a treaty that includes the integrated development

of the Mahakali river including the Sarada Barrage, Tanakpur Barrage,
and the Pancheshwar Barrage. The Mahakali treaty dates back to the
1920s when ‘both the parties had entered into an arrangement for the
construction of the Sarada Barrage in the Mahakali river, whereby Nepal
is to receive some waters from the said Barrage’;20 while the decision on
the construction of the Tanakpur Barrage was taken in the year 1992 when
a Joint Communique was issued. The Tanakpur Barrage was to be a part of
the eastern afflux bund at Jimuwa constructed in the course of the Mahakali
river and the adjoining poundage area of the said Barrage lying in the
Nepalese territory. On the other hand, the Pancheshwar project was to be
constructed on a stretch of the Mahakali river where it forms the boundary
between the two countries. Here, one of the most distinctive aspects in
case of the Pancheshwar project was that both the countries would have
equal entitlements to the utilization of the waters of the Mahakali river.21
Article 5 of the Mahakali treaty says that, ‘Water requirements of Nepal
shall be given prime consideration in the utilization of the waters of the
Mahakali River.’22 The Mahakali river basin has drainage area of 12,100
kilometre2. In Nepal, the drainage area is 2,380 kilometre2 (19.7 per cent)
and in India it is 9,720 kilometre2 (80.3 per cent).23
Major Hindrances and Obstacles in the Project

While the most relevant and strategic corner of any project on the part of
the government is its acceptance by the public, a major hindrance could
at times be the monetary support which is required to undertake such
a massive project. In the Kosi river project, gaining public acceptance,
sustaining rivers and livelihoods, ensuring compliance, recognizing
compensations, and sharing benefits are all hindrances that are in the
pathway of the successful completion of the Project. Severe floods like
the one that took place in 2008 have been blamed on the Kosi river project
by prominent offices like that of Pushpa Kamal Dahal, the then Prime
Minister of Nepal. Environmental aspects attached to any such major
project to be undertaken at the cost of nature’s resource are a vast subject
to be dealt separately. Geographical aspects related to such large projects
are being dealt with on a daily basis over the years. Not to forget that this
Project was strongly opposed by the Maoists in Nepal. Major opinions

expressed by several prominent activists and the mushrooming of non-
governmental organizations (NGOs) working in the field of environmental
protection and awareness have taken place as environment gets affected
due to such manmade initiatives that needs to be taken to address the rising
demands of an energy intensive country with its rising population.
According to a state government report of Uttarakhand in India, the Dam
would submerge 60 villages and affect 19,700 people in Uttarakhand; on
the other hand in Nepal, the Dam would submerge 14 villages, affecting
a population of 11,466. While the numbers are only on the rise, the 2010
research report states that more than 82,000 people in the immediate area
of the proposed Pancheshwar project, and more than 84 lakh people in the
wider catchment would be affected by it.24 But both the Koshi and Gandak
river projects of the 1950s has been criticized for not being inspired by
long-term visions of regional cooperation. Some have even been critical of
the view that it was a sell out of Nepal’s natural resources to India. Factors
such as poor design, inefficient implementation, and low maintenance are
responsible for the formation of another treaty in 1966 and 1964 as a form
of amendment of the original Koshi and Gandak treaty. With reference to
the Mahakali project particularly, it can be said that too many commitments
at the same time do takes away the focus from one single area; hence,
there crops in the problem of slow and inefficient implementation, lack of
proper supervision and low maintenance, etc. In case of the Mahakali river
treaty, one of the main obstacles was the impediments that were already
faced in the past activities. Coordinating all the treaties giving rise to the
integrated development of the Mahakali river becomes an important part
here to understand. While on the other hand it is vital to note that the
Mahakali treaty was mainly governed by the Sarada treaty which was
entered into at the time of British India in the 1920s where the political
status of India as well as the needs of both the countries was different.
The Hindu reported that according to a 2010 research report the Mahakali
project was seen in Nepal as an undue result of pressures from India and
the United States.25 An element of suspicion and mistrust being present
and enhanced by the big brotherly stature of India, only makes Nepal feel
not being adequately consulted or considered when these agreements on
water sharing between India and Nepal was drawn upon. This point almost
gets validated by the fact that Nepal feels disadvantaged given the ratio of
cultivable land which is always more on the Indian side. Hence, in case
of irrigation and agricultural productivity it is India that gains much more
when compared to Nepal. Nepal on the other hand, as a neighbouring state
to India finds it plausible to generate large revenues from the export of
electricity to India from a number of hydro-electric projects on the rivers
of the Ganga system though not making India its sole buyer and thus,
increase its own dependency on India.
Conclusion
There are, thus, two principal points of contention between India and
Nepal: the issue of water rights and the question of the management and
second, the control and operation of the barrage. Though it is argued
vehemently that the building of dams do help in flood control, it is a point
highly arguable. In fact the notion of flood control is most often considered
as a fallacy. In the Koshi river project, an exception may lie, but in most
other general cases a single purpose dams are found to be more efficient
for flood control. Nepal being an upper riparian and India a lower riparian
state, advantages and disadvantages from the construction of a dam would
differ widely and of course obviously. Hence, it is necessary that the two
countries arrive at a common framework for working out a solution, a
method, and a shared understanding on upstream and downstream rights.
Information sharing and cooperation on water issues can play a pivotal role
in joint operation of major water projects undertaken by the two countries.
With respect to the second point of contention, joint mechanisms need
to be evolved for water management and control. An inclusive approach
would enhance the trust factor and help grow mutual friendship. For either
country surrendering water rights is unthinkable and also not advisable.
The mutual trust and cooperation is the foundation for sustainable water
relations. The hydro potential of Nepal if fully realized is quiet capable of
transforming its economy and social conditions. The moot point and rather
an old school perspective is that manmade features do remain artificial at
the end of the day and hence, often finds it incapable to deal with the forces
of nature, with the force of the Himalayan rivers which can easily be kept
undisturbed as this might instigate seismic activities of a mountainous area

like the Himalayas along with other non-natural miseries like displacement,
migration, loss of livelihood, soil fertility. Hence, this affects agricultural
productivity and causes ecological damage. As far as India is concerned it
should be noted that the Himalayan river system is not the only alternative
and mode to grow electricity. With the Nepalese government on the other
hand, Article 126 in the Constitution of the Kingdom of Nepal 1990, made
water not a resource exclusively in the hands of the hand and a prerogative
of the executive branch of the government. Hence, any decision over water
and its resources should take place with due consultation and consent of the
general public as a whole. Water in Nepal like most other civilized nations
is considered as a common property and a basic human right of individuals.
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Environmental Law Programme, 2004, accessed on June 21, 2016. https://portals.
iucn.org/ library/efiles/edocs/EPLP-051.pdf
10. Ibid.
June 17, 2016. http://www. ohchr.org/Documents/Publications/FactSheet35en.pdf.
12. Philippe Cullet & Joyeeta Gupta, ‘Evolution of Water Law and Policy in India’,
International Environmental Law Research Centre (IELRC), accessed on June 28,
2016. http://ielrc.org/content/a0901.pdf.
13. ‘Nepal India Cooperation on Hydropower (NICOH)’, CII, Independent Power
Producers’ Association (Nepal), 2006. Accessed June 28, 2016 http://cii.in/WebCMS/
Upload/ CII%20-%20Nepal%20India%20Cooperation%20on%20Hydropower.pdf.
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Nepal_ Bilateral_Brief_for_MEA_website_-_Oct_2015.pdf.
15. Liam D Anderson, “Searching for Security: India’s Role in the Post War Federal
Democratic Republic of Nepal”, Himalaya (The Journal of the Association for Nepal and
Himalayan Studies, 33(1) (2014), 11-21, accessed July 3, 2016. http:// digitalcommons.
macalester.edu/cgi/viewcontent.cgi?article=1834&context=himalaya,
16. Tyker Mc Mohan, ‘War Over Water: Water, Poverty and Conflict’, Independent
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digitalcollections.sit.edu/isp_collection/345/.
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multipurpose-projectnepal.
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Diplomacy’, 2008, Institute for Defence Study Analyses, IDSA Comment,
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24. Ibid.
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(Dehradun), (August 24, 2014). Accessed August 22, 2016. http://www.thehindu.com/
news/national/ environmentalists-oppose-pancheshwar-dam/article6347305.ece.
10
Consolidating Nepal-China
Engagement and Emerging
Challenges for India
Sangit Sarita Dwivedi
Abstract
N epal and China have a very long, cordial and constantly sustained
relationships, marked by friendliness, mutual support, as well
as understanding and appreciation of each other’s aspirations and
sensitivities. Nepal and China have been enjoying friendly relations based
on trust since the past and Nepal wants to utilize support and cooperation
from China in its socio-economic endeavours. China has appreciated the
stand of the Government of Nepal that Nepal will never allow her territory
to be used for anti-China activities. Nepal has recognized Tibet and
Taiwan inalienable part of the People’s Republic of China. Over a period
of time, China has improved its capacity in terms of its technological
prowess and economic growth to extend support to Nepal in developing
trade relations. China wants to use its power to disseminate Chinese
values and re-establish China’s image at an international level. Nepal
is always dedicated to ‘One China Policy’ and grateful towards China’s
regular diversified assistance. At the same time, China did not want to
lose this opportunity when it perceived that India’s influence in Nepal was
declining. Despite geographical adversities, China stands in favour of
Nepal’s prosperity and progress. Although India is Nepal’s top economic
partner in terms of bilateral trade, investments and technical cooperation,
it has never been treated as a benign power. China’s involvement in Nepal

has a concrete impact on India’s strategic security. The chapter intends
to examine different reasons for the revision of China’s stance, vis-à-vis,
Nepal. It critically examines growing influence of China in Nepal and tries
to analyze the implications for India and recommends policy options to
enhance India’s relations with its neighbours.
The former Nepali Prime Minister Surya Bahadur Thapa commented,

‘Nepal is surrounded by dogs, the one to the South barks but does not bite,
the one to the North does not bark but bites viciously’ (Iyer-Mitra, 2012). A
dominant feature of the twenty-first century world politics has been the rise
of India and China as the two Asian superpowers. Both nations have been
fiercely trying to expand their influence in South Asia, which has resulted
in a deep-rooted rivalry between the two. This has had a far-reaching
effect on the national security of both countries and is seen as a decisive
factor in reshaping the regional and international order. China-Nepal-India
is a very complex set of relationship, often invoking concerns and raising
questions whenever Nepal gets closer to either India or China by playing
the ‘card’ diplomacy. Analysts have referred to Nepal as the ‘yam between
two boulders’ as it is situated in the frontier mountain areas between China
and India. Keohane’s ‘Lilliputian dilemma’ aptly captured the dilemma
the small states had with respect to dealing with bigger powers (Keohane,
1969). Up to the beginning of the twentieth century, Nepal remained as a
major trading route between India and China. Nepal and China have very
long and cordial relationships marked by friendliness, mutual support,
and understanding of each other’s aspirations and sensitivities. On the
other hand, Nepal, one of India’s geographically close neighbours, has
a significant geo-strategic, economic, and political importance for India.
Geography, polity, society, culture, and economy are the factors that have
encouraged both the countries to adopt close bilateral relationship. China’s
involvement in Nepal has a concrete impact on India’s strategic security.
Certain developments in Sino-Nepalese relations in the present century
acquired crucial significance for India and rest of Asia.
The foreign policy of a country is guided by its national interest.
Himalayas, which were once considered impenetrable, are now penetrable
due to technological developments in the field of transport, communication,
Consolidating Nepal-China Engagement and Emerging Challenges for India • 135
and weapons. China is the biggest neighbour of South Asian countries and
has been pursuing bilateral relationship with all the South Asian Association
for Regional Cooperation (SAARC) member countries. Chinese soft
power has reached South Asia. Historically speaking, barring the age
old cultural contacts, relations between Nepal and China were very few
and limited. Besides, China’s relations with Nepal were always indirect,
through Tibet (with whom Nepal had ancient relationship). Towards the
middle of the present century, various events outside and inside Nepal
led to the development of an international relations of Nepal and allowed
revision of external relations. Nepal’s intimate relations with India were
traditional and ancient. Nepal, being a part of the geographic and cultural
unity, is represented by the subcontinent of India. It presents one of the
most complex foreign policy challenges for Indian policymakers. The
complexity lies in the internal instability of Nepal because of different
levels of issues that have derailed the political, social, and economic
modernization of the country like multi-party democracy versus party-less
democracy; Maoists versus other political parties; party rivalry, etc.
There is neither unified regional security policy in South Asia nor do
common perceptions of external threats bind together the countries of
the region. In 1949-50, India had sought to build a security community
when it formulated a southern Himalayas policy that brought Bhutan,
Nepal, and Sikkim under its security umbrella. This was accomplished
by concluding bilateral treaties with these three Himalayan monarchies
that abut the Chinese (Tibet) borders. In succeeding years, this miniature
security system suffered a setback when one of its components—Nepal,
with whom the Treaty of Peace and Friendship was concluded with India
in 1950—developed its own security perspective on its contiguous border
with China. Nepal not only deftly pursued its China policy in the 1950s
but also succeeded in expanding and extending its relations with as many
countries of the world as possible. However, there are different views on
the close and friendly relationship between China and Nepal. According
to one point of view, Nepal’s relations with China are regarded purely as
balancing its relations with India. In other words, this view underestimates
the relations between China and Nepal. At the same time, the Indian media
often complain of Nepalese leaders ‘playing the China card’ to extract
concessions from New Delhi. According to another view, Nepal tries to

view China and India off against each other. With the accession of King
Mahendra to the throne, the principle of ‘special relationship’ with India
was rejected and concept of ‘equal friendship’ with both of her neighbours
(India and China) was adopted. This stand was taken by Nepal mainly
because of King Mahendra’s personal predisposition and commitment
to withdraw Nepal from the Indian influence (Singh, 1992). Particularly,
the perception each country held about the other determined the policies
towards each other.
Given the internal political upheavals in Nepal, its closeness with
China, this chapter focuses on the complex foreign policy challenges to
India. It examines and analyzes Nepal’s relations with China and India in
the framework of ‘small and major powers’ equation. This is an attempt
to trace the growth of Sino-Nepalese relations in the contemporary
period. The major issues of India-China relations, including the Tibet
issue, regional competition and cooperation, and India-China relations
in the global context will also be reflected. It also attempts to conduct a
comprehensive assessment of China’s and India’s interest in Nepal, i.e.
the common interests of China and India, their conflicting interests, the
areas of cooperation, the areas of competition, etc. This chapter intends
to examine different reasons for the revision of China’s stance, vis-à-
vis, Nepal taking an analytical approach. The study critically examines
growing influence of China in Nepal and tries to analyze the implications
for India and recommends policy options to enhance India’s relations with
its neighbours.
Sino-Nepalese Relations in the Twenty-first Century

Nepal is being configured as part of China’s purported Asia-Pacific
‘encirclement strategy’. Nepal constituted one of the five fingers in Mao
Zedong’s five finger policy. According to Kumar, Chinese engagement
with Nepal can be listed in three phases. The first phase lasted from 1955
to 1989, when the prime motive of China was to create infrastructure in
Nepal and promised Nepal to protect its territory from third country. The
second phase focused on Nepal’s overdependence on India. The third
phase focus on encircling Nepal (Kumar, 2011). Nepal and China have
been enjoying friendly relations based on trust since the past and Nepal
wants to utilize support and cooperation from China in its socio-economic
endeavours. From China’s perspective, Nepal’s significance stemmed
largely from the fact that it borders Tibet. Unsurprisingly then, Chinese
engagement with Nepal has aimed at getting it to crackdown on Tibetan
activism on Nepalese soil (China Brief, 2011). Nepal hosts to some 10,000
Tibetan refugees (UNHCR, 2013). Nepal’s importance to China grew in
the wake of deteriorating Sino-Indian relations. Especially in the context
of its sanctuary to the Dalai Lama and the large Tibetan exile community,
India’s dominating presence in Nepal, close to Tibet, aroused fear in
China that India would ignite unrest in that region. This is the underlying
reason for Chinese attempts to weaken India’s presence and influence in
Nepal. The importance of Nepal to China arises as Nepal has potential
for being used against India in times of peace and war (Raman, 2011).
China also sees Nepal as its gateway to the vast South Asian market. China
wants to use its power to disseminate values and re-establish image at an
international level.
Diplomatic relations between China and Nepal were established in 1955
when both sides agreed that five principles should be the basic guidelines
for bilateral relations. Since the beginning of ambassadorial exchanges
in 1960, the two countries have developed a good relationship. Since
1980, China has strengthened its cooperation with the neighbours. Over
a period of time, it has improved its capacity in terms of its technological
prowess and economic growth to extend support to Nepal in developing
trade relations. For more than 20 years, China has assisted Nepal in 20
construction projects including roads, power stations, and various kinds
of factories contributing to Nepal’s national economy. Friendly cultural
exchange between the two countries is another characteristic of bilateral
relations in the 1980s. There have been visits by journalists, youth groups,
students, cultural representatives, etc. The development of friendly China-
Nepal relations is based on firm foundations. Nepal is always dedicated
to ‘One China Policy’ and grateful towards China’s regular diversified
assistance. At the same time, China did not want to lose this opportunity
when it perceived that India’s influence in Nepal was declining. China has
been playing an important role in determining future of Nepal’s politics.
Till 1995, trade between China and Nepal was limited to 0.7 per cent.
The rest 99.0312 per cent trade was with India (Singh, 2016). China
was conscious of the geographical proximity between India and Nepal.
Therefore, new routes to trade in Nepal were planned. On the other hand,
China encouraged Nepal to adopt the equidistance policy between India
and China. In the early years, Chinese assistance was pledged in terms
of projects and numerous financial involvements were initiated. From the
mid 1990s, the Chinese government has been pledging grant assistance
to Nepal under the economic and technological aid. In 2013, China was
the fourth largest market for Nepal’s goods, absorbing 4 per cent of its
exports and the second largest (15 per cent) source of its imports (Atlas
of Economic Complexity, 2013). Sino-Nepalese trade was worth US$
23 billion in 2014. China is the top most investor in Nepal and Chinese
investment in Nepal is increasing day-by-day.
In post-2005, China has gained a solid foothold in Nepal’s
telecommunications sector with the entry of ZTE Huawei. China will
double its efforts on the tourism, trade, and investment fronts to win the
people. China may pressure Nepal to reclaim the Kalapani trijunction where
India is in control of 37.5 thousand hectare of land or call for a trilateral
dialogue to settle the border dispute (Rana, 2013). In the hydropower
sector (Nepal’s most precious natural resource, on the West Seti project)
Nepal has acquiesced to terms that are highly favourable to China, setting
a new benchmark for Nepal’s water agreements with competitors like
India (Manchanda, 2012). China’s proposed US$ 3 billion investment in
the transformation of the town of Lumbini into a special development zone
will revive traditional Buddhist links. China Study Centres and Confucius
Institutes will spread language, culture, and the ideational power of the
Chinese model (Manchanda, 2012).
Nepal is important for China to check the rise of India. In the last decade,
Chinese activities in the region have increased enormously generating
huge concerns in New Delhi, about India’s preponderance in the region. In
the recent past, Nepal’s approach towards India and orientation of foreign
policy has been changing. Given ‘China’s Encirclement Policy of India’,
the Indian policymakers look upon Nepal with suspicion as China has been
trying to wean Nepal away from India. Anti-China sentiment in Nepal is
‘less intense’ as the people of the two countries do not mingle as much as
Nepalese and Indians (Singh, 2016). Therefore, closeness between Nepal
and China acts as irritant for India. However, contemporary Indo-Nepali
relations needs to be treated in view of changed national, regional, and
global context as there have been far reaching changes in both Nepal and
India.
India-Nepal Relations: Rediscovering Each Other

Foreign policy is an instrument to conduct relations of one country with
another. There are numerous causes which bring India and Nepal close
despite the differences in size, population, resources and economy. About
12 of 13 trade routes of Nepal are via India. India and Nepal are not only
linked due to the proximity of land, but it is the cultural affinity that binds the
two nations. The common linguistic and ethnic identities, Hindu religious
practices, similar festivals, resemblance of dresses, all make inseparable
ties between India and Nepal. New Delhi has always been sensitive to
being perceived as ‘Big Brother’ from the time of Nehru. India’s interest in
Nepal is to curb the influence of anti-India and pro-Chinese forces. Since
1952, India has significantly invested in Nepal’s development through
economic assistance. Although India is Nepal’s top economic partner
in terms of bilateral trade, investments and technical cooperation, it has
never been treated as a benign power. India’s attitude towards Nepal has
been guided by belligerent relation with China, Pakistan, and Bangladesh.
There remains an anti-India sentiment in Nepal. There are complex
reasons and have much to do with small country fear psychosis. Today,
India-Nepal relations need to be looked in different perspective.
In context with India and Nepal there are many issues that are either
sources of intimacy or irritants. For Nepal, India’s Big Brother attitude
has been evident in several matters. India remains non-committal towards
the implementation of the Mahakali project. It maintains silence over
Nepal’s protests at the Indian presence in Kalapani. Indian imports have
been perceived as throttling traditional Nepalese products. There is a
perception that Nepal was not given due share in the three major water
deals between Nepal and India, namely, the Kosi Agreement, the Gandak
Treaty, and the Mahakali Treaty. These issues give rise to suspicion,
conflict, and cooperation between the two neighbours. As for India,

Nepal is an important strategic neighbour with which it has had a lot of
cooperative relations. China’s successful assault on Tibet forced the Indian
policymakers to reconsider their northern security strategy. The security
concerns of India made Nepal an important foreign policy variable with
China annexing Tibet in the early 1950s. The Chinese military thrust
across the Indian border in 1962 has made the Indian foreign policymakers
more alert to defend this strategically important Himalayan country from
internal and external subversions.
Indian firms are the biggest investors in Nepal, accounting for about
40 per cent of total approved foreign direct investments. India has long
enjoyed a significant voice in Nepal’s politics and is proactively involved
in upgrading Nepal’s infrastructure and improving Indo-Nepal road and
rail connectivity. India has been a part of Nepal’s growth in diverse areas
as water resources, human resource development, health, power, civil
aviation, tourism, and agriculture. India is Nepal’s biggest trading partner
and also the largest foreign investor. In an open challenge to India’s
primacy in Nepal, Nepal negotiated a deal for the purchase of Chinese
weapons in the mid-1988. According to India, this deal contravened an
earlier agreement that obliged Nepal to secure all defense supplies from
India. It was considered by India as an attempt to discard the Indian
security umbrella. India-Nepal relations reached the nadir when the Indian
government refused to renew the two separate treaties of trade and transit
in March 1989.
Nepal-India border constitutes the single most important aspect for the
realization of social, cultural, economic, and political relations in practice.
Considering India’s policy towards Nepal, the significant aspects like
open border need deeper analysis. Nepal avowed not to allow its territory
to be misused by any inimical elements against India and also expects
some reciprocity from India. Policymakers in India have taken note of
the deteriorating security situation along the India-Nepal border and have
undertaken a number of bilateral measures in response. Pranay Sahay,
the Director General of Armed Border Force Sashastra Seema Bal after
an India-Nepal border meet told the press that the Chinese activities in
the southern part of Nepal have increased. Transforming the India-Nepal
border from an ‘open border’ to a ‘closed border’ would severely damage

the traditional socio-cultural and economic ties. It would be prudent to
keep the border open but manage it more effectively through mutual
cooperation. However, recent security concerns have given India new
reasons to reassert itself in Nepal by investing in infrastructure as well as
more troops on the border. The anti-Indianism emanating from Kathmandu
is mostly opportunistic and betrays a ‘small country complex’ not needed
between two sovereign states with a shared destiny (Ramachandran,
2003). The manner in which both India and China are coming close to
each other suggests that India-Nepal and India-China relations deserve to
be reviewed. Therefore, a balanced and friendly relationship with Nepal’s
two immediate neighbours, that is India and China, is the need of the hour.
India, Nepal, and China: Time for New Perspectives of Tri-

junction
At the inaugural session of the 6th General Assembly of the Nepal Communist
Party (Maoist) in Kathmandu on 9 January 2013, Chairman Mohan Baidya
Kiran stated, ‘China respects Nepal’s sovereignty unconditionally, while
India has set an evil eye… there exists several unequal treaties between
the two countries’ (Kochhar, 2013). Chinese Ambassador to Nepal, Qiu
Guohang conveyed that trilateral relations between Nepal, China, and
India should be developed in a unified manner (Roy, 2011). According to
S D Muni, the present day China has an advantage over India in Nepal due
to its pragmatism.
Beijing does not have any serious emotional or cultural bonds with
Nepal like India does. It can therefore relate itself with any political
force in control of Nepal be it Maoist or the army (Kumar, 2011).
Nepal’s strategic environment stems from the fact that it virtually

forms a buffer between India and China. Placed between two huge
countries–democratic India and communist China, Nepal was called to
develop relations with both, consistent with the requirements of her own
independent economic and political growth. Although traditionally, Nepal
has been under New Delhi’s shadow—all its fuel, most of its military
equipment, and almost all cultural influence comes from India—is slowly
shifting in favour of China. The 10 years of Maoist insurgency followed

by the political vacuum after the abolition of the monarchy and the
delay in the drafting of the Constitution has given credence to the role of
external powers in shaping the domestic politics in Nepal. Nepal could no
longer keep its relations with China as casual as they were before. Despite
geographical adversities, China also stood in favour of Nepal’s prosperity
and progress.
India and China’s goals in Nepal are shared. Both fear destabilization
from Nepal and feel the need to influence it. Both want Nepal’s political
situation to stabilize and are worried about security. India’s concerns stem
from the fact that any agitation from the Nepalese side of their shared
border spills over to India and the possibility that Pakistan trained militants
could move through Nepal. China sees Nepal as crucial security to Tibet
as Nepal has been crossing point for Tibetan refugees. India felt directly
challenged as Beijing began to expand its sphere of influence in South
Asia. While China’s relations with Nepal grow, resentment against India
is also on the rise. According to Nepal India’s expansionist tendencies are
gaining ground. The influence of India and China may be an inevitable
dilemma for a small country squeezed between two giants. In the 1970s,
when King Birendra of Nepal proposed Nepal as a ‘zone of peace’ between
India and China, India did not show keen interest, while China was quite
supportive. These and many such issues created a rift in Nepal-India ties.
India’s presence in Nepal is dominant and Nepal’s relations are
compounded by India’s asymmetry. But this is changing dramatically as the
Chinese build roads and railways to the Nepalese borders. Beijing-Lhasa
railway line will be extended to the border of Nepal as China has succeeded
in linking Kathmandu to Lhasa and Lhasa to Beijing by road. This has
added a new dimension to India’s security in the north. New land routes
will be opened and made available to the locals. China is making forays
in trade, investment, finance, and tourism in Nepal. It will exceed India’s
share in many spheres in Nepal within the next decade. Simultaneously,
there is added emphasis on boosting cultural exchanges. There are now
almost 19 China Study Centres (CSC) and Confucius Institutes in Nepal
to promote Chinese language and culture. Although Nepal and India have
an open border and free mobility of populace across borders, it is China
that is increasingly working to take over India’s position of the largest

trading partner of Nepal. In the 1990s, China and India’s trade with Sri
Lanka, Nepal, Bangladesh, and Pakistan was roughly equal. Now it has
outpaced it. In 2011-12, India-Nepal trade was US$ 3 billion and the total
volume of trade between Nepal and China amounted to US$ 1.2 billion. To
enhance these ties, China has offered zero-tariff treatment to 60 per cent
products of Nepal. Entering the hydropower sector, China’s Three Gorges
Corporation contracted to build the US$ 1.6 billion West Seti 750 MW
hydropower plant in West Nepal. Sino-Nepal military ties also got a boost
with the Chinese military chief’s visit in March 2011, yielding a US$ 20
million agreements and the affirmation of ‘ties between the two countries
as important to world peace and the Asia Pacific region’ (Manchanda,
2012). For Nepal, closeness with China is important as it could gain
much from China’s economic growth. China serves as an alternative
for its diplomatic bargaining, vis-à-vis, India. In particular, the Chinese
economic clout over Nepal is giving space for open antagonistic view
against India. However, logistical challenges persist. Higher transportation
costs make Sino-Nepal trade economically unviable. Nepal’s turn to China
to meet its long-term fuel requirements is unrealistic. China is unable to
match India in supplying fuel to Nepal. Nepal’s annual purchase of fuel
from India reached 1.37 billion litre. China’s recent supply of 1.3 million
litre of gasoline to Nepal—can realistically only meet Nepal’s needs for
a day or two (Ramachandran, 2015). Furthermore, China encountered
major logistical challenges when transporting the gasoline. It will become
difficult to change this dependency overnight as currently 70 per cent of
Nepal’s trade is with India. According to one Nepalese commentator:
India cannot be substituted by any other county in Nepal. Its strong

civilizational, cultural and historical ties with Nepal combined
with its control of two-thirds of Nepal’s trade cannot be substituted
overnight” (Ramachandran 2015).
The former Prime Minister of Nepal K P Sharma Oli concluded a successful

week-long visit to China from 20 March 2016 to 27 March 2016. It shows
that most of the issues agreed upon are subject to feasibility, implying
Nepal is now fully playing the ‘China card’ on India. The Prime Minister
of Nepal also visited India a month before and the visit did not produce a
joint communiqué signifying it was an unsuccessful visit. During his visit
to China, the two countries signed 10 Memorandums of Understanding
(MoU), including the Transit and Transportation Treaty thereby ending
India’s monopoly over Nepal’s third-country trade. The current Chinese
President Xi Jinping broached the topic of making Nepal an economic
‘bridge’ between India and China during his recent meeting with Prime
Minister Oli, a win-win situation for all three (Baral, 2016). This visit to
China of the Nepalese Prime Minister, thus assumes significance as the
atmosphere is not the same between India and Nepal; therefore its impact
needs to be assessed.
India-China relations are constrained by the asymmetry between their
threat perceptions, which has been a destabilizing factor in India-China
relations. The military gap between India and China is phenomenal as China
is upgrading its military infrastructure in Tibet. There are many areas of
common interest between India and China in terms of trade, investment,
finance, energy and sweet water security, manufacturing and services
environment, fight against terrorism, role in multipolar world, China-
India-Nepal trilateralism, China-India cooperation (BMIC), etc. There are
China-India competitive areas as well like soft power projection, resources,
information technology, military, and aerospace. At the same time China and
India have issues like Tibet, border disputes, cyber security, China-Pakistan
ties, etc. India’s concerns reflect a fear that any international presence in
Nepal will reduce its grip in the country which would challenge its position in
the neighbourhood. Nepal has become place of rivalry between two nations,
(India and China) when its own political stability is at stake. Sharpened
by India’s political rivalry with neighbouring China and Pakistan, and of
critical importance to Washington in its complex relationship with Beijing,
Nepal has suddenly acquired a permissive security environment.
How these two Asian Giants behave towards each other in the coming
century will have global repercussions (Randol, 2008). China remained
the major obstacle obstructing India’s membership bid in the Nuclear
Suppliers Group as 47 of 48 members supported New Delhi’s application
(Bagchil, 2016). For better operational cooperation both India and China
need to go beyond rudimentary agreements and work on accountable
framework for fresh collaboration. There is need to develop China-India

coordination mechanism. Forums, track II diplomacy, summits, and Sino-
India talks and communication should be encouraged. The relationship
between the three countries should be modernized according to the
needs of twenty-first century geo-politics. The rise of China and India is
undoubtedly a major feature of global politics nowadays. The interactions
between the two rising Asian powers will not only exert a profound and
far-reaching influence over regional security, but is also seen as a decisive
factor in reshaping international order. China obtained the observer status
in South Asian Association for Regional Cooperation (SAARC) and India
the observer status in Shanghai Cooperation Organization (SCO). China
has already welcomed cooperation on trilateralism. It is of urgent need that
India relooks its policy options and cooperative ties with China and Nepal.
A cautious approach and reassessment of this relationship is the need of
the hour. It is common wisdom that the dragon and the elephant don’t
necessarily have to compete negatively but may peacefully rise at the
same time (Dingli, 2010). As stated by Baburam Bhattarai, Nepal can only
thrive through ebbs of India-China contestations and flows of India-China
synergies if it is prepared to play a facilitative role of a bridge between the
two neighbours (Nepal, 2011).
Conclusion
A harmonious balance is never easy between a big power and a smaller
power in geo-politics. Such is the psychology of Nepal’s relations with
India and China. Nepal is strategically located between India and China,
which also is a paramount concern for her security and stability. (Bhattarai,
2005) India and Nepal both must look at national interests for security
reasons and develop a better relationship. A strong China has historically
been an assertive China. It is important for Nepal to build its own foreign
policy institutions for stability. Geography dictates to Nepal that Nepal
maintains its traditional ties with India. Energy security for the South-East
Asian region is dependent via India; to try and tame the Himalayas may
not be cost effective.
China is not only India’s competitor but also an important partner in
many global forums. For better operational cooperation, India and China
need to go beyond rudimentary agreements and work on accountable

framework for fresh collaboration. Platforms such as Brazil, South Africa,
India, China (BASIC) and Brazil, Russia, India, China, South Africa
(BRICS) are gaining global significance as they bring together the emerging
powers such as India and China. India and China have recognized their
mutual interest in working together on climate change and the World Trade
Organization (WTO). Slightest of stir in Nepal will have spillover effect
on these two fastest growing economies. India has consistently responded
with a sense of urgency to the needs of the people and the Government of
Nepal in ensuring the success of the peace process and institutionalization
of multi-party democracy through the framing of a new Constitution by
a duly elected Constituent Assembly. Apart from the economic and trade
interest of both the countries, they also have interest in containing the
United States influences in the region. Being a close neighbour, Nepal is
in China’s priority list and has done everything possible to further deepen
the age-old friendly relationship with Nepal. India is also paying attention
to Nepal’s concerns and working on bilateral issues to promote a model of
harmony and interdependence. The aim now is to have a comprehensive
cooperation that serves mutual development and prosperity. Therefore,
there is the need for bilateral approach to deal with problems. The three
countries must review their relations in the light of past experiences and
future prospects and develop a balanced neighbourly policy.
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11
Nepal’s Deepening Engagement with
China: Challenges for India
Chanchal Kumar
Abstract
N epal used to be a safe zone for India as China was least interested
in Nepal till the 1950s. But strategic design changed once Tibet
became part of China. 1,751 kilometre India-Nepal border runs through
20 districts of 5 Indian states. The India-Nepal border is open. China,
through its long strategy, has tried to erase Nepalese dependency on
India. The Maoist parties in Nepal at times have played the China card
to balance India. Rails and roads infrastructures have created a route
through which China can move to Indian heartland. The economic and
other development packages of China have weakened India’s strategic
gain in Nepal. If Chinese wave continues unabated in Nepal, India might
face multiple security threats in future.
China has adopted an aggressive posture to weaken India’s hold on
Nepal. There are people who argue that China is not only courting the
Nepalese Maoists, but also rendering political as well material support to
the Indian Maoists whose ultimate aim is to overthrow the parliamentary
democracy through an armed struggle. The sheer political capital of the
Maoists, and the anti-China protests of March 2008 in various parts of
Tibet including Sichuan, underscored the importance of Nepal for China.
According to one of the representatives of the Dalai Lama Nepal has a
Nepal’s Deepening Engagement with China: Challenges for India • 149
sizeable Tibetan community of 20,000. Kathmandu has become the latest

proxy battleground between the regional powers, India and China, to
demonstrate their influence. New Delhi is increasingly getting tensed
about China’s creeping influence in the still-new Himalayan republic.
Introduction
India has enjoyed substantial regional influence across South Asia due to its
size, comparative economic might, and historical and cultural relevance to
the region. China’s increased involvement in South Asia poses a challenge
to India as the regional economic and diplomatic heavyweight. Yet this
is not a simple story of regional displacement. Despite recent headlines
proclaiming India’s eclipse by China, several threads of economic
interaction continue to link India with its neighbours quite deeply.
As China steps up its engagement with the region and promotes Asian
connectivity, largely through its Silk Road ‘belt and road’ initiative, it can
marshal extensive resources on initiatives such as the Asian Infrastructure
Investment Bank that will likely outpace other financial sources. With an
eye on India’s own regional position, the current Prime Minister Narendra
Modi has doubled down on his outreach across South Asia, stressing
infrastructure development, people-to-people connectivity, and a ‘lift all
boats’ approach to help India’s neighbour’s gain from its own rise. For
Nepal, China serves as a potential supplier of goods and assistance that it
badly needs to recover its economy. Almost half the population of Nepal
is unemployed and more than half is illiterate. At the same time, more than
30 per cent of the people in Nepal live in abject poverty. To deal with its
internal problems, Nepal surely has serious business to engage with China
to overcome its poverty and unemployment. Another factor to increase the
interest is China card which most of the South Asian counties are playing
with India to gain the mileage in negotiations and counter India’s Big
Brother approach.
Nepal and China Relations

After Tibet became part of China, Nepal agreed to enter into treaty
arrangements with India. However, too much dependence brings forth
to the small state fear of being incorporated or turned into an ally of
the dominant state. The open border between India and Nepal created
ideological and political linkages between the two countries much to the
chagrin of the monarch. For instance, NC, a protagonist of democracy and
a socialistic party, had links with the Indian National Congress even before
the independence of India (Bajaj, 2011). Landlocked Nepal, to preserve
its own interest, utilized its geographical location to its advantage by
undertaking strategies of distancing with India and following neutrality or
non-alignment with its neighbours. Such as Nepal developed diplomatic
relations with China under King Mahendra’s rule and tried to assert its
independence and sovereignty.
In 1960, both Nepal and China agreed to demilitarize 20 kilometres on
both sides of the border to reduce the expenditure on border security. The
two countries completed the 115-kilometre long Arniko Highway between
1 July 1962 and 30 June 1966, to connect Kathmandu to Tibet. With the
construction of this road, Kathmandu was connected to Lhasa, the capital
city of Tibet. This road was opened in May 1967, but it had very little
commercial and economic value for Nepal (Himalayan News Service,
2012). The Tibet region of China has emerged as Nepal’s top trade partner
since 2001 (nepalnews.com, 2011). Bilateral trade between Nepal and
Tibet through the border points skyrocketed to US$ 945 million in 2011
from US$ 235 million in 2000 (Xinhua, 2012). However, Nepal’s exports
amounting to US$ 14 million proved quite meagre in comparison to the
total volume of trade of US$ 1.2 billion with China (Sweta Baniya, 2013).
Nepal exports foodstuffs like flour, vegetable ghee, handicrafts, metal
statues, incense and construction materials to Tibet; whereas it imports
sheep wool, textiles, household electrical appliances, and traditional
medicines from Tibet.
Informal trade between Nepal and China is also on the rise. Several
cases of undesirable activities have been recorded along the border regions
due to the growth in the smuggling of red sandalwood, currencies, and
illegal animal skins. Because of the presence of hooligans, trading through
the Kathmandu-Tatopani route has become quite insecure. They extort
money from traders. Cases of theft, wear and tear of goods are rampant.
But to facilitate its exports, China is now in the process of constructing
a dry port at Larcha in the Sindhupalchowk district. Nepal and China
have also agreed to construct dry ports at Yari-Pulam, Rasuwa-Jilong and

Kodari-Zangmu (Khasa), Kimathanka-Dingri, Olangchungola-Riwa and
Mustang-Ligzi (Post Report, 2012).
China’s policy towards Nepal is different from those towards the other
South Asian countries. China also has three major strategic interests in
Nepal. These are:
1. Containing Tibetan refugees in the south of the Himalayas and
controlling their anti-China activities;
2. Neutralizing India’s influence in Nepal and setting a pro-China
regime in Kathmandu, for which China has scaled up its engagement
in recent years and has also taken soft diplomatic measures, i.e.
people-to-people contacts, cultural relations, scholarships for
students, economic aid, and spread of Chinese Confucianism by
setting up Confucius Institutes in Nepal; and
3. Investing in strategically important infrastructure projects like
airports and important highways.
The internal political dynamics in Nepal also influenced the making of its
foreign policy with India. There have been frequent changes in the political
system in Nepal from the rule of Ranas to the monarchy to the Panchayat
democracy and constitutional democracy and in every political change
the ruler has looked towards those out of power with suspicion. Such
as when King Mahendra faced opposition from pro-democracy political
parties like the Nepali Congress (NC) and Communists, he apprehended
Indian support to them. To strengthen the monarchy, King Mahendra tried
to diversify relations with extra-regional countries and tried to maintain a
distance from India. Similarly, King Birendra tried to maintain a distance
from India which was alleged by Nepal to be supporting the pro-democracy
and anti-monarchy Congress rebels, by proposing to be a ‘Zone of Peace’
in the region. Despite the Government of India’s assurances on various
occasions, Nepal remained unconvinced.
On 24 October 2005, China pledged military assistance of US$ 9,89,000
to Nepal. The assistance was provided to curb the Maoist insurgents
in Nepal while India, the United States, and the United Kingdom had
suspended military assistance to Nepal since February 2005 which was
after King Gyanendra seized power. Again, in December 2009, China
agreed to provide military aid worth 20.8 million Yuan (approximately

Rs 220 million) to Nepal for the supply of ‘non-lethal’ military hardware
including logistics and training the Nepal Army. According to the
agreement, China had to supply 20 million Yuan worth of ‘non-lethal’
military hardware to Nepal and the remaining 8,00,000 Yuan would go
into construction of a ‘friendship building’ in the Nepali territory along the
Nepal-China border (Nepalnews.com, 16 December 2009).
The construction of a road link between Lhasa and Khasa, a border
town located 80 kilometre north of Kathmandu is functional. Furthermore,
China has also accepted Nepal’s proposal in April 2009 to open two more
custom points in addition to the existing five. China is also building a 65
kilometre second road link, the Syabrubesi-Rasuwa Gadhi road, which is
the shortest route from Tibet to Kathmandu. Chinese engagement in Nepal
has been prominent once the Comprehensive Peace Agreement (CPA) was
signed in 2006, with a particularly marked increase in 2011. In the last few
years, trade relations between Nepal and China have taken a rapid pace
with China’s share in Nepal’s foreign trade increasing from 11 per cent in
2009 to 19.4 per cent in 2011.
China has increased its aid to Nepal. China has pledged US$ 140
million assistance to Nepal during the former Prime Minister Wen Jiabao’s
visit to Kathmandu on 14 January 2012. During discussions with Nepali
counterpart Dr Babu Ram Bhattarai, the Chinese leader was also positive
to extend support for infrastructure development of the impoverished
landlocked country, which may cost more than US$ 5 billion. China also
pledged to construct an international airport in the second largest city,
Pokhara, three large hydropower stations in the west, and improvements
of roads and creating rail networks. This shows the level of importance
China has attached to its close door neighbour on the south. On a similar
light, India also pledged approximately US$ 220 million grants to Nepal
for the year 2012-13 (Jaiswal, 2014).
In traditional neo-realist thinking Dabhade and Pant note as follows:
If we take South Asia as a regional subsystem, then the two major

powers whose behaviour substantially impacts the foreign policies
of smaller states in the area are China and India (Dabhade and Pant,
2004).
In their analysis of Sino-Indian rivalry and penetration of Nepal, they

concluded as follows:
Chinese and Indian strategies reflect their respective desires to

expand their relative influence over Nepal at each other’s expense.
Both powers display a lack of satisfaction with the current status quo
and have pursued strategies that are aimed at maximizing their share
of regional power (Dabhade and Pant, 2004).
China has always expressed that Nepal is capable of solving its own
internal problems, and has largely kept itself out of the Nepalese political
affairs. Implicitly Chinese ODA and its ‘One-China’ policy with regard to
the Tibetan question may be regarded as pressure and a clear attempt to
influence the polity in Kathmandu (Sangeeta Thapliyal, IDSA).
Nepal-China Agreements, 2016

The transit treaty signed between Nepal and China in March 2016
undoubtedly marks a milestone in bilateral relations between the two
countries. There are detractors who have said the agreements are
impossible to implement. Some have gone further, spelling doom,
reminding Nepalese of their absolute dependence on India and warning
of the wrath they are likely to incur for challenging Indian hegemony in
the region. The following agreements and memorandum of understanding
were signed between the two giants:
• Agreement on Transit Transport between China and Nepal;
• Agreement between China and Nepal on the Construction,
Management and Maintenance of the Xiarwa Boundary River
Bridge in Hilsa, Humla;
• Agreement on Economic and Technical Cooperation between
China and Nepal to implement Pokhara Regional International
Airport Project;
• Framework Agreement on the provision of Mixed Loan between
China and Nepal to implement Pokhara Regional International
Airport Project;
• Letters of Exchange on Project Initiation for the Feasibility Study on
Chinese Assistance to Nepal for Exploration of Oil and Gas Resources;
• Memorandum of Understanding between the Ministry of Population

and Environment of Nepal and National Development and Reform
Commission of the People’s Republic of China concerning the
provision of goods for addressing climate change;
• Memorandum of Understanding between the Ministry of Industry
of Nepal and State Administration for Industry and Commerce of
the People’s Republic of China to strengthen intellectual property
system;
• Memorandum of Understanding between the Ministry of Commerce
of the People’s Republic of China and the Ministry of Commerce
of Nepal on Launching the Joint Feasibility Study of China-Nepal
Free Trade Agreement;
• Memorandum of Understanding between China Banking
Regulatory Commission and Nepal Rastra Bank; and
• Concessional Loan Agreement on Pokhara Regional International
Airport (Nepali Times, 2016).
The two countries have also agreed to sign an extradition treaty–something
that China had long been pressing for to curb Tibetan activities in Nepal.
China has also agreed to conduct a feasibility study for the extension of
the Chinese railway into Nepal. China is planning to link Kerung, the
nearest Chinese trade point for Nepal, with its mainland by 2020 and
Kathmandu is trying to persuade Beijing to extend it further down to
Pokhara and Lumbini. Nepal and China have signed a joint communiqué
on 23 March 2016, laying the foundation for new agreements on fuel trade
and extradition. When Oli visited New Delhi in February 2016 for a week-
long state visit, Nepal and India did not issue a joint statement (Nepali
Times, 2016). On 21 May 2016, Nepal and China signed highly strategic
Tibet rail link which once completed will end India’s monopoly as being
Nepal’s only connectivity point to reach out to the world by way of trade
and people-to-people contacts.
Nepal and Changing Relation Between two Asian Giants

India and China
Nepal, a landlocked country, has a strong and unique identity among the
nations as a sovereign state, but it holds a shaky balance between its two
giant neighbours’, India and China. Due to its geographical bondage,

Nepal’s foreign policy priorities and options are limited, as is its ‘strategy
for survival’. To the south, east, and west, Nepal has encircling frontiers
with India. Nepal and China relation have always remained sound and
cordial. Nepal and China’s diplomatic relations were established on 1
August 1955. Nepal’s relation with Tibet and China was first recorded
at the mid of the seventh century. When the Chinese communist invaded
Tibet in 1950, Nepal’s relation with China was brooked and continued till
1955. Nepal and China share a long border spanning range about 1,414
kilometre. Both governments have resolved border issue amicably in 1961.
Nepal has always been upholding ‘One China’ principal and is committed
to not allow Nepalese territory to be used against China.
Nepal has been described as a yam between two boulders. It is landlocked
between two Asian giants India and China. Even though Nepal has sought
to maintain friendly relations with both neighbours, its cultural, linguistic,
religion, and economic ties with India is historically much closer than
China. A significant percentage of all foreign investments in Nepal come
from India. Nepal is dependent on India as the access to the sea is through
the major port of Calcutta (now Kolkata). Due to Nepal’s geography, the
northern border limits access to China. Nepal and India has open border
about 500 mile. India has considered Nepal as a strategic link in its northern
border defences. India thinks Nepal’s instability plays the role of catalyst
for the decentralization of India’s north-eastern state. India-Nepal relations
have been formed and shaped by their geographical contiguity and socio-
cultural identities which has influenced their historical past. The historical
linkages emanating from the racial, religious, and linguistic affinities were
possible because of the 1,750-kilometre-long open border which made
communication easier and possible. The crossing of the border by the
people has not only influenced each other’s history, culture and tradition,
but also had an impact on the political, economic, and strategic relations
between the two countries (Ashlyn Anderson, 2015).
There was friction when Nepal criticized India’s 1975 annexation of
Sikkim as an Indian state. The same year late King Birendra had proposed
Nepal to be recognized internationally as a ‘Zone of Peace’ and received the
support from both China and Pakistan. Nepal repeated the same proposal
and there was no reaction from India and in 1990, Nepal had received the
support from 112 countries including China. An open challenge to India’s
dominance in Nepal, Nepal negotiated a deal for the purchase of weapon
from China in the mid 1988. India perceived that the deal contravened an
earlier agreement that obliged Nepal to secure all defence supplied from
India (Rahul Singh, 2010). There was neither border dispute nor unequal
treaty between Nepal and China, and that is why there is sound relation
since 1955.
The geo-strategic location of Nepal between India and China has
also shaped its relations with its neighbours. The high peaks and rough
terrain towards the north made communication and people’s movement
and habitation difficult, if not impossible, towards the Tibet region
of China. This is not to say that Nepal did not have historical political
linkages with its northern neighbour. However, the presence of China and
Russia in the north led British India to consider Nepal as a buffer state
and integrate Nepal into British India’s security parametres. Independent
India also could not ignore the geo-strategic importance of Nepal and
considered it as a buffer between itself and Communist China (The Times
of India, 23 October 2010). It was not only the ideological differences
with China that alarmed India but also the Chinese efforts to undermine
India’s security interests by undertaking road construction projects in
Terai area which is contiguous to the plains of India. In fact, soon after
Communist China’s expansion towards Tibet, India entered into the Treaty
of Peace and Friendship with Nepal in 1950 which defined the political,
economic, and strategic relations between the two countries (Kulkarni,
Sudheenadra, 2010). There is also a general perception that India didn’t
like the emergence of CPN-M as the largest party. However, some sections
argue that India tried to cultivate the Maoists just after the Constituent
Assembly (CA) elections but they were betrayed by Maoists as they did
not fulfil the promises they made to the Indians. After the resignation
of Prachanda, it was believed that India was not in favour of a Maoist
government assuming power in Nepal. Maoists blame and accuse India of
interfering in the internal affairs of Nepal and encouraging encroachment
of Nepalese territory along the borders. The Maoists have also tried to
convince the people that India does not want political stability in Nepal. In
this context, they say that some Madheshi parties supported the Madhav
Kumar Nepal government on India’s behest. It is also argued that India
does not support the integration of Maoist combatants into the security
forces despite the fact that other parties like the NC, the Communist Party
of Nepal-Unified Marxist Leninist (UML) and the Nepal Army, are also
against bulk integration of Maoist combatant.
The role of external powers in fomenting anti-India feeling in Nepal
has not been investigated till date. There are reports that both China and
Pakistan are providing financial support to media houses who add fuel to
the anti-India fire in Nepal. Since the 1960s, Pakistan has made its presence
felt in Nepal and its intelligence agencies have used Nepalese territory
to export terror to India, taking advantage of the open border between
India and Nepal. Therefore, Pakistan’s ability to foment anti-Indianism
through sponsorship should not be underestimated. Some analysts in
Nepal admitted that the Nepalese often shared their resentment against
India with officials from the Western embassies in Kathmandu.
On 20 September 2015, the long stalled Constitution of Nepal was
passed with 90 per cent approval from the representatives in Nepal’s
Constituent Assembly (Hari Phuyal, 2015). The 2015 Nepal blockade,
which began on 23 September 2015, is an economic and humanitarian
crisis which has severely affected Nepal and its economy. The Government
of Nepal has accused India of imposing an undeclared blockade. India
has denied the allegations, stating that the supply shortages have been
imposed by Madheshi protesters within Nepal, and that India has no role
in it. However, despite Indian denials, minimal border entries even from
border points that have witnessed no agitation added to the allegations that
it was indeed an India enforced border blockade (Nepali Times, 2016).
With the election of CPN-UML and leader K P Oli as the prime
minister in Nepal, the rift between Delhi and Kathmandu has widened,
and could potentially lead to a massive humanitarian crisis, as shortages
of fuel, medicines, and essential supplies across Nepal, with no sign of
reconciliation in sight. Oli was under pressure to diversify Nepal’s trade
and imports away from India in the wake of a 5-month Indian blockade
that created a humanitarian crisis in the earthquake-devastated landlocked
country. China has agreed to allow Nepal to utilize Chinese ports, putting
an end to the landlocked country’s dependency on India for international

trade. In the wake of the Indian blockade, Nepal has tried to increase
road connectivity with China, hoping to lessen the impact of future
Indian embargos. In the 5 months of the recent blockade, Nepal suffered
a humanitarian crisis as people were deprived of fuel and cooking gas.
Amidst the blockade, Nepal decided to import one-third of its fuel needs
from China, and PM Oli was expected to sign an agreement to this effect
during his China visit. But the fuel deal was struck off from his agenda
just a few days before he flew to Beijing. Many believe that Oli backed out
from the fuel duel because of Indian pressure, though he said that it was
because of the lack of enough preparation.
Growing Rivalry Between India and China

Since the establishment of diplomatic relations between Nepal and China,
the rivalry between the two has been increasing on Nepalese soil. India
wants to uphold its traditional leverage in Nepal; whereas China wants
to puncture this relationship and seek its own space in different layers of
administration, security agencies, army, and the people. India wants to see
that China does not keep its footprints in the region across its border in
Nepal. China, too, does not want India’s presence whatsoever in Nepal’s
northern region bordering Tibet. India pressured Nepal to prevent China
from undertaking any survey work for cotton cultivation in the Nepalese
border region in the south. On another occasion, the Indian authorities
asked Nepal to withdraw Chinese from bridge construction projects in the
western sector of the East-West Highway in Nepal. On 24 June 1969, the
then Nepalese Prime Minister Kirti Nidhi Bista demanded the immediate
withdrawal of Indian wireless operators posted along the checkpoints
in the northern border region of Nepal. Ultimately, the Indian Military
Personnel and Indian Military Liaison Group were removed from Nepal’s
northern checkpoints. Even in October 2010, there was a case involving
the humiliation of an Indian envoy by a former Maoist minister during
the Indian envoy’s visit to Solukhumbu in the north in connection with
inaugurating an India-aided development project (The Times of India,
2010).
China and India have been competing for influence along the Nepal-
China border. Soon after India provided development assistance of Rs

100 million for the remote hilly region of Mustang, China responded
with financial assistance worth Rs 10 million for construction of a library,
science laboratory, and school building with computers in Chhoser village
(adjoining Jhongwasen district of Tibet) in the same region to counter
Indian influence. Subsequently, the ambassadors of both countries have
visited the area (Hindustan Times, 8 July 2010).
There are reports of China funding and promoting China Study
Centers (CSCs). According to the CSC website, there are ten local
branches (most of them on the India-Nepal border) located in Butwal,
Banepa, Sankhuwasabha, Pokhara, Biratnagar, Morang, Sunsari,
Chitwan, Nepalgunj and Lumbini, besides the central organization
of the CSC-Nepal in Kathmandu. China Radio International has also
launched a local FM radio station in Kathmandu (The Financial Express,
25 April 2008). There has been a gradual shift in China’s focus from the
eastern seaboard to the south-west China such as Tibet, Qinghai, Gansu,
Sichuan, Kunming and Xinjiang, which are immediate neighbours of
Nepal. Nepal is assuming a new geo-strategic eminence as buffer zone
between India and China, particularly for the defence build-up in Tibetan
plateau, construction of Karakoram highway, rail link from Beijing to
Lhasa, and now from Lhasa towards Nepal and Sikkim (Rana, 2011).
From China’s perspective, Nepal’s significance stemmed largely from
the fact that it borders Tibet. Unsurprisingly then, Chinese engagement
with Nepal has aimed at getting it to crackdown on Tibetan activism
on Nepalese soil (China Brief, November 2015). Nepal’s importance to
China grew in the wake of deteriorating Sino-Indian relations. Nepal
also offers China potential use against India in times of war (China Brief,
November 2015). China sees Nepal as its gateway to the vast South
Asian market. China’s role in Nepal has expanded steadily over the
last seven decades. Although difficult geographic terrain has restricted
bilateral trade, China’s strategic road construction in the Himalayas has
helped trade grow.
China has already constructed roads in its territory in Tibet bordering
Nepal. Plans are afoot to link Kerung along the Nepal-Tibet border with
Lhasa by Chinese rail. Lhasa is already connected with mainland China
by rail. The Maoists in Nepal have been advocating for the extension of
the Chinese railway from the Nepal-Tibet border down to Lumbini, the
birthplace of Buddha, which is just a stone’s throw from the Nepal-India
border. China is keen to link Nepal’s southern border with India through
railway as it wants to tap not only the Nepalese market and its virgin natural
resources but also it has design to capture the market across the Nepal-
India border in India. On the other side, India has also started constructing
roads, railways, and other infrastructure facilities in its territory closer to
the Nepalese border.
Nepal has retrieved from two greatest crises, namely, natural crisis in
the form of earthquake and constitutional crisis. Both the events have
shaken the roots of Himalayan country. However, these two events had
contrastingly affected the India-Nepal relations. Cooperation and timely
support during the earthquake proved India’s worth for Nepal and its
irreplaceable geo-strategic position. However, forming of new constitution
and its implementation created a tense scenario between the two nations
and overshadowed the Indian rescue efforts during earthquake. In both the
events China took advantage to deepen its ties with Nepal and put India on
the strategically disadvantageous position, whereas, Nepal also seems to
play the China card on India’s suggestions for the demands of Terai people
and constitutional reforms, i.e. for more representation of Terai people
in the parliament, provincial territory demarcations, and issues related to
citizenship rights.
China’s overstepping in Nepal has a real and concrete strategic impact
on India’s Himalayan security. India’s stakes in Nepal became stickier after
the Maoist rise in Nepal. Instability in Nepal is likely to have an adverse
impact on India’s political, economic, and security interests. China has
tried to use an unstable Nepal to its own advantage. The densely populated
Terai area is mushrooming Chinese study centres. Fundamentally these
Chinese agencies are building anti-India sentiments in Nepal. India is
also taking the Chinese expansion as security threat. Therefore, Nepal
has become a battleground between India and China. The young republic
of Nepal and Bhutan have an important place in India’s foreign policy
scheme (Indian Express, 2011).
Nepal-China Relations: Challenges for India

Most of the terrorism and insurgency related problems in India have cross-
border linkages. Consequently, border management has become an integral
component of India’s internal security management. The India-Nepal
border has assumed significance only in the recent years due to continuing
instability in Nepal and increasing Chinese proximity to Nepal. The 1,751
kilometre India-Nepal border runs through 20 districts of 5 Indian states.
Unlike Nepal-China border, which runs mainly through high altitude
mountains, most of India-Nepal border runs through plains and rivers. The
India-Nepal border is open and there is no visa regime for persons of both
the countries. There are 22 agreed routes for mutual trade and 15 for land
traffic. Most of the border areas run through underdeveloped and populous
areas where a high crime rate, poor governance, inadequate infrastructure,
and an ill-equipped police force make conditions conducive for various
forces inimical to Indian and Nepalese interests to operate. Moreover,
there is a high volume of illicit trade in forest products and wildlife. The
open border and absence of effective law and enforcement in Nepal have
also contributed to drug smuggling. Numerous reports have indicated that
Nepal’s Maoist insurgents are involved in smuggling drugs to India to
raise money to buy arms (South Asia Monitor, 2006).
On 12 May 2016, China announced the opening of a new rail and
road trading route to Nepal, coming amid fresh stains in the country’s
relations with India following the cancellation of its president’s visit and
the recalling of its envoy from New Delhi in May 2016. Further tensions
were triggered in May 2016 after Nepal announced the cancellation of a
scheduled visit of the Nepalese President to India, blaming New Delhi for
what it described as efforts to destabilize Prime Minister K P Sharma Oli’s
government (India Today, 2016). Drugs and mafia on the India-Nepal
border pose a serious challenge to the Indian security apparatus, and most
criminals find safe passage and refuge to Nepal. The Nepalese border has
been the easy passage to smugglers, who have been able to smuggle drugs
and arms to India without hindrance.
The Chinese presence in Nepal is getting thicker. It is working
systematically to remove the Nepalese over dependence on India. So, in
formulation of anti-wave against India, China has been very instrumental.
China gave aid to Nepal as part of its policy. The road provided a direct
strategic connection between China and Nepal via the difficult Tibetan
route. If Nepal was not able to resist an attack through this road, the Indian
heartland would be easily accessible. For India, these developments were
a cause of grave concern. It is evident that China is trying to make Nepal
one of a series of ‘Little Dragons’ spewing fire at India. The Maoists-led
Nepal will not only assert itself, vis-à-vis, India, it is also likely to be
influenced by China in its foreign policy decision-making. This means that
Nepal may toe the Chinese line in its international relations. This would
mean more space for infiltration of Chinese agents and their clandestine
activities against India.
Nepal used to be a safe zone for India. Till the 1950s, China was least
interested in Nepal. But strategic design changed once China forcefully
occupied Tibet. China has tried through its long strategy to erase Nepalese
dependency on India. Rails and roads infrastructures have created a route
through which China can move to Indian heartland. The economic and
other Chinese packages are designed to weaken India’s strategic gain in
Nepal. If Chinese wave continues unabated in Nepal, India might face
multiple security threats in future.
China has adopted an aggressive posture to weaken India’s hold on
Nepal. There are people who argue that China is not only courting the
Nepalese Maoists, but also rendering political as well material support to
the Indian Maoists whose ultimate aim is to overthrow the parliamentary
democracy through an armed struggle. The sheer political capital of the
Maoists, and the anti-China protests of March 2008 in various parts of Tibet
including Sichuan, underscored the importance of Nepal for China, because
Nepal has a sizeable Tibetan community, 20,000 according to one of the
representatives of the Dalai Lama. Kathmandu has become the latest proxy
battleground between the regional powers, India and China, to demonstrate
their influence. New Delhi is increasingly getting worried about China’s
creeping influence in the still-new Himalayan republic. Although Nepal and
India have an open border and free mobility of populace across borders; it is
China that is increasingly working to take over India’s position of the largest
trading partner of Nepal. As India is the largest economy of south Asia and
has been emerging as a leader of South Asian countries, China wants to
contain the India’s emergence as growing power, which may become a

threat to Chinese dream of becoming the superpower.
Conclusion
Nepal should clearly prioritize its national interests and adopt a policy in
managing its relationships with India and China, that best preserves and
promotes her national interests. As the country has recently undergone
political transformation, such national interests could be: security, internal
stability, economic development, and establishing a sound democratic
mechanism. To preserve its long-term security, it is necessary for Nepal
to understand the sensitivity of India and China in terms of their security
related issues and adopt policies wisely, following a middle path that
respects the interests of both neighbours. China’s interest in Nepal
is primarily geo-strategic. Professor S D Muni, a visiting fellow at the
National University of Singapore, attributes China’s upper hand in Nepal
to its pragmatism. He says:
Beijing does not have any serious emotional or cultural bonds with
Nepal like India does. It can therefore relate itself with any political
force in control of Nepal, be it Maoists or the army.
China’s presence in Nepal will definitely challenge Indian security. In the

long-term, Nepal is going to be a battleground between India and China,
if not dealt well.
References
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idsa-india.org/an-dec-5.html
“China offers Rs 220 m military aid to Nepal”, Nepalnews.com, 16 December 2009,
[Online: web] Accessed 12 May 2010, URL: http://www.nepalnews.com/main/
index.php/news-archive/1-top-story/2933-china-pledges-20-m-yuan-military-
assistance-to-nepal.html.
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12, 2016, http://indiatoday.intoday.in/story/china-opens-new-trade-route-to-
nepal-amid-india-tensions/1/666482.html
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india/28220763_1_indian-ambassador-rakesh-soodindian-envoy-maoist-
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Times, October 28, 2010, http://www.thehimalayantimes.com/fullNews.php?hea
dline=Shoe+attack+on+Indian+envoy+flayed+&NewsID=263392
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india/28220763_1_indian-ambassador-rakesh-soodindian-envoy-maoist-
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archive/2011/feb/feb27/news07.php
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blogs/thebrief/2016/03/23/joint-communique/
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2010.
Nepal gains access to China ports March 21st, 2016 Nepali Times http://www.
nepalitimes.com/blogs/thebrief/2016/03/21/nepal-gains-access-to-ports/
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2015 http://thediplomat.com/2015/09/nepals-new-constitution-65-years-in-the-
making/
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January 15, 2012.
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options-for-nepal-249.html
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(accessed April 12, 2012).
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November 29, 2010.
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single/?tx_ttnews%5Btt_news%5D=44603&cHash=5040f870e38c38499d84838
a639567a8#.V4nTFGh9600
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regular-columns/Making-It-Plain/triangular-relationship-between-india-china-
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2012, http://english.peopledaily.com.cn/90778/7875730.html
12
Rise of China and India: Nepal’s
Future in an Affluent Neighbourhood
Monica Verma
Abstract
T here is a fundamental change taking place in Nepal’s immediate

neighbourhood in terms of an increase in material capability of India
and China. The economic rise of both the countries will have implications
for the entire South Asia. One common tendency is to look at such a rise
as a contest between the two countries for influence in South Asia where
Nepal has the choice to closely align itself with either of the giants. This
chapter instead explores the possibility for cooperation between these
countries in the region where India and China’s rise can contribute to
economic development of Nepal.
This includes looking at the current status of bilateral relations between
India, Nepal, and China. Indian and Chinese economies within the larger
backdrop of South Asia are complementary to a great extent. Smaller
countries of South Asia can benefit from their rise and through a possible
cooperation between them. Nepal’s economy is suffering from a dearth
of infrastructural investments and low level of industrialization due to its
status as a land-locked country. A rising China can supply Nepal with key
investments where as India can complement this equation by upgrading
trade linkages with Nepal.
Rise of China and India: Nepal’s Future in an Affluent Neighbourhood • 167
Introduction
There is a huge transformation taking place in Nepal’s neighbourhood.
Its first order neighbours, China and India are witnessing a rise in their
economic capability. According to the World Bank (2016), China’s
economy is now worth US$ 10.35 trillion. Its economic performance has
helped China to firmly secure its position as a formidable great power. In
fact, China is seen as a possible challenger to the position of United States
as a leading country of the current international order (Mearsheimer,
2001). Nepal’s other neighbour, India is also growing at a fast pace. It
recently became a US$ 2.049 trillion economy and the fastest growing
economy in the world with a growth rate of 7.5 per cent (World Bank,
2016). Geopolitically, Nepal has always been in a precarious position due
to its location between the two giants. This position has made it difficult for
Nepal to pursue an independent foreign policy. At the same time it has also
affected the process of Nepal’s economic development as Khadka (1992)
traces from the 1950s to 1990 in his paper, ‘Geopolitics and Development:
A Nepalese Perspective’. The fact that China and India are both witnessing
economic growth on an unprecedented scale will also have implications
for Nepal. This chapter is an attempt to argue that the change in power
equations in its vicinity may lead to a bright future for Nepal’s economy
if the rising powers aim at cooperation. A great power rivalry between
India and China on the other hand might place Nepal in a disadvantageous
position. Nepal may then have to choose one of the sides and face adverse
consequences from the other.
Intensifying Power Rivalry: What are Nepal’s Choices?

The geo-political position of Nepal was best summed up by King Prithvi
Narayan Shah in the eighteenth century when he described Nepal as ‘a
yam between two boulders whose continued existence depended on
harmony between its giant neighbors’ (Garver, 1991). Since the 1950s,
Nepal has been caught in the crossfire between China and India on many
occasions. An arms deal between China and Nepal in 1988 is a case in
point. In 1988, Nepal and China negotiated an arms deal that included
light arms and ammunition, uniforms and boots, and 16 anti-aircraft
guns. This raised serious concerns in New Delhi regarding Nepal’s future
security equation with China at the cost of India. Reportedly, there was
an intelligence exchange agreement as well and it was feared that China’s
military relationship with Nepal might evolve into a Pakistan-like situation
(Garver, 1991). This led India to impose harsh economic sanctions against
Nepal. China extended modest support to Nepal by supplying key goods
via Lhasa to Nepal. However, it is important to note that China clearly
underlined the constraints of geography and finances in not being able to
fulfill the needs of Nepal (Garver, 1991).
This incident highlights the fact that the location of Nepal is such
that it is dependent on India economically and this dependence leads
to dependence in terms of security as well, since China cannot replace
India’s position due to the harsh Himalayan terrain. While geo-strategic
experts in India often refer to Himalayas as a potent check against China’s
overtures, the rise of China has neutralized this strategic edge to a great
extent. Chand and Danner (2016) look at the implications of China’s
rise for Nepal. They note that since 2008 China has become assertive in
the South Asian region mainly because it has been able to recover from
the financial meltdown faster than the United States and other western
great powers. This new found confidence has made China assertive in
various theatres such as the South China Sea and South Asia (Chand and
Danner, 2016). The evidence related to China and Nepal’s interactions
in economic, political, and military domain support this argument. Nepal
former Prime Minister KP Oli’s visit to China in March 2016 presents an
interesting contrast to the 1988 situation between Nepal and China when
India imposed economic sanctions on Nepal. The two sides have signed
10 agreements including a landmark transit trade deal that is set to end
Nepal’s dependence on India (PTI, India’s monopoly to end as Nepal gets
trade point in China, 2016). This assumes importance in the light of the
6-month long blockade imposed by Madhesis. Nepal’s fear of similar
blockades and China’s increased capability to help Nepal skirt them is a
sign of diminishing Indian influence in the country. It means lesser leeway
for India to influence Nepal’s domestic and foreign policy.
In the political domain, much of Nepal-China relations are hinged on the
Tibetan refugee question besides a Chinese interest in keeping rising India
under check (Chand & K. Danner, 2016). The 2008 Tibetan uprising has
led China to pressurize Nepal into persecuting Tibetans within Nepalese

territory. Nepal has signed several security and ‘intelligence-sharing’
agreements with China since 2008 and has also intensified checks on the
activities of the Tibetan community under directions from China (HRW,
2014). The Tibet question and its new found assertiveness has made China
offer military aid as well to Nepal. In 2011, China agreed to provide US$
7.7 million in military aid to Nepal in return for its commitment to the
‘One China Policy’ (Krishnan, 2013). The evidence of China’s increased
engagement with Nepal is viewed suspiciously by India as undercutting
its own influence in what has been traditionally an Indian sphere. The
nature of security dilemma between China and India is such that any
action that China undertakes in Nepal to ensure its own security, vis-à-vis,
the Tibet question is seen suspiciously by India as aimed at containing it.
The economic rise of both the countries has the potential to intensify this
equation even further.
Rise of a country has ramifications for the international order and it
also has implications for its immediate neighbourhood. Nicholas D Kristof
explains this succinctly:
Rise of powers has inevitably led to crisis as the old order needs to be
recalibrated even as rise of a power in the vicinity leads to discomfort
in the neighborhood (Kristof, 1993).
Any implications of China and India’s rise for Nepal can be analyzed in
two ways. First, India and China’s relations with each other in the backdrop
of the entire international system are important. Second, the question of
security in South Asia in view of China and India’s rise is important.
The rise of China is a hotly contested topic with experts placing bets on
a peaceful or a not so peaceful rise of China. John J Mearsheimer (2010)
argues that China will not have a peaceful rise because the balance of power
is changing in Asia where the United States primacy is getting challenged
by China’s rise (Mearsheimer, 2010). There exists, according to him, a
possibility of miscalculation which might lead to confrontation between
the United States and China. In event of such a security competition,
‘most of China’s neighbors, to include India, Japan, Singapore, South
Korea, Russia, Vietnam, and Australia—will join with the United States
to contain China’s power’ (Mearsheimer, 2010). Mearsheimer notes that

there is already substantial evidence to show that India is afraid of the
ascendency of China which is the reason why it is seeking strategic ties
with the United States and Japan (Mearsheimer, 2010). In light of the
current state of the balance of power in the international system, India and
China seem to be on a path of confrontation.
Their respective rise has the potential to alter the security equations in
South Asia as well. The South Asian security complex since decolonization
has been dominated by the India-Pakistan equation (Buzan and Waever
2003). This security complex, according to Buzan and Waever (2003)
has the potential to transform externally if India witnesses a rise in its
capability where India-Pakistan equation will transform into an India-
China equation (Buzan and Waever 2003).
If India and China embark on a path of confrontation, Nepal will be
presented with the choice of aligning with one of the two countries. Tsering
Topgyal (2016) examines the responses of South Asian countries to the rise
of China. He postulates that balancing, bandwagoning, and hedging are
the main strategies available to South Asian countries. Similarly, Sanjay
Upadhya (2012) notes that, the increase in power of both the countries has
made it a conquest of influence that must be won in the minds first. He
clearly outlines Nepal’s strategy of putting China and India against each
other for its own interests.
This seems to be a grim scenario for South Asia where the great power
rivalry has the potential to paralyze the course of economic development
especially for small countries such as Nepal. What can potentially save
the region from a great power rivalry? What is emerging to be a potential
savior for the region is that the axis of global capitalism is shifting from
the West to Asia.
The Nature of China-India Growth Story: Alternative to

Power Politics?
If we consider the current growth rate in the West and compare it with
South Asia, we will find that South Asia has emerged to be a sweet spot
for growth. The World Bank (2016) has pitted South Asia as the fastest
growing region in the world where growth rate is going to accelerate
further. According to Annette Dixon, World Bank South Asia Vice

President:
South Asia has been resilient to global turbulence due to its limited
exposure to slowdowns in other major economies coupled with
the tailwinds of favorable oil prices, capital flows, and remittances
(World Bank, 2016).
The ‘tailwinds’ of oil prices and remittances might be short-lived in their

contribution to South Asian growth story. To sustain this growth, South
Asia needs changes that are long-term.
Growth is not just a matter of choice but of compulsion for the countries
in South Asia as there is going to be a spurt in young population across
all the countries in the region. This draws our attention to the question
of demographics in South Asia. South Asia is going to add 18 million
people on an average to the labour force over the next two decades, taking
working age to non-working age ratio to its peak at 2.2:1 by 2040 (Bloom,
Rosenberg, & Canning, 2011). Such a huge labour force can be either a
boon or a bane depending on the outlet for employment. The demographic
data of South Asia emerges as an even brighter spot when compared to
the ageing population in the United States, Japan, and countries of Europe
such as Germany, Italy, Greece, Finland, France, the United Kingdom, etc.
(Adamy, 2016). The countries of South-East Asia are also set to occupy
top spots in the ageing chart by 2050 (Adamy, 2016). This means that
the region of South Asia is going to remain under spotlight due to its
demography over the next 30 years at least. In South Asia, Nepal itself is
undergoing a demographic transition where the problem of unemployment
is set to aggravate even further (Paudel, 2014). The trends of demography
and growth in China and South Asia point to a fundamental change in the
world economic system. According to Minqi Li (2005), China and India
are the last largest stock of labour and natural resources. He argues that
the growth in China and India will prove to be the linchpin of capitalism’s
survival. Geographic expansion is a key characteristic of capitalism. It
helps capitalism to avoid crisis of lesser profits or rising wages by providing
access to new sources of cheap labour and resources. Li notes that there
has been a flight of capital from the West to China and India. This means
that as an overarching system of organization, capitalism is going to be an

important factor in deciding the future course of the relations between the
two. While a balance of power understanding of the rise of China and India
inevitably points to conflict between the two, the role of the two countries
in saving the system paves way for constructive action. As Li also notes
that, China and India not only have the capability to save capitalism from
death but they also have the ability to modify it for better by making it
more egalitarian in characteristic.
The trends in both the countries also present evidence in support of
this argument. Innovation is often seen as the benchmark for productivity
and prosperity in a capitalist society. While the growth of China and India
inspires awe in the entire world, skeptics brush them off as, ‘World’s
factory’ and ‘World’s Back office’. This is a misperception regarding China
and India’s contribution to innovation. If we take patents registration as a
mark of innovation efforts in these two countries, China and India are
outperforming the West and Asian tigers in terms of patent growth rate. As
Dan Steinbock (2007) notes that from the year 2000 to 2005, China and
India were in a class of their own—with 22.5 and 19.6 per cent, respectively
as their patent growth rate. A sustained increase in innovation effort is
also important from the point of view of their economies. Steinbock also
notes that ’in the long term, the economic expansion of both emerging
economies requires that their respective innovation strategies succeed’
(Steinbock, 2007). Hence, China and India are no more the factory or
back office of the world, but they are spearheading innovation that leads
to increased productivity and prosperity.
This according to Steinbock is a signal from the giants that they are
willing to move up the value-addition ladder. Hence, Li’s argument of
China and India as the last savior of capitalism from demise becomes
especially relevant here. If their economies would focus on capital-
intensive production, this will have implications for their neighbours as
well. This includes shifting of labour intensive industries from China and
India to neighbours, availability of investment as outward foreign direct
investment (FDI), infrastructural development, access to technology, and
access to their respective markets.
Rising China and India: What can Nepal Gain?

While one aspect of China and India’s economic rise is that it will lead
to conditions that may prove ripe for a great power rivalry. On the other
hand, as has been noted in the previous section, China and India will try
to consolidate their economic achievements by looking for markets and
newer shores for their increased cash flow by way of investments. For
the entire South Asia and for Nepal in particular, this would prove to be
beneficial economically. Let us examine this argument in detail by first
looking at the recent economic performance of China and India and how
it has generated surplus resources for them. This exemplary economic
performance has also led them to increase their economic diplomacy in
Nepal.
The Peculiar Problem of Chinese Surplus

Overcapacity in key industrial productions is a major problem that China’s
economy faces today. China’s steel production volume is more than double
of the next four steel producers combined- Japan, India, the United States,
and Russia (Fulco, 2016). The problem of overcapacity is not limited to
steel alone as aluminum and cement production output are also more than
the demand that China caters to. Likewise the cement production between
2011 and 2013 in the country exceeded the entire production of cement by
the United States in the twentieth century (Fulco, 2016). The main reason
behind this problem is a lack of structural reforms in China. This problem
was further aggravated by the 2008 financial crisis. First, the crisis made
China overproduce to provide stimulus to the economy in the face of a
possible slow-down. Second, as a result of the slowdown, the United
States and Europe have failed to remain a profitable market for China to
export its surplus produce. The cheap steel imports from China are hurting
the interests of the local steel producers that are demanding anti-dumping
duties. The United States has already increased tariff from 266 per cent to
522 per cent on imports of cold rolled steel from China (Kollewe, 2016).
The bigger question is that if Chinese economy is suffering from the
problem of overproduction and the United States as well as Europe are no
more an attractive destination to export the surplus output, what options
does China have? In the long run, China cannot evade the question of
structural reforms. This means that China will have to adopt ways of resource
allocation that suit a market economy and cut down on overproduction
by way of market-linked planning. In the short-term however, China can
export the overcapacity to its developing neighbours. This will not only
provide respite to China by taking care of the overproduction but it can
also augment China’s influence in the neighbourhood.
One Belt One Road (OBOR) policy by China is a step in the same
direction. This Policy was announced in the year 2013 by the current
President Xi Jinping. It has two main components—the Silk Road
Economic Belt connecting China with Europe through Central Asia and
the Maritime Silk Road Initiative connecting China to South-East Asia,
South Asia, and Africa. Various analyses of the initiative by experts call
the initiative as a Chinese strategy to tackle industrial overcapacity at
home. As Jacob (2015) notes:
OBOR makes a virtue out of necessity by moving Chinese overcapacity

out of the country to meet demand abroad. Infrastructure connectivity
has thus become a major, specific feature of the OBOR with Chinese
state-owned enterprises in the roadway, railway, telecom and energy
sectors ranging far and wide.
Similarly, the former Foreign Secretary of India, Shyam Saran (2016) calls
OBOR an economic strategy that will help China deal with the problem of
overcapacity. According to him:
The infrastructure to implement OBOR will require vast amount of

construction materials and capital equipment, sectors where China
has vast unused capacity.
Thus, OBOR initiative can help China stimulate growth even in the face
of a weakening demand from the developed world. Michael Pettis (2016)
explains how OBOR can help China generate debt-free additional demand
where ‘China can generate more demand by exporting more capital to the
developing world’. This is possible not only in the way of infrastructure
development in the developing world but also by connecting markets
through OBOR for trade. Hence, OBOR is not going to remain a one-way
street where China alone will export its products to the developing world.
The infrastructure that OBOR creates will also provide access for other
players to the huge market in China and other countries.
The problem of overproduction and initiative such as OBOR by China
has come as a blessing in disguise for the economy of Nepal. There are
many challenges such as a difficult regulatory environment, poverty,
and lack of stability in the financial sector that the economy of Nepal
faces. However, most critical of all the challenges is the lack of adequate
infrastructure. According to the World Bank, low quality of transportation
network and unreliable electrical power remain a major hindrance to job
creation in Nepal (Nepal: Overview, 2015). In a ranking of 147 countries
on the scale of physical infrastructure, Nepal ranks at 132. Further, it ranks
136 on the quality of electricity supply and 115 on roads (Sapkota, 2015).
Transport and power emerge as sectors that require immediate attention
in Nepal for the country to transcend the status of a ‘Least Developed
Country’ (LDC). While its immediate neighbours are now considered as
rising powers, Nepal continues to battle economic challenges. It is here
that the rise of China and India becomes even more important for Nepal.
While Nepal has a huge hydropower potential, it lacks capital to realize this
potential on its own. Foreign investors are often deterred from investing in
the sector due to insecurity of the investment because hydropower plants
are a capital intensive industry and require assured buyers of the produce
before investment (Lamichhane, 2013).
Hydroelectricity production, however, can prove to be a strong
backbone for Nepal’s economy. It can spell a new lease of life for Nepal’s
own industries as electricity is a key input in industrial production. Also
the export of hydroelectricity to neighbours such as India and Bangladesh
can secure investment in hydroelectricity by way of adequate returns.
The rise of China and India has a complementary equation to it
especially with regards to Nepal. China has adequate capital and is looking
for avenues to invest it. Whereas the Indian economy is currently growing
at a fast pace and requires energy to propel it. Nepal on the other hand,
has an underutilized 42,000 MW capacity of hydropower generation but
lacks capital to generate it on its own. If the three countries can cooperate
with each other in hydro sector, it can lead to a win-win situation for each.
Currently, both India and China have signed investment agreements with
Nepal to produce hydropower. Chinese hydropower firm Three Gorges

Corp has secured a US$ 1.8 billion contract to develop hydropower in
Nepal in what is the biggest foreign investment in the Himalayan country
so far (Sharma, 2015). The risk of investing in capital-intensive projects of
hydropower production by China and India has been made possible by their
respective economic growth. However, challenges to such investments
remain such as the security of investment in terms of low returns and
threat to environment. Nepal does not have the capacity to absorb all the
hydropower that will be generated through these projects and hence there
is a need to recognize the complementary equation between India and
China when it comes to Nepal.
Transport infrastructure remains another important bottleneck in the
way of Nepal’s development. Nepal is a landlocked country. It has a harsh
Himalayan terrain, lacks adequate road connectivity, and is dependent on
India for key supplies. Time is ripe to transform Nepal’s landlocked status
to that of a land-linked country. China’s problem of industrial overcapacity
might find a ready solution here. China has surplus steel, cement, and
other key infrastructure inputs and on the other hand Nepal economy is
suffering from the lack of connectivity. The OBOR initiative can prove to
be a possible game changer by helping upgrade the connectivity in Nepal.
One Belt One Road initiative is often dismissed as way too ambitious.
However, China has a record of executing the projects that it announces
to the finish. M K Bhadrakumar (2016) cites the Central Asia- China
gas pipeline project as a case in point. The supply of gas to China from
pipelines in Central Asia that start in Turkmenistan is steadily increasing
every year and 140 billion cubic metre of natural gas has been transported
to China via the pipeline’s A, B, and C from the late 2009 until March
2016. OBOR is China’s ‘necessity meets diplomacy’ initiative where it
can direct its own surplus resources to neighbourhood and reap rewards in
the form of goodwill.
Nepal has also recognized the importance of OBOR initiative. Nepal
Prime Minister K P Oli noted in his visit to China in March:
The initiative of Belt and Road will propel our prospects to benefit
from the unprecedented transformation that is taking place in China,
will cumulate the positive spillovers from development of China.
Being the immediate neighbor of China, Nepal’s gain from this

initiative will be remarkable (Kutniti, 2016).
His visit has also generated momentum for trans-Himalayan railway

connectivity as two Chinese companies—CAMC Engineering Company
Ltd and China Railway Construction Corporation Limited—have expressed
interest in developing rail network in Nepal aiming at connectivity with
China.
While a rising China is able to commit more resources to the
neighbourhood, same is true for India. India has demonstrated a
commendable economic performance in the last two decades. As the
fastest growing economy in the world, India has also assumed increased
responsibility to help its LDC neighbours such as Nepal and Afghanistan
deal with their development dilemma. India’s rising economy has proved
to be a natural market for Nepal’s hydropower industry. In this direction,
India and Nepal signed a power trading agreement in 2014 and further two
Project Development Agreements for the export-oriented Upper Karnali
(900 MW) and Arun III (900 MW) hydropower projects were also signed
between the two (Upadhya, 2015). India-Nepal cooperation is not limited to
just hydropower alone. A rising India has also shown commitment towards
helping Nepal develop its road infrastructure. India has announced a line
of credit for Nepal to develop a ‘Fast Track’ highway between Kathmandu
and border town Birgunj that would reduce travel time and cost of logistics
substantially (Upadhya, 2015). India and Nepal have also agreed to lay a
strategic oil pipeline between Raxaul in India and Amlekhgunj in Nepal.
This will reduce transportation cost and damage to environment while
there are also plans to extend this oil pipeline to Kathmandu.
The neighbours of Nepal are getting affluent due to their economic
performance but at the same time they are willing to share the fruits of
such affluence with Nepal as is visible in their investment in Nepal. Their
intention might be purely economic in nature but the security dilemma is
such that each giant is suspicious of the other.
India: An Indispensable Friend?

The increase in economic profile of China and its renewed interest in the
neighbourhood especially Nepal has sparked fears in India. Experts on
the subject have cautioned India to reconsider its policies towards Nepal
else India might ‘lose’ Nepal to China. It is important to note that China
considers Nepal as its link to South Asia. According to Professor Hu
Shisheng, Director of the Institute of South and Southeast Asian and
Oceanian Studies at China Institutes of Contemporary International
Relations:
China not only wants physical connectivity with South Asia but also
wants to achieve institutional interface along with people-to-people
diplomacy, and Nepal can be that bridge (Upadhyay and Sharma,
2015).
China’s increasing interest in South Asia has become a cause for India’s
worry. Satish Kumar (2011) in his paper, ‘China’s Expanding Footprint
in Nepal: Threats to India’ terms China’s ‘overstepping’ in Nepal as a
security threat to India. He highlights defense cooperation between the
two countries to emphasize his point. According to a US Congressional
Research Service report, China’s increased interest in developing closer
ties with South Asian countries is viewed by some as ‘predominantly’
economically driven while in strategic circles in New Delhi view it as
a matter of geo-political concern. India’s worries regarding growing
Nepal-China relationship are well placed because of the nature of security
dilemma in International Politics. However, any strategic move by India as
a response to this must not be based on suspicion alone. As both the giants
rise and renew their cooperation and investment in Nepal, it is important
for both of them to be aware of their limits. It is also essential for Nepal to
recognize the limitations of getting too close to either of them as it might
hurt Nepal’s development, a prospect that it cannot afford.
If we look at the hydropower sector and transport and connectivity sector,
the limits of cooperation with China become apparent. Chinese firms are
investing in the hydropower sector in Nepal. This is a welcome change
keeping in view Nepal’s electricity crisis. However, the problem is that
hydropower generation is a capital-intensive industry. In order for Chinese
firms to commit to these projects, it is necessary for them to be assured of
the investment’s security in the long-term. This is only possible if Nepal is
able to absorb the production of electricity on its own, but Nepal’s limited
manufacturing capacity makes it impossible. The excess electricity thus

generated can’t even be utilized by China. China’s industrial overcapacity
problem extends to its hydroelectricity sector as well. Although the data on
wastage of hydroelectricity is not yet available but industry players have
stopped power production at their dams for the fear of wasting money due
to absence of buyers (Liu, 2015). It is here that India’s rising economy and
growing energy need can become complementary to Nepal and China’s
cooperation in the hydroelectricity sector. China can help Nepal develop its
hydropower sector under assurance from India it will buy hydroelectricity
from Nepal.
Nepal and China’s cooperation in the transport and connectivity sector
also suffers from limitations. While India and Nepal border has transit
points that allow for cost effective logistics, China and Nepal share a
harsh Himalayan terrain at the border. It is not possible to ferry heavy
products through the proposed rail network. Roads are also not suitable
for the purpose as elevation level is very high making landslides common
and hence, logistics expensive and risky (Florcruz, 2016). Nepal being a
landlocked country cannot depend on China due to the nature of terrain for
key supplies such as fuel. This makes it imperative for Nepal to continue
to be dependent on India. This dependence spills to Nepal’s manufacturing
sector as well because any production in Nepal’s industries to be exported
and the way for which only India can provide keeping the prices of
Nepalese exports competitive.
China’s increased investment in Nepal is a welcome step for the
economy of Nepal but ground realities make it imperative for Nepal to
continue its cooperation with a rising India to have a stake in its increasingly
prosperous neighbour’s growth. At the same time the equation between
China and India is an important one. Only an environment of trust and
cooperation can actually lead to trilateral cooperation between the three.
China and India: A Case for Cooperation for Growth’s

Sake
The increase in the economic growth of its neighbours is a much welcome
development for Nepal; however, in international politics, economic
growth always comes with an increase in political ambitions. China’s
assertiveness in Nepal is viewed suspiciously in India while India’s own

increased commitment to the development of Nepal is seen as a reaction
to China’s overtures. Competition for influence between the two giants is
good for Nepal. If we look at the progress that Nepal related policies by
India have made in the recent times, we would note that China’s rise has led
to a positive impact on it. This is especially true for India’s commitment to
improving connectivity with Nepal (Mitra, 2016). However, if the equation
between China and India becomes confrontational, smaller countries such
as Nepal will have to choose a side (Topgyal, 2016). Balance of power
politics as has been noted at the outset of this chapter are a reality of this
sub region.
The simultaneous rise of China and India can either intensify it
or transform the region into a zone of economic prosperity. As noted
previously, China and India are the only remaining sweet spot of global
capitalism. As matters currently stand, China has a clear edge over India
in terms of resources. It has an economy four times the size of Indian
economy. At the same time China’s military capability outdoes India in
terms of personnel and resources. Despite such clear edge China cannot
risk aggression towards India due to the nature of balance of power
politics. Any misadventure by China in South Asian region will have
implications for China. India has also started courting China’s immediate
neighbours such as Mongolia. Prime Minister Narendra Modi paid a visit
to Mongolia in 2015, first ever by an Indian prime minister in the 60
years history of diplomatic relations between the two countries (Bator,
2015). These games of power politics are not novel to South Asia. Since
independence of India and creation of Pakistan, India and China have
faced antagonizing relations that have also led to a war in 1962. What has
changed in recent times is the nature of India and China’s growth. Both the
countries underwent reforms that opened their economies and integrated
them to the world market. Such economic growth is not possible without
complex interdependence on other countries for trade and resources. Both
need to sustain this growth to lift millions in their respective territories
from the clutches of poverty. This means that regional level cooperation is
beneficial for both of them. Regional level economic cooperation is a must
in the ‘New Regionalism’ paradigm of current world economy due to the
stalemate in global trade negotiations such as the Doha Round (Callens

and Cherfi, 2015). Interestingly, India as the fastest growing country in the
world is not part of any global trade block except OBOR. This point is well
explained by Stephane Callens and Sofiane Cherfi (2015) who analyze the
trend of ‘New Regionalism’ in the form of global trade blocks such as
the Trans Pacific Partnership (TPP), Transatlantic Trade and Investment
Partnership (TTIP) and OBOR.
While China’s growth is slowing down, India has vast unutilized potential.
Both countries have shown positive signs of economic cooperation. India
has a trade deficit of US$ 52.67 billion with China. China has offered to
compensate this deficit by increasing investment in the Indian economy
(PTI, 2016). The initiative of OBOR perfectly complements China and
India’s economic cooperation. It will not only increase connectivity in the
region but will also lead to market access. The narrative of power politics
leads to a zero sum game but political economy is where China, India,
and Nepal can cooperate with each other. OBOR can provide a possible
framework for such cooperation. India has reservations regarding OBOR
mainly due to a section of China-Pakistan Economic Corridor (CPEC)’s
passing through disputed territory of Kashmir. However, such political
issues can be managed. Abhineet Singh (2016) puts it succinctly in his
analysis of the CPEC and implications for India. He notes that India needs
to be a part of regional groupings to maintain its current rate of growth;
however, WTO stalemate makes it unlikely. India has the choice to be
or not to be active with OBOR. Strategic issues remain but India does
not have capability to confront China to secure gains in its favour yet.
What works for now is India’s strategy of making use of OBOR to grow
economically. It will help China overcome its overcapacity problem; it will
help India maintain its growth rate and most importantly LDC economies
in South Asia such as Nepal can focus on economic development instead
of mulling over which side to choose in a power rivalry.
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http://data.worldbank.org/country/China>.
13
Nepal and Bhutan - Contrasting
Narratives of India’s Contemporary
Relations With Its Himalayan Neighbours
Divya Agnihotri
Abstract
T o its north, India shares its territorial boundaries with two very
important buffer states situated in the Himalayan belt: Bhutan and
Nepal. Surrounded by China to the north and India to the south, these
democratic countries, though separated by only a few kilometres of land,
have had very distinct political evolutions. Their relationship with India
has generally been extremely friendly for most of the period, although
recent events and happenings depict different yet interesting strategic turns
these countries have taken vis-à-vis India. Two Himalayan neighbours, a
historical backdrop, amicable people-to-people contacts and yet different
narratives. This is what defines the contemporary relationships of India
with Nepal and Bhutan. This chapter would attempt a comparative study
of the variegated dimensions of the evolution of bilateral dynamics of
these Himalayan states with special reference to India.
Nestled in the Eastern Himalayan ranges, Bhutan is a landlocked

country, where Vajrayana Buddhism is the dominant religion. In 1949,
Bhutan signed a Treaty of Friendship with India, which became its most
significant foreign policy feature. Though Bhutan is a constitutional
monarchy, its transition from an absolute monarchy has been a recent
event. It conducted its first general elections in the year 2008 and has been
a two-party democracy since then. Despite a few misgivings in the matter

of its relationship with India, the general association has been extremely
cordial and brotherly. The people of the two countries value and nurture
the special bond between the two nations and the same feelings are
reciprocated at the highest levels of the national governments of Bhutan
and India.
Nepal, the other Himalayan neighbour of India, presents a more
challenging and complex bilateral scenario for India. Landlocked by
geography, but larger in size than Bhutan, Nepal is a secular parliamentary
republic. Home to the world’s highest mountain peak, the Mount Everest,
it traces a bloody history with respect to its transition from a Kingdom
to a parliamentary democracy. The vestiges and memories of the Maoist
insurgency and loyalists of the erstwhile monarchy concern this fledgling
democracy in great measure.
Like Bhutan, Nepal too had concluded a Treaty of Friendship with India.
Though India enjoyed a great relationship with the Nepalese for many
years, the political mileage and bilateral capital has been eroded in great
measure in recent years. The bonhomie between India and Nepal could
be gauged by the fact that a complete Infantry regiment of the famous
Gorkhas, who mainly belong to Nepal, proudly serve in the Indian Army
and are very well respected for their martial traditions and bravery.
Recent years have been difficult for Nepal. Inability to implement the
newly framed Constitution, political instability, a lack of consensus on
contentious social issues, pressing Madhesi problem, rehabilitation of
Maoist cadre, and other factors have complicated the survival of Nepal as
a state. On top of this, a general feeling of resentment towards India grips
Nepal. Suspicion of India meddling in Nepal’s internal affairs, as well as
indifference of the Indian state in allaying the above suspicion have all
strengthened the anti-India sentiment. Increasing presence of the Chinese
in Nepal and intensifying anti-India rhetoric is a veritable combustible
mix. This is thus a matter of alarm and concern for India.
Two Himalayan neighbours, a historical backdrop, amicable people
to-people contacts and yet different narratives: this is what defines the
relationships of India with Nepal and Bhutan. This study would thus, try
to focus on the various factors, including the Chinese danger, in India’s
Nepal and Bhutan - Contrasting Narratives of India’s Contemporary Relations... • 187
backyard and would suggest the road ahead for the future. The five major
factors which are common in India’s relation with both Nepal and Bhutan
are discussed below.
Historical Legacy
Bhutan’s relation with modern India can be studied in three different
chronological phases. According to the 1910 Treaty of Punakha, British
India agreed not to interfere in the internal affairs of Bhutan, while the
kingdom agreed to be guided by Indian advice in regard to its external
relations. The main objective of the British rule behind the treaty was to
keep Bhutan as a buffer state on the northern frontiers to ward off any
threat of Chinese incursions. This treaty did not define Bhutan’s technical
or legal status. The British did not feel the necessity to discuss Bhutan’s
external relations as long as it served their purpose.
After the British left the subcontinent in 1947, a need was felt for the
renegotiation of the 1910 Indo-Bhutan treaty. Bhutan’s main concern with
regard to the new treaty was the restoration of its sovereign status, and when
negotiations for a renewed treaty with India began in 1949, Bhutan had its
objectives lined out: recognition of its independence and restoration of
the Dewangiri hill strip on the frontier with India. In the newly negotiated
treaty, Bhutan received its part of the bargain: it achieved autonomy in
internal affairs while agreeing to be guided by India in external matters.
However, the treaty was worded differently in the Dzongkha language
version from the English version. The Bhutanese argued that India had
accepted the interpretation that the 1949 treaty does obligate Bhutan to
seek Indian advice on its foreign relations, but does not obligate Bhutan
to accept it (Aziz-al and Chakma, 1993). New Delhi interpreted this to
mean that Bhutan could not have direct relations with a third power except
with India’s concurrence, and the Indian authorities were not prepared to
concede with respect to Sino-Bhutanese negotiations. Bhutan, however,
interpreted the treaty to mean that it must consult with New Delhi on
external relations, but need not accept the advice received (Rose, 1974).
Bhutan was under the assumption that New Delhi would not obstruct
the gradual expansion of Bhutan’s relations with the outside world if this
could be accomplished without undermining India’s regional security
interests. Notably, in 1961 India sponsored Bhutan’s membership in the

Colombo Plan when the Royal Government requested it. This incident
marked the first occasion when Bhutan sought and obtained membership
in an international organization. The Indian response gave the impression
that India would be lenient and accommodating in allowing Bhutan to
expand its international relations in other directions, especially if it
conducted its business tactfully and did not sabotage India’s interests. In
the 1970 session of the United Nations (UN), India proposed Bhutan’s
admission to the international organization and a resolution to this effect
was quickly approved without opposition. Bhutan’s formal admission
at the 1971 Fall session was universally welcomed in Bhutan as a
major achievement, and there was widespread appreciation for India’s
cooperative attitude. The opening of a Permanent Mission to the UN in
1972 had several consequences. It provided Bhutan with an alternative
channel of communication to the outside world, in some respects more
important than the mission in New Delhi, which has to function in an
Indian environment. While the provisions of the 1949 Indo-Bhutanese
Treaty remained intact, the manner in which ‘guidance’ was provided by
New Delhi had undergone modification (Rose, 1974).
In 1990s, the importance of neighbours was best articulated by the
Gujral Doctrine, posited by I K Gujral, a highly respected figure in the
South Asian region, who would later become the Prime Minister of India.
The Gujral Doctrine identified the South Asian countries as forming the
first circle in India’s foreign policy. It is a set of five principles which arise
from the belief that India’s stature and strength cannot be divorced from
the quality of its relations with neighbours.
These principles are:
• First, with neighbours like Bangladesh, Bhutan, Maldives, Nepal,
and Sri Lanka, India does not ask for reciprocity, but gives and
accommodates what it can in good faith and trust;
• Second, no South Asian country should allow its territory to be
used against the interest of another country of the region;
• Third, none should interfere in the internal affairs of another;
• Fourth, all South Asian countries must respect the territorial
integrity and sovereignty of each other; and
• Fifth, they should settle all their disputes through peaceful bilateral
negotiations.
The belief was that the implementation of these principles would generate
a climate of close and mutually benign co-operation in the region, wherein
the weight and size of India is regarded positively and as an asset by these
countries (Murthy, 2007). India and Bhutan revised the Friendship Treaty
of 1949 and signed it on 8 February 2007. The revised treaty significantly
amends articles (ii) and (iv) of the 1949 treaty. It speaks of co-operation
and setting up of a consultative mechanism in conducting the foreign
policy of Bhutan. Bhutan is no longer bound to be guided by India’s advice
with regard to its external relations. Further, another amended clause in the
treaty states that,
the Government of India agrees that Government of Bhutan shall

be free to import from or through India into Bhutan, whatever arms
and ammunition, machinery, warlike material or stores as may be
required or desired for the strength and welfare of Bhutan….as
long as the government of India is satisfied that the intentions of the
Government of Bhutan are friendly and there is no danger to India
from such importations.
According to the earlier clause, the same had to be done with the assistance
and approval of the Government of India (GOI) (Murthy, 2007). It ended
India’s 57 years of direct oversight in guiding Bhutan’s foreign and
defence policies. ‘This means that the revised treaty, therefore, is not
only just relevant to the times but is also a strong basis for the future of
Bhutan’s external relations’ (Jasim Uddin, 2007). India has upgraded the
1949 Friendship Treaty with Bhutan. In 2007 the then Minister of External
Affairs, Pranab Mukherjee said that India’s decision to upgrade the 1949
Friendship Treaty with Bhutan and its willingness to review the 1950
Treaty with Nepal reflected New Delhi’s commitment to develop political
relations with neighbours on the basis of sovereign equality, and mutual
respect. He said,
Amidst the increasing globalization of South Asian economies and

polities, there is no question of India pursuing the outdated idea of
an exclusive sphere of influence. India’s strong support to the entry
of China and Japan into the SAARC as observers underlies India’s

commitment to open regionalism in the subcontinent (Murthy,
2007).
India’s relations with Nepal are older and more multi-layered than with
any other country in the world. Somewhat different from India’s other
relationships in the neighbourhood, India-Nepal relations are determined
by geography, defined by history, and shaped by strong people-to-people
exchanges across an open land frontier straddling five north Indian states.
From the Himalayan heights to the Indian Ocean, they share a common
terrain. Their civilizational contacts run from Janakpur to Ayodhya,
Lumbini to Bodh Gaya, Pashupatinath to Kashi Vishwanath, and from
Muktinath to Balaji Vishwanath. A sizeable Nepali population lives and
works in India, where they are well liked and treated at par with Indian
citizens. Bound by common languages and religions, cuisine and culture,
marriage and mythology, the two peoples are bound by indissoluble ties
(Prasad, 2016).
Nepal’s external relations during King Tribhuwan’s rule (from February
1951 to March 1955) were dominated by India. The two countries were
described as having ‘special relations’ with each other. The phrase ‘special
relations’ was very frequently used by both India and Nepal during this
period, though later it became a much despised and maligned expression for
Nepal. The era of ‘special relations’ constituted an important initial phase in
the evolution of Nepal’s foreign policy. Therefore, the genesis, growth, and
decline of ‘special relations’ that Nepal had with India need our attention
before more substantive aspects of Nepal’s foreign policy are taken up. There
were various factors that accounted for ‘special relations’ between Nepal and
India. There were the constant factors, like geographical contiguity, strong
socio-cultural and ethnic identities between the two countries, and Nepal’s
excessive economic dependence upon India. However, there was something
more than these factors during King Tribhuwan’s period that accounted for
the pattern of ‘special relations’. These additional factors were the legacy of
the Rana regime and the domestic and external milieus existing at that time
in the Kingdom (Muni, 1973).
Ties between India and Nepal have consistently been close. They
reflect the historical, geographical, cultural and linguistic links between
the two nations. The signing of the India-Nepal Treaty of Peace and
Friendship in 1950 established the framework for the unique ties between
the two countries. The treaty was signed with an objective to strengthen
the relationship between the two countries by recognizing historical
values and perpetuating peace in the region. It provided the foundation
for India and Nepal relations. The treaty contains 10 articles and a letter
of exchange. In Article 1, the two countries acknowledged each other’s
territorial integrity and sovereignty. Article 2 says that they have to
inform each other in case of friction with neighbouring countries. Under
Article 3, in order to establish and maintain the relations referred to in
Article 1 the two Governments agree to continue diplomatic relations
with each other by means of representatives while under article 4 The two
Governments agree to appoint Consuls-General, Consuls, Vice-Consuls
and other consular agents. Articles 5, 6 and 7 deal with arms imports of
Nepal, national treatment of each other’s citizens in economic matters,
and reciprocal treatment to nationals in matters concerning residence,
protection, and trade. Article 8 cancels all the past treaties between
Nepal and British government. Articles 9 and 10 deal with renewal and
cancellation of the treaty. The objective of the treaty, signed by mutual
consent of the contracting parties, was to establish permanent peace and
friendship between the two countries by identifying their mutual politico-
economic and socio-cultural linkages and security requirements (Manhas
and Sharma, 2014).
Unlike with Bhutan, more than half-a-century-old Indo-Nepal Treaty of
1950 has not been modified despite several informal talks at different times
between the prime ministers of Nepal and India to revise it according to
the needs, demands, and interests of the people. Other than the treaty, India
and Nepal also have an Arms Assistance Agreement which was signed
in 1965 to assist in reorganization and modernization of the then Royal
NepalArmy (presently Nepal Army) with the objective of strengthening the
security of Nepal by providing military hardware and training assistance.
The agreement established India as the principal supplier of arms and
ammunition to Nepal (Pathak, 2009).
Both Nepal and Bhutan signed the treaty of Peace and Friendship with
India. Both of them had some reservations about the provisions of the
treaty, believing the treaty made their foreign policies India-centric and
they were not free to explore all of their options. In case of Bhutan, first
they found another way with a different explanation of the treaty, and
finally in 2007 India also revised the treaty with changes in India-centric
clauses. In case of Nepal neither thing could happen. To make matters
worse, the long existing political instability in Nepal further fuelled anti-
India sentiments.
Open Borders – A Security Issue

The Nepal-India Peace and Friendship Treaty which was signed on 31 July
1950 agreed to grant, on a reciprocal basis, to the nationals of one country
in the territory of the other the same privileges as of their own citizens
in matters of residence, ownership of property, participation in trade and
commerce, movement and other privileges of a similar nature. It became a
major turning point in the movement of Indians into Nepal and was further
reinforced by the Nepal-India open border (Kansakar, 2001).
Nepal is very important in the context of defence of India. After the
Chinese established a significant military presence in Tibet, Nepal became
an important buffer vis-à-vis China. The porosity of the India-Nepal
border, along with the open access available to people on both sides of it,
creates security vulnerabilities. Nepal has been used by terrorist groups
as a transit point, where temporary shelters and sleeper cells assist such
movement. Organized crime, including drugs and arms trafficking, is
supplemented by smuggling of fake Indian currency notes consignments
into India by Pakistan-based networks. The law enforcement agencies
have forged close functional cooperation to deal with these threats, even
though the formal institutional and legal framework, through mutual legal
assistance and extradition treaties, is still not in place (Prasad, 2016).
The border between India and Nepal is open and the flow of people
is allowed without any restriction. Citizens of both the countries enjoy
unrestricted freedom of movement through the open border in accordance
with the Treaty of Peace and Friendship. Though there is no separate
treaty on defining the status of the border, considering the traditional ties
between the two countries and considering the geographical reality of
the border, which runs through plains, jungles and mountains, the border
remains opened. Article VI of the Treaty of Peace and Friendship allows

the citizens of both the countries to receive ‘national treatment with
regard to participation in industrial and economic development of such
territory and to the grant of concessions and contracts relating to such
development.’ In fact, according to Article VII of the Treaty, the citizens
of both the countries can move, reside, and own property and participate
in trade and commerce in each other’s territory. However, it is alleged that
citizens of other countries also enter Nepal to avail the opportunities under
the guise of Indians. The open border makes it difficult to check the flow
of movement of population and to ascertain whether they are from India
or some other South Asian country. Similarly, the open border helps the
Nepalese to move and reside not only in India, but also in Bhutan through
India, which has brought its own problems associated with the movement
of population, for example, demographic and economic displacement of
the locals. The open border has been misused by the criminals, smugglers,
and terrorists who take refuge in Nepal after committing crimes in India or
vice-versa. Arms and drugs have also been moving from Nepal to India.
The open border is used by the Inter-Services Intelligence (ISI) of Pakistan
to facilitate movement of the Kashmiri terrorists to carry out anti-India
activities (Thapliyal, 2016).
India-Nepal border has several sub-customs posts. It is allegedly
possible to facilitate illegal movement of people and goods in collaboration
with personnel deputed in these posts. From the practical point of view
it does not appear unusual to have illegal smuggling of goods, trafficking
of girls to brothels in Indian cities, trafficking in narcotic drugs, arms and
ammunition, and movement of criminals and terrorists through such an
open border. In principle, both Nepal and India have positively agreed
to control such illegal activities along the border, but there is lack of an
effective and practical approach.
The most serious and adverse impact of an open and uncontrolled
Nepal-India border has been a growth in anti-social and illegal activities
in the area close to the border. The ever increasing crime along the border
has been a major concern for both governments since the early nineteenth
century; however, the policy of open border has enhanced such activities.
The unrestricted border has indeed been responsible for various criminal,
anti-social, and illegal activities such as robbery, theft, murder, smuggling

of goods to evade custom duties, narcotic drugs trafficking, trafficking
of girls, arms smuggling, smuggling of archaeological arts and artefacts
and manuscripts, etc. Since 1980s, Nepal-India border has developed
into a thorough passage for the cross-border movement of terrorists. An
open border has provided safe passage to criminals and terrorists. The
incursions of Indian police inside Nepal without permission in search of
criminals who fled into Nepal have hurt the sentiments of the Nepalese
and are reported to have generated hatred against India (Kansakar, 2001).
Bhutan also shares an open border with India which makes movement of
people convenient, but it does not share any of the problem associated with
India-Nepal border. The major problem concerning India-Bhutan border
is insurgency. Many insurgent groups in the north-eastern states of India
find Bhutan as their natural hideout. For Bhutan, the major security threat
comes from its unguarded southern border. India may be a good friend
and neighbour, but its north-east insurgents are not. These non-state actors
from Assam and West Bengal, who are fighting for independence from
the Indian state have the potential to undermine the friendship not only
between the two countries, but also between the people of both countries
living along the borders. The insurgents had been using Bhutanese soil as a
hideout and training ground to carry out hit and run activities against vital
infrastructure and security forces of India. The presence of these militants,
United Liberation Front of Assam (ULFA), the National Democratic Front
of Bodoland (NDFB), and Kamtapur Liberation Army (KLA) had been a
great concern to Bhutan for nearly a decade until they were flushed out in
December 2003. Bhutan’s proximity to the region makes it very susceptible
to any ethnic tensions in the North-East region of India (Penjore, 2004).
Democratic Transition
Before the transition to democracy, Nepal had been a monarchy for a very
long time. Under monarchy, people of the country faced many economic
and social difficulties, which led them to consider monarchy as the sole
factor responsible for their problems. In the bid to emancipate the Nepalese
people from these problems, multiple mass movements were launched.
Ultimately the monarchy was abolished in May 2008. The formation of the
Constituent Assembly (CA) in April 2008 provided a strong foundation for

abolition of the monarchy. The CA declared Nepal a republic, which set the
tone for rebuilding the state and democracy in Nepal. Almost all political
parties agreed on federalism and inclusive democracy. The unification of
all the political parties in 2005 had already laid the framework for these
principles. The newly implemented constitution accepted secularism,
federalism, and inclusive democracy. The major hindrances in realization
of these goals came in the form of unstable governments, weak and
fragmented leadership, non-cooperation of major political parties, lack
of consensus on major issues, excessive social and political mobilization
of masses, the failure of the government in responding to their rising
aspirations, etc. (Singh, 2014). This political instability and the unfulfilled
aspirations of the people provide a tool in the hands of anti-India voices,
who blame India for every failure of the Nepali establishment. On one
hand, the Maoists accuse India of supporting the monarchy; on the other
the political parties allege that India is supporting Maoists in a clandestine
way. The issue of Madhesis, who include a sizeable population of Indian
origin living in the Terai region of Nepal, is also an irritant in Nepal-India
relations. In cases of incidence of unrest in the region, the political class
of Nepal blames India for fuelling anger among the different ethnicities
of Nepal.
In contrast to Nepal, the transition from monarchy to democracy was
very smooth in Bhutan. The King is a very respectable figure in Bhutan and
there was no popular demand for democracy. However, the fourth King
of Bhutan, His Majesty Jigme Singye Wangchuck, voluntarily transferred
most of his powers to a nominated Council of Ministers, thereby volitionally
diluting the concentration of power in the throne. Finally, in 2005, when
he was only 50 years of age, he abdicated his throne in favour of his
eldest son, Jigme Khesar Namgyel Wangchuck. This announcement was
accompanied by a royal command that work on a new Constitution must
begin immediately with the express purpose of converting Bhutan into
a parliamentary democracy with a constitutional monarchy. An absolute
monarchy, in this fashion, gave way to a constitutional monarchy. The
transition was so facile that it did not provide any scope to fuel sentiments
against any country, including India, for the failure of the process.
Problem of Left Wing Extremism and Insurgency

India is no stranger to the issue of violent leftist rebellion. The Naxalite
rebellion spanning many states in the east, north and Centre of the country
has been a major concern for the central, as well as the state governments.
It has lasted in India for many decades (Kshetry, 2014). Almost 40 per cent
of Indian territory is facing the problem of Left Wing Extremism and many
of its north-eastern states are suffering from the problem of insurgency. The
Left Wing Extremists of India had close contacts with the Maoist insurgents
in Nepal, which further complicated India-Nepal relations.
The Maoist insurgency, which began in Nepal in the 1990s, had two
main political objectives:
1. Abolishing the monarchy, seen as an obstacle to the economic,
social and political development of Nepal; and
2. Cancelling the ‘unequal’ treaties with India in order to end the
virtual control of the Nepalese economy by Indian businesses.
The Maoists began to be seen as a viable alternative to the increasingly
unsatisfactory situation created by the endless squabbles among
the parliamentary political parties, rampant corruption, economic
mismanagement, neglect of the real concerns of the people, and unfair
access to and unbalanced distribution of Nepal’s resources (Subedi, 2005).
Since 1990s, when the popular revolution started in Nepal, Maoists came
up as a major political alternative.
Bhutan has never experienced any kind of left extremism, but the illicit
establishment of camps by the ULFA, NDFB, and the KLO militant outfits
in the dense jungles of south-east Bhutan has been a matter of great concern
and security threat for Bhutan. In addition to hampering businesses and the
implementation of development activities in many parts of the country,
the presence of these militants had the potential of affecting the friendly
relations enjoyed by Bhutan with India.
In consideration of the close ties between Bhutan and India, and
recognizing that the militants (despite their actions) are nonetheless Indian
citizens from the neighbouring states of Assam and West Bengal, the
Bhutanese government repeatedly urged the militants to leave the country
peacefully. The KLO did not respond to the peace-making overtures of
the Bhutanese government. When the talks with ULFA and NDFB failed
in December 2003, the Bhutanese government’s attempts towards a

peaceful solution came to an end. On the morning of 15 December 2003,
the Bhutanese army launched military operations to flush out the militants
from its territory (Choden, 2004). This gesture of the Bhutanese King was
highly appreciated by India.
Chinese Influence
In the geopolitical game, China has always attempted to actively
counterbalance the predominant influence of India on Nepal, which has
witnessed a ‘political power vacuum’ since the abolition of Monarchy in
2008. China is making studied efforts to use this opportunity to neutralize
Indian influence in Nepal. China is actively boosting its economic ties
and trade with Nepal. Principally, China’s interest in Nepal has always
been tied to its geopolitical concerns over the security of Tibet, which has
been dominated by China since 1950. Nepal has emerged as a forum for
anti-China activities. China therefore hoped to erode India’s traditional
influence and to install a pro-China regime in Nepal in order to suppress
the anti-China activities (Patel, 2013).
From the 1960s, the Monarchy in Nepal also began to use the China
card in its dealings with India. However, for China, its primary concern
has remained the movement of the Tibetan refugees into Nepal and the
activities of the Tibetan community in Nepal. To address these issues,
the Chinese authorities maintained close ties with the King, while links
with Nepal’s political parties were relatively low key. During the decade-
long Maoist insurgency, China was strongly supportive of the King, even
providing military assistance to the Army when India and the rest of the
international community was nudging the King to lift the Emergency rule
and re-open political dialogue. None of the Maoist leaders received support
from Beijing during this era; on the contrary, many of them sought refuge
in India using the open border and the provisions of the 1950 Treaty to open
bank accounts and rent properties. After the abolition of the monarchy in
2008, China moved to set up linkages with Nepal’s political parties. On
the other hand, China has consistently advised Nepali political leaders to
manage their differences with India, in view of the close economic and
cultural ties dictated by geography (Sood, 2016).
To further counter India’s influence in Nepal, China asked the Nepal

government to sign a Peace and Friendship Treaty and submitted a draft
to the Government of Nepal on 27 February 2009. The proposed draft
states that the treaty shall call for China not to attack Nepal and to respect
sovereignty and territorial integrity of Nepal, as Nepal recognized the
‘One China’ policy, admitting in practice that Tibet was an inalienable part
of China. Nepal would not allow her territory to be used for anti-Chinese
activities as China suspects that Nepal is a fertile ground for protest about
Tibet by the activists of the Dalai Lama, who has been living in India
(Pathak, 2009). On several occasions, both the right and left-wing political
forces in Nepal (the royalists, communists and the Maoists) have generated
anti-India sentiment for their own political benefit. The Maoists accuse
India of not letting them come to power and also hold it responsible for the
political instability in Nepal and delay in the drafting of the Constitution.
China is also providing financial support to media houses who add fuel to
the anti-India fire in Nepal.
Contrary to Nepal, Bhutan has refrained from playing the China card
with India. When Prime Minister Narendra Modi chose Bhutan as the
country for his first foreign visit after assuming office, speculations were
rife about this move being a part of his ‘China containment strategy’
in the neighbourhood. Although China and Bhutan are yet to establish
formal diplomatic relations, economic and geopolitical considerations
make both the nations take interest in what the other has to offer. For
instance, Bhutan can offer one of the shortest routes to Tibet, assisting
China in bolstering its strategic interests in the region. The various
mega rail projects along China’s entire Himalayan borders with India
are Chinese efforts to enhance connectivity to Tibet and link its markets
with the Himalayan fringelands like Bhutan. China is also adopting the
route to soft diplomacy through sports and tourism to warm up relations
with Bhutan (Sen, 2016). Territorial security has been a core determinant
of Bhutan’s foreign policy. In the past, China’s assertive claims have not
only made the Himalayan kingdom insecure, they have also pushed it
towards India, a move that has benefited Bhutan both economically and
politically (Bisht, 2010).
The Road Ahead

Notwithstanding the initial bonhomie, warm relations, and solemn
declaration of non-interference in the internal affairs of the other country,
the Indian state’s relations with its two Himalayan neighbours, that is,
Nepal and Bhutan have surprisingly proceeded on different trajectories.
This has not just been a cause of concern, but also an enigma to Indian
diplomacy.
India’s relations with Nepal in particular, have nosedived, much to
the chagrin of the Indian state. On top of this, the loss of general Indian
goodwill amongst the common Nepalese populace, as well as the lurking
Chinese danger in the backdrop has raised Indian hackles. India’s implicit
persuasions and explicit reprimands to the Nepali political setup have
been numerous. These include homilies on the fraught Madesi issue, as
well as subtle interferences in the complex constitution making process of
Nepal. Obviously, such muscular interventions have been unwelcome and
highly despised by the Nepalese populace, which has been unnecessarily
radicalized by the self-seeking politicians of Nepal, who point towards
India as the root cause of all evil. Interestingly enough, India has done
little to allay such fears and negative sentiments against itself. Yet, Prime
Minister Narendra Modi’s bilateral visit to Kathmandu in August 2014,
the first such goodwill visit undertaken by an Indian premier in 17 years
signalled the start of a two-way political reengagement between India and
Nepal. This was preceded by a ministerial Joint Commission meeting,
held after a gap of 23 years, and was followed by Modi’s visit for the
South Asian Association for Regional Cooperation (SAARC) Summit
in November 2014. Although India has remained invested in Nepal’s
stability and progress since its independence, Modi lifted the vision of
the relationship to a new level. He underlined the inseparability of India
and Nepal and projected the latter as New Delhi’s partner of the first rank.
His half-hour speech in the CA, and his deportment and gestures during
the visit, impressed both the Nepali people and leadership, cutting across
Nepal’s political spectrum. The visit did mark a change in mindset about
India’s determination to reconstruct a new development partnership with
Nepal. Both sides agreed to review, adjust, and update the 1950 Treaty of
Peace and Friendship and to resolve pending boundary issues, including
Kalapani and Susta, by reviving the Boundary Working Group (BWG),

a long pending demand from Nepal (Prasad, 2016). Bhutan, on the other
hand, provides India with a more benign and warm interface. The deep
rooted trust amongst the top politicians of both the countries, fantastic
equations with the titular monarchy, as well as the existence of friendly and
respectful relations between the populace of the two democratic nations
towards each other have been the defining reasons for the Indo-Bhutanese
bonhomie. The icing on the cake remains the 2003 military action of the
then Bhutanese King, against anti-India terrorist organizations based on
Bhutanese soil. It is expected that the future too would engender great
cooperation and respect between the two countries.
From the Indian diplomatic point of view, real bilateral success would
only occur when these two very important Himalayan neighbours accept
India’s genuine strategic interests in the South-Asian neighbourhood and
would be ready to cooperate on such issues willingly. On India’s part,
enhanced magnanimity and greater accommodation of the interests of these
geographically smaller entities would need to be displayed. If required, an
expanded Gujral Doctrine 2.0 may be the effective way forward.
References
Abhishmita Sen, ‘India-Bhutan Relations, A Year After Prime Minister Modi’s
Historic Visit’, Centre for Policy Studies, 2016, 1-5.
Bawa Singh, ‘Democratic Transformation in Nepal: An Overview of India’s Role’,
FPRC Journal; India-Nepal Relations, 2014,3, 203-26.
Bishnu Pathak, Nepal-India Relations: Open Secret Diplomacy, Kathmandu: Conflict
Study Centre, 2009.
Dharmesh Patel, ‘The Entangled Triangle of Nepal, India & China’, Culture Mandala:
Dorji Penjore, ‘Security of Bhutan: Walking Between the Giants’, Journal of Bhutan
Studies, 2004, 10, 108-31.
Jayant Prasad, ‘India-Nepal Relations; On the Threshhold’, in Neighbourhood First,
ORF Series, ed. Aryaman Bhatnagar et al., Durham: Wiley-Blackwell, 2016,
96205.
Jiwan Kshetry, ‘Drifting Right? The Shared Predicament of the Left in India & Nepal’,
FPRC Journal; India-Nepal Relations, 2014,3, 241-52.
Leo E Rose, ‘Bhutan’s External Relations’, Pacific Affairs, 1974, 47(2), 192-208.
Medha Bisht, ‘Bhutan: Internal Developments and External Engagements’, IDSA
Country Brief, 2010,1-36.
Mohammad Jasim Uddin, ‘Bangladesh-Bhutan Relations Challenges and Prospects’,
BIISS Journal, 2007, 28(2), 120-39.
Natasha Manhas and Mamta Sharma, ‘The 1950 Treaty of Peace & Friendship: An
Issue of Contention between Indian and Nepal’, International Journal of Scientific

and Research Publications, 2014, 4(11), 1-5.
Padmaja Murthy, ‘India’s Eastern Neighbours – Nepal, Bhutan, Bangladesh: The
Security and Stability Challenge’, World Focus, 2007, 28(11-12), 408-13.
Rakesh Sood, ‘India-Nepal-China Relations And A Development Strategy for Nepal’,
ORF Issue Brief, 2016,154, 1-12.
S D Muni, Foreign Policy of Bhutan, Delhi: National Publishing House, 1973.
Sangeeta Thapliyal, ‘Changing Trends in India-Nepal Relations’, IDSA Comment,
accessed on 31 July 2016, URL:https://www.idsa-india.org/an-dec-5.html.
Surya Subedi, ‘India, Nepal & the Maoist Conflict: A Nepalese Perspective’, Liberal
Democracy Nepal Bulletin, 2005,01(01), 1-8.
Syed Aziz-al Ahsan and Bhumitra Chakma, ‘Bhutan’s Foreign Policy Cautions Self
Assertion?’ Asian Survey, 1993, 33(11), 1043-54.
Tashi Choden,, “Indo-Bhutan Relations: Recent Trends’, Paper presented in the
Regional Conference for Institute of Foreign Affairs, Kathmandu, Nepal, 2004.
The Bulletin of the Centre for East-West Cultural & Economic Studies, 2013,10(02),
41-4.
Vidya Bir Singh Kansakar, ‘Nepal-India Open Border; Prospects, Problems and
Challenges’, Paper presented in a seminar organized by the Institute of Foreign
Affairs and FES, Kathmandu, Nepal, 2001.
14
Understanding Nepal: Tracing the
Predicament of the Tibetan Refugees
in the Country
Supreeta Mehta
Abstract
T he question of Tibetan refugees has always been a sensitive issue in Nepal.

When anti-Chinese activities broke out in Nepal in 2008 among the
Tibetan population living there, the government suppressed these uproars.
The reason advanced was that Nepal does not support any anti-Chinese
activities on its soil instead of referring to it as a solution to the law and
order problem in the country. There is an interplay of different nationalisms
in this context. It is not as much a question of foreign policy as it is about
Nepal’s image in the international realm. This chapter attempts to trace the
Tibetan situational deadlock in Nepal and China’s pervasiveness in this
matter. There is no doubt about the latter’s sensitiveness and strong opinions
on Tibetan diaspora. Just how the international community responds to this
behaviour is what this chapter seeks to explain.
Introduction
It is a well-read historical fact that how, during the 1950s, Tibetans fled
from their native land facing persecution and crossed international borders.
Tibetan communities have since then settled in parts of India and Nepal
and some other areas. Keeping in tune with their original contention that
the land of Tibet is independent of China, a Tibetan government in exile
Understanding Nepal: Tracing the Predicament of the Tibetan Refugees... • 203
has existed since 1959. It is called the Central Tibetan Administration

(CTA) and the Tibetans outside Tibet and, even some of those inside, look
at it as their representative. The head of this government, the Dalai Lama,
currently resides in Himachal Pradesh, India.
Like India, Nepal is also home to a number of Tibetan refugees, a
sizeable population. Of late, these refugees are finding it more and more
difficult to cross border and enter Nepal or use Nepal as a transit route
into India. The Government in Nepal refuses to recognize their plight
and allow them entry into the country. It has also clamped down on anti-
Chinese demonstrations or any such activities by the Tibetan communities
in Nepali soil. These incidents have sparked off interest and outraged in
the subcontinent and beyond, and has raised questions. These questions
are posed at the Nepali government, and have also been directed at the
growing influence of China in the region. This chapter seeks to find out
how this present state of affairs came to be in Nepal. In doing so it asks
a number of questions. Why has there been a sudden change in Nepal’s
attitude towards the Tibetan refugees residing and arriving in the country?
How has Nepal responded to the steadfast thrusting of Chinese agenda?
How successful has China been in infiltrating domestic considerations of
Nepal? What has been the international response to the scenario and, how
is Nepal viewed in this context? Answering these questions might help us
in grasping the various motives and rationales of the different countries
involved in the matter, by taking different variable under consideration.
The then kingdom of Nepal had earlier granted asylum to Tibetan
refugees and allowed access and freedom of navigation within the country.
King Mahendra of Nepal, head of the kingdom from 1955 to 1972, had
received much praise for accommodating the Tibetan refugees. Refugees
were granted asylum irrespective of their social status. Refugee camps
were built along the mountain passes between Tibet and Nepal to shelter
them. Challenges of food shortages, lack of shelter, and basic healthcare
continued to dog the government. Instead of shying away from these
glitches, the Nepali government met them head on and managed to attain
help from international institutions such as the International Committee
of the Red Cross and the United Nations High Commissioner for Refugee
(UNHCR). With their help, shelters were built and emergency relief camps
were installed. These were done in spite of threats of reprisal from China
(Mathur, 2014). Such were the efforts made by the Nepali government.
However, things took an absolute roundabout turn from 1986 onwards.
There was a huge transformation in the approach of the Nepali government.
Refugees arriving from Tibet were no longer simply welcomed in the
Himalayan country. Post 1986, Nepal is seen to have tilted much towards
China. The latter, in turn, has influenced the former heavily in terms of the
Tibetan population residing there. Nepal signed treaties with China, and
China apparently used them as a leverage to prevent Nepal from hosting
further Tibetans arriving in the country. Moreover, Nepal also stopped
providing Refugee Identification Cards (RICs) to the Tibetan refugees.
This was a blow to the refugee population as RICs enabled them to work
in their host country and receive some other benefits. Loss of identity
prevented the Tibetan refugees from accessing basic amenities. Thus, post
1986, the legal status of Tibetan refugees has deteriorated and as a result
they are undocumented and can no longer legally work, own property,
businesses or even automobiles (Morch, 2015).
Nepal: Giving into Pressure?

The question that immediately comes to mind is that why did this sudden
change occur in the attitude of the Nepali government. An explanation can
be provided by focusing on two aspects.
Robert O Keohane in a review article, published in International
Organisation, Spring 1969, introduced the term Lilliputian’s Dilemmas,
referring to the actions, reactions, and policy preferences of small states in
the international scenario. It is essentially a review of a few other scholars
who have contributed to the literature of the behaviour of small states in
an international setting. Robert Keohane at the very beginning talks about
how small states have risen to prominence in world politics by going on
board with the group of countries propagating non-alignment. Written in
the midst of Cold War politics, this is an apt observation. What is interesting
is that the similarities in the conduct of small states as expounded by the
scholars, whose work Robert Keohane reviews, is relevant even today.
In fact they quite well explain small state mannerisms in contemporary
politics. Rothstein is one of the scholars whose work had been reviewed.
He provides the following definition of small states in the international

order:
A Small Power is a state which recognizes that it cannot obtain

security primarily by use of its own capabilities, and that it must rely
fundamentally on the aid of other states, institutions, processes or
developments to do so; the Small Power’s belief in its inability to rely
on its own means must also be recognized by other states involved in
international politics (Keohane, 1969).
It essentially refers to the fact that a small power cannot take care of itself
alone and requires help from other stronger powers. This is mainly due to
unavailability of resources and even weak or unstable political structure.
One of the three aspects of a small power’s situation, which Rothstein
points out, includes the necessity of outside help (Keohane, 1969). If
we are to put Nepal in this framework of small power, then it becomes
easy to understand its policy decisions with regard to Tibetan refugees.
Nepal stands as a buffer between two big powers and is heavily influenced
by them. It is also not in a position where it can sustain without outside
aid, and requires assistance from its bigger neighbours. This in turn is
fully recognized by the bigger neighbours who have used their influence
in different points of times to further their interests. At the same time,
to further its own national interest, Nepal has similarly taken advantage
of the situation. Since China has been providing huge amounts of aid
to Nepal and assisting it to develop infrastructure and similar facilities
(elaboration of such projects will be done subsequently), Nepal started
refusing entrance and recognition to Tibetan refugees, as per asked by
China. Nepal no longer welcomed these refugees fleeing persecution.
Nepal understands its own status and position in the region. With its dire
need of aid and help being recognized and provided for by China, the latter
seeks to address the problem of Tibetans condemning Chinese oppression
and prevent their migration. Therefore, its small power status effectively
explains why Nepal has allowed itself to be dictated by China even in the
matters of its domestic affairs.
The second aspect refers to Chinese nationalism. The need for
assimilating minority groups within China, that is, the non-Han
communities had become an important part of Chinese nationalism

since the early nineteenth century. This was thought to preserve Chinese
national integrity and is also crucial to the country’s national security.
This thought process continued in the policies of Mao Zedong who
contended that this amounted not to Chinese oppression, rather these
minorities were being liberated. This was a persistence of Chinese
imperialism (Bhattacharya, 2007). The ‘One China’ principle which
determines China’s diplomatic relations with other countries has evolved
to maintain its territorial sovereignty and territorial integrity. On the day
of its founding, the Government of the People’s Republic of China (PRC)
had declared that, ‘This government is the sole legitimate government
representing the entire people of the People’s Republic of China’ (Paper,
2000). The implication was that any other government claiming to be
representing any section of China, in part or whole, should be considered
as illegitimate. This was accepted by the international community, as
foreign governments came forward and established diplomatic relations
with the PRC after 1949. Although ‘One China’ principle was endorsed
especially in connection with the issue of Taiwan, it essentially
showcased China’s fixation on holding on to the territories which it
claimed to be originally of its own, and from which the natives wanted to
be independent. China has been criticized and faulted by other countries
and the international community at large for aggressively claiming these
contested territories and its highhandedness in these matters. China has
defended itself back with the same vigour. To exhibit its foreign policy
stance on controversial issues like human rights, Tibet, democracy, and
so on China has published White Papers from time-to-time, where it
defends itself on these issues (Bhattacharya, 2007).
Amidst the Chinese efforts in defending its position on such controversial
issues, another feature which has time and again cropped in its behaviour
has been the undesirability of China’s administration to internationalize
these disputes. China has expressed its displeasure whenever there has
been foreign interference in its border problems or contested territorial
disputes, claiming such actions encroach upon the sovereignty of the
country. It has also taken steps to keep away limelight and focus on many
occasions. While preparing for talks with the Dalai Lama, concerning the
status of Tibet, the Chinese government has often asked the Dalai Lama
and his representatives to refrain from involving foreign governments in
this matter. During a similar situation in 1988, the Chinese government
had clearly stated that, ‘… no foreigner … should be involved’. When
the Dalai Lama chose Geneva as the venue for talks, China rejected it
and blamed the former for his insincerity (Administration, p. n.d.). It is
quite clear that China wanted to resolve this issue without any kind of
intervention by any other power as it does not consider it as just. When
Chinese human rights abuses were reported in the international realm
and the same has asked questions, China defended itself by saying that
the Western understanding of human rights is different from that of other
countries, especially the developing ones (Bhattacharya, 2007). Therefore,
it has no right to judge the issues under the same criteria as differing
situations has rendered differing interpretations; hence, its outright dislike
of foreign intervention.
Nepal’s acceptance of the ‘One China’ principle had been established
from the very beginning. It had pledged its acceptance to China. What has
changed has been the increased vigour on China’s part of promoting its
aggressive nationalism. As a result of this Nepal’s stance towards Tibetan
refugees, which had been accommodating before, turned strict later on.
Nepal reiterated its loyalty towards the Chinese cause of maintaining the
‘One China’ principle in meetings between the two countries. In fact, Nepal
has not been alone in being influenced by China’s nationalism. As will be
explained later, other powers have often fallen in line in face of China’s
brand of aggressive nationalism. Hence, the struggle of small powers and
Chinese nationalism very well explain the reason for Nepal’s change in its
attitude towards Tibetan refugees.
Checkbook Diplomacy refers to the act of using one’s economic
weight to influence other countries or gain diplomatic advantages. This is
especially successful when applied with respect to countries that cannot
fend for themselves and are in dire need of help and aid from the other
nations. This is similar to the situation between China and Nepal, where
Nepal has been at the receiving end of aid from China and, the latter has
been using its economic clout to quell anti-China protests by the Tibetan
communities in Nepal and also prevent their entry into the country. While
this provision of aid has been continuing ever since the 1980s, the signing
of deals for building infrastructure in Nepal in recent times has received
a boost. The year 2012 was called a ‘Year of Friendship’, to signify the
diplomatic headway made between China and Nepal and also mark the
significance of the number of deals signed between the two countries.
Chinese government officials claimed that Beijing was providing
assistance and technology for the construction of a dry port in Tatopani,
which would link the two countries with a friendship bridge. Attempts
were made to build land networks to boost trade with Nepal. The year
2012 also saw a growth in trade between China and Nepal by 61 per cent
from the previous year (Krishnan, 2012). The Kathmandu Post reported
on November 20, 2014, that the construction of the dry port in Larcha
,Tatopani has been delayed. This is due to transportation problems created
by a landslide in the surrounding area (Paudel 2014). According to the
Kathmandu Post, in November 2016, Nepal-China Executives Council,
a non-profit organisation based in Nepal, and the Chinese government
signed an agreement to work in collaboration to promote bilateral trade
and investment. Nepal also signed a Memorandum of Understanding with
the Chinese province of Yunnan which will enable both the countries to
share information on trade tourism and investment. In May, 2016, China
announced the opening of a new rail and road trading route in Nepal. The
new rail-cum-road-trading route would involve an international freight
train loaded with eighty six cargo containers carrying goods and it will
be set out from China’s western province Gansu to Kathmandu (Krishnan
2016). China also announced its intention of assisting Nepal in its socio-
economic development. Grants were increased as a result. The Chinese
Foreign Minister even went as far to say that China would help Nepal
recover from its Least Developed Country (LDC) status to a developed
one by the target year of 2022 (Jayshi, 2014). Such increased aid has led
to a pronounced tilt towards China by Nepal. China has been earning
brownie points from Nepal by welcoming its new constitution and by
providing 1.3 million litre of petrol to Nepal as grants in aid assistance,
when the latter could not procure its regular fuel supplies from India.
China is also building a regional international airport in Pokhara, the
second largest infrastructure project undertaken by it. (Nayak, p. n.d.).
Checkbook diplomacy, thus, is being used quite effectively by China in its

dealings with Nepal.
Increasing its clout in the South Asian subcontinent, one of the drivers
maybe propelling China to use these tactics. But for the purpose of study
here, it is shown how China uses its economic clout to influence Nepal and
even intervenes in its domestic policies. Nepal, on its own part, has been
playing the stooge.
Nepal’s Response to Chinese Overtures

China does not put up with separatism in any of its form within its territory.
It takes this issue very seriously and guards its sovereignty closely. It
has contended that Han and other minority nationalities are inseparable
from each other and they must coexist and be loyal to the Communist
government of the PRC. Separatism or incitement to separatism is deemed
as criminal activity under Chinese law (Watch, Under China’s Shadow:
Mistreatment of Tibetans in Nepal 2014). Hence, any negotiations which
does not involve full loyalty to the Communist Government of China
or one which involves negotiations on different government within the
country have been met with skepticism and rejection. It is one of the
reasons why China has not been successful in negotiating with the Dalai
Lama. The Dalai Lama has revised its position and affirmed that Tibetan
independence is not demanded, rather a separate government elected in
the Tibet Autonomous Region (TAR) and in association with the Chinese
government is what has been claimed. The Dalai Lama would hand over
the powers he holds over the Tibetan government in exile to the newly
elected government which would take care of internal policies while
foreign relations will be controlled by the Chinese government. However,
these claims have not been met with enthusiasm by China and she has time
and again reiterated that the Dalai Lama and the Tibetan protestors should
give up their demands for independence. (Administration, p. n.d.) This
clearly shows China’s clear and utter disregard for propositions which
does not live up to its conditions.
China has in recent years stepped up its policies to curb Tibetan
nationalism within its territory (TAR of China), since recent times has
seen an increase in Tibetan protests both outside and inside China. Border
controls have been put in place from where Tibetans are known to flee. With
international borders sealed off, Tibetans find it very difficult to access
other countries, especially India and Nepal. This has been successful in
achieving the desired results:
…the number of Tibetans crossing the border has dropped from

an average of 2,200 per year before the 2008 protests, to under a
thousand between 2009 and 2012, to 171 in 2013. The available
evidence suggests that Tibetans detained by Chinese authorities for
crossing the border irregularly from Nepal are routinely imprisoned
and physically abused in China (Watch, Under China’s Shadow:
Mistreatment of Tibetans in Nepal, 2014).
Apart from preventing Tibetans from crossing international borders,

China has also forced Tibetans, who travelled from Tibet to India or
Nepal, to remain in Nepal and denied them entry in China. This was done
to discourage stealthy visits to Dharamsala, India, which is home to the
Tibetan government in exile. This goes on to demonstrate the suspicions
of the Chinese government. The latter has made it very difficult for
the Tibetans to travel internationally, making them go through several
complex procedures and keeping tabs on them. Monitoring and censoring
of telecommunications, internet activity has stepped up than before,
trying to prevent any kind of communication between the Tibetans and
those Tibetan communities in exile and limit the influence of Dalai Lama
(Watch, Under China’s Shadow: Mistreatment of Tibetans in Nepal, 2014).
Apart from controlling the claims of freedom from Chinese oppression by
Tibetan communities residing in China, it has also sought to extend its
clout to manipulate foreign governments into following its directions with
respect to the Tibetans in exile. Three factors can be ascertained as to why
China sought to influence Nepal in dealing with the Tibetan population
living there. These are as follows:
• Nepal hosts a sizeable Tibetan population living within its territory;
• Nepal also acts as a transit route for those Tibetans who enter Nepal
to pass through to India, which is home to the Tibetan government
in exile; and
• Since India and Nepal host the two largest Tibetan communities
living outside Tibet, China viewed that it would be much easier to

influence Nepal to comply with its policies towards them.
China had been stepping up financial aid and grants to Nepal to influence
its policies on the Tibetan population living there. China understood the
need to provide Nepal with incentives so that she acts in accordance to her.
China’s success in these pursuits has been quite evident. In 2008, there
have been reports of how the Chinese embassy had attempted to influence
a decision by the Nepali Supreme Court with respect to the registration
in Nepal of a Tibetan Welfare Office, which is the de facto representative
office of the Dalai Lama and the CTA. Nepal has time and again reiterated
its adherence to the ‘One China’ principle and its steadfast position that it
will not allow Nepal to be used as a place for anti-China activities in almost
all meetings between the two countries. Top Nepali government officials
have gone on record to proclaim similar views. For example, in 2012, the
former Nepali Prime Minister Baburam Bhattarai of the Communist Party
of Nepal (Maoist) announced during a state visit by Chinese Premier Wen
Jiabao:
Nepal attaches great importance to China’s core interests, firmly

adheres to the ‘One-China’ policy and deems Taiwan and Tibet as an
integral part of China. The Nepali government will never allow any
anti-China activities on its territory (Watch, Under China’s Shadow:
Mistreatment of Tibetans in Nepal, 2014).
Since Nepal had stopped providing valid documents (RICs) to the Tibetans
which recognize them as refugees residing in Nepali soil, fear among the
Tibetan refugees grew as they were being deported to China flouting the
principle of non-refoulement. Nepal had deported 18 Tibetans to China
in 2003 without regard for due process as they were travelling without
valid documents. Nepal went as far as shutting down offices, which
represented the Tibetan government in exile, in the country. The Nepali
government closed the Office of the Representative of His Holiness the
Dalai Lama in 2005. China went on record to welcome this move (Watch,
Appeasing China: Restricting the Rights of Tibetans in Nepal, 2008).
Following clashes between Tibetan protestors and Nepali police forces,
Nepal has stepped up oppression against the Tibetans. From banning all
kinds of anti-China protests or gatherings of the same, preventing entry of

Tibetans to Nepal and restricting their movement and taking away their
rights of freedom of expression and assembly, Nepal has gone a long way
to proclaim its loyalties to China. A report published by Human Rights
Watch in 2008, Appeasing China: Restricting the Rights of Tibetans in
Nepal, gives a detailed account of how the rights of free speech and right to
assembly of the Tibetans had been flouted in Nepal by the authorities and
the police force. The Report essentially demonstrates how human rights
had been openly defied and captures attacks and abuses on the protestors.
Interviews of Nepalese police personnel reveal (Nepal’s Deputy Inspector
General of Police Bharat Bahadur G C gave the interview to Human
Rights Watch) how they acted on orders from political echelons to disperse
crowds demanding Tibetan independence:
Nepal Prime Minister Khil Raj Regmi and Deputy Prime Minister/
Minister for Home Affairs Krishna Bahadur Mahara gave (the)
order to crackdown on all ‘Tibetan Independence’ activities in
Nepal. Prime Minister Khil Raj Regmi said that Nepal and China
enjoy a strong friendship, so the Nepali government will not allow
any ‘Tibetan Independence’ activities on its soil. …The police see
the leadership’s determination as reassurance to act on this issue
…’ (Watch, Appeasing China: Restricting the Rights of Tibetans in
Nepal, 2008).
Another aspect which shows growing Chinese influence and Nepal’s

acquiescence is border management and control. These have emerged as
key areas of cooperation between China and Nepal. Reports even claim
that Nepalese police receive training and equipment from the Chinese.
Presence of Chinese security in Nepalese borders has also been detected
(Mandhana, 2012). In March 2016, China had dispatched a special security
delegation to Nepal to ensure that there will be no Tibetan protest meetings
and other such activities on Tibetan National Uprising Day. Discussions
on this were held at a meeting of Nepal-China Security Mechanism
and Cooperation, which was held in Kathmandu. Apart from the Nepali
security forces, representatives of Nepal’s Ministry of Foreign Affairs and
the Ministry of Home Affairs were also present (Review, 2016). These
reports establish the fact that China has been successful in infiltrating the
domestic affairs of Nepal. To prescribe a sovereign country on how to take
care of its domestic law and order conditions, is a clear indication of how
much control and sway the former holds over the latter.
International Response
Nepal is strategically very important to China for conducting its foreign
policies. Both these countries share a history, with deep cultural, economic
and people-to-people contacts that goes back to centuries. Tibet forms a
common passageway that links China and Nepal. 22 of the counties in
Tibet share a border with Nepal. During the 1940s, Mao Zedong and
the Communists had also planned to create a Himalayan Federation of
Mongoloid People of Tibet, Nepal, Sikkim, Bhutan and, India’s North
East Frontier Agency (Lama, 2013). This plan, however, failed to take
concrete shape. This explains that power China wields over Nepal has
been in existence for quite long and is not a recent phenomenon. Stepping
up of financial aids and grants has been a diplomatic move to remind the
country of where its loyalties lie.
Nevertheless, the fact of the matter is that Nepal has flouted a number of
international norms and obligations in the way it has handled the Tibetan
situation in its soil. The Gentleman’s Agreement, an informal agreement
signed between Nepal and the UNHCR, is a crucial agreement for the
Tibetans as this guarantees their safe passage from Tibet to India, using
Nepal as a transit route. If some of these people crossing borders are
found to be carrying invalid or no documents, then they come under the
jurisdiction of the UNHCR as Nepal would be obligated to hand them
over to the UN body. This ensures that the Tibetans fleeing persecution are
provided with an alternative as they are processed, and their circumstances
considered. This is also in accordance with the principle of non-refoulement,
an international customary law, which works in favour of refugees which
requires that they are not to be forcibly returned to a place where they or
their freedom are likely to be harmed, where there is a well-established
fear of persecution. Recent happenings have revealed that Nepal has
openly flouted its commitments. It also prevent UNHCR staff operating in
the country from accessing the border areas from where Tibetans are often
forced back to China. Nepal, in its defense, says that it has not flouted
any of its international obligations since it is not a signatory to the 1951
Refugee Convention and hence, not required to comply by the principle
of non-refoulement (Watch, Under China’s Shadow: Mistreatment of
Tibetans in Nepal, 2014). However, this explanation falls short as the
latter is a customary law, and Nepal is required by community standards
to observe it, plus, it stands in violation of the Gentleman’s Agreement.
China, on the other hand, says that it does not recognize these Tibetans
crossing international bodies as refugees at all.
Nepal might contend that it is not a signatory to 1951 Refugee Convention
and its subsequent 1967 Protocol, however, it is party to a number of other
international agreements, the principles of which clash with its present
behaviour. These include the Convention against Torture and Other Cruel,
Inhuman or Degrading Treatment of Punishment (CAT), the International
Covenant on Civil and Political Rights (ICCPR), and the Convention on
the Rights of the Child (CRC). These treaties establish the obligation to
respect the principle of non-refoulement. Moreover, the UN Human Rights
Committee on its General Comment in the ICCPR has stated that:
Aliens have the right to freedom of thought, conscience and religion, and
the right to hold opinions and to express them. Aliens receive the benefit
of the right of peaceful assembly and of freedom of association (Watch,
Under China’s Shadow: Mistreatment of Tibetans in Nepal, 2014).
Therefore, Nepal is in clear contradiction to its international commitments.

Nepal has nonetheless continued to contend that the freedoms granted by
it (in this case freedom of movement, expression and peaceful assembly),
is constitutionally granted only to its citizens and not non-citizens.
Moreover, its allegiance to China surpasses its legal obligations (Watch,
Under China’s Shadow: Mistreatment of Tibetans in Nepal, 2014). China
supports Nepal in the latter’s defense arguments. When China’s human
rights violation cases had been called into question, China had contended
that situations in developing countries are different from that of the
developed world and hence, their understanding of human rights does not
apply in a similar manner either. Also Tibetans fleeing the TAR region are
not recognized as refugees at all.
International legal bodies have spoken against the coercive practices

of China and Nepal towards the Tibetans. The Human Rights Watch has
published reports on the conditions of the Tibetans residing in Nepal, how
their rights are being flouted, the oppression against them, and also provided
recommendations to the governments of China and Nepal on how to improve
the circumstances for the Tibetans. The Dalai Lama was awarded the Nobel
Prize for Peace in 1989, for his efforts to solve the situational deadlock
between the Tibetan government in exile and the Chinese government.
These efforts demonstrate international sympathy for the Tibetan cause.
However, any real endeavour to remedy the situation has been lacking. Even
responses from foreign governments have been quite weak. Apart from the
international human rights agencies, disapprovals, and protests by foreign
governments have been muted. The reason for this has been attributed to
Chinese pressure. In fact, in 2009, the former President Barrack Obama’s
decision to postpone a meeting with the Dalai Lama has been attributed
to Chinese pressure. The United Nations strategy in how to deal with this
situation has been to keep criticism to a minimum while working behind the
scenes to ensure Nepal observes its obligation to provide safe passage to the
Tibetans. Even the United States proclaimed that it was in its core interest
to ensure that Tibetans are not forcibly sent back to harm (Bruno, 2010).
However, these claims have been mere rhetoric as concrete action has been
non-existent. None of the governments or international agencies want to
pressurize or push China to mend its ways. The ‘One China’ policy has been
accepted at least in principle by most. This has to be accredited to China’s
brand of aggressive nationalism, its steadfast claim over its minorities.
International response has fallen weak in the face of Chinese prerogative.
Due to similar reasons, any international action or criticism against the
Nepalese government for its conduct towards its Tibetan population has
been mere pretense, devoid of any achievement.
Conclusion
This chapter has attempted to trace the Tibetan situational deadlock in Nepal
and China’s pervasiveness in this matter. China’s successful application
of checkbook diplomacy has induced Nepal to act in accordance to the
former’s wishes. Nepal had earlier welcomed Tibetan refugees fleeing
Chinese persecution, to reside and work in the country, and providing them
with unique identification certificates. Post 1989, witnessed a complete
roundabout turn of events as Tibetan refugees were now turned back from
the borders, identification certificates withdrawn, and freedoms curtailed.
While adherence to the ‘One China’ policy has been forwarded as one of
the reasons for such behaviour, the understanding of the struggles of a small
power in the international political scenario can also explain the situation.
Although it may seem that Nepal is being bullied in this scenario, the country
does receive its fair share of benefits. Thus, Nepal’s acquiescence is being
bought by China. It is a clear case whereby Nepal bandwagons in favour
of China, the country which it considers to be more powerful. Nepal has,
thus, responded positively to Chinese overtures, and has been constructive
in dealing with anti-China protests by the Tibetan community in the country.
Looking out for its own benefit, progress and development, Nepal is actually
acting on the first and foremost characteristics of conducting foreign policy
that is, catering to its own survival.
With respect to the Tibetans in question, is there any possibility of
improvement of their situation? The answer to this question, unfortunately,
is in the negative. Without question, China will continue to exert pressure
to prevent challenges to its hegemony. International community has been
rather meek in questioning or condemning Chinese oppression. Tibetans for
their part have appealed to international organizations, the only platform
where they can voice their opinions and bring their grievances to centre
stage. However, there have not been any such tangible efforts to alleviate
their complications. Nepal might argue that its handling of Tibetans residing
or arriving in the country has been just, with respect to the number of
defensive claims it has put forward. Yet Nepal is considered in violation of
human rights and, in violation of its international obligations in its dealings
with Tibetans. While human rights and pro Tibet groups have criticized this
conduct and put forward recommendations that might improve the state of
affairs for the Tibetans, any constructive action seems far less than likely.
References
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available at http://kathmandupost.ekantipur.com/news/2016-11-03/mou-signed-
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20, 2016.
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from https://www.theguardian.com/commentisfree/cifamerica/2010/aug/13/tibet-
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ChinaPeriphery-Nepal.pdf, accessed on June 19, 2016.
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Narrows. Time. Retreived from http://world.time.com/2012/07/17/as-china-
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Kathmandu Post, November 20, 2014, available at http://kathmandupost.
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Nepal. New York. Retrieved from https://www.hrw.org/report/2014/04/01/under-
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15
Can Nepal Bridge India and China?
An Assessment of Nepal’s Transit
Diplomacy
Gaurav Bhattarai
Abstract
N epal is being variously suggested to bridge the gap between its

immediate neighbours, India and China, and derive economic
development and prosperity for the country by being bridge between two
economic giants. This chapter analyzes political, economic, cultural, and
psychological aspects of Bridge Metaphor: Can Nepal Really be a Bridge
Between India and China?
Background
The ascent of country from poverty to prosperity, from tradition to
modernity, is a great and fascinating enterprise (Das, 2000). A prosperous
Nepal is greatly aspired by all Nepalese these days, chiefly owing to the
geo-strategic location it has between two emerging Asian economies—
India to the south and China to the north.
Development in the Third World these days is no more an autonomous

pursuit, for to a very large extent, it has to depend on the financial
assistance from the developed world (Vyas, 1).
Nepal, as a Third World, is searching prosperity and development by

looking for ways to be a bridge between India and China. And unlike
Can Nepal Bridge India and China?... • 219
the Korean Peninsula that has always been an integral part of the North-
East Asia strategic discussion, and Mongolia that has been an inherent
component of the China-Russia relations for a long time, Nepal wants to
get out of its trapped status of a ‘buffer state’ that has often been associated
with economic backwardness and political instability. Now, following
the robust economic development of China and India, Nepal wants the
benefits of closer economic relationship with both China and India, rather
than just from India (Shiping, 2016).
It was Nepal’s former Prime Minister Pushpa Kamal Dahal who proposed
the trilateral cooperation between China, India, and Nepal in April 2013
during his visit to India, shortly after he had returned from a week-long
visit to China. Since then, the idea of trilateralism is being understood
variously. Some perceive it economically, while others find it ‘an idea in
the making’. While proposing the trilateral cooperation, Dahal not only
mentioned of joint ventures seeking Indian and Chinese investment in
hydel projects in Nepal but also advocated the idea that Nepal must also
benefit economically from the two growing Asian economies, by being an
adequate bridge between India and China.
Few years later, another former Prime Minister Baburam Bhattarai
envisioned Nepal’s role as an ‘economic bridge’ between China and India.
However, only the former Prime Minister K P Oli dared to act by signing
the Transit and Transportation Treaty with China in 2016, which has
eliminated the traditional geo-political metaphor for Nepal as landlocked or
sometimes as ‘India-locked’ due to Nepal’s economic overdependence on
India. Now with the signing of the Treaty, Nepal is land-linked to Chinese
port of Tianjin and Indian port of Calcutta (Kolkata). To apprehend the
bridge concept in a better light, it is therefore important to look at the
proposed trilateral engagement from different levels and interpretations.
Content
In 1960, when Nepal’s first elected Prime Minister Bishweshwar Prasad
Koirala visited China, he was told by the then Chinese premier Zhou Enlai
that, ‘China should not compete with India in providing aid to Nepal and
China’s contribution should be always less than India.’ Apparently, Zhou
Enlai had acknowledged the geo-political sensitivities in the region during
the cold-war period. His acknowledgement was nevertheless prior to the

1962 border war between India and China when India was reiterating on
Nehru’s Himalayan Frontier Policy.
But today, things have changed and situation is different although
geo-political sensitivities do exist. Now, China is one of the major donor
partners, surpassing India in providing aid and economic assistance to
Nepal. In 2015, China increased its annual grant assistance to Nepal more
than fivefold to RMB 800 million (Rs 12.83 billion) to mark the 60th year
of the establishment of bilateral relations. Some view this as a testimony
to India and China vying for their influence in Nepal. Some take it as a
strategy to counter balance Indian influence in Nepal through soft power.
China has been hinting repeatedly at the trilateral cooperation by
advocating the idea of Nepal as a bridge between China and India. However,
it has generated suspicion and distrust in India. It is being deemed as the
strategy of China to enter South Asia through Nepal, as China does not
have any diplomatic relations with Bhutan. Meanwhile, Nepal’s search for
prosperity is being understood by relating her geographical proximity with
the development of India and China. Can Nepal really bridge China and
India? The answer to this question seeks different level of understanding.
Geographical Level
The geography or location of state or nation provides opportunities
as well as imposes limitations, and as said by Sempa, ‘also conditions
the perspectives of a state’s leaders or rulers and, thereby, affects their
decision-making in matters of foreign policy’. Geography has provided
Nepal all the chances and opportunities to bridge the two economic giants.
Bhanjyang in Humla is considered as the most northern point of Nepal
while Lodabari of Jhapa is the southern point. Dodhara of Kanchapur is
the western point and Taplejung district is the most eastern point of Nepal.
Among the 75 districts in Nepal, 24 Nepali districts are adjacent to India
and 14 districts are adjacent to China. There are 2 districts, which are
adjacent to both China and India, and these are Taplejung and Darchula.
Besides her immediate neighbours, the eastern border of Nepal is also
closer to Bangladesh (27 kilometre) and Bhutan (32 kilometre). Hence,
geography provides Nepal all opportunity to be a bridge albeit southern
plains in more favourable than Northern Himalayas. At present, Nepal

is dependent on the Kolkata Port in India for all its sea freight imports.
Tianjin Port, the nearest Chinese port is 3,300 kilometre away from the
Nepalese border as against the closest Indian port of Kolkata which is
only 1,000 kilometre (Chalise, 2016). Largest port in northern China,
Tianjin Port, trades with over 600 ports in 180 countries, and is considered
as the maritime entryway to Beijing. China opened its first rail-and-road
service to Nepal with international freight train on 12 May 2016, with
2,431 kilometre of rain transport from Lanzhou to Shigatse, 564 kilometre
of road transport from Shigatse to Kyirong, and 160 kilometre of road
transport from Kyirong to Kathmandu.
Talking about India, the 1700 kilometre long Indo-Nepal open
border has not only facilitated socio-cultural exchanges that date back
to centuries but have been strengthened by age old historical ties. The
geographical proximity and socio-cultural affinity have determined the
contour of the relationship between both the countries (Pattanaik, 1998).
Throughout history, the movement of people between Nepal and India was
unrestricted. Some archaeological remains in the Lumbini garden attest
to the fact that since the third century bc till about ad fourteenth century,
Lumbini was regularly visited by masses from various regions of India,
Tibet, and Nepal (Rizal, 1979). India’s first Prime Minister Jawaharlal
Nehru said as follows:
Broadly speaking, our relations depend not really on any person’s

goodwill, on Nepal’s goodwill, on that government or this
government...they depend on geography and history, which cannot
be easily done away with (Bhasin, 1970).
Jiwan Subedi (2016) has also talked about possibility of Nepal as a transit
route between India and China. To support his argument he has also listed
the possible trade and transit routes to link India and China. The data was
provided by the Government of Nepal, Department of Roads, 2005. The
possible trade and transit routes are depicted in Table 1.
Table 1. Possible Trade and Transit Routes

Transit Road Corridors Total Length(KM)
Mohana-Dhangadi-Ataria-Baitadi-Darchula- 415
Tinker
Nepalgunj-Surkhet-Jumla-Hilsa-Yari-Purang 581
Bhairahawa-Pokhara-Jomsom-Lizhi 467
Birgunj-Trishuli-Rasuwa 265
Birgunj-Naubise-Kathmandu-Tatopani-Nyalam 393(existing)
Janakpur-Dolakha-Lamabagar-China border 295
Rani-Itahari-Hile-Kimathanka-China border 419
Kechana-Taplejung-Olangchung Gola 460
Source: Government of Nepal, Department of Roads, 2005.
Political Level
The 1950 Treaty of Peace and Friendship is the only document regulating
Nepal’s bilateral relations with India while Panchasheel, the Non-Aligned
Movement and the United Nations Charter are considered as the guiding
factors in governing Nepal’s relation with China. India’s Neighbourhood
Policy and China’s Peripheral diplomacy are going to be beneficial for
Nepal. At present, Nepal is one of the founding members of China-led
Asian Infrastructure Investment Bank (AIIB) and dialogue partner of
Shanghai Cooperation Organization (SCO). Nepal needs to utilize these
forums along with the South Asian Association for Regional Cooperation
(SAARC) to secure her interest and strengthen preparedness to act as a
bridge between China and India. To AIIB, Nepal could request for grants
and loans to upgrade her infrastructure. Similarly, according to the former
Nepali ambassador to China Mahesh Maskey, SCO provides Nepal a
platform to build cooperation with Kazakhstan, Kyrgyzstan, Tajikistan,
and Uzbekistan for oil and energy. However, political stability in Nepal
is prerequisite to echo the concerns of Nepal’s national interest at such
forums.
Protracted transitional period in Nepal is excessively criticized for
her oscillating approaches in foreign policy executions, particularly
in dealing with India and China. However, Nepal’s capability to act as
a bridge between India and China have witnessed different untoward
incidents including Indian blockade on Nepal after the latter promulgated
its constitution. Repetition of such actions probably executes the spirit of

trilateral partnership. Take the case of Lipulekh. In 2015, India and China
agreed to use Lipulekh as the transit route between them sans Nepal’s
consent. It drew flaks from different quarters in Nepal. Politically, Nepal
has always addressed China’s Tibet issues and India’s security concerns.
Economic Level
Nepal’s economic over dependence on India is severely criticized though
diversifying trade relations is being emphasized. Nepali currency pegged
with the Indian currency forms the foundation of Nepal-India trade
relations. In the year 2015, 65.5 per cent of the total export and 63.5 per
cent of the total import was with India, while with China it was 2.6 per
cent of the total export and 12.9 per cent of the total import. Having duty
free access of Nepali manufacturing goods, Nepal exports woollen carpets,
leather items, traditional handicrafts, jute goods, polyester yarns, and few
agro-processed items to India. However, exporting handicrafts, woollen
carpets and noodles to China (which are produced in Nepal by importing
goods from India itself), high transaction cost, and tough competition in
Chinese markets are still obstacles. More than 60 per cent of the country’s
imports from India pass through Birgunj border point, which suffered a
most during Indian blockade of 2015. Besides rice and paddy, vehicles
and spare parts, petroleum products stand at the 20 per cent of the total
import from India as the sole supplier to Nepal. Talking about in-land
trade with China, Tatopani customs point on the northern border has been
blocked since the 25 April earthquake but another customs point on the
border with China, Rasuwagadhi, had been reopened just few months
back. Talking about investment, Indian investment on manufacturing and
energy sectors is higher than Chinese investment on energy and service
sectors. Remittance brought by seasonal Nepali migrants by utilizing
hands at open labour market in India has benefited households from
upper parts of far- and mid-west and the Terai belt. This access is absent
in China. It shows that in terms of proximity and cost the Indian market
appears more lucrative than the Chinese one. Except for its trade with
the Tibetan Autonomous Region (TAR), Nepal’s foreign trade with third
countries has to transit through India. Trade by sea route through India,
even with mainland China, is more economical than trade by land route
(Nayak, 2016). According to the Transit Treaty of January 1999, India
has offered 15 transit points to Nepal to and from Kolkata/Haldia ports
and Visakhapatnam for third-county trade. India also provides two transit
routes to and from Bangladesh and three transit routes to and from Bhutan
for Nepal. Further, in an effort to improve bilateral trade and facilitate
Nepal’s third country trade, India has proposed to construct four integrated
customs check-posts on the borders. Of these, Birgunj and Bhairahawa
are in operation; the others, at Nepalgunj and Biratnagar, are still under
construction. The two countries have also agreed to improve their border
infrastructure and India has committed itself to connect Nepal’s major
border cities with railway lines. Until now, Nepalese traders have been
using Indian railway services up to the nearest border point for onward
transport to Nepal by road. However, Nepal has often demanded extra and
better transit facilities from India for trade with third countries because
of some restrictive provisions in the Treaty. In the view of Nepal, this
has not borne any fruit. For example, the Transit Treaty was renewed in
January 2013 without any changes. Nepal’s access to Bangladesh seaports
via India has been limited due to security factors and availability of
poor infrastructure from the Indian side. Since Nepal has been exploring
possibilities of using Bangladesh seaports, it has frequently blamed poor
returns from its foreign trade on poor transit facilities provided by India.
Another example could be restrictions imposed by bordering Indian
provinces on Nepalese origin products. The Nepal Herbs Entrepreneurs’
Association filed a case in the Lucknow High Court of Uttar Pradesh in
February 2013 against the government of that state, challenging the transit
permit-related restrictions imposed on the export of herbs. Nepalese
exporters have also made allegations that Nepal-bound goods are required
to be checked for security purposes at the Rajauli transit point in Bihar,
while the consignment is already authorized by customs officials at the
Kolkata port (Acharya, 2012). On the issue of Nepal’s request for easing
procedures to send money through Indian banks, India appears firm.
However, currently, Nepali people need authentication of the Indian
government officials to open bank accounts in India. Nepalis’ cannot carry
more than IRs 25,000 cash while travelling to Nepal from India. Anyone
having opened banks accounts there cannot send more than IRs 50,000
even through the banking channel (The Kathmandu Post, 2016).
Cultural Level
These days cultural proximity matters more than geographical proximity.
China-Nepal relations are confined to government and elite groups.
People-to-people relations are almost absent between Nepal and China.
For Nepalis, China remains a distant and remote land. But, India is like
second home to most of the Nepalese. Besides the shared values of
Hindu culture, many Nepalese send their children to India for education.
Admittedly, middle-class Nepalese actually watch India soap operas on
Chinese TV. Many Nepalese kids are taught in English and love Bollywood
and Hollywood. However, few kids in Nepal are aware of contemporary
Chinese movies. Facebook is part of life in Kathmandu but Facebook is
legally banned in China. Only VPN and Lantern provide access to use
Facebook in China. Students taking Chinese classes have increased in
Nepal but still not at significant level. Flight cost to Chinese provinces
from Kathmandu is expensive than flying to Indian cities and even the
phone call to Nepal from China is higher than calling back from other
countries. Many Chinese still have misconceptions that Nepalese speak
Hindi and Nepal is predominately Buddhist. Cross border business and
kinship, language, free movement of labour are missing in Nepal-China
relations.
Psychological Level
For Prithvi Narayan Shah, who unified modern Nepal deemed Nepal as
a ‘yam between two boulders’. Later on during the period of European
colonialism, British defined Nepal as a buffer zone between India and
China. With the rise of India and China, Nepal is better suggested to
be a bridge between the two economic powerhouses. It is said that the
buffer system ends only if the buffer state becomes strong and could stand
up against the big powers, or else one of the struggling powers become
successful in occupying the buffer state. However, for Nepal, the escape
appears possible only through the economy and trade, by enhancing its
comparative advantage apprehending the demands of Tibet and UP-Bihar.
According to senior economist, Bishwambher Pyakurel, the agreement

on transit and transport with the People’s Republic of China could be a
psychological shift for the future. ‘The agreement is going to have a huge
psychological shift in otherwise India-locked Nepal as the country will
now have an option for international trade’ (Chalise, 2016).
Similarly, trade expert and former commerce secretary Purushottam
Ojha said that the Treaty is a milestone, but Nepal needs to invest its huge
resources and efforts on road infrastructure to benefit from the Treaty.
‘Nepal must increase road connectivity to take advantage from the transit
treaty and increase economic integration with China’ (Chalise, 2016). Ojha
said, apart from widening of Rasuwagadi customs point, and upgrading
Korala and Kimathanka customs points, Nepal also has to work hard to
simplify trade-related issues, including visa, currency and language, to
make the Treaty work in its favour (Chalise, 2016).
According to Leo Rose:
India’s statements and actions are interpreted by Kathmandu in

the context of Nepali assumptions about New Delhi’s motives and
intentions rather than its overt behavior due to intense intimate
nature of Indo-Nepal relations where as China’s relations with Nepal
have avoided the extremes of excessive intimacy and complete
unresponsiveness (Rose, 1971).
Nepal has always been successful in maintaining a balanced relationship

with China where as India’s motives and intentions are purportedly
exaggerated in Kathmandu in an endeavour to discover Nepal’s own
national existence.
Security Level
Besides legitimate security concerns and geo-strategic interests, India
and China have different threat perceptions about each other’s actions
and intentions in Nepal. India’s security concerns in Nepal are created
by operation of counterfeit fake Indian currency in Terai areas of Nepal,
possibility of international criminal organizations operating within Nepal
against India, the ‘vulnerability’ of Nepal’s international airport, danger of
Nepal-India open border being exploited by anti-Indian elements. Nepal-
India 1950 treaty has specific provision on security concerns of Nepal
as ‘India has de facto say over Nepal’s security, especially regarding

the consultations about third country threats emanating from Nepal’
(Ramakant, 1976). The concern of China is about the increasing ‘free
Tibet movement’ in Nepal and its impact on ‘territorial integrity’ (Thierry,
2005). Approximately 20,000 Tibetan refugees now reside in settlements
scattered throughout Nepal (BBC, 2008). Paradoxically, Nepal is not
a ‘signatory to the 1951 Refugee Convention or the 1967 Protocol’ and
does not have a ‘domestic Refugee Legislation’, despite hosting masses
of refugees and asylum seekers. Nepal has acceded to the ‘Gentlemen’s
Agreement’, whereby it facilitates the transit of new Tibetan arrivals
through Nepal, typically to Tibetan exile communities in India (Dietrich,
1997). However, the flow of people has rarely been uni-directional. Many
Tibetans instead are choosing to stay in Nepal and, increasingly, Tibetans
who have returned from India are reportedly participating in various
political activities in Nepal. One of the recent examples was when a Tibetan,
who had returned from India, died by self-immolation in Nepal (The Times
of India, 2013). China always held a deep suspicion towards India’s role
in instigating the ‘Free Tibet movement’ in Nepal. Additionally, China is
concerned about the impact of a possible federal Nepal with the provision
of ethnic self-determination on Tibetan nationalism (Karki, 2012). The
Nepali government firmly supports the ‘One China Policy’, upholding the
belief that Tibet is part of China, and remains adamant that Nepali territory
should not be used for Tibetan protests against China (Karki, 2012).
International Level
The growth of China and India has been deemed as the shift of the centre
of global power from the trans-Atlantic to the Asia Pacific region. The
shift has also created an unfathomed impact in shaping a new geo-politics
in the bid to struggle for global primacy in the Asia Pacific region. Nepal
is situated between two competing powers, and faces both challenges and
opportunities.
While both China and India are competing for global and regional
influence, there is also a concern about securing their interests in their
close neighbourhoods. Both countries are vying for influence in Nepal as
they fear that Nepali soil can be used to harm their respective core interests
(Dabhade and Pant, 2004). Ultimately, as argued by Manish Dabhade and

Harsh V Pant, both countries have increased their interference in Nepal,
while severely undermining ‘Nepal’s sovereignty and its ability to cope’
with these regional giants effectively (Dabhade and Pant, 2004).
Conclusion
Unlike those who believe that conflict between India and China is
advantageous to Nepal, the bridge concept emphasizes on the Sino-
India cooperation and Nepal drawing benefits from their economic
development, although mutual suspicion engulfs the relations between
India and China, and at the same time the poor infrastructure in the border
region of Nepal does not offer much hope to be optimistic. Geographically,
Nepal can be a bridge between UP-Bihar of India and Tibet of China, and
even psychologically also the idea of bridge looks convenient provided
that India’s and China’s security concerns are addressed. However,
economically, Nepal needs to do more. Having access to Tianjin alone
is not sufficient. Culturally, Chinese language classes will not just solve
the problem, better understanding of Chinese culture, values, and interests
is essential. Politically, Nepal as a small state between two big powers
should always articulate against any threat against her sovereignty and
territorial integrity. Political stability centred on economic development
is a prerequisite for that. Moreover, leapfrog from bilateral to trilateral
arrangements seeks a new order of diplomatic partnership between
India and China, and for that Nepal could commence by convincing her
immediate neighbours that she does not side with one at the cost of the
other.
References
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Kathmandu Post, 14 December 2012.
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news.bbc.co.uk/2/hi/south_asia/7613664.stm, accessed on June 12, 2016.
A S Bhasin, Documents of Nepal’s Relations with India and China, 1949-66, Bombay:
Academic Books, 1970, 105.Kuvera Chalise, ’Nepal, China Ink Historic Trade,
Transit Treaty’, Republica, 21 March 2016.
Manish Dabhade and Harsh Pant, ’Coping with Challenges to Sovereignty: Sino–
Indian Rivalry and Nepal’s Foreign Policy’, Contemporary South Asia, 2004,
13(2), 159–60, 166-67.
Gurucharan Das, India Unbound, London: Penguin Books, 2000.

Angela Dietrich, ’Tibetan Refugees in Nepal: Balancing Humanitarian and Security
Concerns’, in Tapan K Bose and Rita Machanda (ed.), States, Citizens, and
Outsiders: The Uprooted Peoples of South Asia, South Asia Forum for Human
Rights, Kathmandu, 1997, 284-88.Rihit Karki, ’Catch 22: Tibetan Refugee and
Security’, Republica, 14 July 2012.
Thierry Mathou, ’Tibet and Its Neighbors: Moving Toward a New Chinese Strategy in
the Himalyan Region’, Asian Survey, 2005, 45(4), 517-18.
Nihar Nayak, ’Landlocked and Transit Developing Countries: Nepal’s Transit Route
Negotiations with India’, Strategic Analysis, 2016, 40:2, 101-21.
Smruti Pattanaik, ’Indo-Nepal Open Border: Implications for Bilateral Relations and
Security’, Strategic Analysis, 1998, 22:3, 461-78.
Babu Krishna Rizal “Archeological Remains of Kapilavastu, Lumbini and Devadah”
(Kathmandu, 1979), pp.13-14 as cited in Ram Niwas Pandey, “Historical
Perspective of Nepal Border Relations” in Hari Bansh Jha, ed., Nepal-India
Border Relations (Kathmandu, 1995), p.6. 6.
Ramakant, Nepal-China and India: (Nepal-China Relations), New Delhi: Abhinav
Publications, 1976, 35.
Leo E Rose, Nepal: Strategy for Survival, South Asian Edition published by Mandala
Book Point, 1971; First Edition by Berkeley: University of California Press, 9.
Jiwan Subedi, ‘Nepal’s Evolving Bilateral Relations with India and China, and the
Question of Trilateralism’ in Promod Jaiswal and Geeta Kochhar (eds.), India-
China-Nepal: Decoding Trilateralism, New Delhi: GB Books, 2016, 27-60.
Shiping Tang, Foreword, in Promod Jaiswal and Geeta Kochhar (eds.), India-China-
Nepal: Decoding Trilateralism, 2016, New Delhi: GB Books, viii.
The Kathmandu Post, ’India for Common Standards on Exports’, 30 June 2016.
The Times of India, ’Tibetan Self-Immolation Protester Dies in Nepal’, 14 February
2103, available at http://articles.timesofindia.indiatimes.com/2013-02-14/
south-asia/37099627_1_tibetan-monkprotest- against-chinese-rule-immolation,
accessed on May 10, 2016.
V S Vyas, ‘Introduction’, Third World Development, Autonomy Vs Growth, [Ina Shree
Publishers, Jaipur, 1998, 1.
16
Triangular Cooperation Between
India, Nepal, and China: A New Norm
of Foreign Policy of Nepal
Vijay Jayshwal
Abstract
T he first section of this chapter depicts historical lineages of foreign

policy of Nepal with India and China and need for establishing a
new norm on it. Nepal, since its recognition has practiced principle of
equidistance as her guiding norm of foreign policy. Nepal shares three
side borders with India on the south, west, and east and with China in
the north. The bilateral relation with India and China is magnificent
and has crossed in very significant percentage of trade and commerce.
The political differences are becoming shadow over the cooperation of
investment and trade. There is urgent need for Nepal to reform her foreign
policy from traditional buffer state to the vibrant bridge between these
two giant nations. Nepal shall be actively involved in between trade and
commerce without undermining its sovereignty and national interest with
neighbour. The trilateral notion of new foreign policy has to be submerged
with the triangular notion of new form of foreign policy whereby entire
partner’s have due consideration and equal responsibilities with Nepal.
The growing concern of China in Nepal is making some kind of refutation
and allegation from the Indian think tank which is largely based on
reports and Medias reporting. China does have legitimate concern in
Nepal relating to issues of Tibet and Tibetan and their voices and for it,
Triangular Cooperation Between India, Nepal, and China... • 231
China wants to extend her hand with Nepal. The Triangular Cooperation
between India, Nepal, and China shall be the new norm of foreign policy
of Nepal in the twenty-first century. This norm will not undermine the
national interest of Nepal rather it will assist to involve in equal footing
and bear proportional responsibility.
The second section of this chapter shall examine the various forms of
diplomatic minute concluded between Nepal, India, and China which is
illustrative for triangular cooperation. India and China conclude bilateral
agreements with Nepal with respect to investments, trade, commerce,
cooperation and others, but they hardly cooperate jointly or in multi-lateral
forum. This triangular norm of foreign policy will enhance the multi-lateral
forum and also will urge to establish more multi-lateral cooperation in
regards to Nepal’s stability and development. The triangular norm of
foreign policy out rightly rejects the notion of reciprocity via considering
the status of Nepal as land linking nation than the land-locked one. China
has initiated ‘One Belt, One Road’ both in Maritime Silk and Land Silk
Road without physically touching as similar like other adjoining states.
This triangular norm of foreign policy will bring India and China together
for uplifting the status of Nepal with joint effort and cooperation.
The last section of the chapter will testify the possibilities of
institutionalizing this norm of foreign policy. Nepal will try to remove
the cloud of dishonesty and doubt and will extend her hand for mutual
cooperation and assistance. Nepal will not allow her land for any activities
which can create confrontation with neighbours and other. This section
will come with some official lines of Ministry of Foreign Affairs.
Strategic Location of Nepal in Regional Politics

Nicholas Spykeman argues that the geography is the ‘most fundamental
conditioning factor in the foreign policy of states because it is the most
permanent.’1 What other factor determines as something special about
the geo-political position of Nepal? The answers are its size, geography,
cultural and ethnic links, borders and population movement, natural
resources and economic development, as well as economy and trade of
Nepal with other region.2 However, various writers argue that in terms of
size Nepal is not as small as it appears. Pandey argues that the geography
of the country has affected not only the perception of its size but also
the substance of its public policies and performance.3 Nepal’s perception
of insecurity is a psychological phenomenon resulting from its physical
environment, which in turn is a consequence of its size.4 Nepal is still
perceived as a landlocked country in the global politics. This perception
was overruled by considering Nepal as only one nation in the world which
is ‘Land Linking’ nation with the two rising economies of the world.
Similarly, the then Indian Foreign Minister K Natwar Singh once said that
geography dictated Nepal-India relations.5
Nepal has a strong and unique identity among the nations as a sovereign
state and it is the only nation which has been never occupied by any foreign
country or was under the colonial empire, but it always holds a remarkable
balance between its two shining neighbours, India and China. Sometimes
the geo-situation of the nation is taken as the bondage for the expansion
of friendly relation with the immediate neighbours. Nepal’s foreign policy
priorities are always considered for as ‘strategy for survival’. Nepal-India
boundary has a comparatively recent origin and its present boundary
demarcation and delimitation took place after the Anglo-Nepal War of
1814-16 which was ended with the signing of Treaty with the British
East India Company who prepared a draft of the Treaty with the signature
of Lieutenant Colonel Paris Bradshaw on 2 December 1815.6 Nepal is
located between the two of the largest and most populous countries of the
world—China and India—that Nepal has acquired an image of a ‘small’
nation.7 With an area of 1,47,181 square kilometre, Nepal is bigger than
some other states in the region. According to the 1996 World Bank Atlas,
only 41 countries out of 209 have a population larger than that of Nepal. As
Dahal argues ‘Nepal occupies a pivotal position in the Himalayas located
between the Central and South Asian regions, a part of Eurasian landmass,
to use Mackinder’s terminology.’8
Dahal further argues that such a position of Nepal forms its geo-
strategic with regards to the Gangetic belt, an area critically important
for India’s security and the stability of its heartland, where an
enormous share of its human and resources base is concentrated. This
is the primary reason why India has been striving towards a firmer
influence in Nepal for its territorial and political defense in areas that
border China, which Indian strategists perceive is the actual rival of

India.9
Nepal’s King Prithvi Narayan Shah’s famous ‘yam between two boulders’
quote reflects the great understanding of Nepal’s security dilemma, even as
far back as the eighteenth century.10 Its geo-political position is becoming
central point of concentration of Asian relation. Nepal has seen the
repercussion when India and China was far with each other in the War of
1962 ad. There was dilemma among the intellectuals that what will be the
impact on Nepal if China and India comes closer to each other. Ultimately,
as argued by Manish Dabhade and Harsh V Pant, both countries have
increased their interference in Nepal, while severely undermining ‘Nepal’s
sovereignty and its ability to cope’ with these regional giants effectively.11
Nepal has encircling frontiers with India to the south, east, and west.
Northwards, the Himalayas constitute an almost impassible frontier
beyond which lies the border with China.12 Nepal has a 1,400 kilometre
border with China; while on the east, west and south, Nepal has 1,700
kilometre border with India.
The continual changing in the political space has urged the
reconsideration of Nepal’s strategic position for the overall development.
If those in power now fail to demonstrate wisdom they could preside
over change not only in the course of Nepal’s history but also its
geography.14 Nepal has played the ‘China Card’ or ‘One China Policy’
(Nepal has always committed not to allow Nepalese territory to be used
against China.) in search of counterbalance what it considers undue
pressure from India to preserve national interest. The national interest
of countries vary from time-to-time based on social, cultural, religious,
political predispositions, economic outlook, as well as world views and
interests of changing political leadership. To quote, Henry Kissinger,
‘Personality and policy could never be fully divorced.’15 The bilateral
relations with the countries are governed by the foreign policy of nation.
Nepali leadership has long resented Indian economic influence and
has sought to establish an independent foreign policy. Nepal’s foreign
policy rests on Faith in the UN Charter, adherence to the principles of
Non-alignment, the Panchsheel, and respect for international law and
contribution to world peace.16, 17
Nepal’s foreign policy is always guided by the foreign policy of India

and there are similarities between these two countries foreign policy.
India is revising regional policy nowadays. They are also reviewing their
regional involvement since 1947. A recent report, ‘Non Alignment 2.0: A
Foreign and Strategic Policy for India in the Twenty First Century’, states
that a future policy of India must be centred on three ‘core objectives’.
These are:
To ensure that India did not define its national interest or approach
to world politics in terms of ideologies and goals that had been set
elsewhere; that India retained maximum strategic autonomy to pursue
its development goals; and that India worked to build national power
as the foundation for creating a just and equitable world order.18
In South Asia, India has been driven by the vision of encouraging regional
integration to bring peace and prosperity for the more than 1.5 billion
people living in this region. As part of this vision, this geography of
hope, India has been implementing a policy of asymmetric engagement
in providing greater market access to neighbours, which enables regional
integration in a mutually beneficial manner.
Nepal’s needs to review its 1950s regional policy with India and should
give clear stand on it. Nepal shouldn’t act as puppet or platform for the
Indian foreign policy. India and China are becoming close to each other
which is being time and time proven by increasing trade volume, soft
power, and hard power. Nepal needs to identify its soft power because the
hard power will not make any sense to these two countries. Nepal’s can’t
challenge the military and economic strength of these two nations. Nepal’s
must develop attractive soft power as key of regional foreign policy. Nepal
has always been upholding ‘One China’ policy and is committed not to
allow Nepalese territory to be used against friendly neighbour China’s
core interests.19
Bilateral Intervention Between Nepal and India

Nepal has always practiced a defensive foreign policy to maintain
independence and sovereignty of the nation even during the colonial
India and in post India too. This may be due to the fact that its immediate
neighbor, India, is 23 and China 68 times bigger in size. But this has not
been considered a fear of threat but has to be converted into possibilities
of development and interconnectedness. In 1950, Nehru said, ‘Nepal
is geographically almost a part of India, although it is an independent
country.’20 Even after the independence of India, Nepal and India relations
are based on the Treaty of Sagauli and the 1923 Treaty of Friendship signed
with the then Government of British India.21 The 1950 Treaty of Peace
and Friendship concluded by the last Rana Prime Minister of Nepal with
India is another example which regulates bilateral ties.22 Nepal and India
bilateral ties are always subject to multiple hypotheses and presentations
made by various scholars. Pandey argues, a country of 23 million people
that wants to develop has to ‘think big’, ‘dream big’, and ‘be big’ not in a
physical sense, or in an arrogant or megalomaniac way, but to be rid of the
defeatist complex it carries on account of its social debilities and physical
surroundings.23 India’s status of a ‘rising power’ had led it to reorient and
reformulate its relations with global powers. This has been particularly so
since the end of Cold War and disintegration of the Soviet Union which
continued to be the most important strategic partner of India since the
signing of the bilateral treaty in 1971 till its collapse in 1991.24 India’s
economic growth has also been part of the success story in enhancing
global reach. This target of Asian tiger is being assisted by the United
States through series of agreements ranging from military assistance to
cultural exchange. Nepal is being benefited because as Narendra Modi
says, ‘India is Nepal open country not locked’25 reflects the relation
between these two nations. The Indian foreign policy never disfavours
the neighbour and Nepal is strongest allies with India. Nepal’s substantial
percentage of trade is with India and this has contributed to the growth in
gross domestic product (GDP).
There are four regional organizations or initiatives where Nepal is
party and India has taken lead. These are as follows: the South Asian
Association for Regional Cooperation (SAARC), the Bay of Bengal
Initiative for Multi Sectoral-Economic Cooperation (BIMSTEC), the
Indian Ocean Rim-Association for Regional Cooperation, and the Mekong
Ganga Cooperation Initiative.26 China, as another immediate neighbour,
is a key priority of India’s foreign policy. The two neighbour’s quest of
becoming superpowers in the next 20 to 30 years and incredible economic

rise have compelled Nepal to rethink its foreign policy basically regional
policy from traditional buffer state mindset towards becoming a vibrant
bridge between them.27
India has attempted to establish a strategic and cooperative partnership
with China. It has emerged as the largest trading partner of India, and
India’s engagement is now multi-faceted. The maintenance of peace and
tranquility on borders with China, and the quest for a peaceful, negotiated
settlement of the outstanding boundary question, are areas of crucial
importance in India’s bilateral relationship with China. India have specific
policy called the ‘Look East’ Policy, which has tried to reconnect and reach
out in the civilization space share with near neighbours’ in South-East Asia
since the early 1990s. India is building strong bilateral ties, expanding
their roles in regional organizations, and working to build comprehensive
economic partnerships.
India has tried to build mutually beneficial ties with all the major powers,
foremost among which is the United States. The relationship with the United
States is in fact built on shared values and converging interests. It is based on
fundamental belief that both have mutually beneficial stakes in each other’s
success. In the last decade, India has set up a comprehensive architecture
of engagement based on broad political support in each of countries, strong
people-to-people linkages, and a growing habit of cooperation. Over the
past 10 years, the two governments have put in place a very robust agenda
of cooperation for partnership. According to the former Prime Minister
Dr Manmohan Singh, this cooperation for partnership is founded on both
‘principles and pragmatism’. The United States will continue to make the
necessary investments to ensure that India maintains regional access and the
ability to operate freely in keeping with treaty obligations and international
law. Working closely with the Indian network of allies and partners, India
will continue to promote a rules-based international order that ensures
underlying stability and encourages the peaceful rise of new powers,
economic dynamism, and constructive defense cooperation.28
Critics also argue that the Indian hegemony at the regional level
has expressed tension of rivalry with Pakistan and excessive increase
of military expenditure. The twentieth century had witnessed that the
regional space is becoming increasingly essential for the power transition

and projection. It is seen as serious threat to global rising power like India
if she fails to maintain amicable relation with regional players through
positive transformation in the zone, growth, and peace. This makes it
relevant to properly analyze the impact of Indian policy in South Asia
region.29 The United States has concentrated on making good relations
with other countries of Asia under continuous support of India. Nepal
receives aid in various sectors from the United States government which
includes education, health, infrastructure, and others. The Indo-United
States bond will provide more similar opportunities for Nepal. China
has started showing its interest in Nepal due to Tibet uprising and their
movement.
India’s major economic initiatives are mainly directed through the ‘Look
East Policy’ which seeks to expand India’s link with the countries located
in South-East Asia and East Asia along with her burgeoning influence in
the Asia-Pacific and the Indian Ocean zones. Joint economic initiatives
involving South Asian countries like the South Asian Sub-regional
grouping, the Kunming Initiative, the BIMSTEC, the Mekong-Ganga
Cooperation, the Bangladesh-China-India-Myanmar (BCIM) Economic
Cooperation, the Indian Ocean Rim Association for Regional Cooperation)
are mostly attempts to create extra-regional economic linkages between
South Asia (IOR-ARC), South East Asia and East Asian countries.30 India
is also showing serious concern about the Human Security along with the
economic cooperation with regional blocks. There are growing regional
conflicts such as Pakistan versus India over Kashmir issues, China and
India over border issues, and many others. India is in search of alternative
security pact with joint venture of all regional players. Recent attempt to
project an alternative security problematique in South-East Asia through
regional consensus building efforts to ‘Asianise’ the paradigm of human
security to make it more appropriate for regional application, could perhaps
be emulated in South Asia in this regard.31 Nepal can play its important
role for figuring that no harm is caused from Nepal to India, which is
India’s major pillar of foreign policy since 1947.
The regional involvement of India along with the cooperation of the
United States shall benefit all the countries situated in this land. The
year 2008 witnessed positive symbol for the Asian countries which
can strengthen regional relations. In February 2008, Pakistan adopted
civilian rule through denouncing long military dictatorship, Bhutan
constitutionally established democratic government, Nepal successfully
adopted the Constituent Assembly after 10 years of insurgency and long
political turmoil, and Maldives ushered in multi-party democracy.32
This ray of hope reflects the numerous possibility of this region to stand
together for each other causes and development. Asian region is culturally
rich, naturally beautiful, economically growing, and militarily sound and
there are many more hidden treasures in this region. India is leading this
region towards progress and development. The Indian policymakers need
to spell out a new vision of a global order barring a vague preference
for multipolarity.33 The regionalism in the international power always
assists for the accumulation of global power. The United States is well-
versed with the idea of making strong regional alliance to keep global
hegemony in rest of the world. India has adopted the same model where
Indian presence in the Asian regional hemisphere has contributed for the
development of her presence.
The colonial period of India was also concerned with the friendly
relation with the neighbours. The British Raj and independent India in
their geographic neighbourhood, Martin Wainwright pointed to the huge
continuities across the great chasm of decolonization that separated them.
Although the two regimes differed markedly in their constitutional

basis of power, their ethnic composition, and their long-term goals,
the attitudes of their members toward South Asian security were
remarkably similar.34
India and the United States are well aware about the relationship of each
other to suppress terrorism globally which is mostly seen in the Asian
region. The incidences of 9/11, 7/11, and 11/11 had brought these two
countries together to fight against global war to eliminate roots of terrorism
from the region. Nepal is also duly victimized by the act of terrors because
India always accused Nepal as being transit point for the terrorist to enter
into the Indian soil. The triangular relationship with the United States,
India, and Nepal must be strengthened in upcoming days. India had reacted
against Nepal and imposed an economic blockade when Nepal imported

ammunitions from China which was nominal in terms of quantity and
even quality. Commenting on the issue, the former Indian Ambassador to
Nepal, K V Rajan said, ‘India was left in a weak position to question the
need or assert itself under the 1950 Treaty.’35
Nepal and China Bilateral Interventions

In 1955, Nepal and China concluded formal diplomatic relations. China
has shown cordial relation with Nepal and her only concern is that
insecurity and instability in Nepal might strengthen anti-China elements
along its own borders. The Khampa uprising of the 1960s and 1970s were
the most sensitive issues for the Chinese government. The independence
of India was the first instance for Nepal’s relation with China. India got
independence from the British in 1947, and in 1950, Nepal and India
signed the Treaty of Peace and Friendship. They confirmed that the border
between the two countries would remain open to the great advantage of the
peoples of the two countries and the establishment of the People’s Republic
of China (PRC) in 1949, both states emerged as developing-world leaders
and became ‘non-aligned’ signatories of the Five Principles of Peaceful
Coexistence, or Panchsheel, in 1954.36, 37 During the early stages of the
Cold War, Nehru’s India and Mao’s China found common cause in anti-
colonialism, socialism, adherence to strict notions of national sovereignty
and equality in international affairs, and a developing-world mentality that
sought to distinguish itself from traditional, great-power politics. When
Chinese premier Zhou Enlai visited India in 1956, Indians lined up at
the streets and chanted Hindi-Chini Bhai Bhai, or ‘India and China are
brothers.’The northern border of Nepal limits access to China. Nepal and
India has open border that is about 500 mile. India has considered Nepal
as a strategic link in its northern border defenses. India thinks Nepal’s
instability plays the role of catalyst for the decentralization of India’s north-
eastern state. Both China and India possess nuclear weapons. Pakistan,
which is also in the neighbourhood, also possesses weapons. South Asia
in general and Nepal in particular has been most nuclear-locked nations in
the world. South Asia has been described as the most dangerous place on
the Earth as any misshapen shall create havoc on Nepal.
White pagoda temple constructed under the guidance of Nepalese

architect ‘Arniko’, and the marriage between Tibetan king, Song Sang
Gampo and Bhrikuti, the daughter of king Licchavi in the seventh century
provided the historical relationship between Nepal and China. Nepal and
China relation can be traced back to the fifth century, when saints and
sages engaged in visiting with the aim of knowledge and peace. There
was a spiritual and cultural tie between China and Nepal. China and Nepal
witnessed the two greatest civilization of the world. Nepal’s relation with
Tibet and China was first recorded at the mid of the seventh century. When
the Chinese communist invaded Tibet in 1950, Nepal’s relation with China
was halted and then continued after 1955. Both countries relation became
better after the establishment of the resident ambassador in Beijing and
Kathmandu in July 1960.
The bilateral relation with China and Nepal is not limited with the
Diplomatic exchange but since 1999, China has substantially assisted
for the development of Nepal is almost all the sectors such the Chinese
government has been providing medicine and medical equipment to B P
Koirala Memorial Cancer hospital worth NPR 1.4 million.38 The recent visit
of the current Prime Minister Narendra Modi revived the bilateral relation.
China and India are big in terms of population and physical dimensions,
economic and military size and Nepal, by no means can match them. Its
ambitious mammoth neighbours, India and China, have tried to exercise
influence in a way that undermines the sovereignty of Nepal. The wisdom
of Nepal lies in having balanced relations with both, winning their trust by
maintaining its non-alignment principles.
There are numerous incidences that had flooded the historical
conjugative relation with China and Nepal. The incidence of 1854 is
considered as turning point of relation which was terminated and the Treaty
of ‘Thapathali’ was concluded in March 1856. The Treaty exclusively has
recognized the special status of China and Nepal agreed to assist Tibet
in the event of foreign aggression.39 Both the countries jointly agreed to
protect the autonomous status of Tibet. But in 1912, Nepal warned to China
that it would help Tibet attain conquer independent status as long as it was
consistent with British interest. This affected Nepal and China’s relation
in adverse manner. The Thapathali Treaty was replaced by a new treaty
under which Nepal recognized China’s sovereignty over Tibet and agreed
to surrender rights granted by the old treaty.40 This is still in practice and
Nepal is fulfilling obligation arising from this Treaty.
The abolition of monarchy and establishment of communist government
for certain time has brought some predominant influence of China on
Nepal. There has been a ‘political power vacuum’ in Nepal since the
monarchy’s abolition in 2008 with China is trying to make use of this
opportunity to neutralize the Indian influence. PRC’s policy towards Nepal
is demonstrated through China’s growing investment in strategically
crucial infrastructure, including airports and highways. China seems to be
matching Indian aid with its own ‘cheque-book’ diplomacy. Since 2009,
China has doubled the aid, providing Nepal Rs 1,100 million annually
(US$ 22 million) and Rs 1,000 million (US$ 20 million) aid package for
the Nepalese army.41
The politically fragile nation and heading towards failed state has
now become a ‘battlefield’ for competing influences from India and
China. Jayadeva Ranade, the former Additional Secretary of the Cabinet
Secretariat of the Government of India warned that, ‘If China succeeds
in bringing Nepal into its orbit, it will have crossed the Himalayas and
established its influence up to the foothills bordering India.’ Cooperation
and improving mutual security across the open border is crucial. Recent
concerns over security have motivated India to reassert its influence on
Nepal by infrastructure investments and extra troop deployments on the
border.42 Nepal, in turn, has made assurances ‘at various levels that it would
not allow its territory to be used for any activity against India’.43 Principally,
China’s interest in Nepal has always been tied to its geo-political concerns
over the security of Tibet, which has been dominated by China since 1950.
Nepal has emerged as a forum for anti-China activities. China, therefore,
hoped to erode India’s traditional influence and install a pro-China regime
there. Recently, China has intensified its engagement policies, including
a ‘soft’ diplomatic agenda using people-to-people contacts, cultural ties,
student scholarships, and increased aid flows.44 India and China are today
concerning about the Trans Himalaya Security and Economic Cooperation
(THiSAEC) among these three nations.45
Tringular Norm of Foreign Policy

India has different sets of policies toward her immediate neighbour. These
are ‘Neighbourhood First Policy’ while China also has policy towards her
immediate neighbour called the ‘Neighbour Priority Policy’ to increase
its influence in the region. Nepal is trying to promote a balanced, vibrant,
trilateral or recent triangular norm as new idea of Nepal’s twenty-first
century foreign policy. For it, first the region has to be correctly understood.
Geo-strategy defines the capacity that each nation owes to its

configuration to its sea and continental boundaries and to influence
that it exercises through its intrinsic or acquired power.46
Nepal is largely based on India’s trade and relations which have created a
kind of dependency with India totally ignoring the north due to geographical
complexity. Today, the:
[I]dea of global politics challenges the traditional distinctions

between domestic/international, inside/outside, territorial/non-
territorial politics, as embedded in conventional conceptions.47
There are thousands of inter-governmental organizations (IGOs), non-

governmental organizations (NGOs), community based organizations, and
pressure groups at the bilateral, regional, international and intercontinental
level, which aim to pursue the goals and objectives that have a bearing on
transnational rules.48 There were various efforts made to establish a close
relation with China via Nepal such as the following:
In the Himalayas, the British had a Resident or Envoy in Nepal

from 1819-1947. Bhutan was a protectorate from 1907-1947. These
arrangements enabled the British to control both kingdoms’ external
relations. In the south, Sri Lanka was a British colony called Ceylon
from 1815 to 1948. The Maldives was a British protectorate from
1887 to 1965. Westwards, the British never directly ruled Afghanistan,
although they did fight the Afghans in 1839-42, 1878-80 and 1919.
They also controlled Afghanistan’s foreign policy from 1879-1919.49
India has perceived a potential threat from growing engagement of

China in the region specific in Nepal which can challenger her ‘big
brother syndrome’. India has also concern regarding China’s presence

in the region which probably will keep South Asia as part of its region.
Beijing is doing so through a number of initiatives. Delhi and Beijing is
coming closer on various projects which can build trust and contribute for
the development. Nepal has to understand very carefully regarding the
involvement of China with Pakistan, India and Nepal for the triangular
policy. Some of the moves that China has taken to undermine the India’s
influence in the region are as follows: First, with neighbouring Pakistan,
China is developing the momentous China-Pakistan Economic Corridor
(CPEC), ‘a network of roads, railway and pipelines between the long-time
allies … [that] will run some 3,000 km (1,800 miles)’ from Kashi (formerly
Kashgar), in western China, via disputed Jammu and Kashmir, to Gwadar,
in far south-western Pakistan. CPEC forms part of China’s ‘One Belt,
One Road’ strategy to establish trade and economic connections centred
on China that follow both the old land-based ‘Silk Road’ and a maritime
equivalent. It will develop Pakistan–although it will be interesting to see
how much Chinese ‘assistance’ actually gets delivered, by whom, and in
what form.50 According to Christopher Snedden this strategy has some
possible problems. These are as follows:
First, the project must traverse incredibly difficult and rugged
mountainous terrain in northern J&K and Pakistan that is prone to
earthquakes, landslides and regular periods of freezing-to-cold weather that
hampers travel, closes roads due to snow and ice, and makes construction
arduous. Second, CPEC is strategically vulnerable and politically
sensitive, with New Delhi considering the disputed J&K territory through
which it will traverse to be an “integral part of India and third, CPEC will
go through politically sensitive regions with ethno-religious or separatist
issues, particularly at the Balochistan end where Pakistan is yet to fully
placate volatile and tenacious Balochi militants.
Second, despite Modi improving India’s relations regionally, India itself
suffers from an ‘ugly Indian’ image due to a hegemonic attitude and ‘big
brother-type’ actions, and from Indians being ‘boorish, condescending
or overbearing’.51 Pragmatically and not surprisingly, India’s neighbours
are keen to ‘hedge’ their strategic ‘bets’ by having good relations with—
and extracting benefits from—both China and India. A third Chinese
initiative involves China establishing its own regional organizations

and initiatives, with these not necessarily involving the United States. A
third Chinese body is the Asian Infrastructure Investment Bank (AIIB),
of which there are 57 prospective founding members, including six
from South Asia: Bangladesh, India, Maldives, Nepal, Pakistan, and Sri
Lanka.52
Nepal has a historical contestant with the India for the various reasons.
Some of them are the Treaty of Segowlee (Sagauli Treaty), Peace and
Friendship Treaty 1950, the Arms Assistance Agreement 1965, Mahakali
Treaty 1996, and others.53 These guide the current bilateral relation with
India and Nepal. These treaties are the subject to revision and to revive and
review those documents, the Government of Nepal and India has recently
established the Eminent Persons Group (EPG).54 The triangular relation
with India, Nepal, and China is only possible when the bilateral relation
shall be uplifted and improved with these nations. Nepal has to possibly
consider these points to build her triangular policy to preserve and protect
the national interest of the country.
Way Forward
• The Independent India is still continuing with the British security
structure where Nepal is considered as an integral part of India.
Nepal’s north and some states of India lie under the Himalayan
frontier policy of British which can be considered as one of the
regulating principles of Nepal and India relation. Since, India
and China is coming closer to their trade and commerce, Nepal
shouldn’t be perceived as proxy ground for India and China rivalry.
The traditional notion of ‘buffer’ state has to be converted into ‘a
bridge’ diplomacy.
• Nepal has always practiced an equidistance policy, aligned with
Panchsheel as similar with our neighbour, but global politics has
been remarkably changed since the 1960s and today Nepal has to
expand her relation with other countries for stability. Buddhism
originated from Nepal; it is widely practiced and accepted. There
are various others soft assets of Nepal which can be capitalized in
the long-term. The foreign policy must be directed towards those
material things which can assist to maintain Nepal’s independence

and sovereignty.
• The way India and China has designed their policy towards Nepal
in changing global prospect, Nepal mustn’t stick with ‘yam’ notion
of foreign policy. Nepal’s foreign policy has to be accommodated
with changing global politics. This land shouldn’t be used as land
for westerners for spying immediate neighbours which can be
threat for Nepal’s independence and bilateral relations.
• Nepal has to design her foreign policy which can be part of the ‘One
Belt One Road’ economic corridor and similar kind of proposal
made by India to link Iran, Afghanistan, and India. Substantially,
Nepal has to be accommodated in any of the proposal which
concerns about the economic development of the nation. Nepal has
to play more on the economic diplomacy than the political blame
game.
• There is need to establish think tank who can devise the contextual
foreign policy on the basis of historical linkages and connectivity
with India and China. Nepal’s security concern also must be one of
the agendas of triangular norm of foreign policy.
• The triangular norm of foreign policy will focus on the way
which can create hub as Nepal for soft culture, soft diplomacy,
power and centre of number of IGO’s and the UN agencies. The
economic crisis must be narrowed down through enabling national
entrepreneurship and investing on the natural resources. The
triangular norm of foreign policy will also emphasize on creating
favourable environment, trust among neighbour investors, their
security of investments, foreign MNCs, regional bodies, INGOs,
and other stakeholders which can be helpful for institutionalizing
this notion.
Hence, although this is an attempt to choose a different path in foreign
policy from traditional buffer state, land-locked state, yam policy, defensive
policy, etc, which has not geared up the development of Nepal as expected
level. This notion of triangular will bring India, Nepal, and China not on
reciprocal basis but considering each other situations and potentialities.
References
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2. Rajan Bhattarai, Geo Politics of Nepal and International Response to Conflict
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3. Ibid.
4. N Khadka, Foreign Aid and Foreign Policy, Major Powers and Nepal, Delhi:
New Vikas Publishing House Pvt Ltd, 1997, 56.
5. Rajan Bhattarai, Geo Politics of Nepal and International Response to Conflict
Transformation, Published by Friend For Peace, Publication series 006, 2005,05.
6. Buddhi Narayan Shrestha, Boundary of Nepal, Kathmandu published by
Bhumichitra Co. P. Ltd, 2000, p. 15.
7. D R Pandey, “Nepal’s Failed Development: Reflections on the Mission and the
Maladies, Kathmandu, South Asia Center, 1999,pp.viii-432 .
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Anand Aditya, (ed.) The Political Economy of Small States, Kathmandu: NEFAS,
1997 subscribed from http://nepalforeignaffairs.com/geopolitical-specialties-of-
nepal-and-international-approach-to-conflict-transformation/ accessed on 1th
June 2016.
9. Ibid.
10. Rajeev Ranjan Chaturvedy and David M Malone, ‘A Yam Between Two Boulders:
Nepal’s Foreign Policy Caught Between India and China’, in David M Malone,
Sebastian von Einsledel and Suman Pradhan (eds.), Nepal in Transition: From
People’s War to Fragile Peace, Cambridge: Cambridge University Press, 2012,
287-92.
11. Manish Dabhade and Harsh V Pant, ‘Coping with Challenges to Sovereignty:
Sino-Indian Rivalry and Nepal’s Foreign Policy’, Contemporary South Asia,
13(2), 2004, 159-60.
12. Dharmesh Patel, ‘Entangled Triangle of Nepal, India and China’, Culture
Mandala: Bulletin of the Centre for East-West Cultural and Economic Studies,
Vol. 10, No. 2, 2013, 41-44.
13. The Kathmandu Post (National Daily) Newspaper, ‘The Crying Soul’, 8 April
2004, available at http://www.ekantipur.com/the-kathmandu-post/2004/08/03/
related articles/the-crying-soul/15389.html accessed on 5th May 2016.
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344.
16. The Five Principles of Peaceful Coexistence, known in India as the Panchsheel
Treaty (from Sanskrit, panch: five, sheel: virtues), are a set of principles to govern
relations between nations. Their first formal codification in treaty form was in
an agreement between China and India in 1954. They were enunciated in the
Preamble to the ‘Agreement (with exchange of notes) on trade and intercourse
between Tibet Region of China and India’, which was signed at Peking on 29
April 1954. This Agreement stated the five principles as Mutual respect for each
other’s territorial integrity and sovereignty, Mutual non-aggression, Mutual non-
interference in each other’s internal affairs, Equality and cooperation for mutual
benefit, and Peaceful co-existence.
17. Interim Constitution of Nepal 2007, Article 35(21), Policies of State is as follows:
[T]he State shall pursue the foreign policy of Nepal based on the principles of
the Charter of the United Nations, non-alignment, the principles of Panchsheel,
international law and the norms of world peace.’
18. Available at http://pinpointpolitics.co.uk/can-non-alignment-2-0-be-the-future-
of-indian-foreign-policy/, accessed on 4 May 2016.
19. Available at http://www.mofa.gov.np/en/nepal-china-relations-78.html, accessed
on 4 March 2016.
20. D Norman, (ed.) Nehru: The First Sixty Years, Vol II NY, 1965, 269.
21- Surya Subedi, ‘The Challenges to the National Security of Nepal and the Role of
International Law and Foreign Policy’, Nepal Institute for Policy Studies (NIPS),
2010, 10.
22. Surya Subedi, ‘India-Nepal Security Relations and the 1950 Peace and Friendship
Treaty: Time for New Perspective’ Asian Survey’, 1994, vol 34, no.3, 273-84.
23. Op. cit. (2).
24. Shantanu Chakarabarti, ‘India’s Regional Policy Making in Post Cold War
Setting’, University of Calcutta, Institute of foreign Policy Studies, 2012, 408.
25. This geo-strategic reality means that South Asia is essentially ‘India-locked’ for
non-Indians to access each other; they must either cross the Indian territory or meet
in third locations away from South Asia. Despite the existence of the South Asia
Preferential Trading Arrangement and the South Asian Free Trade Area, South
Asian nations enjoy little interconnectivity or inter-regional trade. Indeed, inter-
regional trade is ‘less than 2% of GDP, compared to more than 20% for East Asia’.
26. Available at http://us.macmillan.com/ indiasforeignpolicyandregional
multilateralism/Arndt Michael, accessed on 4 March 2016.
27. National Planning Commission and Institute of Foreign Affairs, ‘From a Buffer
Towards a Bridge’, Nepal’s new Foreign Policy Agenda, 2013, 01.
28. J N Dixit, ‘Indian Foreign Policy and its Neighbors’, 2001.
29. Rajagopalan R Sahni V, ‘India and Great Power: Strategic Imperatives, Normative
Necessaries’, South Asian Survey, 2008, 15.
30. Ibid, 419.
31. W Sucharithanarugse, The Concept of Human Security extended Asianzing the
Paradigm, New York: United Nation University, 200, 49-61.
32. S Ganguly, ‘Structure and Agency in the Making of Indian Foreign Policy’, ISAS
working paper No. 116, 2010, 11.
33. R Kumar, ‘India as a Foreign Policy Actor-Normative Redux’, Center for
European Policy Studies (CEPS) working document No. 285, 2008, 26.
34. A Martin Wainwright, ‘Regional Security and Paramount Powers: The British Raj
and Independent India’, in Chetan Kumar and Marvin Weinbaum, (eds.), South
Asia Approaches the Millennium, Boulder, Colo: Westview, 1995, 43.
35. Rajan K B, Recent US/UK Activities in Nepal, Observer Research Foundation,
New Delhi, 2003.
36. Hari Bansh Jha, 1950 Treaty: A Visionary Approach, South Asia Analysis Group,
17 May 2010.
37. Agreement between the People’s Republic of China and the Republic of India on
Trade and Intercourse between Tibet Region of China and India, 29 April 1954.
The Five Principles of Peaceful Coexistence are as follows mutual respect for
each other’s territorial integrity and sovereignty, mutual nonaggression, mutual
noninterference in each other’s internal affairs, equality and mutual benefit, and
peaceful coexistence.
38. Biseshwor P Koirala Cancer Hospital is the first cancer hospital in Nepal. During the
official visit by the Girija P Koirala on 18 March 1992, the Government of China
agreed to assist in building the hospital. The hospital started functioning on 11 October
1995, available at www.bpkmch.org/aboutus.aspx, accessed on 17 April 2016.
39. On the China-Nepal relations, please see ‘country listing’, Nation Encyclopedia,
based on the Country Studies Series by Federal Research Division of the Library
of Congress, available at http://countrystudies.us/nepal/69.htm, accessed on 4th
May 2016.
40. Andreas M Savada, Nepal: ‘A Case Study’, Washington GPO for the Library of
Congress, 1991, available at http://countrystudies.us/nepal/, accessed on 17 April
2016.
41. Ivan Campbell, China and Conflict-affected States: Between Principle and
Pragmatism’, available at http://www.saferworld.org.uk/downloads/pubdocs/
FAB%20Nepal.pdf, accessed on 17 April 2016.
42. Jyoti Thottam, ‘Nepal: Caught Between the Ambitions of China and
India’, Time, March 2010, available at http://www.time.com/time/world/
article/0,8599,1967859,00.html, accessed on 17 April 2016.
43. ‘Indian Embassy—Embassy of India Kathmandu Nepal’, available at http://www.
indianembassy.org.np/index1.php?option=information&id=5, accessed on 17
April 2016.
44. John Daly, ‘India and China Vie for Influence in Nepal’, Oil Prices & Energy
News: Crude Oil Price Charts, Investment Advice. Last modified on 13 March
2002; Satish Kumar, ‘China’s Expanding Footprint in Nepal: Threats to India’,
IDSA 5, no. 2, 2011, 77-80, available at http://idsa.in/system/files/jds_5_2_
skumar.pdf, accessed on 17th April2016.
45. B Emmott, Rivals, ‘How the Power Struggle Between China, India and Japan will
Shape our Next Decade’, London: Penguin, 2008. The relationship between India
and China has long been one of the most understudied great power complexes in
international affairs. A increasingly common argument posits that India and China,
as rising Asian and global powers, are natural competitors whose proximity and
zero-sum interests are creating tensions that will make it extremely difficult to
avoid sustained strategic rivalries.
46. Devraj Dahal, ’Small States in the Global Political Economy’, FES, Kathmandu,
2004, 9.
47. R B J Walker, Inside/Outside, Cambridge: Cambridge University Press, 1993.
48. J Rosenau, Along the Democratic Foreign Frontier, Cambridge: University Press,
Cambridge, 1997.
49. Christopher Snedden, Shifting Geo-politics in the Greater South Asia Region,
Daniel K Inouye Asia-Pacific Center for Security Studies, 2016.
50. Ibid.
51. Rajiv Sikri, ‘Challenge and Strategy: Rethinking India’s Foreign Policy’, Indian
Foreign Affairs Journal, Vol. 9, No. 1, January-March 2014, 64.
52. ‘Prospective Founding Members’, The Asian Infrastructure Investment Bank,

available at www.aiib.org/html/pagemembers/, accessed on 13 August 2016.
53. Bishnu Pathak, Nepal-India Relations: Open Secret Diplomacy, CS Conflict
Study Center, 2009.
54. Nepal-India Eminent Persons Group Aggress to Review India–Nepal Treaties,
available at http://kathmandupost.ekantipur.com/news/2016-07-05/nepal-india-
eminent-persons-group-agrees-to-review-nepal-india-treaties.html, accessed on
12 August 2016.
17
Unfolding Bangladesh-Nepal Relations
in the Age of Globalization: Current
Scenario and Future Directions From
Bangladeshi Perspectives
Md. Abul Kashem and Md. Shariful Islam
Abstract
W hat is the nature of Bangladesh-Nepal relations in the era of

globalization? What are the major issues, and opportunities that
define the bilateral relationship? This chapter investigates these questions.
The chapter presents that the demise of the Cold War and the growing
level of inter-dependence due to increased pace of globalization has led to
the changing foreign policy formulations of many nations including Nepal
and Bangladesh. Globalization has created a sense of shared prosperity
which merits cooperation. The chapter also contends that though,
‘India factor’ was considered a predominant force in the foreign policy
formulations of both Nepal and Bangladesh, the end of the Cold War and
the growing level of interdependence due to economic globalization and
so forth, Nepal-Bangladesh relations have witnessed a new development
in this age of globalization. The chapter also identifies the major issues,
and opportunities that define Nepal-Bangladesh bilateral relationship.
Introduction
Bangladesh-Nepal relations date back in 1972 when the latter established
its diplomatic relations with the former in April 1972. Notably, Nepal was
Unfolding Bangladesh-Nepal Relations in the Age of Globalization... • 251
the seventh country who recognized Bangladesh as a sovereign nation.

Thus, the establishment of this relationship was crucial for Bangladesh
being a newly independent state. In fact, from its inception, a friendly
gesture is observed in Nepalese foreign policy. For instance, in 1973,
when Bangladesh was faced with a severe food crisis, Nepal agreed to
provide 15,000 tonnes of rice to Bangladesh. Bangladesh also maintains
reciprocal relations with Nepal which is manifested in 2015 through
Bangladesh’s contribution in post-earthquake rescue and relief in Nepal.
Notably, Bangladesh sends 10,000 metric tonnes of rice and adequate
supply of water to Nepal as relief for earthquake victims (The Kathmandu
Post, 2015). Notably, Bangladesh’s contribution was highly appreciated
by the Nepalese government as in a statement the Prime Minister of Nepal
said that, ‘[The] Government of Nepal is thankful for the support and
cooperation from the Bangladesh Government, security mechanisms and
people after the devastating earthquake’ (The Himalayan Times, 2016).
It is also argued that though Bangladesh and Nepal did not enjoy warm
relations at its highest level during the beginning, it began to develop
when an anti-Indian faction came in power in Dhaka in 1975. As Kamala
Sarup notes that:
The turning point in Nepal-Bangladesh relations, however, occurred

in April 1976 when the two countries signed four agreements relating
to trade, transit, civil aviation, and technical cooperation. They also
jointly issued a communication on maintaining close cooperation
in the fields of power generation and the development of water
resources’ (Sarup, 2005).
Madhukar Sjb Rana, the former Finance Minister of Nepal argues that:
Both Nepal and Bangladesh share a common fear perception from

Indian asymmetry given India’s territorial, economic and demographic
size, as well as its military might fortified by its democratic polity
and rapid strides in modernization. Both the countries also draw their
heritage from a civilizational thread common to all the peoples of the
Indian subcontinent (Rana, 2016).
In addition, in many cases ‘alignment of national interest’ is observed

between Nepal and Bangladesh as argued by Rana. Thus, Bangladesh-
Nepal works shoulder-to-shoulder in many regional and global forums.

Rana also writes that:
Bangladesh and Nepal share the same environment and watershed, and
so there is a commonality of interests for preserving environmental,
food, water and energy security. Floods and silting in Bangladesh
can be prevented with cooperative actions in reforestation and water
storage in Nepal (Rana, 2016).
Rana also notes that, ‘The presence of arsenic in tube wells in the plains
can be substituted, through cooperation, by harnessing sweet Himalayan
waters for the common good’ (Rana, 2016). Bangladesh-India-Nepal,
trilateral water cooperation can be promoted to address water scarcity in
the days to come. Thus, the chapter focuses on the new opportunities where
Bangladesh-Nepal can cooperate to the betterment of both countries.
The contributions of this chapter would be both from theoretical and
policy perspective. Since there is dearth of scholarship in Bangladesh-
Nepal relations, it will fill the gap. From policy perspective, the chapter
will provide new insights into Bangladesh-Nepal relations which will
be imperative for the policymakers to shape their policy. The chapter
proceeds as follows. The first section of the chapter briefly touches on the
historical account of Bangladesh-Nepal relations. Second section focuses
on the major dimensions. Finally, the chapter concentrates on the policy
implications.
A Brief Historical Account

As mentioned in the earlier part, Bangladesh-Nepal established its
diplomatic relations in 1972, but the ‘cordial relations between Bangladesh
and Nepal existed even when the former was a part of Pakistan during
1947-1971’ (Ahmed, 2008). There was a Nepalese Consulate in Dhaka
as far back as March 1954. In fact, it is argued that Nepal’s international
trade was facilitated by the transit Trade Agreement between the two
countries which dates back to August 1963. If one looks at the trajectory
of Bangladesh-Nepal relations:
Although the [G]overnment of Nepal did not directly support

Bangladesh’s Liberation War of 1971, the people and the media
of Nepal reacted sharply against Pakistani military atrocities and

condemned Pakistan’s actions (Ahmed, 2008).
When the then UN Secretary General called for contributing to the United
Nations Relief Fund for Bangladesh, the Nepalese government contributed
Rs. 25,000 which needs to be recognized. It shows the positive Nepalese
view towards Bangladesh. In fact, the emergence of Bangladesh as an
independent state was received very positively from Nepalese side. As
Kamal Uddin Ahmed argues that:
Nepal viewed the emergence of independent Bangladesh in 1971

as an encouraging development since landlocked Nepal wanted to
promote its economic benefits through the much-needed sea-route of
Bangladesh (Ahmed, 2008).
In fact, Nepal took a very bold initiative recognizing Bangladesh through

establishing its Embassy in Dhaka in 1972. As a consequence of Nepalese
recognition, Pakistan cut off diplomatic relations with Nepal. Notably
the first Bangladesh Ambassador to Nepal offered his credentials on 22
December 1972 and the Nepalese Ambassador to Bangladesh presented
his credentials on 9 September 1972.
One of the major developments in Bangladesh-Nepal relations is that
the Government of Bangladesh and the Government of Nepal concluded
an Agreement on 2 April 1976, which provided a general framework for
partnership and cooperation. The salient features of the Agreement are
as follows: (1) Making available services of experts of either country for
assisting/advising in the formulation and implementation of development
projects in the respective countries; (2) Providing facilities for practical
on the job training and higher education in the institutions of respective
countries; (3) Exchange of information and technical and technological
matters between institutions/organizations of the two countries; (4)
Exchange of general studies, feasibility reports and analysis relating to
economic development; (5) Other forms of cooperation as may be mutually
agreed upon by the contracting parties; (6) The subject is to be reviewed by
a Ministerial Level Joint Economic Commission (JEC), which will meet
at least once a year (Government of the People’s Republic of Bangladesh,
1979). The exchange of high level official visit is also manifested from the
very beginning in forging Nepal-Bangladesh relations. For instance, the

then Bangladesh Foreign Minister Abdus Samad Azad paid an official visit
to Nepal within 5 months of Nepalese recognition. In the following year,
Foreign Minister of Nepal Gyanandra Bahadur Karki paid a return visit to
Bangladesh. In 1977, there was an exchange of visits at Foreign Ministers
level of the two countries to reinforce and diversify the relations. In addition,
the visit of Bangladesh former President Ziaur Rahman to Nepal in 1977
was a milestone in deepening Bangladesh-Nepal relations. All aspects of
the bilateral relations were discussed during Ziaur Rahman’s visit. It is
also pertinent to note that the visit of former Nepalese King Birendra to
Bangladesh in the following year, and the state visit of the King and Queen
of Nepal to Bangladesh in 1980 marked an unprecedented phenomenon
in developing Nepal-Bangladesh relations. As such high level official
exchanges contribute to bridge the gap in Bangladesh-Nepal relations.
One of the significant outcomes was the setting up of a Ministerial Level
JEC during the visit of King Birendra in 1978 (Ahmed, 2008). Nepal-
Bangladesh cooperation is also manifested at international arena. For
instance, it is worth noting that in the 33rd session of the United Nations
General Assembly in 1978, Nepal extended its support to Bangladesh in
the contest against Japan for the prestigious UN Security Council non-
permanent seat. In addition, Nepal also extended its strong support for
Bangladesh’s suggestion to create South Asian Association for Regional
Cooperation (SAARC) in the context of regional peace, security, and
development. Thus, Kathmandu-Dhaka attaches importance towards each
other to promote their bilateral relations which is manifested through their
actions with each other. Bangladesh-Nepal relations developed gradually
which is often characterized by mutual cordiality, mutual understanding,
mutual respect, and shared values and aspirations of the people.
Theoretical Understanding on Bangladesh-Nepal Relations

In fact, when two symmetric power works, there is more probability of
cooperation than competition. In addition, in case of Bangladesh-Nepal
relations, there is no historical animosity between these two countries.
Hence, there is more probability to promote cooperation between
Bangladesh and Nepal.
In the 1970s and 1980s, the foreign policy of the states/nations was
determined by the dominance of security dimension based on neo-realist
paradigm of security. But in the twenty-first century, age of economic
globalization and interdependence, it is economics which basically
determines the foreign policy of the states/nations following neo-liberal
economic policy to a larger extent. In addition, the twenty-first century is
often defined as the shared prosperity and development.
In Bangladesh-Nepal relations, theory of neo-liberalism can be applied
as the theory focuses on the issues of cooperation, free trade or free market
economy, and the role of institutions. In fact, foreign policy of Bangladesh
and Nepal premised on the issues of cooperation and multilateralism. It
is observed that Bangladesh-Nepal focuses on promoting cooperation in
different dimensions in their relations. Besides, both the countries work
hand-in-hand at regional and international levels in institutions like
SAARC, or in the UN forum. Nepal Embassy in Dhaka argues that:
Nepal and Bangladesh share similar views on various issues of common

interests and work closely in various regional and international
forums, including the UN, NAM, SAARC and BIMSTEC. Exchange
of visits at various levels has consolidated close bond of relations
between the two neighbours (Nepal Embassy, Dhaka n.d).
Thus, this chapter employs neo-liberal theory of International Relations.
Issues in Bangladesh-Nepal Relations in the Age of

Globalization
It will not be incorrect to claim that the increased pace of globalization
especially economic dimension of it, has created interdependence
among states, which basically drive the states to forge cooperation for
shared peace and prosperity. Thus, globalization has increased the scope
of engagement between Bangladesh and Nepal. In addition, Nepal and
Bangladesh do not share any historical dispute which is also imperative
to nurture better relations. The following part concentrates on the major
dimensions of Bangladesh-Nepal relations including economic and
socio-cultural.
Economic Cooperation
In Bangladesh-Nepal economic cooperation, bilateral trade and investment
will be emphasized here. In fact, trade is considered the main concentration
in Bangladesh-Nepal economic relations. Bangladesh matters for Nepal as
according to the Trade and Exports Promotion Centre, Bangladesh is the
second biggest market for Nepali products. Trade surplus works in favour
of Nepal in most of the cases (Table 1). According to the report of the
Kathmandu Post:
[W]hen Nepal and Bangladesh had just begun, the latter enjoyed a
trade surplus for few years. During 1996-97, export from Bangladesh
used to be at Rs 13 million, while Nepal used to export goods worth
Rs 1.1 million. In 1997-98, Nepal’s exports figure jumped Rs 42.3
million, while imports were at Rs 48 million (The Kathmandu Post,
2015).
The headline like ‘First trade deficit with Bangladesh in 10 years’ in the
Kathmandu Post, on 6 August 2015 clearly shows that trade balance
works in favour of Nepal (The Kathmandu Post, 2015). Since 2004-05
to 2014-15, Nepal was enjoying a trade surplus for 10 years. It is also
observed that Bangladesh export basket has been diversified. In this
context, Bimal Acharya, member of the Eastern Region Chamber of
Commerce and Industry points out that ‘Bangladesh has been increasing
its export items to Nepal every year, but Nepal has not been able to do so’
(The Kathmandu Post, 2015). Notably, Bangladesh exports more than 20
products, including medicine, solar, raw jute, jam, powder milk, potatoes
to Nepal. The trade route of Kakarvitta-Phulbari-Banglabandh, connecting
Nepal with Bangladesh, was opened in 1997 which played an important
role to increase bilateral trade. Reportedly, in the last 18 years, total
Nepal-Bangladesh trade stood at Rs 37.92 billion. Of the total, Nepal’s
exports amounted to Rs 26.58 billion which goes in favour of Nepal (The
Kathmandu Post, 2015).
The common framework like commerce secretary level meeting
between Bangladesh and Nepal is a positive development to facilitate the
bilateral trade. For instance, in its third commerce secretary level held
in May 2016 at Dhaka, Nepal has expressed interest in using Chittagong
port and railways routes in Bangladesh to carry their transit goods, which
will ultimately boost bilateral trade between the two nations, as argued by
Hedayetullah Al Mamoon, Senior Secretary to the Commerce Ministry of
Bangladesh (The Daily Star, 2016). It is pertinent to note that one of the
major outcomes of the meeting was that both Bangladesh and Nepal agreed
to remove trade barriers through discussion to increase regional trade.
Mamoon argued the same. Notably, to boost bilateral trade, Bangladesh
has offered duty-free benefits to 108 products of Nepal while sought for
56 items on export to Nepal.
In fact, under the Bangladesh, Bhutan, India, and Nepal (BBIN)
agreement, signed in June 2015, Bangladesh was also thinking of giving
access to Nepal of Chittagong, Payra, and Mongla ports which is expected
to boost the bilateral trade, if implemented. And given the blockade at the
Nepal-India border at the end of 2015, Bangladesh offered transit facility
to Nepal using sea-ports of the former. According to the media report,
Bangladesh has already permitted Nepal to use Chittagong and Mongla
seaports (The Daily Star, 2015). In addition, another outcome of the
meeting was that the countries also agreed to launch a tourist package titled
‘From the Highest Peak to the Longest Sea Beach’ between Bangladesh
and Nepal to explore the untapped potentials in tourism sector. To facilitate
the tourism industry, they also agreed to simplify tourist visa system which
will impact their economic relations.
In case of Bangladesh-Nepal economic relations, new development
is also observed. For instance, Bangladesh and India has opened
immigration offices at their respective sides in Fulbari-Banglabandha
border point, the route which is used for bilateral trade between Nepal
and Bangladesh. The Daily Star, the leading English daily in Bangladesh
writes that Nepal and Bangladesh has recently signed a Letter of
Exchange which:
[H]as removed several restrictions on Nepal-Bangladesh trade

through this route. So far, trucks carrying Nepali goods (not less
than 25 at a time) could travel to Bangladesh through India only in
the day time and under Indian police’s escort. But now, Nepal and
Bangladesh can do trade based on documents (The Daily Star, 2016).
It is expected that this development will facilitate Nepal-Bangladesh economic

relations. In this regard, Gautam Dev, Minister for North-Bengal Development
under the Government of West Bengal thinks that the setting up of immigration
offices will positively contribute to boost Nepal-Bangladesh trade. He claims
that ‘Both India and Nepal will benefit’ (The Daily Star, 2016).
Table 1: Bangladesh-Nepal Bilateral Trade Statistics (US$ million)

Year Export Import Trade Ratio
2007-08 6.70 52.95 1:7.90
2008-09 8.78 68.73 1:7.82
2009-10 8.78 43.13 1:4.91
2010-11 10.84 48.56 1:4.47
2011-12 41.58 26.08 1:0.63
2012-13 26.41 35.6 1:1.34
2013-14 13.68 21.5 1:1.57
Source: Dhaka Chamber of Commerce and Industry (n.d.)
Recent Developments in Socio-cultural Relations

In April 2015, a Nepalese cultural team consisting of writers, and artists
visited Bangladesh. Consequently a 2-day workshop was held between
Bangladeshi and Nepalese writers and artists. Such kind of programmes
needs to be promoted as they play crucial role in bridging people-to-people
contacts. The Nepal Academy of Fine Arts (NAFA) and Bangladesh
Shilpakala Academy (BSA) signed a Memorandum of Understanding
(MoU) on cooperation in Kathmandu in June 2016. According to the
MoU, these two premier institutions:
[W]ill undertake exchange of cultural artists and delegations, exchange

exhibitions and exchange academicians and trainers with a view to
enhance knowledge and awareness of the varied and rich cultural
heritage of Bangladesh and Nepal (The Kathmandu Post, 2016).
According to the statement issued by the Embassy of Bangladesh:
This cultural exchange will greatly help to further strengthen and

deepen the already existing excellent bilateral relations between the
two close South Asian countries (The Kathmandu Post, 2016).
Fostering cooperation at media level is also important. One of the

recent developments is that recently in a visit to Nepal, Bangladeshi senior
Information Minister, Hassanul Haq Inu:
Nepal and Bangladesh have struck an agreement for the exchange of

news and information and mutual cooperation between government
media of both countries (The Kathmandu Post, 2016).
‘India Factor’ in Bangladesh-Nepal Relations

How does India impact in Bangladesh-Nepal relations? In fact, India
works as an important factor in Nepal-Bangladesh relations. Kamal
Uddin Ahmed rightly points out that, ‘[t]he foreign policy of Bangladesh
and Nepal are extremely influenced by their dominant and powerful
neighbour India’ (Ahmed, 2008). Both for Bangladesh and Nepal, India
is an important neighbour. Historically, Nepal-India shares a unique
relationship of friendship and cooperation characterised by open borders
and deep-rooted people-to-people contacts of kinship and culture. There
has been a long tradition of free movement of people across the borders.
This forms the bedrock of the special relations that exist between India and
Nepal (Choudhury, 2016).
In addition, Nepalese citizens can move and work in India under
the provisions of the India-Nepal Treaty of Peace and Friendship.
India’s role as the facilitator for the understanding reached between the
Seven Party Alliance (SPA) and the Maoists in 2005 is also remarkable
(Choudhury, 2016). Despite having such decade’s long cooperation
and friendship, many Nepalese identify India as a hegemonic country
who is interested to establish its hegemony in its small neighbouring
countries.
Indian ‘big brother’ attitude is a major problem to nurture sustainable
Nepal-India relations. In 2015, India imposed blockade against Nepal
which impacted Nepalese economy very badly. In fact, it also affected
Bangladesh-Nepal bilateral trade. Reportedly, in October 2015, Nepal
Transit Warehouse Company claims that, about 200 trucks carrying
various imported goods have been stuck at Banlabanda on the India-
Bangladesh border due to ‘Indian imposed blockade’. In this regard, Yadav
Raj Shiwakoti, chief of the company at Kakarvitta, Jhapa points out that:
Bangladeshi exporters are reluctant to dispatch goods to Nepal. They

fear of a possible obstruction by the Indian customs office at Phulbari
(Portel, 2015).
During this crisis situation, Bangladesh publicly supported Nepal. For

instance, talking with The Hindu, the leading English daily in India,
Bangladesh former Minister of Commerce Tofael Ahmed points out that
this blockade is no longer a matter between India and Nepal only as it
has the potentials to hamper shared prosperity between SAARC members.
And thus, the Minister asked India to leave the blockade at the earliest
(The Kathmandu Post, 2015).
According to a trilateral accord signed in 1998, India has been allowing
Nepal to use the Kakarbhitta-Phulbari-Banglabandha route for its bilateral
trade with Bangladesh. But in 2011, India too started trading with Bangladesh
through this route. So, India is an important factor in Bangladesh-Nepal
relations. Without India’s cooperation, elevating the bilateral relations
between Nepal and Bangladesh is not possible. Thus, it is better to cooperate
with India and create a trilateral cooperative framework.
Bangladesh-Nepal and Regional Connectivity

In South Asia, regionalism came in the 1980s through the establishment
of SAARC. In fact, Bangladesh and Nepal played significant role behind
the establishment of SAARC. In addition, in the activities of SAARC,
Bangladesh and Nepal plays important role. In its 16th Summit of SAARC
in Thimpu, Bhutan in 2010, member countries declared 2010-20 as the
‘Decade of Intra-regional Connectivity in SAARC’. For land-locked
countries like Nepal or Bhutan, this intra-regional connectivity merits
serious attention. It is therefore, maintaining good relationship with
India becomes vital for the national development of both Bangladesh
and Nepal.
It is also pertinent to note that in June 2015 Motor Vehicle Agreement
between Bangladesh, Bhutan, India, and Nepal (BBIN) has been signed for
seamless movement of passengers and vehicles. Among them, Bangladesh,
India, and Nepal have already ratified the Agreement. It is expected that
Bhutan will ratify the Agreement soon. Thus, it can be argued that for the
South Asian peace, prosperity, and security the role of Bangladesh and
Nepal is inevitable along with other SAARC member countries.
Future Prospects
Promoting Economic Relations

There are huge untapped potentials in Bangladesh-Nepal economic
cooperation which needs to be explored and harnessed. In fact, the gesture
from Bangladesh is very positive as the country has already allowed Nepal
to get access to Mongla port which will create more economic interactions
between Nepal and Bangladesh. Though it’s not substantial amount, there
is an increase in Bangladeshi exports to Nepal. For instance, in the fiscal
year 2014-15, Bangladesh exported goods worth US$ 25.05 million to
Nepal, while it was US$ 13.68 million in the previous year (The Daily
Star, 2016). On contrary, the amount of Bangladesh imported goods to
Nepal decreased. For instance, Bangladesh imported goods worth US$
11.50 million from Nepal in the fiscal year 2014-15 and US$ 21.50 million
in the previous year, according to data from the Commerce Ministry of
Bangladesh.
One prospect is that Bangladesh and Nepal have begun talks at the
ministerial-level to operate direct bus service between the two countries.
Notably, Bangladeshi Minister of Road Transport and Bridges Obaidul
Quader visited Kathmandu in August 2015 where in his discussion with
his counterpart Nepalese Minister for Physical Infrastructure and Transport
Bimalendra Nidhi decided to go with the preparatory works to operate
Kathmandu- Dhaka direct bus services (The Kathmandu Post, 2015). If
properly implemented, this will create business opportunities for both
Bangladesh and Nepal.
Nepal-Bangladesh expo is another development in Bangladesh-Nepal
economic relations which provides a platform for the business communities
of the two countries to foster business linkages. Bangladesh-Nepal Expo
2015 was jointly organized by WREN, Networking Business Globally
and the Bangladeshi Embassy in Kathmandu, with 125 stalls showcasing
handicrafts, textiles, pharmaceuticals, herbal products, information
technology, education institutions, readymade garments, boutiques, frozen

sea foods, confectionery, beverages, ceramic products, and cosmetics
from Bangladesh and Nepal. Regarding the Expo, the current Minister
for Commerce and Supply Sunil Bahadur Thapa said that, ‘As we share
many common cultures, this expo will be an opportunities to enhance
trade between the countries’ (The Kathmandu Post, 2015). Similarly,
Bangladeshi Ambassador to Nepal Mashfee Binte Shams said that, ‘I
firmly believe that this expo will provide opportunity for entrepreneurs
to strengthen business linkages with each other’ (The Kathmandu Post,
2015). Such expo will be imperative to boost bilateral trade. Alongside
state, non-state actors need to come forward to elevate bilateral trade
between Bangladesh and Nepal.
Promoting Energy Cooperation

Nepal has huge potential of power as it is estimated that Nepal has
more than 43,000 MW of technically feasible hydropower potential
(Poudyal, 2016). Nepal’s per capita electricity consumption is 93 units,
far below the Asian average of 806 units, according to the International
Energy Agency (IEA). In 2010, Nepal’s electrification rate was only
53 per cent, which means 12.5 million people did not have electricity
(Poudyal, 2016).Similarly, Bangladesh faces energy crisis considering
its growing demand. Against this backdrop, Bangladesh-Nepal can
cooperate on this sector considering their growing energy demand and
surplus in Nepal.
In fact, the former Nepalese Prime Minister Sushil Koirala and the
incumbent Bangladeshi Prime Minister Sheikh Hasina Wajed has held
a meeting at the Jakarta International Convention Centre in Jakarta
on the sidelines of the 10th Anniversary Commemoration of the New
Asian-African Strategic Partnership (NAASP) in the Indonesian Capital
in April 2015. Issues of bilateral cooperation in the development of
hydropower, agriculture, tourism, and physical infrastructure were
main agendas of discussion. Bangladeshi Prime Minister has urged
Nepal to help resolve the existing energy crisis to the former which
was taken by Nepalese Prime Minister very positively (The Kathmandu
Post, 2015).
With regard to recent development in energy cooperation between

Bangladesh and Nepal it is claimed that:
Nepal and Bangladesh have intensified interactions expected to lead

to a power trade agreement with the Energy Ministry preparing a
draft memorandum of understanding (MoU) on energy cooperation
(The Kathmandu Post, 2016).
It is also argued that:
[T]he draft includes mechanisms for conducting power trade

between the two countries as envisioned by the SAARC Framework
Agreement for Energy Cooperation signed by all the SAARC nations
in November 2014 (The Kathmandu Post, 2016).
Bangladesh and Nepal have been holding discussions on power trading

since the then Energy Minister Radha Gyawali visited Bangladesh in
August 2014. It is certainly a positive development in Bangladesh-Nepal
energy cooperation.
Promoting People-to-People Contacts

People-to-people contact is one of the major dimensions in any bilateral
relationship. It is argued that better people-to-people contacts translate into
better state-to-state relations. Thus, it can be argued that in promoting Nepal-
Bangladesh relations, promoting cooperation at people-to-people level becomes
important. Because it increases mutual understanding and knowledge which
in fact, facilitates bilateral relations to a larger extent. Though Bangladesh-
Nepal belongs to the same region sharing common values, people of the
countries have very limited knowledge towards each other. This limited scale
of people-to-contacts work as an impediment to elevate Nepal-Bangladesh
relations. In this context, education can be imperative. In fact, students and
faculty exchange will play an important role in this regard.
Reportedly, Bangladesh offers some scholarship to Nepalese students
in the field of medicine under the Technical Cooperation Agreement,
signed in April 1976. Furthermore, to study other fields, including
nursing, dentistry, and engineering hundreds of Nepalese students come
to Bangladesh. The Nepalese Embassy in Dhaka notes that ‘at present,
more than 2,500 hundred Nepali students are engaged in higher studies in
various cities in Bangladesh’.
Regarding educational opportunities for Nepalese students to
Bangladesh, in an interview with Kantipur Television Bangladeshi
Ambassador in Nepal, Mashfee Binte Shams, points out that:
We really welcome Nepalese students. They have been going there

for the last 30 years. Every Nepalese student who has come back,…
they said that they had a very good experience in Bangladesh. And
we consider this to be very strong point in our bilateral relations
(Bangladeshi Ambassador in Nepal HE Mashfee Binte Shams, 1
February, 2014).
Mashfee Binte Shams also thinks that there is also possibility to strengthen
Bangladesh-Nepal academic cooperation. As she argue:
There could be some sort of exchange programmes like educational

exchange programme formally where we could have exchange of
trainers, exchange of teachers, exchange of curriculum, those sort of
things could be sort of, working out.
Needless to mention this will work as a bridge to cement Bangladesh-Nepal

relations. Hence, Bangladesh needs to offer more scholarships to Nepalese
students and teachers to study at the prime universities in Bangladesh.
Besides, short-term student and faculty exchange programmes will also
be imperative.
Elevating cooperation at academic and media level become important
to deepen people-to-people contacts. Nepalese prime academic institutions
can collaborate with the prime Bangladeshi academic institutions. In this
case, both Bangladesh and Nepal need to focus on promoting fellowships
and scholarships to organize short-term exchange programmes or seminars,
conferences and joint research projects. Relations also need to be promoted
between different think tanks between Nepal and Bangladesh.
Tourism can be another area to accelerate people-to-people contacts.
More than 27,000 Bangladeshi tourists visit Nepal every year. On the
contrary, the number of Nepalese tourists in Bangladesh is not significant.
One of the major hurdles behind such lower Nepalese tourists in Bangladesh
is high visa fee and airfare as argued by Amit Gurung, a representative of

Nepal Tourism Association (The Kathmandu Post, 2011). Such hurdles
need to be addressed at the earliest. In fact, Biman Bangladesh Airlines
and United Airways are operating Dhaka-Kathmandu on daily basis.
If proper steps are taken, it is expected that these will be imperative to
improve people-to-people contacts. And this improved level people-to-
people contacts will have implications in Bangladesh-Nepal bilateral
relations including economic, social, and cultural.
Conclusion
Bangladesh-Nepal relations have improved a lot since its inception. But
there are still untapped potentials that need to be explored and harnessed
for the betterment of both Nepal and Bangladesh. The areas identified
including trade, energy and people-to-people contacts need to be elevated.
Especially, elevating people-to-people contacts become vital as it will
work as a bridge between Bangladesh and Nepal. Finally, scholarship
need to be promoted as there is dearth of scholarship. Without scholarship,
without proper knowledge and awareness towards each other, no bilateral
relations can be elevated.
India matters in Bangladesh-Nepal relations. It is therefore, the
persisting negative perception towards India whether in Nepal or in
Bangladesh needs to be addressed. And for that, India needs to play
significant role. India needs to demonstrate its small neighbours that India
believes in shared prosperity and security. India also needs to show that
it is no longer a threat towards its small neighbours including Bangladesh
and Nepal. In fact, Narendra Modi regime is emphasizing to deepen India’s
relations with both Nepal and Bangladesh. After taking office, Narendra
Modi’s visit to Bangladesh and Nepal demonstrates its importance. During
Modi’s visit to Kathamandu in November 2014, India-Nepal signed 10
agreements and inaugurated bus service to elevate the bilateral relations.
On the other hand, in June 2015, Modi paid an official visit to Dhaka
which also elevated Bangladesh-India relations.
With regard to future research agenda, it will not be incorrect to claim
that no study covers everything. Thus, there are scopes left to study in this
important issue of Bangladesh-Nepal relations. One of the future research
agendas can be to look at how Bangladesh-Nepal can cooperate curbing

common threats including terrorism or human trafficking. It will also be
interesting to look exclusively how do the academic and media of the
respective countries can contribute to boost Bangladesh-Nepal relations
in the days to come.
References
Interview of Bangladeshi Ambassador in Nepal HE Ms Mashfee Binte Shams, 1
February 2014, Interview was aired on Kantipur Television on Saturday at 10.30
AM. The interviewer was Shyam Kadel, available at https://www.youtube.com/
watch?v=xpIOM4NQGF8, accessed on 28 May 2015.
Kamal Uddin Ahmed, Bangladesh and Its Neighbours, Dhaka: Asiatic Society of
Bangladesh, 2008, 113, 118.
Kamala Sarup, ‘Nepal and Bangladesh, A Strong Relationship’, Scoop Independent
News, 8 April 2005, available at http://www.scoop.co.nz/stories/HL0504/S00076.
htm, accessed on 15 July 2017.
MadhukarSjb Rana, ’Let’s Team up’, The Kathmandu Post, 8 July 2016.
Nepal Embassy in Dhaka, (n.d.) ‘Nepal Bangladesh Relations’, available at http://
www.nepembassy-dhaka.org/relations.html#, accessed on 10 March 2016
Parbat Portel, ‘Nepal-Bangladesh Bilateral Trade Halted’, The Kathmandu Post, 8
October 2015.
Ramhari Poudyal, ‘Balance of Power, The Kathmandu Post, 13 March 2016.
The Daily Star, ‘Bangladesh Offers Transit Facility to Nepal’, 1 December 2015.
The Daily Star, ‘Govt to Export Raw Jute to Nepal: Tofail’, 25 January 2016.
The Daily Star, ‘Trade with Nepal: Bangladesh Opens Immigration Office at Border’,
22 February 2016.
The Daily Star, ‘Nepal Looks to Use Ctg Port, Railways’, 12 May 2016.
The Himalayan Times, ‘Bangladesh Security Officials Meet PM Dahal’, 17 August
2016.
The Kathmandu Post, ‘Bangladesh PM Sends 10,000 Metric Tons of Rice for Quake
Victims’, 5 May 2015.
The Kathmandu Post, ‘First Trade Deficit with Bangladesh in 10 Years’, 6 August
2015.
The Kathmandu Post, ‘India’s Blockade Against Nepal Should End Soon: Bangladesh
Minister Ahmed Blockade Against Spirit of Regional Cooperation, says Minister,
19 October 2015.
The Kathmandu Post, ‘Nepal and Bangladesh Reach Agreement to Exchange News
Among Both Government Media, 4 March 2016.
The Kathmandu Post, ‘Nepal, Bangladesh Begin Talks on Operating Direct Bus
Service’, 3 August 2015.
The Kathmandu Post, ‘Nepal, Bangladesh Sign MoU on Cooperation in Fields of Arts
and Culture’, 21 June 2016.The Kathmandu Post, ‘Nepal, Bangladesh Likely to
Sign Power Trade Agreement’, 17 August 2016.
The Kathmandu Post, ‘PM Koirala Meets Bangladesh PM’, 23 April 2015.
The Kathmandu Post, ’Call for Nepal-Bangla Tourism Promotion Drive’, 29 January
2011.
The Kathmandu Post, ‘Varied Goods on Show at Bangladesh-Nepal Expo’, 12
February 2015.
Ziauddin Choudhury, ‘Nepal’s Plight: Land Locked or India-locked?’, The Daily
Star, 27 February 2016. Government of the People’s Republic of Bangladesh,
‘Agreement on Economic and Technical Cooperation and Joint Commission’,
Ministry of Finance, 1979, 12-13.
18
Dynamics of Nepal-Bangladesh
Relations
Binodkumar Singh
Abstract
D iplomatic relations between Nepal and Bangladesh was established

on 8 April 1972, though the interactions between the people of Nepal
and Bangladesh go back to thousands of years. Since the establishment
of diplomatic ties, the bilateral relations between Nepal and Bangladesh
are characterized by cordiality, goodwill, mutual understanding, and
shared values as well as aspirations of the people. The relation between
Bangladesh and Nepal is based on mutual trust and respect. Nepal and
Bangladesh are members of the South Asian Association for Regional
Cooperation (SAARC), the Bay of Bengal Initiative for Multi-Sectoral
Technical and Economic Cooperation (BIMSTEC), and Non-Aligned
Movement (NAM) and cooperate closely on international and regional
issues. Bangladesh seeks Nepal’s cooperation in the management of
environment and waters resources in the region. What Nepal does
with respect to environment and water management has an impact on
Bangladesh. Furthermore, both countries are least develop countries
(LDCs) and are working together to design a new international strategy
for the LDCs to come out of the group. Economic globalization is a reality
in a competitive world and both countries have been adjusting themselves
to the new de-regulated economic environment. Trade liberalization has
Dynamics of Nepal-Bangladesh Relations • 269
been both an opportunity and a threat to them because of competition.

They are bound to grow as both countries have similar goals, which could
be achieved by cooperative efforts. There appears to be a solid basis on
which to build on a wide range of relationship for benefit to both countries.
Both countries need to reflect on the direction which their great potentials
will take in the twenty-first century.
Introduction
Nepal’s foreign policy and the dynamics of its relationship with neighbouring
states have been conditioned by a complex of factors, of which the
political component is one of the most important (Rose, 1971). As a small
and developing country, Nepal has been motivated in the formulation and
execution of its foreign policy by three strong urges. The three urges, as
described by Liska, are ‘Security, Stability, and Status’ (Liska, 1968). The
urge for ‘Security’ has found expression in the objectives of preservation
of autonomy and independence in taking and implementing foreign policy
decisions, and preservation of territorial integrity. The first objective
has a politico-diplomatic connotation and its task may be described as
one of counteracting undesirable external pressures and influences. The
second objective has a politico-military-strategic connotation and its task
is defence against external aggregation for the preservation of territorial
integrity. The urge for ‘Stability’ also has two dimensions, namely,
stability of the domestic power structure in which every ruling group has
the highest stakes, and stability through development. These dimensions
have been accordingly expressed as objectives of foreign policy. The urge
for ‘Status’ is psychological in nature and it has been one of the forceful
drives behind Nepal’s foreign policy behaviour (Muni, 1977).
Nepal occupies a unique position in South Asia. It is a small and
landlocked semi-buffer country located between two Asian powers, which
have fought a war with each other. It shares huge geographic, historical,
and cultural linkages with both the countries. Nepal figured prominently in
world politics during the Cold War. It lost its importance, to some extent,
with the China-United States rapprochement in 1972 and then again with
the end of Cold War. But it has always figured prominently in the power
politics of the Himalayan region. Since the mid 1990s, Nepal has gained
some importance because of the strategic developments following the start

of the Maoist movement in 1996, the emergence of China and India as
Asian economic powers, and the United States global campaign against
terror launched in 2001 (Nayak, 2014).
Nepal opened up to the outside world after the overthrow of the
Rana regime in 1951. In 1955, Nepal attended the Afro-Asian Bandung
Conference and was admitted to the United Nations (UN) in the same
year. Nepal became a founding member of the NAM in the early 1960s
and actively participated in all NAM Summits at the highest political
level. Precisely speaking, the parameters of Nepal’s foreign policy have
been guided since 1951 by the principles enshrined in the UN Charter,
the Panchsheel, the principles of Non-alignment, world peace and respect
for international law. The same parameters were reaffirmed in the 1990
Constitution following the People’s Movement or Jana Andolan-1. The
government elected under this Constitution gave a new dimension to the
country’s foreign policy by laying special emphasis on human rights,
freedom, and economic diplomacy (Institute of Foreign Affairs, 2008).
Despite political instability resulting from frequent changes in the
government, the democratic dispensation embraced by the country
considerably boosted Nepal’s international image during this period.
The country’s prestige suffered a setback in the community of nations
after the Royal takeover in February 2005. The international community
welcomed the change and the ongoing peace process after the second
historic People’s Movement of April 2006 or Jana Andolan-2. It is hoped
that elections to the Constituent Assembly (CA) would usher in a new
era of peace and stability with a positive impact on the foreign policy
apparatus of the country. The unprecedented historic people’s movement
of April 2006 provided Nepal an excellent opportunity to renew, redefine,
and prioritize her foreign policy and benefit from the goodwill earned by
commitment to democracy and human rights, which has been applauded
by the international community at large (Institute of Foreign Affairs,
2008).
Nepal-Bangladesh Relations
Nepal established diplomatic relations with Bangladesh on 8 April 1972.
Nepal was the seventh country to extend recognition of Bangladesh’s

sovereign rights and independence soon after its independence. Since
the establishment of diplomatic ties, the bilateral relations between
Nepal and Bangladesh are characterized by cordiality, goodwill, mutual
understanding, and shared values and aspirations of the people. Nepal and
Bangladesh share similar views on various issues of common interests and
work closely in various regional and international forums, including the
UN, NAM, SAARC, and BIMSTEC. Exchange of visits at various levels
has consolidated close bond of relations between the two neighbours
(Embassy of Nepal, 2016). At regional level, Bangladesh supported Nepal
on various issues for instance when Nepal had proposed in the 1973 Non-
Aligned Conference that Nepal should be declared a ‘Zone of Peace’,
the then President of Bangladesh, Zia ur Rahman during his visit to
Kathmandu in December 1977, reaffirmed his support to Nepal’s proposal
(Akhtar, 1995).
Given the context of the present world, more globalized and
interdependent in nature, it has become a critical task for the states/nations
to pursue their foreign policies. The mission is even more challenging for
the smaller nations like Bangladesh or Nepal who are mired in the power
structure of both the international and regional system, given their limited
sovereignty in decision-making process and lesser domestic capabilities.
However, the large consumer market and geographical location of
Bangladesh and Nepal also put them into a crucial position together in
regional and international setting, where apart from India and China, the
United States, Japan, the United Kingdom or the European Union are the
key actors into the play (Morsalin, 2012).
Bangladesh and Nepal are close and friendly countries, and that the two
countries have forged a relationship of mutual respect and trust, equality,
and cooperation. The turning point in Nepal-Bangladesh relations, however,
occurred in April 1976 when the two countries signed four agreements
relating to trade, transit, civil aviation, and technical cooperation. They
also jointly issued a communication on maintaining close cooperation in
the fields of power generation and the development of water resources.
Nepal-Bangladesh Joint Economic Commission (JEC) was set up in 1978
at the level of Finance Minister. The opening of Kakarbhitta-Phulbari-
Banglabandha transit following the 1998 Treaty between Bangladesh and

India was a major development in the trade between Nepal and Bangladesh.
This Agreement allowed Nepali goods an access to Bangladesh through
a transit route in India. Bangladesh has also permitted Nepal to use the
Mongla Port since September 1997. Since then, both countries have taken
concerted efforts to further consolidate the diplomatic ties. The exchange
of visits at various levels has further strengthened the relations between the
two countries creating an atmosphere conducive for upgrading political
ties, improving trade and commercial relations. According to the Trade
and Export Promotion Centre (TEPC), there have been around six to seven
visits—some at the highest political level—between the two countries
after the year 2000 (New Business Age, 2013).
Remarkably, on 30 July 2012, at the invitation of the then Foreign
Secretary of Bangladesh Mohamed Mijarul Quayes, Foreign Secretary
Durga Prasad Bhattarai arrived in Dhaka for a 3-day official visit
of Bangladesh. During the visit, the Nepalese and the Bangladeshi
delegations held extensive discussions on entire gamut of bilateral
relations. The talks covered to enhance bilateral cooperation in such
areas as trade and investment, transit, connectivity, tourism and
people-to-people contacts, education, hydropower and water resources
management. The two foreign secretaries also discussed on matters of
common interests in regional forums such as SAARC, BIMSTC, and
the UN. They also discussed issues relating to climate change, migration
and issues of concern to LDCs. The foreign secretaries of Nepal and
Bangladesh signed a Memorandum of Understanding (MoU) on Bilateral
Consultations between the Ministries of Foreign Affairs of Nepal and
Bangladesh on 31 July 2012 at the Foreign Ministry of Bangladesh.
The MoU envisages the establishment of a mechanism for regular
consultations between the two foreign ministries to further strengthen
the bilateral relations between the two countries. According to the
MoU, the foreign secretaries will meet annually to consult on bilateral,
regional, and multilateral issues of common interest of both the countries
(Embassy of Nepal, 2012). The following are the areas of cooperation
between Nepal and Bangladesh:
Economic and Commercial Relations

Economic and commercial relations between Nepal and Bangladesh have
been growing steadily over the years. There is tremendous potential for
expanding and diversifying trade between the two countries. Nepal’s
exports to Bangladesh constitute mainly yellow lentils, oil, cakes,
cardamom (large), wheat, vegetable seeds, handicrafts, pashminas, etc.
Imports from Bangladesh include industrial raw materials, chemicals,
fabrics and textile materials, jute products, electric and electronic items
(Embassy of Nepal, 2016).
To enhance bilateral economic cooperation, for the first time, a month
long Joint Trade fair was held at Sirajul Islam stadium in Panchagarh district
of Bangladesh in February 2001. The commodity bazaar accommodated
100 stalls of Bangladesh and 50 of Nepal showcasing goods and services
of agriculture, industry, education, health, and culture. Bangladesh former
Commerce Minister Abdul Jalil inaugurated the fair on 10 February 2001.
The fair was organized by Panchagarh Chamber and Michi Chamber of
Nepal in association with the Bangladesh Commerce Ministry. The two
chambers signed a MoU when Panchagarh Chamber president toured
Nepal in 2000 as a Federation of Bangladesh Chambers of Commerce and
Industry (FBCCI) delegation member as his Frontier District is the transit
point. Representatives of both chambers urged the government to allow
duty-free entry of Nepalese goods to the fair through Banglabandha land
customs on the transit route (Bangla, 2000).
Further, to enhance bilateral trade and tourism, Nepal and Bangladesh
were looking into signing an agreement for direct transport services
between Kathmandu and Dhaka. Former Bangladesh Commerce Minister
Amir K M Chaudhary, who visited Kathmandu on a 2-day official visit
in March 2004, told his Nepalese counterpart Hari Bahadur Basnet that
Dhaka was upgrading roads and sprucing up infrastructure to boost such
a link. He also said work at Bangladesh’s Mangla Port is likely to be
completed soon (Phayul.com, 2004).
With a view to promoting Nepal’s bilateral economic and commercial
relations with Bangladesh, the Embassy of Nepal, Dhaka organized an
interaction programme on Business and Investment opportunities in Nepal
on 27 June 2013. Speaking as the key-note speaker, Binod Chaudhary,
the former President of Federation of Nepalese Chambers of Commerce

and Industry (FNCCI) and Founder President of Confederation of
Nepalese Industries (CNI) highlighted that there exist vast untapped
potentials between Nepal and Bangladesh to promote, trade, tourism, and
investment. He also added that Nepal offers huge potential for investment
in hydropower development, infrastructural projects, and tourism as well
as hospitality services. Welcoming the guests, Ambassador of Nepal to
Bangladesh H E Hari Kumar Shrestha noted that there exists profound
goodwill and cooperation between Nepal and Bangladesh, which needs to
be translated for tangible benefits to people by enhanced level of economic
relations. He also emphasized that private sector and business community
had important role to play to intensify bilateral cooperation by expanding
and diversifying trade and commercial relations between the two countries.
Prominent businessmen and industrialists of Bangladesh attended the
interactive programme, including the office bearers and members of
Federation of Bangladesh Chamber of Commerce and Industries (FBCCI),
Dhaka Chamber of Commerce and Industries (DCCI), Metropolitan
Chamber, International Chamber of Commerce (ICC), members of
diplomatic corps, and media (Embassy of Nepal, 2013).
To promote trade, business, and investments between the two countries,
the Nepal Bangladesh Business Forum (NBBF) was conducted on 22-23
January 2016. As a bilateral business platform of Nepal and Bangladesh,
it brought together more than 120 delegates ranging from government
personnel, business professionals, and political leaders to participants from
all major trade, commerce, banking, industry, education, tourism, energy,
and media-related institutions from both nations. It was held at Annapurna
Hotel, Kathmandu with the aim of promoting dialogue, enhanced mutual
knowledge, and collaboration between the two countries to build bridges
that would help connect both economies, thus offering new opportunities
for Nepalese business people in Bangladesh (Embassy of Bangladesh,
2016).
On 11 May 2016, to expand trade volume between the two countries,
Nepal-Bangladesh Commerce Secretary-level talks concluded in Dhaka
with the signing of a MoU for removal of Technical Barriers to Trade
(TBT). With this, Nepal has agreed to provide preferential market access for
50 Bangladeshi goods, whereas Bangladesh has agreed to provide similar

treatment for 108 Nepali goods (Table 1). The list of goods for preferential
market access has been already prepared and this will come into effect
after signing letter of exchanges of implementation modality. During the
talks, both countries agreed to enhance the existing infrastructure to boost
trade. Facility of the Land Customs Offices will be enhanced under this
MoU. Likewise, Bangladesh government will improve the condition of
Jamuna Bridge, which links Mangla port of Bangladesh. As the Indian
government has agreed for seamless movement of vehicles in Phulbari-
Banglabandha corridor, both countries have agreed to improve land
customs facility eyeing expansion of trade volume in future. In addition
to this, both countries agreed to simplify visa and immigration process for
the tourists travelling to each other’s countries via land route to promote
tourism. During the talks, both countries also agreed to participate in trade
fairs of each other’s countries (The Himalayan Times, 2016).
Table 1: Nepal-Bangladesh Trade (Value in Million US$)

Year Export Import Trade Ratio
2009-10 43.13 8.78 4.91:1
2010-11 48.46 10.84 4.47:1
2011-12 26.08 41.58 0.63:1
2012-13 35.6 26.41 1.34:1
2013-14 21.5 13.68 1.57:1
2014-15 12.04 25.052 0.48:1
2015-16 9.431 17.89 0.53:1
Source: Dhaka Chamber of Commerce & Industry (DCCI), 2017.
Transit Route
The Bangladesh government has provided transit facilities to Nepal in
Chittagong and Mongla ports. The overland trade route to Bangladesh
from Kakarbhitta-Phulbari-Banglabandha has been operational since
September 1997. Bangladesh has also provided additional rail corridor to
Nepal via Rohanpur-Singhabad for transit. According to the Air Service
Agreement (ASA) between the two countries, Biman Bangladesh Airlines
and United Airways—a private airline of Bangladesh have been operating

their flights in Dhaka-Kathmandu sector on daily basis, which have
contributed to tourism promotion and people-to-people contact between
the two countries (Embassy of Nepal, 2016).
On 3 August 2015, Nepal and Bangladesh have begun talks at the
Ministerial level to operate direct bus service between the two countries.
The discussion was held between the then Minister for Physical
Infrastructure and Transport Bimalendra Nidhi and visiting Bangladeshi
Minister of Road Transport and Bridges Obaidul Quader. Both countries
decided to go with the preparatory works to operate Kathmandu-Dhaka
direct bus services (The Himalayan Times, 2015).
In fact, Nepal as a landlocked country relies on transit access from
neighbouring countries, especially from India, to participate in international
trade. In 2010, a Joint Communiqué issued by the former Prime Minister
of India Dr Manmohan Singh and the Bangladeshi Prime Minister Sheikh
Hasina Wajed assured giving Nepal access to Mongla and Chittagong ports
(Ministry of External Affairs, 2010). Further, India on 1 November 2015,
implemented the regional free trade agreement–the Bangladesh-Bhutan-
India-Nepal (BBIN) Motor Vehicles Agreement. The BBIN Motor Vehicles
Agreement, signed on 15 June 2015, allows vehicles to enter each other’s
territory and does away with trans-shipment of goods from one country’s
truck to another at the border, a time consuming and costly process.(Hindu
Business Line, 2015). Additionally, India and Nepal on 20 February 2016,
signed an agreement to provide transit facility to Bangladesh. According to
the Pact, rail transit facility would be operationalized through Singhabad in
India for Nepal’s trade with and through Bangladesh. Another agreement
envisages simplification of modalities for traffic of goods between Nepal
and Bangladesh while transiting through India, through the Kakarbhitta
(Nepal) and Banglabandha (Bangladesh) corridor (The Economic Times,
2016).
Educational Cooperation
Under the Technical Cooperation Agreement signed between Nepal and
Bangladesh in April 1976, Bangladesh offers some scholarships every
year to Nepalese students in the field of Medicine. Besides, every year
hundreds of Nepalese students come to Bangladesh to study medicine,

nursing, dentistry, engineering, and other courses. At present, more than
2,500 hundred Nepali students are engaged in higher studies in various
cities in Bangladesh (Embassy of Nepal, 2016). The Embassy of Nepal
in Dhaka extends all kinds of cooperation to Nepali students studying in
Bangladesh. With a view to remain in touch with them at all the time,
the Embassy requests all Nepali students to fill up the Registration Form
for Nepali Students in Bangladesh (Embassy of Nepal, 2016). More than
2,000 Nepali students go to Bangladesh to pursue medical studies on a
yearly-basis.
Power Sector
Nepal has a huge hydropower potential. In fact, the perennial nature of
Nepali rivers and the steep gradient of the country’s topography provide ideal
conditions for the development of some of the world’s largest hydroelectric
projects in Nepal. Nepal is blessed with significant hydropower resources.
Nepal’s theoretical hydropower potential has been estimated to be around
84,000 MW, of which 43,000 MW has been identified as economically
viable. However, currently, Nepal’s installed hydropower capacity is 753
MW (International Hydropower Association, 2016). Therefore, bulk of the
economically feasible generation has not been realized yet. Besides, the
multipurpose, secondary, and tertiary benefits have not been realized from
the development of its rivers.
From 26 to 27 July 2012, a Bangladesh delegation led by the Joint
Secretary of Power Division, Ministry of Power, Energy and Mineral
Resources visited Kathmandu for consultations with their counterparts
in Nepal to explore possibilities of cooperation in the power sector. The
objective of the meeting was to know the potentials of the two countries in
the sector, their future plan to meet the power shortage, and examine the
possibilities of import of power from Nepal which has huge potentials in
generation of hydro electricity (Ministry of Foreign Affairs, 2012). Further,
the then Bangladesh Foreign Secretary Ambassador Mijarul Quayes and
his Nepalese counterpart Durga Prasad Bhattarai signed a MoU on 31 July
2012, in Dhaka to formally establish Foreign Office Consultations (FOC)
between the two countries. In line with the MoU, foreign secretaries of
both the countries will meet annually and consult on bilateral, regional,
and multilateral issues of common interest. During the talks, the two
foreign secretaries covered the entire range of bilateral issues, including
cooperation in sectors such as trade and investment, connectivity, tourism,
and people-to-people contact, education, water resources management,
and hydro-power.(Ministry of Foreign Affairs, 2012).
At the invitation of Nasrul Hamid, State Minister for Power, Energy
and Mineral Resources, Radha Kumari Gyawali, Minister for Energy,
Government of Nepal paid a visit to Bangladesh from 5 to 8 August 2014.
The Nepalese delegation comprised Keshab Dhoj Adhikari, Joint Secretary,
Ministry of Energy, Nirmala Sharma, Joint Director, Nepal Electricity
Authority and Dipak Kumar Rauniyar, CEO, Hydropower Investment and
Development Company Ltd. The delegations from Nepal and Bangladesh
held extensive talks on enhancing power sector cooperation between Nepal
and Bangladesh and shared views on potential ways and means to harness
synergies and complementarities by promoting cooperation in regional/
sub-regional levels. In this regard, Minister Gyawali welcomed the
initiatives of Bangladesh for trilateral cooperation involving Bangladesh,
India, and Nepal for hydropower development and grid connectivity. She
also appreciated offer of the Government of India to hold the meeting of
Joint Working Groups of three countries and expressed Nepal’s readiness
to be the part of the trilateral process. They also reviewed current energy
situation and future power demand taking into consideration the projected
economic growth and growing household demand for energy and agreed
to share experience and best practices in such areas of energy efficiency,
rural electrification by the utilization of alternative source of energy
through exchange of visits, and sharing of information at technical and
expert’s levels. During her visit, Gyawali paid a courtesy call on the
President of the People’s Republic of Bangladesh, H E Md Abdul Hamid,
Prime Minister H E Sheikh Hasina, Foreign Minister H E Abul Hassan
Mahmood Ali, and Advisor to the Prime Minister on Power, Energy and
Mineral Resources H E Dr Towfiq-e-Elhai Choudhury. On those occasions,
matters relating to strengthening the bilateral relations between Nepal and
Bangladesh, particularly in the power sector, connectivity, transit, trade,
and people-to-people relations were discussed. The Nepalese delegation
visited Bheramara, Kushtia near the Bangladesh-India border to observe

the 400 KV double circuit first inter-country grid interconnection between
Bangladesh and India with 500 MW back-to-back High-Voltage Direct
Current (HVDC) substation (Embassy of Nepal, 2014).
Remarkably, in a first major hydro investment deal between Nepal and
Bangladesh, the two countries on 16 October 2016, signed an agreement to
build two hydroelectric plants capable of generating over 1,600 megawatts
of electricity in Nepal. Commerce Minister Romi Gauchan Thakali and
his Bangladeshi counterpart Tofail Ahmed signed the pact to this effect
in Dhaka on the sidelines of the 9th South Asian Economic Summit. The
proposed projects are 1,110MW Sunkoshi II and 536MW Sunkoshi III
located at Sunkoshi river in central Nepal (The Kathmandu Post, 2016).
Tourism
In South Asia, Bangladeshi tourists are the second largest group after
Indian tourists visiting Nepal. Nepal organized tourism fairs and road
shows in major cities of Bangladesh in 2007 and 2008. Bangladesh too
offers many tourist attractions, including archaeological sites, historical
mosques and monuments, longest natural beach in the world, picturesque
landscape, hill forests and wildlife, rolling tea gardens, and tribes. The
longest, unbroken, sandy sea beach of the world (120 kilometre long at
Cox’s Bazar), the largest mangrove forest of the world (the Sundarbans)
and the largest deltaic plain of the world (the Bengal delta) are some of
the major attractions for international and domestic tourists in Bangladesh
(Business Age, 2013).
In fact, tourism has emerged as a good business opportunity; indeed it is
one of the fastest growing sectors of economy in many countries, including
Nepal. Bangladesh is interested to work with Nepal in promoting bilateral
and regional tourism. To expand air services between the two countries,
relaxing the prior limitation on number of frequency and passenger seats,
following a 2-day long review meeting of bilateral ASA, on 23 May
2005, Nepal and Bangladesh signed a MoU to renew the provisions of the
existing ASA. Yagya Prasad Gautam, the Joint Secretary at the Ministry
of Culture, Tourism and Civil Aviation (MoCTCA) and A K M Haroon
Chowdhary, the Chairman of Civil Aviation Authority, Bangladesh signed
the accord on behalf of their respective governments. According to the

new agreement, both the public and private sector airlines can fly between
the two countries and the number of seats has been increased to 3,500 per
week. Bangladesh has also agreed to allow operations to Chittagong airport
for the Nepali airlines, whereas Nepal would allow second airport for the
Bangladeshi carriers once the next international airport is built. The new
Agreement lifted limitation on number of frequency and the annual seat
capacity rose to 1,82,000 passengers. Both agreed to expand the capacity
by 700 seats per week every year till 2010 to make it 7,000 seats a week.
The bilateral ASA was signed in 1976 and initially aimed at promoting the
national carriers of the respective countries. The ASA allowed only seven
flights a week and the number of seats was limited at 40,000 per year for
each side (The Himalayan Times, 2005).
Further, to promote Nepal’s tourism and culture in Bangladesh, the
Embassy of Nepal, Dhaka organized a Naturally Nepal Tourism and
Cultural Evening at the International Conference Centre of Integrated
Rural Development for Asia and Pacific (CIRDAP) on 4 May 2013. H E
Professor Gowher Rizvi, International Affairs Advisor to the Prime Minister
Bangladesh was the Chief Guest of the programme. Welcoming the guests,
Ambassador of Nepal to Bangladesh H E Hari Kumar Shrestha highlighted
that picturesque natural beauty, ancient and historical monuments, and
rich cultural heritages make Nepal an attractive destination for visitors.
He underlined that tourism sector is the backbone of the national economy
generating almost 14 per cent of foreign currency earning and providing
employment to thousands of people directly and indirectly. Ambassador
Shrestha noted that ‘from the highest mountain to the longest beach in the
world’, there tremendous potential exist between Nepal and Bangladesh
for promotion of tourism and cultural cooperation. He also stressed that
promotion of tourism and cultural cooperation play an important role to
strengthen connectivity and enhance relations at people-to-people level
(Embassy of Nepal, 2013).
Remarkably, on 2 August 2015, Bangladesh and Nepal agreed to open
direct bus services between Dhaka and Kathmandu. The Agreement came
from a meeting between the former Road Transport and Bridges Minister
Obaidul Quader and visiting Nepalese Physical Infrastructure and
Transport Minister Bimalendra Nidhi held at the Physical Infrastructure and

Transport Ministry (Daily Sun, 2015). Meanwhile, seeking the cooperation
of Bangladesh’s top newsportal Banglanews for flourishing Nepal tourism
and automobile industry, President of Nepal Automobile Sports Association
(NASA) Dasarath Risal, while welcoming a Banglanews delegation on 27
July 2016 at New Baneshwar in Kathmandu, sought the cooperation of
Banglanews for making Nepal’s tourism and auto sports industries more
popular. He requested Banglanews to make wide publicity through its
newsportal to in and outside Bangladesh (Banglanews 24, 2016). Further,
to promote tourism through photo journalism between the two nations, a
team of National Forum of Photo Journalists of Nepal (NFPJ) under the
Nepal-Bangladesh Exchange Programme, visited Bangladesh from 18-22
May 2017. The visiting NFPJ team also held a meeting with Bangladeshi
Minister for Information Hasnul Haq Inor and drew Minister’s attention
regarding the tourism promotion between the two nations through the
coordination of photo journalism (The Himalayan Times, 2017).
Conclusion
Nepal and Bangladesh, with different conditions, social systems and historical
and cultural backgrounds, have witnessed sound and smooth progress of
their bilateral relations. Nepal and Bangladesh have many things in common
such as culture, heritage, and geographical ties. The bilateral relations,
featuring equal and sincere treatment, mutual support and friendship for
generations, can be an example for relations between these two countries. In
fact, both Nepal and Bangladesh have worked closely together, be it in the
SAARC forum or the NAM or the United Nations. Relations between Nepal
and Bangladesh have been traditionally close and have reflected the links of
history. Nepal continues to maintain very close and friendly relations with
Bangladesh, which is an important maritime neighbour.
Nepal is Bangladesh’s reliable friend, neighbour, and partner despite
changes in international and regional situations. Nepal also hopes to
continuously enhance people-to-people contacts and expand cooperation
with Bangladesh. Bangladesh has already enabled offer made to Nepal for
using the Mongla port which will definitely create a new opportunity for
more economic interactions between Bangladesh and Nepal. When direct
bus services will be available (yet to finalized) between Kathmandu and

Dhaka, much effective interaction between people of two countries can
take place. There are already many flights between Bangladesh and Nepal
and a huge number of Bangladeshi tourists visit Nepal every year. With
the implementation of the agreements under consideration, greater number
of people will be able to travel and that may help boost people-to-people
contact even further.
However, Nepalese business community should explore business
opportunities in Bangladesh and they should not miss out excellent
investment opportunities there, which could multiply benefits. Bangladesh
is a good investment venue, with variety of sectors to invest, such as
cement, ceramics, electronics, electrical items, pharmaceuticals, fertilizer,
food processing and garments, among others. Nepal’s relationship with
Bangladesh is unique. Since the very beginning of the establishment of
diplomatic relations, Nepal-Bangladesh relations were characterized by ties
at the people’s level. The relations have improved and the major stake in the
relation lies in strengthening the border areas and in improving people-to-
people contact as well as furthering economic relations and trade.
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19
Nepal-Sri Lanka Relations:
Challenges and Prospects
Gulbin Sultana
Abstract
A s small countries, Nepal and Sri Lanka share almost similar views on
the regional and global issues. As a result, the two countries are free
from any diplomatic tensions. Moreover, Buddhism invigorates a sense of
goodwill towards each other. Yet the relations between the two countries
are growing at a slow pace. There is scope to improve the political,
economic, cultural, and security cooperation between the two countries,
but the lack of connectivity, lack of political will, and existing political
stalemate in Nepal are standing as impediments.
Geographically, Nepal and Sri Lanka are two different entities in South
Asia. Nepal is a land locked Himalayan country surrounded by India and
China. Sri Lanka, on the other hand, is an Island in the Indian Ocean. As
a land-locked country Nepal, in its history, had very limited interactions
with the outside world. Most of its interactions were with India and China.
Sri Lanka, on the other hand, because of its strategic location in the Indian
Ocean and a source of immense natural resources has attracted the foreign
traders, mercenaries, and maritime powers for centuries. It was ruled by the
Western colonial powers for almost 200 years until it became independent
in 1948. Even though Nepal does not share colonial past with Sri Lanka,
Nepal-Sri Lanka Relations: Challenges and Prospects • 285
the two countries perceive common challenges. After the withdrawal of

the British from the Indian sub-continent, India emerged as a predominant
power in the region. Because of its dealings with its smaller neighbours,
particularly during the Cold War period, India acquired the image of a big
brother. Both Nepal and Sri Lanka perceive India as an interfering giant
neighbour. To address their resentment both the countries often play China
card against India. Both were the victims of home grown terrorism, and
both face severe challenges of climate change, human trafficking, and so
on. As small countries, the two members of the South Asian Association for
Regional Cooperation (SAARC) share almost similar views on the regional
and global issues. As a result, the two countries are free from any diplomatic
tensions. Moreover, Buddhism invigorates a sense of goodwill towards each
other. However, despite the tension-free diplomatic relations, and Buddhist
links, the two countries lack effective people-to-people contact and economic
ties. Even under the South Asia Free Trade Agreement (SAFTA) framework,
trade relations between Nepal and Sri Lanka have not improved much.
In this context the chapter evaluates the bilateral relations between
Nepal and Sri Lanka and also analyzes the impediments in the growth of
bilateral relations. The chapter also explores future scope in the Nepal-Sri
Lanka bilateral relations.
Diplomatic and Political Relations

As mentioned earlier, Sri Lanka was under the British rule until 1948. After
its independence, Sri Lanka established diplomatic relations with several
countries of the world as an independent country. However, the focus of the
foreign policy of the Island nation was on a few important countries such
as the United Kingdom, the United States, Russia, the European Union,
China, India, and Pakistan. Traditionally, Nepal followed an isolationist
policy, but later diversified its diplomatic relations, particularly under King
Mahendra. Yet, its foreign policy, like Sri Lanka, focussed on the bigger
powers of the world and the region. Therefore, even though Nepal and Sri
Lanka entered into a diplomatic relations in 1957 under King Mahendra
and Prime Minister S W R D Bandaranaike, the bilateral relations are
progressing at a slow pace. Nepal opened an honorary consulate general
in Sri Lanka to oversee all the diplomatic issues under King Birendra in
1975, after 18 years of entering into the diplomatic relations. Residential

embassies in both the countries were established much later. Sri Lanka
established its residential embassy in Kathmandu in 1993, and Nepalese
residential embassy in Colombo was established in 1995.
In addition to their attention towards the bigger countries, internal
disturbances in both the countries acted as impediment in the Sri Lanka-
Nepal relations. Sri Lanka was entangled with armed ethnic conflict from
the 1980s. There were wars in the country between the security forces and
the Liberation Tigers of Tamil Eelam (LTTE) till May 2009. Similarly
Nepal experienced violent Maoist movement from 1996 to 2006. As both
the governments were busy tackling their respective domestic problems,
not much attention was given to further the bilateral relations. The two
countries gave serious thought to expand the bilateral relations during the
Golden Jubilee Celebration in 2007 to mark the 50 years of diplomatic
relations between Nepal and Sri Lanka.
The then Sri Lankan Foreign Minister Rohitha Bogolagama visited
Nepal on the invitation of his Nepali counterpart Shahana Pradhan to mark
the 50 years celebration in July 2007. His visit was reciprocated by his
Nepali counterpart in September same year. During Bogollagama’s visit
to Nepal both the foreign ministers held bilateral consultation where they
agreed to expand the existing trade agreement that was signed in 1979 to
include trade in services. In this regard the two countries agreed to work
on finalizing a comprehensive economic partnership agreement. They also
discussed several other issues such as air connectivity, construction work
of the Sri Lanka monastery and the pilgrims’ rest in Lumbini, assistance to
Nepal in the field of heritage management and archaeology, cooperation
in the area of tourism, training assistance to Nepal in the fields of inland
fisheries, tea research and city cleaning systems, and grant annual
undergraduate scholarships to Nepali students.1
Even though, both the foreign ministers discussed modalities to
strengthen the bilateral relations in 2007, actual momentum was built up
to strengthen the relations after Nepal became republic in 2008 and after
the war ended in Sri Lanka in 2009.
Since 2009, the then Sri Lankan President Mahinda Rajapaksa took
special interests to improve relations with Nepal. It is noteworthy to
mention here that the high level visits started between the two countries
with the visit of late King Mahendra to Sri Lanka in 1957.2 But after that
till 2009, no standalone bilateral visits took place at the very high level. All
the high level visits were for the SAARC meetings. Sri Lanka President
Jayawardene visited Nepal in 1987 to attend the SAARC summit in
Kathmandu. Prime Minister Girija Prasad Koirala visited Sri Lanka thrice
in 1991, 1998, and 2008 to attend the SAARC summit in Colombo.
President Mahinda Rajapaksa made a bilateral visit to Nepal on the
invitation of the Nepalese President Dr Ram Baran Yadav in March 2009.
Rajapaksa again visited Nepal on 29 October 2009 on 3-day official visit.3
President Mahinda Rajapaksa went to Nepal again in 2014, but to attend
the 18th SAARC Summit that took place in Kathmandu from 25 to 27
November 2014.4 From Nepal, President Bidya Devi Bhandari made her
maiden visit to Sri Lanka in May 2017 to attend the closing session of the
Vesak Day celebration.
It should be noted that political crisis continued to loom large in Nepal
even after the abolition of monarchy in 2008. The Constituent Assembly
(CA) that was formed through election to formulate constitution in 2008
was dissolved as it could not formulate constitution during the stipulated
time. From 2009 to 2011 three governments were toppled. Because of
the continuous power sharing battle in the country, Nepali Prime Minister
and President have made limited foreign visits which include India and
China and some other foreign countries particularly to attend international
conferences and summits. The Nepali leaders, however, use the opportunity
to interact with Sri Lankan leaders on the sidelines of the international
conferences and summit meetings. Nepal President Ram Baran Yadav and
President Mahinda Rajapaksa held the bilateral discussions in Shanghai
on 31 October 2010.5 Nepalese Prime Minister Dr Baburam Bhattarai held
bilateral talks with President Rajapaksa on 21 September 2011 at the UN
Headquarters in New York on the sidelines of the United Nations General
Assembly (UNGA).6
In the year 2015, significant development took place in both Nepal and
Sri Lanka. In January 2015, Maithripala Sirisena became the President of
Sri Lanka and formed the National Unity Government (NUG) to rectify
the policy mistakes of the previous government. The entire focus of the
NUG is to improve the relations with all the important countries those were
sidelined by the Rajapaksa regime. Nepal, on the other hand, was hit by a
devastating earthquake in April 2015 and the violent protest that broke out
after the promulgation of new constitution by the second CA in September
2015. India shutting the border crossing points with Nepal during the
violent protest caused further crisis in the country. The anti-Constitution
protest simmered down after the amendment of the Constitution, but the
resentment continues.
The Nepal-Sri Lanka relations, thus, once again got sidelined due to the
political developments in both the countries. Bilateral exchanges between
the two countries declined. The former Sri Lankan Foreign Minister
Mangala Samaraweera visit to Nepal in March 2016 was basically to
participate at the thirty-seventh Session of the SAARC Council of Ministers
meeting in Pokhara.7 A H M Fowzie, Minister of Disaster Management
of Sri Lanka visited Nepal immediately after the earthquake in April and
again in June 2015 to attend the International Conference on Nepal’s
Reconstruction 2015 ‘Towards a Resilient Nepal’.8 The Deputy Prime
Minister and Minister for Federal Affairs and Local Development Prakash
Man Singh called on the President of Sri Lanka Maithripala Sirisena on
the sidelines of the 70th Session of the UNGA in New York on 2 October
2015.9 During the meeting, President Sirisena expressed happiness over
the promulgation of the new Constitution and expressed his willingness
to visit Nepal.
It should be noted that Sri Lankan President Mahinda Rajapaksa took
some initiative to give a boost to the bilateral relations mainly for two
reasons. As a Sinhala Buddhist nationalist Mahinda Rajapaksa emphasized
on enhancing the Buddhist linkages. Second, he emphasized on enhancing
relations with the smaller countries in the world to get their support in
the international fora on the alleged war crime and human rights issue.
Nonetheless, there is not much progress in the implementation of the
decision taken during those interactions.
During all the interactions mentioned earlier, the leaders discussed
the matters of mutual interest and the ways as well as means to further
promote bilateral cooperation. During Mahinda Rajapaksa’s first visit to
Nepal in March 2009, the two sides signed the revised version of the Air
Service Agreement which was originally signed on 19 February 1977

to revive the connectivity. An agreement was also signed to establish a
Joint Commission at the Foreign Minister’s level to enhance cooperation
in trade, direct air links, tourism, education, health, global warming, and
climate change issues. Mahinda Rajapaksa’s visit was followed by Dr
Palitha T B Kohona, Secretary, Ministry of Foreign Affairs of Sri Lanka in
July 2009 to discuss the modalities to operationalize the Joint Commission
with Gyan Chandra Acharya, his counterpart in Nepal. They also
discussed the revival of cooperation between the Business Councils of the
two countries.10 It was agreed that the Joint Commission will be meeting
annually for exchanging political and financial support, besides boosting
exchange of cooperation in all these mentioned areas. Nonetheless, both
the countries failed to organize the joint commission annually.11 However,
limited progress has been made in some of the areas of cooperation which
are discussed in the following sections.
Economic Relations
Nepal- Sri Lanka economic relations go back to 1979 when the two
countries signed bilateral Trade Agreement on 3 April 1979. In last 37
years however, Nepal-Sri Lanka economic relations have not gone far.
In 2012, total trade between Nepal and Sri Lanka was US$ 1.2 million.
In 2013,Sri Lanka’s exports to Nepal stood at US$ 5.07 million, a 296
per cent jump from 2012’s US$ 1.2 million (Table 1).12 Yet the share of the
bilateral trade to their total trade with world is much less. Sri Lanka’s total
export in 2013 was approximately US$ 10.2 billion.13
Table 1: Sri Lanka Exports and Imports to/from Nepal

Sri Lanka Export to Nepal (million US$)
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
0.3347 0.8824 1.6594 0.2750 0.2950 3.5645 0.1828 0.1866 0.2710 1.1517 0.6422 1.1049
Source: SAARC Group on Statistics, available at www.saarcstat.org, accessed on 28 July 2016.
Sri Lanka Imports from Nepal (million US$)

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
0.0092 0.1883 0.0086 0.0780 0.1106 0.0717 0.0746 3.5679 5.6632 0.1381 0.3090 0.1327
Total Trade Between Sri Lanka Nepal (million US$)

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
0.3439 1.0707 1.668 0.353 0.4056 3.6362 0.2574 3.7545 5.9342 1.2898 0.9512 1.2376
Sri Lanka’s major exports to Nepal are cocoa and cocoa preparations,
coffee, tea, spices, electrical machinery and equipments including sound
recorders and reproducers, television, preparations of cereals, flour, starch
or milk pastry cook products, sugar and sugar confectionery, miscellaneous
edible preparations, articles of apparel and clothing accessories, or knitted
or crocheted, edible vegetables, and certain roots and tubers. Sri Lanka’s
major imports from Nepal are grains (lentils), plastics and articles, wood
and articles of wood charcoal, carpets and other floor coverings, works of
art, collectors’ pieces and antiques, electrical machinery and equipment,
sound recorders and reproducers, television, printed books, newspapers,
pictures and other products of the printing industry, manuscripts, raw
hides and skins (other than fur skins) and leather, and so on.14
Nepal has a potential to export more items to Sri Lanka.15 But the issue
of sensitive lists stands as barrier. Under the SAFTA, Sri Lanka as a non-
least developed country (NLDC) was required to reduce tariff on items
outside the sensitive list for least developed country (LDC) members to
0.5 per cent by July 2009. But there are many products which Nepal can
potentially increase its export supply are in the sensitive lists of Sri Lanka.
In 2009, 54 of such items were on Sri Lanka’s sensitive list (which had
1,065 items in total). These items represent a market in Sri Lanka worth
US$ 431 million. But the items outside the sensitive list, represent a market
of US$ 164 million.16 In 2012, Sri Lanka revised its sensitive lists for the
LDC which includes 925 items.17 Yet the list is huge. As a result Nepal,
a LDC, is not getting as much benefit as it should have while doing trade
with Sri Lanka under the SAFTA. Sri Lanka needs to reduce the sensitive
list for the LDCs further to encourage more Nepali traders.18
Investment cooperation between the two countries is negligible. Nepal’s
only billionaire Binod Chaudhary’s CG Group has invested in the hotel
sector in Sri Lanka. The Group has launched the ambitious Zinc Journey
brand in Sri Lanka by investing around SLRs 1 billion. Binod Chaudhary
also has a 30 per cent stake in Taj Samudra Colombo and a 50 per cent
stakes in Jetwing Sea and Jetwing Vil Uyana.19 The CG Group is also
planning to invest US$ 200 million for cement factory in Sri Lanka.20
Together, in a bid to promote business collaborations between the two
countries, Nepal and Sri Lanka agreed to establish a joint business council
in 2002. A Memorandum of Understanding (MoU) was signed between
the Ceylon Chamber of Commerce of Sri Lanka and the Confederation
of Nepalese Industries to formalize the partnership between the two
organizations on 31 March 2003.21 The Nepali-Sri Lanka Business Council
has mandate to conduct its trade promotional activities in close association
with the Nepal Embassy. Several promotional visits were conducted.22
For example, Chaudhary Group, Nimbus, Youth Entrepreneurs, and
Sagarmatha Insurance have visited Sri Lanka and taken part in business
forums to extend their business. Similarly, various Sri Lankan companies
took part in Nepali trade fairs to expand their business in Nepal.23 A
12-member business delegation from the Federation of Handicraft
Associations of Nepal also visited Sri Lanka on 29 October 2014.24 They
exhibit their interests to enter into business deal with Sri Lanka as Sri
Lanka has very good processing technology of precious and semi-precious
stones.
However, the traders get discouraged because of some technical and
practical challenges. One of the main reasons for lack of trade between the
two countries is related to transit. As a land locked country Nepal needs
transit facility through India to do trade with a third country. In the 1960s,
by renewing the Trade and Transit Treaty India allowed the land locked
country to use Kolkata port to do trade with third countries. But the Nepali
traders face several non-tariff barriers and other problems in Kolkata
port.25 Nepali traders complain that the congestion, inadequate storage
facilities, inefficient handling, and cumbersome clearance procedure in
the port often raises the cost of items in Nepal.26 India has now allowed
Nepal to use the Visakhapatnam port. However, given the distance of the
Port from Nepal, there is a doubt that trade through Visakhapatnam would
be very cost effective. Trade through air is also very expensive. Until May
2016, there was no direct flight from Nepal to Sri Lanka.
Cultural and Religious Ties

Sri Lanka and Nepal signed the agreement on cultural cooperation in
1999. However, cultural and religious ties between the two countries are
age old. According to Rohitha Bogollagama, the former Foreign Minister
of Sri Lanka:
[O]ne reason for the strong bond of relationship between the Nepal
and Sri Lanka is that both the countries are predominantly Buddhist
countries and Gautam Buddha was born in Nepal.27
According to Mahavamsa, Gautam Buddha visited Sri Lanka thrice.28

Subsequently, the Buddhism was introduced to the Island and it became
the main religion of Sri Lanka. This is interesting to note that, Theraveda
Buddhism in Nepal was inspired by the Sri Lankans. Historical account
suggests that in 1936, Nepali monk Lal Kaji Shrestha, who is known as
Bhikkhu Amritananda, studied Theraveda Buddhism in Sri Lanka for 4
years. Following Bhikkhu Amritananda, several monks went to Sri Lanka.
On their return, they spread Theraveda Buddhism in Nepal. However,
the Rana regime in Kathmandu was not very comfortable with the fast
spread of Budhism in the Kathmandu valley. The government decided
to expel four monks and four novices including Bhikkhu Amritananda.
Amritananda then persuaded the venerable Narada Mahathera of Sri
Lanka to intervene with the Rana Government as Sri Lankan envoy. On his
intervention the monks were allowed to return home. Narada Mahathera
again visited Nepal in 1947 and 1949 to help building Anandakuti as centre
of Theraveda Budhism.29 He also established the first Sima (Uposatha) of
Nepal for Bhikkhus at the Vihara. Later the Sri Lankan government gifted
three teeth of the Buddha to Anandakuti. During his third visit, Narada
Mahathera met the then Prime Minister Mohan Shamasher J Rana and
requested him to declare Baisakh Purnima or Buddha Day as a public
holiday. The Prime Minister agreed and declared it as a public holiday for
the Buddhist government civil officers.30
As the birth place of Gautam Buddha, Nepal has always been the
attraction of the Sri Lankan Buddhist pilgrims.31 Large numbers of Sri
Lankans visit Lumbini every year. More than 60,000 Sri Lankans visited
Nepal in 2012 (Table 2).
Table 2: Sri Lankan Tourists

Table 2: SriVisit Nepal
Lankan Tourists Visit Nepal
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
9,844 9,805 13,930 16,124 18,770 27,413 49,947 32,817 36,362 45,531 59,884 69,476 32,736 37,546
Source: Government of Nepal, Ministry of Culture, Tourism and Civil Aviation, available at http://www.tourism.
gov.np/en/category/tourism/tourism_statistics, accessed on 28 July 2016.
The Sri Lankan government has made special effort to provide facilities
to the Sri Lankan pilgrims in Nepal. In 1992, a pilgrims resting place,
Dutugemunu Pilgrim Rest, was established in Lumbini for the Sri Lankan
devotees. Later, it was renovated in 2012 under the patronage of Mahinda
Rajapaksa. During Mahinda Rajapaksa’s visit to Nepal in October 2009,
he gifted and dedicated to the Maha Sanga, the ‘Sri Lanka Maha Viharaya’
in Lumbini, built for the benefit of Buddhist devotees. The construction
work was carried out by the Sri Lanka Lumbini Development Trust Fund
initiated by President Mahinda Rajapaksa. The first phase of this Temple
was built at a cost of SLRs 74 million. Another 195 million has been
allocated for the second phase. President Rajapaksa gifted 1.5 million to
Sri Lanka Lumbini Development Trust Fund for the future development
programmes of the Sri Lanka Maha Viharaya.32 A bridge close to Lanka
Ramaya temple at Gate No. 4 of the Maya Devi Temple was also
constructed by Sri Lanka.33
Sri Lanka extends support to the Nepali students to study Theravada
Buddhism in Sri Lanka. In 2007, during Rohitha Bogollagama’s visit
to Nepal, Sri Lanka offered training assistance to Nepal in the fields of
inland fisheries, tea research and city cleaning system, and also announced
that Sri Lanka would grant annual undergraduate scholarships to Nepali
students in the areas of urban planning, humanities, and archaeology.34
Before that on 20 April 2007, both the countries signed an agreement for
exemption of visa fees for students studying in Nepal and Sri Lanka.35
All these provisions have encouraged many Nepali students to get trained
in Sri Lanka. However, compared to the Sri Lankans, less number of
Nepalese visit to Sri Lanka. Table 3 shows the number of Nepalese visited
the Island from 2005 to 2014.
Table 3: Nepali Tourists Visit

Table 3: SriTourists
Nepali Lanka Visit Sri Lanka
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
1,077 1,152 885 897 679 602 858 984 2,019 3,296
Source: “Tourism Research and Statistics”, Sri Lanka Tourism Development Authority,
Government of Sri Lanka, available at http://www.sltda.lk/statistics, accessed on 28 July
2016.
Table 3 shows that Sri Lanka is still not in the radar of the Nepali
tourists. One of the main reasons is lack of direct flight between the two
countries. There was a direct flight between the two countries in the 1980s.
However, it was suspended due to the war in Sri Lanka. Sri Lanka was also
avoided by the tourists because of the armed ethnic conflicts. After the
end of war number of Nepali tourists in Sri Lanka is gradually increasing,
yet it is much less compared to the Sri Lankan tourists in Nepal. Large
number of Sri Lankans visits Gaya in India every year. As Lumbini is just
30 kilometre away from Gaya, most of the Sri Lankan visitors in Gaya
visit Lumbini through the land route. But for the Nepali tourist visiting
Sri Lanka via India, becomes lengthy and expensive journey. After several
rounds of talks since 2009, direct flight between Kathmandu and Colombo
has been inaugurated on 12 April 2016.36 It can be expected that the direct
flight will encourage more Nepalese to visit Sri Lanka.
Efforts are being made by both the embassies in Kathmandu and
Colombo to promote tourism. The hotel associations of Nepal and Sri
Lanka have signed an MoU for the promotion of tourism in both the
countries in 2012.37 The Sri Lankan Embassy in Nepal with support of
the Sri Lanka Tourism Promotion Bureau arranged familiarization tour
to Sri Lanka for Nepal Tour Operator Association in 2014.38 But both
the embassies in Kathmandu and Colombo need to be more pro active to
promote tourism.
Humanitarian Cooperation
Both Nepal and Sri Lanka extend their solidarity towards each other
at the time of need. Nepal faced a major humanitarian crisis in the
aftermath of the massive earthquake in April 2015. Sri Lanka provided
immediate assistance to Nepal. On 26 April 2015, the Government of
Sri Lanka dispatched four aircrafts to Nepal with 48 member relief and
rescue team comprising doctors, engineers, and other personnel from Sri
Lankan armed forces; and relief material consisting of medicine, medical
equipment, rice, water bottles, tents, blankets and warm clothes, milk
powder, canned food, etc. The Sri Lankan contingent conducted relief and
rescue work in Dolalghat area in Kavrepalanchok. District as designated
by the Government of Nepal. The Sri Lankan contingent was subsequently
strengthened to 141 on 29 April 2015 with the arrival of second group.
The Sri Lankan medical team treated 2,473 patients including 995 surgical
treatments at Dolalghat and Panchkhal. The team also conducted mobile
clinics in the remote hilly areas such as Palanchowk, Sipaghat, Sipang,
etc. Members of the Engineering Corps of Sri Lanka Armed Forces
cleared roads in Dolalghat and six surrounding areas such as Lamidanda,
Banepa, etc.; cleared the environs of the Bhagwati Hindu Temple of
Palanchowk and the Araniko highway; restored a suspension bridge in
Sipaghat; established water distribution points at Dolalghat; repaired
Banepa Buddhist temple, Sunkoshi Steel Truss Bridge and the suspension
bridge in Dolalghat.39 Sri Lanka further announced US$ 2.5 million for
the reconstruction of two heritage temples ‘Rato Machchindranath’ and
‘Anandakuti Vihar’, damaged due to the earthquake.40
Nepal also helped Sri Lanka during the devastating flood in May 2016.
It provided an assistance of US$ 1,00,000 to Sri Lanka for the flood and
landslides victims.
Security Cooperation
Both Sri Lanka and Nepal were the victims of home grown civil war.
The two countries have successfully resolved the problem of civil war.
Though at present no cases of attacks are observed, the two countries
face transnational security challenges, such as drug trafficking, human
trafficking, cyber crime, and are also vulnerable to global terrorism. News
report suggests that Sri Lanka has been used as transit by the human
traffickers for trafficking Nepali women abroad. As Sri Lanka provides
on-arrival visas to Nepalese, it becomes easy for traffickers to send Nepali
women to other countries without any risk. Over 1,200 Nepali women
have been flown to the Gulf countries through Colombo, according to
informal estimates by Sri Lanka police and other government agencies.

The Government of Nepal is currently working with the Sri Lankan
government to crack down on human traffickers.41
Nepal-Sri Lanka in the Multilateral Fora

Nepal and Sri Lanka hold similar views on most of the regional and
international issues, be it in the United Nations or any other multilateral
forums including SAARC.42 The SAARC was formed in 1985 with the
vision that all the South Asian countries would find solution to their common
problems in a spirit of friendship, trust, and mutual understanding. During
the 7th SAARC Summit in Dhaka the SAARC members agreed to have a
collective position through consultations on the major issues of common
concern.43 However, unfortunately, the South Asian countries over the
years have found it difficult to come into consensus on several issues. One
of such issues is China’s membership into the SAARC. However, Nepal
and Sri Lanka have common views on Pakistan’s proposal for China as a
dialogue partner of the SAARC.44
Nepal and Sri Lanka also work together at the United Nations special
agencies as well as Colombo Plan for cooperative economic and social
development in the Asia and Pacific.
The two countries are also member of the Colombo Process.45 As large
number of Nepali and Sri Lankan citizens46 go abroad for work, these two
countries joined several other Asian labour sending countries in the Ministerial
Consultation in 2003 in Colombo to discuss the management of overseas
employment programmes.47 Since 2003, these countries meet regularly and
share good practices, data, and information through regular dialogue.
Challenges
The small countries of South Asia, Nepal and Sri Lanka are making efforts
to strengthen their relations by engaging and co-operating more, both at
the bilateral and multilateral arrangements. Nonetheless, there are several
factors challenging the Nepal-Sri Lanka relations.
Lack of Connectivity
Lack of connectivity in terms of trade and transportation is the main
impediment in the Nepal-Sri Lanka bilateral relations. As a land-locked
country, Nepal faces tremendous problems in doing trade with countries

other than India and China. The 1950 Nepal-India Treaty of Trade and
Commerce though talked about Nepal’s right of commercial transit of all
goods and manufacturers through the territory and ports of India, India
allowed Nepal to use the Kolkata port for its trade with third countries only
after revising the treaty in the 1960s. However, deteriorated and insufficient
storage space, congestion and other inefficiencies in the Kolkata port cause
delays. Goods are carried between the points in Nepal and the Indo-Nepal
border and the Kolkata port either through rail or trucks.48 Shortages of
railway wagons, cumbersome procedures, and restrictive labour regulations
cause delays which in turn increases the cost of the products. It is argued for
long that an alternative transit facility through Bangladesh may give some
respite to the Nepali traders. However, India until recently was not very keen
to give Nepal transit facility to Bangladesh via its territory.
Even though India has often been blamed by Nepal for not extending
adequate transit facilities, there are some other issues which hinder adequate
trade flow between Nepal and Sri Lanka. Air transport is being used by the
traders. However, large-scale trade through air transport becomes difficult
due to insufficient storage space in the Tribhuvan Airport. Lack of direct
flight between Nepal and Sri Lanka causes further problems. This is also
one of the reasons for lack of people-to-people contact between Nepal and
Sri Lanka.
Political Instability
Political instability in both the countries had negative impact. After
the end of war, Sri Lanka has taken some initiative, but as the political
instability continues in Nepal, it is not able to focus on foreign policy
issues. Business and friendship council are proposing several measures
to strengthen bilateral relations; however, as the leaders are entangled
with domestic issues, Nepal-Sri Lanka bilateral issues are getting
ignored. Also frequent protests in the Nepal-border areas hamper
smooth flow of trade and tourism. Shutting down of the trading points
on the Indo-Nepal border during the anti-constitution protest in 2015
clearly exhibits the vulnerability of the Nepali traders to the political
unrest in the country.
Scope for Further Cooperation

At the moment, progress in the Nepal-Sri Lanka relationship is slow,
but there are lots of potential to strengthen the relations further. Political
stability in both the countries will facilitate strengthening relations in
future.
There is a hope that tourism will increase with the inauguration of
the direct flight, as it will reduce the travelling cost and time. Buddhist
circuit initiative by the SAARC can increase people-to-people contact
and increase tourism. Mahinda Rajapaksa proposed about a programme
to develop a circuit that would promote connectivity among religious and
cultural places of interest in the SAARC region during the introductory
visit of Arjun Bahadur Thapa, Secretary General of the SAARC to Sri
Lanka from 11 to 15 August 2014.49 Now Modi government is giving
emphasis on the Buddhist circuit project. Pakistan and Afghanistan too
expressed interest in promoting their Buddhist sites in collaboration with
India.50 This kind of multilateral arrangement if implemented properly will
increase people-to-people connect.
There is considerable potential in entering into joint ventures,
particularly in the areas like tourism, tea plantations, civil construction,
information technology, and handicraft. Sri Lanka’s handicraft and
jewellery exports to Nepal totalled US$ 0.42 million in 2013. As Sri
Lanka has very good processing technology of precious and semi-precious
stones, the Handicraft Associations of Nepal believe that for Sri Lankan
gem, silver and handicraft exporters, there are huge prospects in the US$
420 million Nepali gold, silver, jewellery and handicraft-making industry
which already employs 2 million workers which fed in the market of India
and Thailand.51
India has now allowed Nepal to use India’s Vishakhapatnam port for
its trade with third countries, in addition to the use of Kolkata port. The
opening of an alternative transit route is expected to ease trade with third
countries. To support the movement of goods between Nepal and the
Vishakhapatnam port, the two countries have also signed a separate Letter
of Exchange on rail transport. The two sides also signed another Letter of
Exchange on rail transit, under which India will offer rail transit facility
through Singabad for Nepal’s trade with and through Bangladesh.52
These facilities, once implemented properly, would reduce the transit

issue faced by the Nepali traders and encourage them to do more trade.
Nepal also may consider using the Hambantota Port in future. In 2011,
Sri Lanka offered Nepal the possibility of using Hambantota port for
trans-shipment.53
There are prospects for more people-to-people contact. A friendship
society was formed in 1986 to promote travel between the two countries.
In 2012, the Society was reconstituted under the patronage of the then
Sri Lankan Ambassador to Nepal Thosapala Hewage to promote bilateral
trade and tourism, people-t-people contact, and cultural exchange. The
Society was formed by a special gathering of renowned Buddhist scholars,
diplomats, tourism entrepreneurs, and media persons.54 The Society can
play an important role to further the relations.
In the age of social media, the civil society of both the countries can
interact more. As both the countries are going through political transition,
citizens of both the countries are debating on similar issues such as
federalism, human rights, governance, relations with regional powers,
and so on. The civil society and pressure groups in both the countries
do monitor the issues in each others’ country and generate debate in
media. The National Business Initiative Nepal and the Business for Peace
Alliance Sri Lanka in June 2008, organized a workshop titled ‘Business
Building Peace in South Asia’ with the objective of strengthening the
private sector’s capacities to contribute to peace and development in both
countries.55 More of these kinds of interactions between the two countries
at the level of civil society and pressure groups can enhance awareness
and people-to-people contact and can encourage the two governments to
strengthen the relations further.
Conclusion
There is no diplomatic or political tension between the countries. The
two countries have never interfered in each others’ domestic issues.
Without making any comment on the dissatisfaction of the Madhesi
groups, Sri Lanka welcomed the promulgations of the new constitution.
The Government of Nepal has also avoided making any comment on Sri
Lanka’s human rights record particularly on the last phase of the Eelam
war. Nepal welcomed the political transition in Sri Lanka in 2015. Yet,
due to some practical problems there is not much progress in the economic
and cultural relations, even though there are lots of potential to grow
the ties between the two countries. The two countries have successfully
eliminated terrorism. However, the main issues which caused terrorism
are yet to be resolved. Until and unless political stability is achieved in
the country, it will be difficult for the countries to give full attentions to
improve bilateral relations. However, as the two countries are no longer in
war like situations, some efforts are being made to strengthen the bilateral
relations particularly in the field of trade and tourism. Nonetheless, as a
land locked and an island country, Nepal and Sri Lanka are dependent on
third country like India or Bangladesh for transit for their bilateral trade.
This requires a trilateral negotiations and understanding. To further the
bilateral relations, the two countries need to sort out their domestic issues
so that they can give attention to their bilateral relations. Second, they
need to find out the problems and prospects in their relationship and work
on it. Third, and the most importantly political will is required in both the
countries to strengthen the bilateral relations.
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16. Ibid.
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18. Ratnakar Adhikari, op. cit. (15).
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July 2016.
20. Ibid.
21. Srimal Fernando, op. cit. (2).
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26. Ibid.
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29. Ananda W P Guruge, Budhism Today as Esthetic Creativity, USA: Lulu.com,
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30. ‘Theravada Buddhism in Modern Nepal’, Lumbini Nepalese Buddha Dharma
Society (UK), available at http://www.lumbini.org.uk/bd_n_thera_t.html,
31. Ananda W P Guruge, ‘Sri Lanka’s Role in the Spread of Buddhism in the World’,
Public lecture under the auspices of the Royal Asiatic Society of Sri Lanka to
mark the 2600 Sambuddhatva Jayanti, Colombo, 15 November 2010, available
at http://www.urbandharma.org/udharma14/srilankahistory.html, accessed on 28
July 2016.
32. ‘President dedicates “Sri Lanka Maha Viharaya” in Nepal to Maha Sanga’,
NewsLine, 30 October 2009, available at http://www.priu.gov.lk/news_update/
Current_Affairs/ca200910/20091030president_dedicates_nepal_maha_sanga.
htm, accessed on 28 July 2016.
33. ‘We are Entering Into Tourism Cooperation With Nepal’, op. cit. (23).
34. ‘Sri Lanka and Nepal Agree to Expand the Bilateral Relations in to New Areas
of Cooperation’, Ministry of Foreign Affairs, Sri Lanka, available at http://www.
mfa.gov.lk/index.php/en/media/news-archive/910-sri-lanka-and-nepal-agree-to-
expand-the-bilateral-relations-in-to-new-areas-of-cooperation, accessed on 28
July 2016.
35. ‘Nepal-Sri Lanka Bilateral Relationship’, Embassy of Nepal in Colombo, available
at http://www.nepalembassy.lk/index.php/NepalSriLankaBilateralRelationship,
36. Tharuka Dissanaike, ‘Is Lumbini Lost?’, The Sunday Times, 16 April 2000,
available at http://www.sundaytimes.lk/000416/plusm.html#1LABEL3, accessed
on 28 July 2016.
37. ‘Nepal-Sri Lanka Joins Hands for Tourism Promotion’, NewsLine, 18 August
2012, available at http://www.priu.gov.lk/news_update/Current_Affairs/
ca201208/20120818nepal_sl_joins_hands.htm, accessed on 28 July 2016.
38. ‘We are Entering Into Tourism Cooperation with Nepal’, op. cit. (23).
39. ‘Sri Lankan Rescue Team Concluded Their Services in Nepal’, Embassy of
Sri Lanka in Nepal, 20 May 2015, available at http://www.slembktm.com/
component/content/article/38-front-page-article/792-sri-lankan-rescue-team-
concluded-their-services-in-nepal.html, accessed on 28 July 2016.
40. ‘Hon A H M Fowzie, Minister of Disaster Management of Sri Lanka Attended the
International Conference on Nepal’s Reconstruction 2015’, Embassy of Sri Lanka
in Nepal, available at http://www.slembktm.com/component/content/article/38-
front-page-article/795-hon-ahm-fowzie-minister-of-disaster-management-of-
sri-lanka-attended-the-international-conference-on-nepals-reconstruction-2015.
html, accessed on 28 July 2016.
41. Siromani Dhungana, ‘Nepali Women Trafficked via Andaman and Nicobar Also’,
Republica, 24 June 2016, available at http://www.myrepublica.com/news/774,
42. ‘Nepal-Sri Lanka Bilateral Relationship’, op. cit. (35)
43. ‘Seventh SAARC Summit Dhaka Declaration’, 11 April 1993, available at http://
www.saarc-sec.org/userfiles/07-Dhaka-7thSummit1993.pdf, accessed on 28 July
2016.
44. G Parthasarathy, ‘The Dragon Gatecrash at SAARC Can’t be Ignored’, The New
Indian Express, 6 December 2014, available at http://www.newindianexpress.
com/magazine/voices/The-Dragon-Gatecrash-at-SAARC-Cant-be-
Ignored/2014/12/06/article2557024.ece, accessed on 28 July 2016. Sangeeta
Thapliyal, ‘Nepal’s Policy Towards SAARC’, in Rajiv Kumar and Omita Goyal
(eds), Thirty Years of SAARC: Society, Culture and Development, Los Angeles:
SAGE, 109.
45. Colombo process is a Regional Consultative Process on the management of
overseas employment and contractual labour for countries of origins in Asia. See
more about Colombo Process at http://www.colomboprocess.org/, accessed on 28
July 2016.
46. There are 21 per cent of Sri Lanka’s working population working overseas and 46
per cent of them are women. According to officials of the Department of Foreign
Employment of Nepal, around 5,15,000 Nepali youths obtained labour permit in
the Fiscal Year 2014-15 to leave the country for foreign employment.
47. The ten initial participating states are Bangladesh, China, India, Indonesia, Nepal,
Pakistan, the Philippines, Sri Lanka, Thailand, and Vietnam.
48. Martrin Ira Glassner, op. cit. (25).
49. ‘H E SG’s Introductory Visit to Sri Lanka (11-15 August 2014)’, SAARC
Secretariat, 14 August 2014, available at http://www.saarc-sec.org/press-
releases/H.E.-SGs-introductory-visit-to-Sri-Lanka-11-15-August-2014/113/,
50. Divya A, ‘On the Anvil, Trans-national Buddhist Circuit From India to Nepal’,
The Indian Express, 31 May 2016, available at http://indianexpress.com/article/
india/india-news-india/ministry-of-tourism-buddhist-circuit-trans-national-
tourist-circuit-nepal-sri-lanka-2826631/, accessed on 31 July 2016.
51. ‘Trade Renewal in Offing With Largest Nepali Biz Visit in a Decade’, op. cit. (12).
52. ‘Nepal Allowed to Use Vizag Port’, Ekantipur, 21 February 2016, available at
http://kathmandupost.ekantipur.com/news/2016-02-21/nepal-allowed-to-use-
vizag-port.html#, accessed on 28 July 2016.
53. This was suggested by the then Deputy Minister of External Affairs, Neomal
Perera to Ambassador of Nepal, Sushil Chandra Amatya on 7 January 2011, when
the Ambassador paid a courtesy call on the Minister at the Ministry of External
Affairs of Sri Lanka. ‘Ambassador of Nepal Paid a Courtesy Call on the Deputy
Minister of External Affairs’, Ministry of Foreign Affairs, Sri Lanka, 7 January
2011, available at http://www.mfa.gov.lk/index.php?option=com_content&task=
view&id=2629&Itemid=1, accessed on 28 July 2016.
54. ‘Nepal-Lanka Friendship Society in Kathmandu’, The Sunday Observer, 15
January 2012, available at http://www.sundayobserver.lk/2001/pix/PrintPage.
asp?REF=/2012/01/15/new70.asp, accessed on 28 July 2016.
55. ‘Sri Lanka and Nepal Exchange Business Leaders in Search for Inclusive
Economy of Peace’, International Alert, 30 January 2009, available at http://
www.international-alert.org/news/sri-lanka-and-nepal-exchange-business-
leaders-search-inclusive-economy-peace#sthash.iIypldaR.dpbs, accessed on 28
July 2016.
20
Nepal-Israel Relations: A Unique
Partnership in Asia
Md. Afroj
Abstract
N epal-Israel relations are one of the unique kinds of relationship in

Asia. Nepal, a country situated on the foothills of Great Himalayas
shares nothing common with Israel, but a bond of confidence developed
through constant dialogues and engagement between the two small Asian
nations. Nepal recognized Israel as a nation from the early days of its
existence, though due to many international as well as regional pressure
couldn’t actively voted in favour of Israel on many international forums.
The Indian pro-Arab stand was the major reason for Nepal’s hesitation
in dealing with Israel. Nepali leaders very cautiously build ties with
Israel without risking their relations with Arab nations, and proved
independence over their foreign policy issues. The Leaders of the two
countries met for the first time in 1952, during the meeting of the first Asian
Socialist conference held in Burma (Myanmar). The first elected Nepali
Prime Minister B P Koirala visited Israel and was impressed with the
technological advancements of this tiny Asian nation. Since then both the
countries have experienced a gradual growth in their bilateral relations.
Later, both the countries opened diplomatic mission to strengthen their
relations. In 2015, during the devastating earthquake in Nepal, Israel
illustrated its concerns for the Nepali people and provided necessary
medical and other important support. A good number of Nepali citizens

are employed in various sectors in Israel.
This chapter is an attempt to study the evolution and historical
development of Nepal-Israel relations. It will further try to focus on the
challenges and obstacles between the two.
Introduction
Nepal is a small South Asian landlocked country situated at the foot of
Himalayas. It has been ruled by traditional monarchy through much of its
history. A popular revolution in 2006 overthrew the Monarchy and replaced
it with the multi-party democratic system. Due to the dominance of very
small royal political elites on the foreign policy matters it experienced a
kind of consistency in its foreign policy throughout the history. It has been
a challenge for Nepali foreign policy to balance its two immediate giant
neighbours, India and China. Nepal cannot afford to cultivate bilateral
relations at the expense of one against another. It is the core policy of Nepali
political establishment to maintain balance between their engagement with
China and India. Its proximity to China and India provided its government
with considerable degree of manoeuvrability, particularly since there was
a conflict between these two great powers (Abadi, 2004). Many scholars
argue that the Nepali foreign policy has been dictated through India and
it is not sovereign in its foreign policymaking. But this argument is not
true in many ways. There have been examples where Nepal unilaterally
developed relations with different countries without the Indian or Chinese
support. Evolution of Nepal-Israel relations is one of the many examples
of it.
Nepal-Israel relation is an example of Nepalese independence from
India over the issues of foreign policy formulation. Nepal was among the
few Asian countries which recognized Israel’s right to existence and came
forward to develop normal relations with Israel. Nepal and Israel shares
nothing shorts of common except their tiny size. Indian pro-Arab stance
in Arab-Israeli conflicts, mainly due to the closeness of the early Indian
leadership with many Arab leaders in the name of Third World solidarity,
always put hurdle in its relations with Israel. On many occasions Nepal
irked the Arab as well as the Indian leadership over its stance on Israel.
Nepal-Israel Relations: A Unique Partnership in Asia • 307
However, Nepal also stand side-by-side with Third World countries on

various international forums including Non-Aligned Movement (NAM)
in solidarity and supported the process of decolonization and anti-western
imperialism in any form.
This chapter argues that despite having domestic as well as external
pressure especially from India and other Arab countries, Nepal successfully
managed to maintain cordial relations with Israel without deteriorating its
relations with its immediate giant neighbours, India and China.
Historical Background of Nepal-Israel Relations

After the establishment of Israeli nation in the heart of Arab land in 1948,
it found itself alone among the nations around the world. Surrounded
with hostile neighbours, Israel was in a desperate need of friends and
allies who can support its cause on international forums like the United
Nations. During the early days it hardly had any friend in Asia due to
the Third Worldism that prevailed in many Asian countries at that time.
The unconditional support of the West especially the United States of
America towards the Israeli cause made the post-colonial Asian world to
believe that Israel is a colonial establishment. The leaders of Asian world
like Mao, Nehru, and Sukarno were anti-Israel due to their sympathetic
attitude towards the Arab World and the so called ‘anti-imperialist’
struggle.
The earliest interaction between Nepal and Israel started during the
reign of King Tribhuvan, when Nepal chose to vote against Israel in the
United Nations on the issue of the Palestinian partition plan. It was mainly
due to the Indian influence over the Nepali foreign policy. Nepal has
endeavour over the years to translate her non-aligned policy and posture
between India and China into a ‘performance of cordiality’, and with
generally commendable success (Kozicki, 1969). But by the late 1950s,
Nepal also started reaching out to other nations to reduce the image of
being carbon copy of India in terms of foreign policy issues. When the
first democratically elected government of Nepal came into power under
Prime Minister Bishweshwar Prasad Koirala in 1959, it started becoming
less depended on India in the matters of foreign policies. Nepal came
forward with the new interpretation of non-alignment and dropped the
traditional interpretation and defined it as non-aligned between India and

China. This means equal engagement with both the Asian giants to exploit
Nepal’s strategic position for the economic as well as security purposes.
This neutralized Nepal’s position provided opportunity to reach countries
without recrimination.
The ‘Socialist oriented’ Nepali Congress Party of B P Koirala had
ideological proximity with Workers’ party of the Land of Israel MAPAI,
the Workers’ Party of the Land of Israel led by David Ben-Gurion. During
the meeting at the First Asian Socialist Conference held in Rangoon
(Yangon), Burma (Myanmar) in 1953 the Israeli Foreign Affairs Ministry
officials including Moshe Sharett met B P Koirala who was leading
Nepalese delegation to Burma. Moshe Sharett visited Nepal in 1956 when
Tanka Prasad Acharya was the Nepali Prime Minister. He tried to convince
Nepali leadership about the importance of Israeli assistance to Nepal, but
failed. The Nepali political elites were still following India over the matters
of foreign policies. The Nepali leadership rejected the Sharret proposal by
saying ‘it will hamper the Nepali relations of larger Arab world and India
as well’. Sharret responded by telling the Nepali Prime Minister that Israel
sought diplomatic ties to prove to the Arabs that the world did not support
them in their refusal to come to terms with Israel (Ben, 1956).
In 1958, Koirala visited Israel. He was invited by the Israeli government
and Histardut (Israeli Organization of Trade Unions). Koirala was
genuinely interested in the moderate Socialist experiments of Israel,
especially the cooperative agricultural community system or Moshav
in Hebrew brought his attentions. This kind of agricultural system and
planning was very much suitable for Nepal. In 1959, Nepal experienced
its first taste of democracy when the nationwide elections were held. B P
Koirala became the first democratically elected Prime Minister of Nepal.
Israel did not miss the opportunity of inviting him to Israel on an official
visit. Though, Koirala was hesitant in accepting Israeli offer due to Indian
reaction in the beginning but he decided to accept this opportunity for the
betterment of Nepal. He decided to be the Nepal’s official representative
to the conference held by Weizman Institute of Science on the topic of
National Development, in Rehovot, Israel. He was among the very few
heads of the states who joined this Conference. As a precautionary measure
Koirala stopped in New Delhi before flying to Tel Aviv, to explain his
purpose of visit to avoid confrontations with New Delhi.
During his visit to Israel, Koirala was deeply impressed with the
technical expertise achieved by Israel without diluting the Socialist
principles of state. During this official visit many rounds of talks were
held on the issues of the establishment of diplomatic ties between Israel
and Nepal and technical assistance by Israel to Nepal. While leaving from
Israel after 10 day-long official trip, Koirala said at the Airport that, ‘Nepal
needs technical assistance from Israel’ and that he hoped that ‘the Israeli
specialists would shortly reach Kathmandu’ (Naya Samaj, 1960). In a
conversation with M Michael in Bombay (Mumbai), Nepal ambassador
to Delhi, Lieutenant General Daman Shamsher Jung Bahadur Rana, said
as follows:
Our Prime Minister told me explicitly that Israel is one of the most
interesting and important countries for us. We would very much like
to establish full diplomatic relations with you; however, we cannot do
that before India does (Michael, 1960).
In 1960, Koirala wrote letter to the then Israeli Prime Minister Golda Meir
and showed his country’s interest in establishing diplomatic relations
with Israel. He raised this issue inside the Nepali Parliament as well. The
pro-Indian groups inside the Parliament opposed this move, but Koirala
ignored the oppositions. In June 1960, Nepal-Israel established diplomatic
relation at an embassy level. The very same year he visited Israel with a
group of Nepali delegates. The Israeli government gave a warm reception
to the delegates. Koirala requested Israel to send the specialist to conduct
preliminary agricultural survey in Nepal. The Israeli government send
technicians and specialist immediately to conduct various kinds of surveys
and research in the field of agricultural as well as the other sectors too.
Within a short period of time Nepal successfully completed the settlement
projects in Nepalganj and Nawalpur. The outcomes of these settlements
surprised the Nepali people. The Israeli expertise in agriculture was very
well used for the development of Nepal. Very soon Nepal started thinking
of other kinds of assistance from Israel, especially in the field of security
and military training.
International community especially India was closely watching each

and every calculated Nepali move in the process of developing ties with
Israel. Koirala was aware of that. In fact many in Arab world strongly
reacted against the new Nepali diplomatic initiatives. Many editorials were
written in Nepali newspapers against the decision of Nepali government to
develop relations with Israel. In an editorial it was argued that:
It’s no crime to have friendly relations with Israel but can we afford
to antagonize so many Arab nations simply in order to get aid from
Israel. Cannot we obtain the same amount of aid from the United
Arab Republic? (Samiksha, 1963)
The democratically elected Nepali Congress government was overthrown

in royal coup d’état by King Mahendra on 15 December 1960 after working
for merely 18 months. During this period there was a deep uncertainty
about the survival of Nepal-Israel relations. This was probably due to the
allegations made by the enemies of Koirala that:
he was planning a military alliance with Israel to pave the way for
coup to remove the Nepali King and set up a republic (Mihlay, 1965).
But the uncertainty did not last long. In its comment on ongoing political
crisis in Nepal, the Israeli Foreign Ministry released statement that,
‘Internal changes in Nepal have not affected the favouring trend of
relations’ (Yearbook, 1961-62). Rejecting all the rumours King Mahendra
acknowledged the importance of Nepal-Israel relations and accepted Israeli
proposal of upgrading the bilateral relations. The then Israeli Ambassador
to Burma served concurrently as the first non-resident Israeli Ambassador
to Nepal (Kozicki, 1969). King Mahendra announced that an embassy
representing Israeli interest would be established in Rome (Abadi, 2004).
A former Nepalese Foreign Ministry spokesman had told Richard Kozicki
privately that Nepal has actually established its new diplomatic mission
in Rome to post that envoy concurrently to Tel Aviv, thereby hopefully
avoiding the severe reaction of the Arab states which would surely have
resulted from Nepal’s sending a resident diplomatic chief of mission
directly to Israel (Kozicki, 1969). As earlier it was believed that Nepal’s
closeness towards Israel will result into Nepal’s alienation in international
community. It turned out wrong in course of time. In September 1963, King

Mahendra made an official 5-day visit to Israel. Before visiting Israel King
Mahendra spend 12 days in India to take India into confidence over the
matter. The Joint Communiqué issued by the King of Nepal and President
Zalmon Shazar of Israel at the conclusion of the King’s visit stated, inter
alia, there call for peace, reiterated their ‘full support for the independence
and integrity of all nations, great and small’, recorded Nepal’s thanks
for Israel’s cooperation in ’development and progress’, and noted that
His Majesty had extended an invitation to the then President of Israel to
visit Nepal ‘at a time suitable to him, which the President accepted with
pleasure’ (Israeli Digest, 1963). In March 1966, the then Israeli President
Shazar made an official visit to Nepal. He stayed in Nepal for 8 days and
discussed various key issues related to the strengthening of relations in
future by more economic and diplomatic cooperation. During his visit
President Shazar made stopover in India en route to Nepal. Israel was not
deterred by any reluctance on the part of New Delhi. This was the most
important time in the history of Nepalese diplomacy. It demonstrated the
Nepali sovereignty over the matters related to the foreign policymaking.
Very soon the time for the test of Nepal-Israel relation arrived in the wake
of 1967 Arab-Israel War or Six Day War. Nepal took very mature position.
It showed its grave concern over the conflict at the same time it maintained
the position that any attempt to destroy Israel is not acceptable and should
be condemned. In Nepali press the reaction was largely in favour of Israel.
The Nepal Samachar wrote as follows:
Israel can count on assistance from any quarter of the world, since
her existence is in danger. If Israel is defeated the existence of small
nations will gradually be wiped out from the world (Nepal Samachar,
1967).
Naya Samaj wrote as follows:
The question is not victory or defeat but of the existence of a nation.

If Israel is defeated, its existence will be wiped out; if Arab nations
are defeated, nothing serious will happen (Naya Samaj, 1960).
In his well-prepared statement of 26 June 1967, Major General Padma

Bahadur Khatri, permanent representative of Nepal to the United Nations,

recalled that his government had maintained ‘the friendliest of relations
with Israel and the Arab world’. He added that Nepal’s ‘policy of non-
alignment demands us of friendship with all the countries of the world’.
He added that while his delegation was opposed to ‘forcible occupation’
of territory by any country it deplored ‘attempts directed towards the
extinction of a state, or a continuous state of belligerency’. (Kozicki,
1969) However, India continued it tradition pro-Arab position. India and
Yugoslavia sponsored a resolution in the United Nation on 4 July 1967,
demanding the unconditional total withdrawal of Israeli forces to the
borders prior to Six Day War, Nepal abstained. But later in a very dramatic
manner Nepali delegation informed the then UN Secretary General in
written that his vote should now be counted as ‘in favour’. This sudden
changed Nepali position disappointed Israel.
In September 1968, Crown Prince Birendra Bikram Shah visited Nepal
on an official visit. It was another step ahead in the relations between the
two countries. Same year, the Nepali government bought the remaining
49 per cent shares of the National Construction Company of Nepal Ltd.
(NCCN) from the Solel-Bonech Ltd. of Israel.
The end of 1968 marked a new phase in Nepal-Israel relations. Nepal
succeeded India as Asian representative in the Security Council, which
means Nepal is going to play a more significant role in international
politics in general and in Arab-Israel conflict in particular. During the
Yom Kippur War Nepal appeared more cautious in its pro-Israeli policies.
Integration of Sikkim into India and liberation of Bangladesh after Indian
military intervention made Nepal more cautious over the foreign policy
related issues. Nepali arms deal in 1988 with China finally irked India.
New Delhi responded by closing 13 out of 15 border points. This Indian
punitive move made realization to Nepal of its dependence over India
in many aspects. After the end of the Cold War, the Indian government
also realized the need of liberalizing its economy. Arab-Israeli conflict
shifted to another phase, Israeli-Palestinian negotiations initiated. This
was the time when India established a full diplomatic relations with Israel.
Similarly, China also started normalizing its relations with Israel. The
major obstacle between Nepal-Israel relations disappeared. In November
1993, the former Prime Minister Girija Prashad Koirala visited Israel on
the invitation of the then Israeli Prime Minister Yitzhak Rabin. During his
visit Girija Prashad Koirala signed the Protocol of Cooperation between
the Federation of Nepalese Chambers of Commerce and Industry and the
Federation of Israeli Chambers of Commerce in Tel-Aviv, Israel (Israel,
2016). He welcomed the historic Oslo accord signed by the Israeli Prime
Minister Yitzhak Rabin and the Palestine Liberation Organization (PLO)
Chief Yasser Arafat. After Girija Prashad Koirala, Ram Chandra Poudel,
the Minister of Agriculture and Local Development also visited Israel.
A six-member Nepalese Parliamentary Delegation comprising members
of Law, Justice and Parliamentary Affairs Committee, including the
Secretary of the Ministry of Law, Justice and Parliamentary Affairs, and
headed by Gehendra Giri, Member of Parliament, paid a visit to Israel
from 18 to 21 November 2001 at the friendly invitation of the Knesset
(Israel’s Parliament) (Israel, 2016). A four-member delegation of the
Knesset (Israel’s Parliament) headed by the Deputy Speaker M K Nawaf
Mazalha, paid a friendly visit to Nepal in December 2001, at the invitation
of the Speaker of the House of Representatives (Israel, 2016). After the
2006 revolution, when Nepal was under the Maoist rule, it experienced the
lowest level of engagement with Israel. But soon things started becoming
normal between Nepal and Israel. In 2007, Nepal opened it embassy in
Tel Aviv, though Israel has already established its embassy in Kathmandu
since 1961.
Recent Developments in Nepal-Israel Relations

Nepal and Israel enjoyed very strong relations since the foundation of
Israel. The Israeli government has been providing scholarships and various
training programmes to the Nepalese since the 1960s. A significant number
of Nepalese workers have been employed in Israel. According to a report
by Nepal Israel Friendship Society (NIFS) among the total population
of migrant workers in Nepal, 75 per cent prefer Israel as their first
employment destination (NIFS, 2011). Likewise, at present 13,000 people
are employed in Israel in different sectors like caregivers, agriculture,
hotel, and factory. According to the Ministry of Labour and Employment
(Nepal), during the period 2014-15 around 589.60 billon (NPR) entered in
Nepal as a remittance from workers employed in various countries, which

contributed the 27.7 per cent share of total gross domestic product (GDP)
(Employment, 2016). The major setback came between the relations of two
countries when Israel imposed ban on Nepalese workers after discovering
that they are likely to violate the terms of their contracts (Miskin, 2009).
Recently, (2015) Israeli Ambassador to Nepal has said that Israel would
give enough opportunities to agriculture workers, trainees, and caregivers
by putting Nepali workers in the top priority (Shrestha, 2015). On the
occasion of 50th anniversary of the establishment of diplomatic relations
between the two countries, the Nepali Ambassador to Israel, Prahlad
Prasai and the Israeli Ambassador Mayer expressed commitment that
they would continuously involve for the expansion of the mutual relations
between two countries (Shrestha, 2015). In 2015, Nepal witnessed one
of the worst earthquakes in its history in which more than 9,000 people
lost their lives. Israelis were among the few who immediately reached
out for the rescue missions. Israel with more than 260 Israeli soldiers,
doctors, and rescue experts worked in the disaster zone. Israel had the
largest of all the international aid teams on the ground, according to the
Israeli Consulate in New York (Wiener, 2015). The Israeli Prime Minister
sent a letter to Nepalese Prime Minister Sushil Koirala, and said that Israel
was pained by the disaster that has befallen Nepal (MFA, 2015). Among
many recent trends, surrogacy is very popular in Nepal. Many Israeli has
chosen it as best way to get child, especially the Lesbian, Gay, Bisexual
and Transgender (LGBT) community. According to a report, just after
the massive earthquake hit Nepal, two dozen newly born babies through
surrogacy were airlifted out of Nepal for gay Israeli couples to safety
(Evans, 2015). Nepal is also one of the most favourite destinations for the
Israeli youths especially after their compulsory military service. Around
5,000 back packers from Israel reach every year to Nepal. The Israeli
and Nepali governments jointly issued a postal stamp, featuring the Dead
Sea and Mount Everest on the occasion of the celebration of 52 years of
diplomatic relations. It juxtaposes the Israeli and Nepalese flags and has
Hebrew, Nepali, Arabic, and English writing on it. In Israel it is valued at
5 shekels (US$ 1.25) and in Nepal at NPR 35 (US$ 0.39) (BBC, 2012).
Future Prospects of Nepal-Israel Relations

Since the end of the Cold War Nepal-Israel relations are going smoothly.
Since, India and Chinese has established bilateral relations, Nepal no more
requires to adopt a balancing attitude between its two giant neighbours
while dealing with Israel. The Israeli relations with its neighbouring Arab
nation are also normalizing gradually. After the Yom Kippur War Israel
signed peace agreement with Egypt and established diplomatic relations.
Similarly, in 1994, Israel signed peace treaty with Jordan. For Nepal Arab
countries were not as important as it was to India or other developing
countries. Nepal, mainly, a rural society with small scale industries was
not much dependent on the petroleum or other energy resources compared
to other countries. In dealing with Israel the major Nepalese concern was
the reaction from India and China. Indian solidarity and uncompromising
attitude towards the Arab cause made difficult for Nepal to openly
develop relations with Israel. In a very calculated way Nepali leadership
(especially B P Koirala) showed courage to engage unilaterally with Israel
without involving India. But this problem also diapered when India itself
established diplomatic ties with Israel. Israeli technical as well as financial
assistance helped a lot in the modernization of Nepalese economy. Here
it is worthy to mention that Nepal never antagonized the Arab countries
by giving openly pro Israeli remarks. It avoided taking sides on the
issues conflicting to the both the parties. Though on some occasions
Arab countries over reacted to the Nepalese diplomatic moves. For years
Nepal maintained low profile relations with Israel. Nepali decision of not
opening embassy in Tel Aviv prior to opening missions in Arab countries
defines the Nepalese commitment to the third world solidarity. It preferred
to open Israeli mission in Rome to avoid unnecessary confrontation with
Arab countries. The foundation of Israel-Nepal relations is based on
historical trust and understanding between the two nations. In future also
it will continue and prosper in the benefits of both the countries. Nepal’s
geo-political location and its political credentials can be beneficial for
Israel to develop relations with other South Asian countries like Pakistan,
Bangladesh, and Maldives. Indian image in the South Asian region is
not effective because of its hegemonic attitude. Nepal can fill this gap,
since it has enjoyed good relations with all the South Asian countries. In
near future Nepal is designed to play a very important and neutral role
in bringing peace to the South Asian region and Israel definitely will be
benefited.
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21
Nepal and USA Engagement: Does it
Have Strategic Configurations?
Ipshita Bhattacharya
Abstract
T he diplomatic relations between the United States and Nepal was first
established in 1947. Since then the United States is giving development
support to Nepal in the form of Fulbright programmes, economic assistance,
and military support. The United States is the principle supplier of military
assistance to Nepal. The military assistance increased after 2001 when
the peace negotiations broke down. Before this the United States military
contribution was only restricted for peace keeping mission in Nepal. The
major cause behind this transition was the United States involvement
from peacekeeping to counterinsurgency operations that finally resulted
in formation of a strategic alliance for counterterrorism between both the
countries. Moreover, the United States was mainly focused on suppression
of communism in Nepal till recent times to keep a consistent check further;
perhaps the United States wants to be engaged in Nepal. This chapter
will explore and analyze the strategic reasons behind the United States
military involvement in Nepal, i.e. the involvement which manifests from
peacekeeping mission to counterinsurgency operations. Second, this
chapter will further explore that Nepal is a buffer nation between India
and China and have a strategic geo-political significance, and whether
it could be another strategic reason for the United States presence in the
Nepal and USA Engagement: Does it Have Strategic Configurations? • 319
region. The chapter is divided into two sections—the first section will deal
with Nepal and the United States diplomatic relations from the embryonic
stage till date with a major focus on the defense relations between both the
countries. The second section will discuss the geo-political significance of
Nepal and the United States strategic interest in the country.
Introduction
Nepal, the Himalayan country situated between two strategically important
countries i.e. India and China. Economically Nepal ranks among one of the
developing countries that needs foreign aids and support, for development.
After, 1990 Parliamentary democracy under a constitutional monarchy was
adopted by Nepal as their political institution. This was followed by some
economic reforms and market liberalization but the political instability and
economic vulnerability could not withstand the challenges emerging from
the internal security threats that resulted in declining economic growth
and reforms further. Gradually stable governance became a crisis and off
course also the primary issue that required dire attention. The country faced
potential political upheavals, local turbulences and internal security threats.
United States, established its diplomatic relations with Nepal on
February 16, 1948, and this establishment of diplomatic relations with
Nepal gave a political impetus which supported it to become a political
entity in itself and achieve the status of a sovereign State. USA started its
economic support in form of Fulbright programs, economic assistance and
military support. Gradually USA, became the principal supplier of military
assistance to Nepal, which increased and gained a regular momentum after
2001 when the peace negotiations finally broke down.
Before this USA’s military contribution was only restricted for peace
keeping mission in Nepal. The major cause behind this transition was
USA’s involvement from peacekeeping to counterinsurgency operations
that finally resulted in formation of a strategic alliance for counterterrorism
between both the countries. Moreover, USA was mainly focused on
suppression of communism in Nepal till recent times to keep a consistent
check further, perhaps USA wants to be engaged in Nepal.
Since years Nepal is passing through a transitional phase and is still
struggling to emerge from the violence and conflicts and as a matured
nation. Nepal holds a pivotal place in the geo-politics of South Asia.

The Himalayan country’s foreign policy has been mainly riveted to its
relation with India and China. However, its dedicated effort to develop
its international relations with other international powers is considerable,
considering its economic status and territorial size for international politics.
The small country of South Asia has managed to develop diplomatic
relations with over 100 countries of the world, and its participation
in international organization (UN Peace keeping force) and forums is
appreciable.
Nepal, with its broken economy, political instability, and insurgency
has struggled for a democratic civil society since decades. The political
situation of Nepal has been a complex ground of upheaval, and the
major cause being, absence of suitable democratic government, political
crevices, and political mayhem. Nepal came in to parliamentary democratic
existence under the constitutional crowned head following the restoration
of democratization motion in 1990. Before that, it had an absolute
monarchy. A constitution was drafted in November 1990 constituting
Nepal as a parliamentary democracy with a constitutional monarch as the
head of state with limited power.
In February 1996, ‘People’s War’ was declared under the canopy of
Communist Party of Nepal (Maoists) (CPN-M). The flare was due to
the broad understanding of government’s failure and corruption charges.
Government’s failure to improve the quality of life of its people, and
failure to give cultivable lands to the farmers created dissatisfaction and
chaos among the people. With this ‘People’s War’ the country was soon
under the conflagration with Maoist running a parallel government. With
the establishment of their own tax system, destroying all the old records
pertaining to land and then redistribution of these lands among poor
people through the armed conflict. The insurgency was further outgrown
by killing of government officials, bombings, and robberies in banks and
other public offices. The fuming dissatisfaction of the people towards its
government and ethnic groups was the key cause behind the upsurge of
CPN-M.
Nepal confronted and dealt with a decade long Maoist insurgency
crisis with the CPN (M) declaration of war in 1996 after disapproving
the fundamental assumptions of Nepal’s constitutional monarchy, and

the institution of parliamentary system founded in 1990 by the popularly
known as Jan Andolan. The 10-year long insurgency and counterinsurgency
took more than 16,000 lives. The Maoist insurgency was the result of
continuous avoidance of the need of the lower sections of the Nepali
society especially in rural areas. The main causes behind insurgency were
feeble governance, lacking resistance to Maoist affect, and economic
crisis. Similarly, government’s inefficacy to find solution for the political
dispute which was within the jurisdiction of directive principles of the
constitution was also the cause of the insurgency in Nepal.
In the beginning years, Maoist started with a mild opposition for the
regime with a less number of insurgents from the rural section of the country.
The government reacted by launching counter-insurgency operation by
the name Romeo and Kilo Sera II. The counter-insurgency programmes
were coercive in nature like imprisonment, torture, and humiliation which
instead of controlling the insurgency fire spread it across the country.
The continuous suppression by the government with the special training
and support from the United State escalated the crisis to an irrevocable
status. There was an urgent need for the negotiations, both government
and insurgents realized that and, hence, couple of peace talks took place
for providing accommodation and cooperation between the two parties.
The focus was to restructure the relations and increased faith in justice.
After out governing the state and military impasse, CPN-M aspired
for political maneuverings by playing up on internal fissures and
dissatisfaction rising between the political parties and the crown to gain
its agendas. As a result, the Government of Nepal failed miserably to
satisfy its citizen on socio-economic issues. Even after the deployment of
Royal Nepal Army (RNA, now Nepal Army) the government was unable
to curb the Maoist insurgency. Maoists controlled approximately 40 per
cent of Nepal’s countryside. Endeavours were made for peace talks but
failed. After the break down of the ceasefire in August 2003, the civil war
resumed with increased intensity and vigour from both sides blatantly
breaching humanitarian law and charging massive abuses. According to
the documented Human Rights reports, the conflict had further caused
a major human rights damage and crisis in Nepal, worsened by the
country’s political instability, awful strategic choices, and dire economic

requirements. The Maoists had a dreadful human rights record. Maoist
forces have abducted, killed, and tortured civilians those who were found
to be suspected of being ‘informers’ or ‘enemies of the revolution’. They
have forced out ‘donations’ from villagers, recruited small children as
fighters and in other conflict-related contents, and abducted students for
political teaching. From year 1996 to 2008, the CPN-M has carried on
insurgency operations, and finally achieved majority rule through free
elections. The internal political fissures and baffled strategic choices
between monarchy and parliamentary parties appropriated Maoists to win
the support of the Nepali people.
The United States Involvement

The United States has dedicated appreciable political and diplomatic
vitalities to its engagement in Nepal which acquired a new intensity for
producing a credible framework for an enduring and sustained system
of democracy. The United States played a role of facilitator for Nepal to
promote its national interest, security, and for its peaceful coexistence with
its neighbours.
Figure 1: US Assistance to Nepal, FY 2006-09.

Source: CRS Report 2008.
The United States supported Nepal in formation of a democratic system,

on all economic fronts, safe guarding human rights, and regional stability
and peace. The United States has been its bilateral donor since 1951. Nepal
has been receiving the United States aids for its defense upgradations to
counter insurgency operations (Figure 1). Before 1998, it was limited for
peace keeping but post 2001 it significantly increased for counter insurgency
objective. However, in spite of sufficient military aids from the United States
political, economic, and social problems could not be compensated.
The United States is Nepal’s second largest export hub. The United States
has close ties with Nepal since bilateral relations were first established in
1947. In 1951, economic assistance like Fulbright programmes began. The
total assistance for development over the years amounts to more than US$
400 million. The security aid, including a one-time amount of US$ 12
million in 2002, ramped up to US$ 22 million overall. The first American
library was opened by the then US Information Service in 1952. In 1962,
the Peace Corps programme was formed in Nepal. It was aborted later
but again decided to resume its operations. The United States and Nepal
also signed a Memorandum of Intent in March 2003, to ‘formalize and
strengthen both nations’ participation in the Anti-terrorist Assistance
programme’. In July 2003 the United States Embassy in Kathmandu
reported that the Maoists had begun targeting the United States aid project
(CRS Report for Congress, 2005).
Figure 2: US Assistance to Nepal, 2001-06.

Source: CRS Report 2005
Establishing a functional democracy and regional stability are central

theme of the United States interests in Nepal. The United States earnest
and conscientious intend is to encourage democracy and civil society in
Nepal and allow developmental aids to its people for progress. The United
States support to Nepal has attempted to help Nepal ‘cement recent gains
in peace and security’ and help Nepal in its move to a democratic system.
The Economic Support Funds (ESF), Development Assistance (DA), and
Child Survival and Health (CSH) programmes have assayed to consolidate
stability and security while putting efforts to strengthen governance and
secure human rights (Figure 2) (Bruce Vaughn, 2012). International
Military Education and Training (IMET) programmes have been included
to grow Nepal’s military’s ability to carry on operations. The United States
started working with Nepal since 1948 after establishing their embassy
in Kathmandu in 1948, prior to this, the United States established its
diplomatic relations with Nepal in 1947. Since the inception of its relation
with Nepal, the United States is cooperating this land-locked Asian nation
on various areas, such as economic development, effective governance,
political constancy, and maintaining regional security as Nepal is a geo-
politically a nation of significant interest.
American development aids to Nepal has increased strikingly over
the years, shooting up from US$ 24 million to US$ 42 million annually
(Nepal: US Embassy). However, half of the amount, i.e. US$ 23 million
is appropriated for basic health needs (from the Vitamin A programme
that saves the lives of more than 25,000 children every year to HIV/
AIDS cognizance and prevention). Other projects includes assistance
for democratic system building, like judicial reform programmes, anti-
trafficking, building job and income opportunities in rural areas to render
peace, providing agricultural market development, and hydropower
development projects. The assistance and aids to Nepal faced obstacles
and risk from a bestial Maoist insurgency. The United States considered
Maoist’s intention to enforce a one-party ‘people’s republic’, control of
farms and industrial enterprises agriculture, and export their revolutionary
thoughts to neighbouring states as threats to peace and stability in the
region. The United States had a firm concern in providing help to the
people of Nepal to defeat the threat of counter insurgency and to address
with the country’s grievous developmental problems. From time-to-time

the United States stated its goals for Nepal, i.e. to be a peaceful, stable,
and democratic country where democratic rights and human rights of its
citizen were protected.
Nepal, an inland South Asian country, suffered plaguing menace of
insurgency since decades that finally ended in 2006. Due to its geological
positioning, Nepal is more vulnerable to other threats like earthquakes and
climate change related issues. After a decade old struggle with its internal
strife Nepal is still striving hard for its identity in the global politics.
The long drawn out Maoist insurgency took a heavy toll on Nepal,
an estimated damage to infrastructure of more than US$ 1.5 billion,
displacement of people, violence and breakdown of its economy followed
as consequence to the turbulent era. However, to counter the effects the
United States aids were given for rural infrastructure projects, and dispute
resolution training for the development of civil society.
Strategic Involvement of the United States in Nepal

The United States was Nepal’s first bilateral donor and it remained its
largest donor until 1965. After that it gradually declined because of
Chinese intervention and interest in Nepal. The major component behind
the United States strategic involvement in Nepal was addressing to develop
a regional and political ideology that would bring forward American
interests and values in the region. The degree and intensity of the United
States intervention in Nepal was primarily based on political orientation
and humanitarian support.
The strategic causes behind the United States engagement in Nepal
were to increase its defense involvement and establish the democratic
system besides trade and investment. In partnership with Nepal, the
United States endeavoured to create a stable security order that establishes
strategic security and stability in the region because if Nepal becomes a
failed nation it would be a supporting avenue for terrorists.
The United States military presence in Nepal can also be understood
under the contours of security dynamics, vis-à-vis, India and China and
that could perhaps be the United States strategic interest in Nepal. The
United States mainly focused on suppression of communism in Nepal
till recent times to keep a consistent check further. China which is a

communist country has its growing influence and interference in Nepal,
and looking into India and China relations, the United States presence
in Nepal was strategic for the region. The United State significant
involvement in Nepal to counterinsurgency has its own interest
and strategic ramifications. America’s intervention in South Asian
continent was also part of Blair’s pet project called the Multinational
Planning Augmentation Team (MPAT)—Tempest Express. The MPAT
is a multinational programme with its Secretariat hosted by the United
States Pacific Command in the United States (Tempest Express, 2015).
It is devised to make a multinational cadre of military system capable
of growing a multinational force headquarters to plan and execute
operations in response to a regional crisis.
The speedy aggression in Maoist activities and the royal massacre in
2001 postulated the United States for its Nepal engagement seriously. Sher
Bahadur Deuba who took over as the Prime Minster and had better relations
with Washington soon arrived at a decision with Christina Rocca (Assistant
Secretary of State for South Asia) for military solution on the insurgency
situation. State of Emergency was imposed in January 2002, and orders
were given to the RNA to break down the rebels. After the visit of the then
US Secretary of State, General Colin Powell, in Nepal, a huge appropriation
of US$ 20 million for the Nepalese security forces was announced by the
Bush administration. To equip and support the RNA a team of the US
military consultants from the US Pacific Command reached Nepal. The
group included a Colonel of the US Marine Corps, the Deputy Chief of
Engineering, and the Chief of the Logistic Plans Division. This Group was
accompanied by dedicated mobile teams that operated with RNA ground
units on affairs of military tactics. Elaborated training programmes for
RNA officers to US military schools were increased. Various workshops
and training programmes were conducted by the US Army War College,
the National Defense University, the US Army and General Staff Colleges,
and the Asia Pacific Center for Strategic Studies for RNA officers. A huge
the United States-aided elaboration of the Security Forces (RNA and the
paramilitary Armed Police Force) commenced. There was an exponential
growth in military forces recruitment. The Army prior to 2001 which was
approximately 35,000 swelled to over 1,00,000 in 2005. However, even

this could not stop the recommencement of the civil war.
January 2003, a ceasefire was declared soon only to discover eroding
faith and growing suspicion between the Maoist forces and government
parties. The United States military support and training could not yield any
result rather the uncontrollable Maoist inferno spread to the districts which
were unaffected earlier.When the change of power took place in Nepal
from Deuba to Lokendra Bahadur Chand he was given the responsibility
that he would convince the US to stop branding the Maoist leaders as
terrorist, along with to conduct cease fire second, to remove rewards
proposed for the arrest of the leaders; and finally, to pull back international
police arrest warrants for them. The branding of revolutionaries as
‘terrorist’ was done precisely and clearly in public by Christina Rocca and
inclusion of revolutionaries in the United States terrorist list in the United
States embassy in Kathmandu further halted the truce and peace process.
The further damage was done by the then US Ambassador to Nepal,
James F Moriarty who suggested the Bush government not to remove
the terrorist tag from the Maoist and also threatened to stop the further
economic assistance if CPN-M was inducted in interim government, peace
talks involving CPN-M leaders was also boycotted and called off by him
(Raman, 2006).
In Nepal, the Washington’s focus on counter-terrorism has admittedly
sometimes neglected the Maoists’ significance as a political force
demanding long-overdue political, economic, and social advancements.
Since the very inception of insurgency, the Maoists have adopted violent
ways in asking for various reforms. While their use of violence means
for innocent citizens in following their political aspirations were not
considered as fair by the United States perhaps rather it became a fair
reason to label the Maoists as a terrorist organization.
The United States kept on pouring money into Nepal to check
communist expansion, despite almost a decade of training, aid, and high-
level pushes for reform. Nepal suffered from insurgency, instability, and
economic crisis. The major strategic causes behind the United States
vigorous involvement in Nepal could be understood under three broad
perspectives. These are discussed next:
Pivot to Asia, ‘Rebalance’

The United States military superiority in power or influence has its bed in
Asia since the Second World War, subsequently enhanced by a Cold War
alliance system based on bilateral security guarantees. The World War II
also transformed defense relations between the United States and Asia.
The military bases of America in the Philippines, Japan, and South Korea
protected Asian boundaries during the Cold War. American prevalence in
the Asia was always in demand since the end of Cold War, especially in
the wake of the United States increasing coalition system, collaboration
in defense partnerships, and growing political tumultuous and fissures in
the region. Moreover, America’s presence was also understood by small
nations as a cushion to balance regional hegemonies.
The United States has been broadening its involvement with Asia with
its ‘Pivot to Asia’ doctrine. The significant aspect behind the United States
‘Pivot to Asia’ is that in future the Asian region will consolidate its place
in the world; hence, formulating and strengthening the relationships in
this region was substantial for the United States for the coming decade.
The major structure on which the United States Pivot to Asia rests are
primarily alliances which includes defense and security with increase
in US military presence in the region; second, economic statecraft since
Asia being driver of global economic growth, and finally to improve its
relations with emerging powers and small nations.
Moreover, the goal intended towards the Pivot to Asia policy
challenges the China’s rise in Asia, as it is growing with immense
power in the region. The United States defined aim was to develop a
relationship that will embellish its presence in other parts of Asia. The
most important element of this military build-up was China, which Bush
depicted in the presidential elections as ‘a strategic competitor’. The
significant economic growth of the Asia-Pacific region, and particularly
China, with Beijing’s increasing military capabilities and its growing
assertiveness in the region, actuated the United States for its military
involvement in Asia and Nepal is surely a strategic move with China in
heed. Therefore, the important precedence before the United States has
been to fortify the coalitions that are the cornerstones of engagement in
the region and build the pillar on which the region’s confirmed peace
and future security issue perches. The terrorist attack on the World Trade
Organization in the United States was also a potential reason for America
following an aggressive counterinsurgency operation in Nepal. In fact,
the United States was on a speedy drive to root out the radical elements
and perhaps that could have been the reason behind equating Nepali
insurgents with terrorists. To draw out potential commercial, trade, and
economic benefits from small Asian countries by fostering relations was
also an important factor.
Anti-Communism Ideology
The twentieth century, post-World War II and the gradual creeping age of
the Cold War, an ideological battle subsisted between communism in its
various forms and the western ideals of democratic government, economic
independence, and individual freedom. This conflict was waged in many
ways and forms in explicit military confrontation in conflicts and also
in covert diplomatic ways. The United States overtly worked to bring
down the ideology of the communist bloc wherever it faced communism.
In Nepal, the United States was particularly concerned about China’s
influence and its centralized state and authoritarian model of governance
since Nepal was already in a politically vulnerable situation. Another
important factor was that since 1949, China was assertively supporting
movements and cause which were communist ideologically related in
South-East Asia, to win the world class war especially in quasi-democratic
societies (Chinese Support for Communist Insurgencies in Southeast Asia
during the Cold War Stanislav Myšička, 2015) and Nepal being a small and
geographically strategic nation had full possibility of getting influenced by
China’s communist ideological inflow.
Moreover, the Maoists took international support, mainly external
political support. CPN (M) is a member of the Revolutionary Internationalist
Movement (RIM) and the Co-ordination Committee of Maoist Parties and
Organizations of South Asia (CCOMPOSA). The RIM is an organized
structure of radical parties devoted to Marxism-Leninism and Maoist
thought. The CCOMPOSA is a similar organization of Maoist parties
established in June 2001 specifically for South Asia. The role of both the
forums is for political statements and expression of ideology.
The concern for communism in the United States was always an

expression of political bothersome anxiety over the infiltration of
international factors. The philosophical foundation of this fear was
based on the marked differences between capitalism and communism as
economic systems since the twentieth century. With the victory of Chinese
revolution in 1949, the United States feared the communist threat in Asia.
The prevailing communist governments in China and Vietnam and its
influence in Indonesia and partially in India, with emerging guerrilla war
in Malaya alarmed the United States for Asia.
The primacy of ideology of the presence of USA in Nepal can also be
seen in origin and development of relations with Nepal. The open and
defined objective of the United States to develop and support democracy
in Nepal was to inhibit spread of communism as Nepal was already
bordered and influenced by China. The United States emphatic averment
to be the leading world power and Nepal’s geo-political location between
India and China has been the main cause behind Washington’s strategic
involvement in Nepal. The strategic pursuit of the United States started
with US Operation Mission (USOM) in Nepal. The initial aids and support
to Nepal was actually directed towards anti-communism and prevent it
from gradually blending in to China. The United States objective was to
bring down communism and prevail democracy, and this was the primary
reason for various economic development programmes launched by the
United States in Nepal. The primary focus was to develop and consolidate
the politically fragmented landscape to a responsible democratic system.
India and China Issue

Given the context, Nepal has vital importance in America’s strategic
interest in Asia. Since Nepal is a buffer state between India and China,
hence, consists of confrontational dynamics in which the United States
finds its concern. Sharing geographical features and natural booties of this
particular region, Nepal, India, and China consists of array of strategic
elements that links them together, and same strategic elements are reasons
behind the United States long stay and participation in the region. Nepal’s
position is strategically significant with ascending China and Nepal being
a buffer state between the two regional powers, it can and could become
the centre of geo-political rivalry between China and India. Since Nepal
is politically vulnerable and economically unstable, ‘the weakness and
collapse of Nepal would offer an opportunity for China to engage directly
in South Asia’ (Cohen, 2001), which off course is not acceptable for
the United States. Moreover, China’s covert diplomacy in Nepal and its
strategy to enter South Asia through Nepal for its own advantages was
calculated well in advance by the United States. Perhaps to thwart the
China’s motives in Nepal, the United States strategically calibrated its
foreign policy objective towards Nepal.
Another concern could be that China’s growing influence may
practically provoke India into a response that could jeopardize Nepal’s
peace. This is grounded on the presumption that India believes Nepal as
being inside its domain of influence and hence, it may regard China’s
increasing engagement in Nepal as a threat. Where in New Delhi could
be apprehensive about China’s involvement into Nepal as a part of its
expansion policy to contain and encircle India (Bhattacharya, 2009).
Therefore the United States, to prevent the occurrence of any such
hypothesis in reality and continue with its strategic motives in Nepal
perhaps stretched its stay and supports both to Nepal for a longer time.
The involvement of the United States and China in the region could have
other repercussions too, because of Chinese financial obligations. Nepal is
often under pressure to take rigorous security measures against Tibetans
to gratify China for its ‘One China Policy’. And, with the United States
involvement and anticipated pressure to grant the Tibetans their political
right to protest, Nepal could be in a confounding situation and in long run
it is likely to face critical diplomatic challenges (IDSA Issue Brief, 2012).
The United States interest in South Asia is evolving. South Asia is
much more significant to the United States, today than it was during the
Cold War—a region once on the fringe has taken centre-stage since last
few decades. However, developing the United States strategic policy
interest is not based on a single issue, but on a set of different issues. This
includes counterterrorism where military and intelligence have particular
influence, economic leverages, and alliances in defense collaborations. A
particular and unique focus is crucial to counter and protect the nations to
counter insurgencies. However, counterterrorism policy also requires to
incorporate regional policy perspectives. This includes the way to work

and act on regional alliances depending on when and how to pressure them.
Nepal has emerged from decades of political unrest and civil conflicts
with a new political framework. Its convincible position between India and
China makes it particularly susceptible to any kind of change or alterations
in the Beijing-Delhi relationship. Perhaps Nepal’s relation with the United
States acts as an over rider to this susceptibility.
According to the current scenario, Nepal’s expanding geo-political
significance rests on the fact that China and India compete for influence,
making Nepal’s political system unrest and a site of an on-going struggle
and conflict. China is also apprehensive about Indo-United States relations
and its effect on Nepal. With traditional links, India has held swing, giving
it control to Nepal’s main overland trade route. However, K P Oli had
better relations with Beijing but will Prachanda too will follow his foot
step and built closer ties with China, there would be political challenges
before Nepal and hence balancing its priorities, vis-à-vis, India and China
would be a tough choice before Nepal.
Conclusion
The United States had the most compelling influence on Nepal during
the Maoist insurgency. The support at least allowed the Army to bring
the insurgents to a military deadlock and extenuated the consequence.
Despite an expressive and weighty military aid from the United States
after 2001, neither military training nor advance equipment were able to
indemnify for the political, civil, and economic crisis that aroused support
for the insurgency. Moreover, after King Gyanendra took over direct rule
in February 2005, majority of the military aid to the RNA was taken back
as the United States hold back support to forestall legitimizing the king’s
anti-democratic accomplishments. Human rights issues, also, discouraged
the United States and other important supporters in the international
community from doing more wrong to help the government.
The incidence of Nepal exemplifies that counterinsurgency requires
more than a strong military campaign. The United States intervention
because of strategic reasons in Nepal also played an important role in the
long counterinsurgency involvement programme there. America’s focus
was mainly on the significance of Nepal and its strategic importance. It

was not on the social and native issues and their crisis. The compelling
reason was the suppression of communism ideology and its influence
seeping in through China and admittedly the China’s rise and its probable
entry in South Asia. India-China relations and its involvement in Nepal
also played an important role in the United States outlook towards Nepal.
The insurgents were successful in Nepal because they were more
effectively tied to the roots than the government in getting support
from the citizens. The insurgents implemented the Mao’s theory for
guerilla warfare in Nepal and orchestrated a strategy that used violence,
to achieve political power by meeting social grievances. The Nepalese
government could not succeed in operating counterinsurgency for
various reasons. One was the individual political desires and aspirations
for power; second was repressive counterinsurgency operations without
understanding the involvement of social issues of the native people
which pushed them further towards the insurgents. Despite America’s
aids and support there was always a crippling shortage of the funds and
resources. There was also a lack of properly guided coherent strategy on
the government’s part.
The counterinsurgency operations in Nepal reveals some important
lessons, primarily any military operations to curb the rising armed
rebellion is not sufficient until and unless it is embedded with solutions of
cultural, socio-political, and economic crisis. A strong and planned study
is always required to understand the elements that are in the root cause of
insurgency. Moreover, it is also essential to know the driving factors to
determine the motivation behind this kind of armed uprisings. America
missed to incorporate the understanding of social and cultural matters
for planning the counterinsurgency operations in Nepal and provide
supportive and cohesive social environment. However, it was visibly
successful in its own foreign policy objectives. Washington made rigorous
effort for establishing democratic society in Nepal, repression of Maoism,
and power grab in South Asia.
Nepal pinned down between India and China—the countries that
are contending regional powers in Asia. They are not only strategically
involved in Nepal but are also looking for increase and to augment their
field of influence to the maximum possible limit. Their interest lies in

economic and politico-strategically in nature. Further to this both India
and China are loath to the intervention of international powers outside
Asia in Nepal.
Nepal is situated in geo-political critical location and immersed deep
into inter-related threats of insurgency and narcotics trade and the United
States has a strategic partnership with Nepal and is also committed to bring
peace, democracy, and long-term security. America’s long and robust stay
in Nepal perhaps could make the situation better there.
Decades after the Cold War, still insurgency remains a major factor
before the world driven by radicalization, separatism, power politics,
etc. The weak and small nations are more prone to complex problems of
rising insurgency crisis. The counterinsurgency operations have more or
less became foreign policy objectives for the United States particularly
in Asia.
The recent earthquake in 2015, once again drew international attention
and an array of international aids. India was prompt in sending disaster
response that included medical facility, food material, and rescue equipment.
China too took no time to send rescue teams, medical facility, tents, cloths,
etc. Moreover, both the countries conveyed condolences and showed their
commitment to help Nepal to overcome the natural disaster. The United
States contributed US$ 10 million to meet the disaster relief work. Disaster
diplomacy is a way to enhance cooperation between countries to bolster
the relationships especially if they are strategically involved in a region.
Nepal’s strategic location strengthen responses from China and India, as
both wanted to prove their worth and influence. America’s response was
anticipated and was a part of global effort to provide humanitarian relief
in one of its chosen strategic regions. The nature of America’s support to
Nepal also contemplates the Washington’s will for engagement in Nepal
for a long time.
References
B Vaughn, Nepal: Political Developments With the United States, USA: Diane
Publishing, 2012, available at https://www.fas.org/sgp/crs/row/RL34731.pdf,
CRS Report for Congress, ‘Nepal: Background and US Relations’, Order Code
RL31599, 2005, available at https://www.fas.org/sgp/crs/row/RL31599.pdf,

CRS Report for Congress, ‘Nepal: Background and US Relations’, Order Code
RL31599, 2006.
Hugh B Wood, ’A Brief History of the American Nepal Education Foundation’,
Himalayan Research Bulletin, 1990, Vol 10 (1).
Ivan Campbell, ’China and Conflict Affected States’, USA, 2012, available atfile:///C:/
Users/Downloads/China%20and%20conflict-affected%20states%20(1).pdf,
John Norris, ’How Not to Wage a Counter-Insurgency: Nepal, the Maoists, and Human
Rights’, 2004, Vol 11(2).
Monalisa Adhikari, ’Renewed American Engagements with Nepal’s Maoists’, Institute
for Defense Studies and Analysis, Issue Brief, 2012, accessed on 25 July 2016.
S P Cohen, India: Emerging power, USA: Brookings Institution Press, 2001.
Stanislav Myšička, ‘Chinese Support for Communist Insurgencies in Southeast Asia
During the Cold War’, International Journal of China Studies, 2015, vol. 6(3):
204, available at https://ics.um.edu.my/images/ics/IJCSV6N3/stanislav.pdf,
Timothy R Kreuttner, ‘The Maoist Insurgency in Nepal and US Counterinsurgency
Doctrine’, USA: Biblio Scholar, 2012, available at http://www.tandfonline.com/
doi/abs/10.1080/09592318.2011.546583?mobileUi=0&journalCode=fswi20,
US Department of States, available at http://www.state.gov/r/pa/ei/bgn/5283.htm,
accessed on 8 July 2016.Nepal US-Embassy, available at https://nepal.usembassy.
gov/05102005.html, accessed on 12 July 2016.
22
Canada-Nepal Relations:
Opportunities and Challenges
Varsha Gautam and Charu Ratna Dubey
Abstract
I n a multi-polar world the relationship between two distant nations

depends on the convergence of national interests of the particular
nations. Nepal and Canada both may not have socio-political and
economic similarities, yet the two nations have the political will to bridge
the gaps developed due to the ignorance of the strategic importance of one
another. Both nations have decades long bilateral relations still it has not
explored all the areas of mutual interests. The time has come to enhance the
relationship from merely a donor-receiver status to an altogether different
level. Canada being a member of the world’s economically most powerful
group of seven (G7), a middle power, and good as well as responsible
international player, participated actively at several multilateral forums
to not just influence but actually formulating the global agenda for peace,
development, and human rights. The bilateral relation which began from
Colombo plan to till now when Canada has proposed to develop a trade
relation, the relationship has evolved and diversified a lot. The chapter
will make an attempt towards looking into the areas of cooperation
accompanied by challenges where Canada has much to offer not just
bilaterally but through various multilateral agencies, private sector, and
Nepal also has the opportunity to benefit itself by recognizing and luring
Canada-Nepal Relations: Opportunities and Challenges • 337
the Canadian opportunities. However, the challenges remain intact and

how progressively the two nations manage to cooperate and sustain the
relationship in a long run.
Introduction
In an era of globalization, interdependence and interconnectedness, the
relationship between the two nations is not confined only by their bilateral
relations. Rather it is broadly analyzed through the interactions and
exchanges between nations at various international institutions such as
the United Nation (UN), Commonwealth, the World Trade Organization
(WTO) and several other global forums for development. It is essentially
important to have a wider perspective while understanding the two nations
like Canada and Nepal. Nepal, officially known as the Federal Democratic
Republic of Nepal, is a landlocked country that shares boundaries with the
two Asian powers, i.e. China and India. Similarly, Canada shares boundary
with the United States which is considered as the most powerful country
on the globe. The common fact between the two nations is that both have
porous borders with their neighbour (Nepal with India and Canada with
United States) and also do maximum trade through the open boundary.
Since Canada is not a landlocked country, it is not dependent on the United
States and has an advantage in comparison to Nepal. Whereas, in terms
of military power, economic development as well as political stability
Canada is far ahead of Nepal. Canada also played a very significant role
during the Cold War period as a ‘middle power’ nation. Nepal, though a
small country geographically, is known as a buffer state between India
and China. The current scenario where the focus of the world is shifting
towards Asia, Nepal is supposed to play a significant role in the global
politics.
Looking into the recent developments between the two nations would
rather provide a better understanding of the bilateral relation. The absolute
monarchy in Nepal came to an end when the Parliament approved the
abolition of monarchy in December 2007. With this, Nepal became a
republic in May 2008. Dr Ram Baran Yadav was elected as the first president
of Nepal in the month of July of the same year. The making of the new
constitution in Nepal was kicked off in 2008 with the election of constituent
assembly and it was decided that the Constitution will be formed within 2
years. Unfortunately the task could not be completed within the timeframe
and the dates were extended four times for preparing the Constitution. The
Supreme Court of Nepal put an end to these extensions and after a year a
new constituent assembly was elected in November 2013 for a term of 4
years though it gave itself a deadline of January 2015 for the completion
of Constitution making process but this too was not observed.
In April 2015, Nepal was hit by a high magnitude earthquake which
claimed more than 8,000 lives which became a wakeup call for political
leadership and the then Government of Nepal. Finally, Nepal promulgated
a federal, democratic, secular, and republic constitution. But the political
instability is still prevailing in Nepal. Later, K P Oli was forced to step
down as the Prime Minister of Nepal and a new alliance was formed after
which Pushp Kamal Dahal became the ninth Prime Minister of Nepal
within a span of 8 years.
In comparison to Nepal, Canada is a politically stable country and
follows the fundamentals of parliamentary form of government. In
the recently held general election the Liberal Party formed a majority
government almost after a decade under the leadership of Justin Trudeau.
Being a developed country, Canada has all those prerequisites which are
essential for becoming an important player in the global politics. Canada
is the part of G-7 which is a group of major economic powers of the world.
It has a robust economy and is active in international trade with a say in
the WTO. It is worthwhile to note that Canada is also a part of the United
States led North Atlantic Treaty Organization (NATO) and was very active
during the Cold War years.
Evolution of Bilateral Relations

The development of bilateral relationship between Canada and Nepal can
be traced back to the establishment of diplomatic relations in 1965. The
two nations came closer when the Ambassador of Nepal to Washington DC
was accredited to Canada and the Canadian Ambassador to New Delhi was
accredited to Nepal. From 1968 to 2013, Canada provided development
assistance to Nepal, later it decided to build trade and investment relation.
Canada is represented in Nepal by the High Commission of Canada in
New Delhi and Nepal has established its Embassy in Canada in 2009. In
2015, both the nations celebrated the golden jubilee of their longstanding
relationship based on mutual understanding and cooperation. Unfortunately,
the celebration was overshadowed by the earthquake in Nepal and the
Parliamentary elections in Canada. Besides that, the two nations have
different levels of economy, culture, and politics. Still both the nations
share the similar views on the various issues of global importance. Both
countries have actively participated in the UN Peace Keeping programmes
and committed towards the promotion and protection of international
peace and supports stable and democratic government.
In spite of having so many differences both the countries have several
opportunities to cooperate with each other on a wide range of issues.
Undoubtedly, the opportunities also bring a number of challenges before
both the countries. The success of any bilateral relationship depends on
the skilful management of the opportunities knocking at the door and the
challenges coming with those opportunities.
Though indirectly, but the warm and friendly relationship between the
two nations actually kicked off during the Cold War period. The Cold
War era was the continuous political and military tussle between the two
super powers–the United States and Russia that led towards the bipolarity
of international system and their allies through NATO and Warsaw Pact.
The bipolar nature of international system was also coincided with the
process of decolonization and the establishment of the UN. It not just led
towards the recognition and importance of these newly emerged nations
by the world community but also introduced a new category in the power
hierarchy which is known as the middle power.
It is widely acknowledged that a kind of power hierarchy in the
international system existed from a long time where on the top were ‘great
powers’ and on the bottom were all other nations (non-great powers).
The concept of middle power came into existence only after the end of
the Second World War. In the changed circumstances, there emerged
a concept of such power which can play a significant role in reducing
tensions between the two blocs of the tight bipolar post World War. The
significance of middle power nations lies not just in ensuring peace and
stability during the Cold War era but also facilitating a dialogue between
the great powers and the underdeveloped nations of the third world. It
helped towards strengthening of the multilateral institutions like the UN
and ensures the participation of every nation in such institutions. Basically
middle power is a nation which lacks the hard power capacity of coercion
or military-strategic power but possesses some specific political and
diplomatic resources, skills and styles (Copeland, 2013).
Canada is one of the middle power nations (such as Australia, Norway,
Sweden, and New Zealand) which along with the like-minded countries
(developed as well as developing) used the multinational institutions such
as ‘Commonwealth’ to develop political and economic ties with countries
to fulfil issue specific agendas. In January 1950, Canada along with
Australia, Britain, New Zealand and other likeminded countries such as
Ceylon (now known as Sri Lanka), India and Pakistan actively participated
in the Commonwealth meeting that took place in Colombo. The meeting
in Colombo was later recognized as ‘Colombo Plan’ for the Cooperative
Economic and Social Development for South and South-East Asia. It later
expanded into an International Organization of 26 nations which now
includes non-commonwealth members. By expanding the membership,
the scope and activities also evolved and so it transformed into Colombo
Plan for Cooperative Economic and Social Development in Asia and
the Pacific. It was launched in July 1951 for the economic and social
advancement of the people of South and South-East Asia and became the
first multinational aid programme of the post-war era. The Colombo Plan
was also quite beneficial from the perspective that it provided the newly
emerged underdeveloped nations a platform to open towards the western
powers. It is noteworthy that the Plan later became instrumental in shaping
the bilateral relationship between the two countries.
Though Nepal has always enjoyed good ties with the Britain yet with
the beginning of the post war era and transforming international scenario,
it extended its diplomatic relations from India and China to the United
States. It was in 1946 when Nepal exchanged a goodwill mission with the
America and later in the year 1947 signed an Agreement of Friendship
and Commerce at Kathmandu (Muni, 1973). In 1949, Nepal established
diplomatic relations with France and also attempted to transform and
renew relations with Britain after the Independence of India in 1947.
Definitely the extension of diplomatic ties and signing of the commercial

and other relations along with the Colombo Plan was not inconsistent with
the effects of the Cold War. Rather it was deliberately designed by the
western block to influence the nations of the region by using economic
and social development as a weapon to contain the spread of communism,
especially when the communist revolution was going on in China. The
geo-strategic location of Nepal increased the nation’s importance and it
started getting various kinds of development assistance from the different
parts of the world including the communist bloc. It has been argued by
Fielden (1998) that the decision of providing assistance to a nation is
quite often influenced by the geo-political motives of the donor country.
He rejects the claims that assistance programmes are motivated by the
humanitarian grounds. Simultaneously, Nepal also began participating
in several international conferences and organizations and applied for
the UN membership and its agencies like IFO, ILO, and World Health
Organization (WHO) in 1949.
Because of the Canadian belief in the policy of Liberal Internationalism,
the Canadian development programme was also motivated with the vision
of creating a free and multiracial commonwealth. Supporting a country
for its multilateral diplomacy as well as trade, international peace-
keeping, promotion of the conditions in the Third World by providing
them assistance thereby contributing towards a just world was the foreign
agenda of Canada. Here, it could be argued that the very basic foundation
of Nepal-Canada relations is being guided and shaped by the low political
issues and not through the high political issues. ‘High politics’ can be
understood as all those issues which are essential for the very existence
of the nation like national security, arms, military instruments, etc.,
while ‘low politics’ is related with economic and social concerns like the
issues of environment, gender equality, social inclusion, free trade, and
good governance. Thus, the issues of low politics have evidently become
equally important as the high politics issues. These low politics issues play
significant role while establishing a bilateral relationship between a middle
power and a small power. As it has already been described that middle
power lacks the military capability and so do the small powers but what
differentiate the two is that middle power counters the domination of great
powers by their diplomatic skills and strengthened economy. While small

powers are often characterized with their dependence on the international
institutions and concerted effort of other small and middle power nations.
In 1952, the indirect involvement of Canada in Nepal through the
Colombo Plan was focused towards the economic and social development
of the South and South-East Asia region. Based on the concept of self as
well as mutual help among the member countries, the aid was directed
towards human resource development and infrastructure building. The
assistance from developed to developing nations did not merely provide
help in monetary terms but also facilitated training programmes for skill
development in economic and socio-political activities and personal
assistance in establishing airports, roads, railways, plants, factories,
universities, steel mills, etc. The direct involvement of Canada in Nepal
began through the Canadian International Development Agency (CIDA)
assistance and other multinational programmes. In 1958, this assistance
under humanitarian act began with one time food aid programme to
Nepal.
Since 1958, CIDA has been actively engaged in various humanitarian
and developmental acts in Nepal. CIDA’s programme is based on the
Millennium Development Goals and being executed by its multilateral
branch. These branches deliver specific projects through the Canadian non-
governmental organizations (NGOs), academic institutions, and private
sectors in partnership with relevant organizations of Nepal. Canadian
development assistance flows not only through the bilateral mechanism
but also through the multilateral institutions which reflects the Canadian
presence as well as its interests in Nepal. Canada Fund, the Women’s
Initiative Fund and Environment Fund, Canadian Executive Agency
(CEAs) and Local Executing Agency (LEAs) are some of the agencies
which deliver the bilateral programme to Nepal. These agencies and local
initiative funds direct their efforts on farmers, local communities of the
nation, the disadvantaged and vulnerable section of society especially the
women and children. Also CIDA provides support to Nepal through various
multilateral organizations like the World Food Program (WFP), United
Nations Development Program (UNDP), United Nations Children’s Fund
(UNICEF), Office of the High Commission of Human Rights (OHCHR),
Office for the Coordination of Humanitarian Affairs, World Bank, Asian

Development Bank (ADB), and through international non-governmental
organizations (INGOs) in peace building programmes. The major concern
areas of CIDA in Nepal are health, energy, rural development, education,
gender equality, agriculture, good governance, and poverty alleviation
programmes. It also extends its support to raise the awareness and capacity
building of Nepalese people towards the issues of constitutional assembly
and constitution making process.
The Canadian International Development Research (IDRC) was
established in 1970 on the recommendation of a report submitted under the
premiership of Lester Pearson. It was in 1969 when Pearson Commission
submitted its report entitled ‘Partners in Development’ which declared
that:
…cooperation for development means more than a simple transfer

of funds. It means a set of new relationships…founded on mutual
relationships and self respect… [and]…a clear division of
responsibilities which meets the needs of both partners.
IDRC is a pioneer among the development research institution in the

world and has helped many developing and underdeveloped countries
to find inventive and sustainable solutions to the problems like poverty,
deteriorating human health, providing nutrition to improve health, support
innovation, and protect the environment.
The major CIDA development programmes were motivated with the
idea of gender equality and socio-economic development, which aims at
providing and facilitating basic education, programmes supporting child
protection, health and nutrition along with the awareness campaigns about
the infectious diseases. Canada along with the UN and other international
partners have proposed as well as participated in various immunization
programmes. The immunization programme for prevention of maternal
and child death and promoting nutrition was put forth under the Canadian
leadership in 1990 at the world summit. Later in 2000, it was endorsed by
the Millennium Development Goal of the UN. To facilitate the nutrition
among the women and children and to combat the Vitamin A deficiency
and malnutrition, Canada along with other organizations including
UNICEF funded for the micronutrient initiative. Canada also provided

funds through UNICEF and WHO.
The sectors in which Canada provided development assistance to Nepal
for the economic growth and improved living standards for the poor
through a renewed focus on agricultural development and private sector
development are Karnali Bheri Rural Development (K-BIRD), fertilizer
fungicide support, health development project, institutional support
to water and energy commission secretariat, and the Nepal Electricity
Authority, engineering education, Nepalgunj aircraft maintenance base,
airport security, and the women development. While in terms of trade,
according to the available data the period from 2008 to 2013, two way
trades ranged from US$ 15 million to US$ 23 million per annum. In
2012-13, Canadian exports to Nepal totalled US$ 7.1 million. Nepal’s
export to Canada includes garments and apparels, textiles, carpets, and
pashmina. Canada’s main exports to Nepal are in the areas of aerospace,
machineries, paper products, and optical instruments and appliances. It
is interesting to note that Nepal has a trade surplus with Canada. This is
partly due to Canada’s favourable treatment of Nepalese exports and there
is a probability of further expansion in Nepal’s export to Canada. Tourism
is another area of potential growth. According to estimates and available
data only around 12,000 Canadians visit Nepal annually. It is also argued
that if the Nepalese government put some efforts to promote the quality of
tourism then the estimated number of visitors and tourists can be increased.
Though the nation is itself facing the challenges of political instability and
good governance yet for its own economic well-being and prosperity the
country has considerable strength to attract the Canadian Foreign Direct
Investment by creating a foreign direct investment (FDI) friendly business
environment.
The fundamental features of Canadian foreign policy such as middle
powermanship and liberal internationalism along with the Canadian
leadership has always been supportive to the developing as well as
underdeveloped nations. An important role played by Canada in
determining the global agenda for peace, developments and human rights
which made the nation an influential middle power at international level.
Many Canadians Prime Ministers from Lester B Pearson to Pierre E
Trudeau, Brian Mulroney and Jean Chretien as well as Foreign Minister

Lloyd Axworthy have been world leaders in promoting international
development and proposing ideas that have been trendsetter in developing
new norms of human rights and peace building in the world.
Opportunities and Challenges

There is a tremendous scope of promoting relations between Nepal
and Canada in the fields of trade, investment, and even development
cooperation. All the countries of the region, including Bangladesh and Sri
Lanka have opened their embassies in Canada and are making efforts to
build good relationship with Canada and also trying to get more benefits
from their relations with Canada. Now the time has come when Nepal
should also engage Canada in the larger interests of both the countries.
Nepal-Canada relations could be reinforced with the establishment
of residential embassy of Nepal in Ottawa. Canada is interested in the
development of Nepal’s hydropower potentials which is a very effective
measure to tackle the electricity crisis without disturbing the ecological
balance of the planet. Canada is also interested in providing assistance to
Nepal to deal with the social issues like refugees, narcotics, empowerment
of women, girl trafficking, child labour, human rights, etc., which have
become major cause of concern for the whole world in contemporary time.
In a world represented by Cobweb Model no issues and causes stand
alone or confined to a single nation rather than it has widespread effects. It
is not to say that the challenges of child labour, trafficking, narcotic, etc.,
which is a question of violation of human rights, is a major concern around
the world and neither developed nor developing nations are unaffected
from it. However, the problem becomes more serious when nation and its
government are under considerable pressure due to limited resources and
fragile economy along with fragmentation within political parties making
effective governance difficult.
Nepal’s slow growth rate and low per capita income contributes to
high rate of child labour, trafficking and narcotics, and inability of the
government to formulate a just policy for prevention and reduction is a
failure at national level. However, it is essential to understand that because
of the global nature of the problems the Government of Nepal alone cannot
tackle such serious issues rather a global cause need a collective initiatives
and country like Canada which has genuine concern and obligation
for human rights can resolve the issue with the help of international
organizations. The international organizations can also assist and supervise
the nations to handle such complicated issues. For instance, the ILO helps
Nepal against the worst form of child labour. With the help of the funding
and technical support from ILO, Nepal came out with its first statistical
report. The Report provides essential statistics for monitoring the child
labour situation in Nepal. It was published in January 2011 and entitled as
‘Nepal Child Labour Report’. The major finding of the Report was that in
Nepal the agricultural sector is the largest employer of child labour.
In a similar way trafficking in persons and more specifically in women
and children is also a very serious human rights problem in Nepal. The
National Human Rights Commission, a constitutional body in Nepal has
the mandatory responsibility to protect and promote the human rights
and people in Nepal for justice, equality, and dignity. The first National
Report on Trafficking in Person especially women and child in Nepal was
published in 2005. The preparation of this Report was assisted by UNDP
and got support and cooperation from other international organizations.
The scope of these problems and challenges crosses national, regional,
and international boundaries. The studies reveal that the reason for all these
problems lies in poverty, illiteracy, lack of awareness as well as ignorance
and the perpetrators of these crimes take advantage of such situation. While
analyzing the bilateral relation with Canada and Nepal the opportunities
exist at three different levels. Both these nations can help each other at
government to government level; second, the Canadian government can
also extend its help to the NGO’s of Nepal or local government; and last
but not least, the Canadian government can also support through IGO’s.
Awareness is also the key to the solution of these problems and this can be
done with the help of local government and NGO’s working in the areas.
Putting pressure on the government to formulate better policies to curb the
violation of human rights will surely help to resolve the issue.
Conclusion
In this way Canada and Nepal have enough scope to enhance relationship
at bilateral as well as multilateral level. Since both the countries have not
explored different areas of mutual interest, the opportunity to come closer
to one another is knocking at the door the only hindrance is recognizing
them. There is a little doubt that the bilateral relationship is also affected
by the international environment but political will power is the first
and foremost ingredient for a delicious recipe. The uncertain nature of
international politics perplexes emerging countries like Nepal but the
mutual respect and understanding overcomes these situations. Keeping
global issues in mind such as poverty alleviation, food security, health
security, global terrorism, pandemics, and climate change are the relevant
areas where both the countries can work together. Since Canada does not
have its embassy in Nepal the time is ripe to do what has not been done
in the past because the focus of the international politics has been shifted
to Asia especially after the emergence of the policy of ‘Pivot to Asia’.
The strategic position of Nepal in Asian continent demands a ‘strategic’
partnership between the two countries. The exclusive experiences of the
past political relationship between the two nations should also consider
establishing a collective think tank to review and re-examine the issues and
problems between the two nations as well as to maintain the international
peace and order. It is important to note that the countries while establishing
bilateral relationship should not primarily focus on what it can provide or
can receive from the other country rather the focus must be on how to
maintain and sustain the relationship in the coming future.
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23
Nepal’s Relations with the Gulf
Cooperation Council Countries
Melissa Cyrill
Abstract
T he chapter traces and analyzes the foreign policy relations of Nepal

towards the six countries of the Gulf Cooperation Council (GCC),
namely, Saudi Arabia, Kuwait, Bahrain, Qatar, the United Arab Emirates
(UAE), and Oman. These nations are uniquely identified by their wealth
of hydrocarbon resources and dependency on labour imports. Funded
largely by oil earnings, the GCC countries have radically transformed
their desert geographies into modern urban landscapes. They are also
the world’s top migrant destinations, and receive the highest number of
South Asian labour migrants, including from Nepal. However, a hierarchy
exists in the GCC region’s migrant labour pool based on sector and
nature of work, gender, and nationality; workers also deal with the lack of
transparent labour laws, leaving them vulnerable to exploitation. In 2014,
more than 1.13 million Nepalese were working in Kuwait, Qatar, Saudi
Arabia, and the UAE. Nepal’s Centre for the Study of Labour and Mobility
has estimated that about 74 per cent of Nepali migrants to the region are
unskilled. These facts dominate Nepal’s foreign policy considerations in
the region. Nevertheless, Nepal’s relations with the GCC region continue
to be ad hoc, though bilateral relations are stronger with some of the GCC
nations. Thus, the chapter makes a case for more concerted action with
respect to the region, whereby Nepal can grow its economic, investment,
trade, and tourism interests by negotiating more beneficial relationships
with the GCC countries.
Introduction
Nepal and the Gulf Cooperation Council (GCC) countries trace their
diplomatic relations to the 1970’s. This was a pivotal period for the
Gulf region, whose hydrocarbon economies witnessed a leap in earnings
that funded and facilitated massive development projects. Given their
small populations, large-scale labour importation to these desert states
became inevitable. Meanwhile, concerns over domestic political stability,
vulnerability to natural disasters, and limited employment opportunities
encouraged a steady out-migration from Nepal. Over the past few decades,
the GCC nations have joined India and Malaysia, as preferred migrant
destinations, both creating and sustaining Nepal’s remittance economy. As
reflected in their numbers, strong migrant networks exist at the level of
civil society, providing necessary social capital that has promoted a chain
migration from Nepal to the destination Gulf Arab countries.
Regardless of the density of migration, a coherent foreign policy
framework has not developed between Nepal and the GCC countries. Yet
at the same time, the political economy of migration provides the indelible
context to their bilateral relations. Consequently, areas of concern get
periodically addressed on an ad hoc basis. This may not be favourable in
the long-term. Deplorable migrant working and living conditions in the
Gulf nations, for instance, is one among the many reasons that should
activate a proactive diplomacy on Nepal’s part. Presently, the slow pace
of economic and infrastructural recovery after the devastating earthquakes
in April and May 2015 has simply fuelled out-migration from the country.
In keeping with this background, the following chapter divides itself
into first, a brief examination of Nepal’s bilateral relations with the GCC
countries, followed by an understanding of how and why the GGC region
is at the forefront of Nepalese out-migration. The third section critically
examines the challenges faced by Nepal’s large-scale labour presence in
the Gulf nations, followed by the section on Nepal’s legal, policy, and
institutional mechanisms governing foreign migration for employment.
Nepal’s Relations with the Gulf Cooperation Council Countries • 351
Lastly, the concluding section reflects on the central observations from

the chapter and ends on Nepal’s future prospects in its foreign policy
engagement with the GCC countries.
Diplomatic Relations Between the Gulf Cooperation

Council Nations and Nepal
Nepal established its diplomatic relations with the GCC nations in the
late 1970s to 1980s, after these countries were formed or won their
independence. Bilateral relations with the respective Gulf nations have
largely been cordial, and based on mutual trust, respect, understanding,
and cooperation. Given the large presence of Nepalese migrant workers in
the GCC region, the Government of Nepal has appointed labour attachés
in all six countries: Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the
UAE.
Nepal-Qatar Relations
Diplomatic relations between Nepal and Qatar were established on 21
January 1977.1 While Nepal opened its embassy in Doha on 11 July 2000,
Qatar finally set up its embassy in Kathmandu in August 2011. Prior to
this, the Qatari embassy in New Delhi was concurrently responsible for
Nepal. Exchange of visits and interactions at government levels between
the two countries took off from the mid-2000s.
1. Bilateral Visits: On 21 March 2005, the then Minister for Foreign
Affairs of Nepal, Ramesh Nath Pandey, visited Doha and signed
the bilateral ‘Agreement on the Regulation of the Employment of
Nepalese Manpower’ in Qatar. This was followed by the Minister
of Labour and Transport, Ramesh Lekhak’s visit to Qatar, where
he signed the Additional Protocol to the Agreement concerning
Nepalese manpower employment, on 20 January 2008. The
former Foreign Minister Upendra Yadav paid an unofficial visit to
Qatar from 14 to 16 March 2009. Prior to this, the former Prime
Minister Baburam Bhattarai had visited Qatar from 28 November
to 3 December 2008 as the then Minister for Finance, leading the
Nepalese delegation to review the implementation of the Monterrey
Consensus of the International Conference on Financing for
Development. Five years after the 2006 political agitation in Nepal

overthrew the monarchy, the then President of Nepal, Ram Baran
Yadav, made an official state visit to Qatar from 10 to 13 October
2011. From 19 to 23 March 2014, the former Prime Minister
Pushpa Kamal Dahal Prachanda paid a private visit to Qatar in
the capacity of a Member of the Constituent Assembly. The visit
was important as Prachanda had meetings with Sheikh Abdullah
Bin Nasser Bin Khalifa Al-Thani, Prime Minister and Minister for
Interior; Khalid Bin Mohammed Al-Attiyah, Minister for Foreign
Affairs; and Abdullah Saleh Mubarak Al-Khulaifi, Minister for
Labour and Social Affairs.
In 2016, Nepal’s incumbent Foreign Secretary Shankar Das
Bairagi made a 3-day official visit to Qatar from 23 to 26 January.
His agenda focused on the welfare of Nepalese migrant workers
and strengthening the bilateral cooperation with Qatar in areas of
trade, investment, tourism, culture, and education. During the visit,
the Foreign Secretary Bairagi met with Qatar’s Foreign Minister
and the Labour and Social Affairs Minister, and held an interaction
with the Nepalese community based in Qatar. Similarly, the
incumbent Attorney General of Nepal, Baburam Kunwar, visited
Qatar from 25 to 31 October 2014, heading a ten member Nepalese
delegation to study the prosecution practices of Qatar at the
invitation of his counterpart Ali Bin Fetais Al-Marri. Similarly, the
then Deputy Prime Minister and Minister for Home Affairs, Bam
Dev Gautam, visited Qatar from 11 to 14 April 2015, leading the
Nepalese delegation in the 13th UN Congress on Crime Prevention
and Criminal Justice. On 13 April 2015, he paid a courtesy call on
Sheikh Abdullah bin Nasser bin Khalifa Al-Thani, Prime Minister
and Minister of Interior for Qatar, on the sidelines of the UN
Congress.
From the Qatari side, Ali Bin Fetais Al-Marri, Attorney General
of Qatar, made a private visit to Nepal from 17 to 18 July 2014.
During the visit, Attorney General Al-Marri held bilateral meetings
with his counterpart, Attorney General of Nepal Babu Ram
Kunwar, and paid a courtesy call on Narahari Acharya, Minister
for Law, Justice, Constituent Assembly, and Parliamentary Affairs.

Similarly, the Minister of Labour and Social Affairs, Abdullah
Saleh Mubarak Al-Khulaifi made an official visit to Nepal from
4 to 7 April 2015. During this visit, the Qatari Labour Minister
had bilateral meetings with his counterpart Tek Bahadur Gurung,
Minister of State for Labour and Employment and the Minister
for Foreign Affairs, Mahendra Bahadur Pandey. He also met with
Prime Minister Sushil Koirala and President Ram Baran Yadav.
2. Trade and Tourism: Trade between the two countries is more or
less negligible, albeit in favour of Qatar. Nepal’s major exports to
Qatar are pasta, carpets, spaghetti, noodles, and tea, while its major
imports from Qatar are polymers of ethylene and oil from petrol
and bituminous minerals. There is also scope for expansion in
tourism between the two countries. Nepal and Qatar signed the Air
Service Agreement in 2002 and Qatar Airways handles the bulk
of Nepalese exports bound for Europe and America. Nepal could
promote itself as an alternative tourist destination for Qataris, given
its world-famous Himalayan trails and the Mount Everest peak. On
22 May 2013, Sheikh Mohammed Bin Abdullah Al-Thani became
the first Qatari national ever to scale the Mount Everest.
3. Labour Relations: Nepal, for its part, has continually sought to
preserve and protect its basic interests, that is, the security and well-
being of its approximately 4,00,000 migrant workers in the Gulf state.2
In recent times, a huge concern has been the status of Nepali workers
in the construction projects for the 2022 World Cup as several migrant
deaths and exploitative working conditions have been reported
by human rights watchdogs.3 This was directly communicated by
Nepalese officials to Qatar’s Labour Minister during the latter’s 4-day
visit in April 2015. In response, the Qatari Minister made mention of
his country’s labour law amendment (Law No. 1, 2015 that amends
provisions of the Labour Act No. 14, 2004) that would address labour
rights, wage security, and safety protocols.4
Nepal-Saudi Arabia Relations

Nepal established its relations with Saudi Arabia on 15 March 1977.5 The
following year, it opened its embassy in Saudi Arabia at the level of Charge
d’Affaires. In 1984, Nepal shifted its embassy from Jeddah to Riyadh.
Nepal’s embassy in Saudi Arabia is also accredited to Jordan, Yemen,
and Sudan. On its part, Saudi Arabia only recently opened its residential
embassy in Kathmandu, having announced the decision in 2012 upon
request from Nepal.
In the last decade, Saudi Arabia has become an important destination
for Nepalese foreign job aspirants, which only intensified after Malaysia
temporarily suspended the recruitment of migrant workers in the early
2016. Moreover, the management of the Haj pilgrimage by Nepalese
Muslims has also become easier with the establishment of the Saudi
embassy in Nepal.
1. Bilateral Visits: The late King Birendra, Queen Aishwarya, and
the former King Gyanendra (at that time Prince) paid an official
visit to Saudi Arabia in 1983. The former Minister for Labour Bal
Bahadur K C also visited Saudi Arabia in his official capacity in
1999. Other high-level visits to Saudi Arabia include the visit of
the Nepalese delegation led by the then Minister for Information
and Communication Mohmad Mohsin in 2004 after 12 Nepalese
nationals were killed by terrorists in Iraq. The former Crown
Prince Paras also visited Riyadh on behalf of King Gyanendra to
offer condolences upon the demise of the Saudi King Fahd Bin
Abdul Aziz al-Saud in August, 2005. From the Kingdom, the Saudi
Prince Alwaleed Bin Talal Bin Abdulaziz Al-Saud visited Nepal in
November 2010, which was followed by the visit of a high-level
official delegation from 24 to 27 December 2011.
2. Development Cooperation: The Saudi Fund for Development
has provided Nepal with loans for several hydroelectric projects
including the Marsyangdi Project. Additionally, it provided a
substantial contribution for the construction of the East-West
Highway of Nepal. Saudi Arabia has also assisted in the Bagmati
I and II Irrigation Project. The Kingdom also sent 190 tonnes of
aid, including food, tents, and medical supplies after the massive
earthquakes in 2015.
3. Economic and Labour Relations: The Saudi government has
primarily focused on the upliftment of the Nepalese Muslim

community, agricultural development, and emergency aid in
its economic cooperation with Nepal. The most important
developments, however, are in the realm of labour cooperation.
Since emerging as a favourable destination for Nepalese migrant
workers, the Saudi embassy in Kathmandu lifted the limit given to
manpower agencies on the number of passports that can be submitted
at the embassy for visa in March 2016. Consequently, 312 local
manpower agencies have been authorized to send workers to Saudi
Arabia and the Saudi embassy has begun to accept up to 1,000
passports per day for visa procedures (the previous limit was 600).
According to Nepal’s Department of Foreign Employment, a total
of 1,38,529 individuals received labour permits to work in Saudi
Arabia during the fiscal year 2015-16, followed by Qatar at 1,29,038.6
Nevertheless, Saudi Arabia’s non-oil economy has slipped into
its first recession since the mid-1980s, and spending cuts by the
government on large construction projects, which mainly employ
foreign labour, will have an impact on the future inflow of migrant
workers.
4. Trade, Commerce, and Tourism: The trade and commerce
relationship between the two countries as yet remains largely
untapped, and is in favour of Saudi Arabia. Nepal’s major exports
include handbags, carpets, and woollen shawls, while major
import items from Saudi Arabia are plastics, mineral fuels and oils,
aluminium, carpet textiles, and copper. Nepal also needs to work
on promoting its tourism potential, especially in areas like eco-
tourism, taking advantage of its Himalayan trails and peaks.
Nepal-United Arab Emirates Relations

Nepal and the UAE established their diplomatic relations on 22 January
1977.7 Nepal opened its embassy in Abu Dhabi in April 2004, while the
UAE officially inaugurated its embassy in Kathmandu on 11 May 2016.
Previously, the UAE’s embassy in New Delhi was accredited to Nepal.
The need for the new embassy was felt in light of the growing presence of
Nepalese expatriates and workers in the Emirates.8
1. Bilateral Visits: The late Queen Aishwarya and late Prince Nirajan
paid an official visit to the UAE in 1995. The next official trip
came almost 10 years later, when the Minister for Information and
Communication Mohmad Mohsin, Minister of State for Foreign
Affairs Prakash Sharan Mahat, and Minister for Labour and
Transport Management Urba Dutt Pant visited the UAE in 2004.
Later, in November, Prakash Sharan Mahat, the then Minister of
State for Foreign Affairs attended the funeral of the President of
the Emirates, Sheikh Zayed bin Sultan Al-Nahyan. In 2005, King
Gyanendra and Queen Komal paid a friendly visit to the UAE from
18 to 22 June. The then Foreign Minister Ramesh Nath Pandey
visited the UAE both in March 2005 and in April 2006. The then
Crown Prince Paras and Crown Princess Himani also visited the
UAE in April 2006. Few years later, the Minister for Labour Lekh
Raj Bhatta visited the Emirates in 2009. The Deputy Prime Minister
and Minister for Foreign Affairs Narayan Kaji Shrestha visited the
UAE from 3 to 4 October 2012 and Prime Minister Sushil Koirala
and Minister for Foreign Affairs Mahendra Bahadur Pandey visited
the UAE from 19 to 20 October 2014–in transit on both occasions,
following their respective participation in UN General Assembly
sessions in New York.
From the UAE, the Minister for Foreign Affairs Sheikh Abdullah bin
Zayed Al-Nahyan paid a 1-day visit to Nepal on 11 June 2009. On 10 May
2016, on the occasion of inaugurating the first UAE embassy in Kathmandu,
Minister Sheikh Abdullah bin Zayed Al-Nahyan paid separate calls to the
Nepalese President Bidya Devi Bhandari and Prime Minister KP Sharma
Oli, respectively. The six member visiting high-level UAE delegation
discussed strengthening bilateral relations, the potential of the tourism
industry, natural resources, and unemployment concerns in Nepal.9
1. Economic Cooperation, Trade, and Investment: There are several
bilateral agreements that have been stuck and need to be better
capitalized upon. The UAE Foreign Minister Sheikh Abdullah
requested (in May 2016) that Nepal sign the pending Agreement on
Protection and Promotion of Investment, Agreement on Avoidance
of Double Taxation, and the Air Service Agreement. The importance
of the UAE can be gauged by the airline connectivity between the

two countries–there are three Emirati carriers (Etihad Airways,
flydubai, and Air Arabia) offering scheduled weekly flights between
the UAE and Nepal. Further, state-owned carrier Nepal Airlines
resumed flights to Dubai from August 18, 2016. This was after a
gap of four years when it shut services in 2012 over concerns over
its fleet reliability. Nepal Airlines has now acquired the 158 seat
Airbus A320, which will operate three-weekly services between
Kathmandu and Dubai from August 2018.10 The re-export trade
(export of imported goods) forms one-third of the entire UAE
trading sector. Nepal, located between two giant economies, China
and India, could very well enhance its value as a transit country.
This would, however, require the capacity to make bulk purchases,
have a low tax framework, good infrastructure and logistics, and
reliable network of traders. In terms of their bilateral trade relations,
major export items from Nepal include cardamom (large), woollen
shawls, scarves, mufflers, and herbal supplements like pachak,
and major imports from the UAE are edible oil, beverage, fuel oil,
petroleum bitumen, polyethylene, and unwrought gold, among
others. Needless to say, the trade relationship is firmly in favour of
the UAE given the latter’s diversified resource and manufacturing
economy. Of late, Nepal has been exploring the UAE market for
organic vegetables, towards which the Nepalese Salt Trading
Corporation opened its branch office in Dubai. The Federation
of Nepalese Chamber of Commerce and Industry is also active in
promoting trade relations with UAE.
2. Labour Relations: The two countries reached a Memorandum of
Understanding (MoU) in the Field of Manpower on 3 July 2007.
Meanwhile, the number of Nepalese nationals migrating to the
UAE for work has been steadily increasing. In the fiscal year 2015-
16 alone, 52,793 Nepalese sought labour permits for the UAE.11
The Emirates is currently the fourth most favourable destination
for foreign job aspirants in Nepal and a conservative estimate puts
around 2,00,000 Nepalese working in the UAE.
Nepal-Bahrain Relations
Diplomatic relations between Nepal and Bahrain began on 13 January
1977.12 Nepal opened its embassy in Manama on 1 September 2013,
prior to which the embassy in Riyadh, Saudi Arabia was concurrently
accredited to Bahrain. Similarly, the Bahrain embassy in New Delhi, India
is concurrently accredited to Nepal.
1. Bilateral Visits: There have been few bilateral visits and interactions
at various levels, which is indicative of the level of ties between
the two countries. The late King Birendra and Queen Aishwarya
visited Bahrain in 1979, soon after bilateral relations commenced.
Thereafter, only two high-level visits have taken place. In 1997, the
then Crown Prince Dipendra visited Bahrain, while the Bahraini
Minister of Labour Majeed Bin Muhsin Al Alawi visited Nepal on
29 April 2008.
2. Trade Relations: Trade between the two countries has been
insignificant. Nepalese exports include carpets and other textile
floor coverings, printed books, and newspapers, while imports
from Bahrain include mineral fuels oils, copper articles, aluminium
articles, dairy products, and confectionary items. The terms of trade
are in favour of Bahrain.
3. Labour Relations: Bahrain is among the top ten migrant destinations
for Nepalese workers, and the two countries signed an MoU in
the Areas of Labour and Occupational Training on 29 April 2008.
Furthermore, on 11 January 2012, Nepal’s General Federation of
Trade Unions (GEFONT) signed an Mou with both the General
Federation of Bahrain Trade Union and the Kuwait Trade Union
Federation (KTUF) to protect the rights of Nepalese migrant
workers, in coordination with the International Trade Union
Confederation. It is estimated that around 35,000 workers are
currently based in Bahrain. In the financial years 2015-16, 3,146
Nepalese nationals went to Bahrain to work; this figure is slightly
lower than the previous year when it was 4,165.13
Nepal-Oman Relations
Nepal and Oman established diplomatic relations on 21 January 1977
along with Qatar.14 Oman as yet does not have an embassy in Nepal and
coordinates its diplomatic mission with the embassy in New Delhi. On the
other hand, Nepal opened its embassy in Muscat on 20 November 201315
as around 40,000 Nepalese workers are based in the Gulf country. Prior
to the establishment of the embassy, labour relations were handled by
the Non-Resident Nepali Association (NRNA). Yet, since the regulatory
and legal work had to be managed by the Nepalese embassy in Saudi
Arabia, Nepalese migrants found it to be increasingly cumbersome and
expensive.16
As of 2014 and 2015, Oman was the ninth most popular destination for
Nepalese nationals migrating for work, though relatively in much smaller
numbers when compared to other GCC nations. A bilateral Air Service
Agreement (ASA) signed between Oman and Nepal in 2014, allows the
designated carriers of each country to operate a maximum of 21 flights
each week, the frequency of which were to increase to 28 flights per week
from 1 January 2016.17
1. Bilateral Visits: On 25 December 2013, the then Nepal’s Foreign
Secretary Arjun B. Thapa met with his Omani counterpart, Under
Secretary (Diplomatic Affairs) Ahmed bin Yusuf Al-Harthy. At
that time, Nepal proposed for the Reciprocal Visa Exemption
Arrangement for government and diplomatic officials, formation
of a joint commission to review and expand bilateral relations
on a regular basis, a labour agreement to regulate the inflow of
Nepalese workers in Oman, and establishing relevant mechanisms
for promoting tourism and cultural relations between the two
countries. Nevertheless, bilateral ties between Nepal and Oman are
still in their nascent stage, with plenty of scope for future expansion
and greater engagement. Nepal desires to promote its tourism
sector, investment in the hydropower, construction, and agriculture
and food production, among other areas.
2. Labour Relations: In January this year, the Nepalese government
fixed the minimum monthly basic salary and food allowances for
unskilled and domestic workers in Oman, at OMR120 (US$ 312).18
Additionally, the Department of Foreign Employment (DoFE) has
decided to issue labour permits to only those prospective migrant
workers whose applications are attached with letters by employers

ready to pay for their air tickets and visa fees, and attested by the
Nepalese embassy.19 This rule is applicable to the rest of the GCC
nations as well.
Nepal-Kuwait Relations
Kuwait was the first GCC nation to have diplomatic ties with Nepal,
which began on 25 February 1972.20 However, Nepal officially opened its
embassy in Kuwait only on 21 March, 2010 prior to which, its embassy
in Riyadh was concurrently responsible for Kuwait. Relations between
the two countries have largely been cordial. Nepal was the first among
the South Asian nations to extend complete and unequivocal support for
Kuwait’s sovereignty, independence, and territorial integrity during the
Iraqi invasion in 1990.
Nepal and Kuwait signed an agreement in January 2010 establishing
a Joint Commission at the level of foreign ministers to cover the entire
gamut of bilateral relations including political and economic cooperation.
1. Bilateral Visits: Exchange of visits have taken place across all levels
and in formal, informal, and private capacities. Former Nepal’s
President Ram Baran Yadav visited Kuwait in February 2011 at
the invitation of the Amir Sheikh Sabah Al-Ahmad Al-Jaber Al-
Sabah to attend the cumulative celebrations of the country’s 50th
Anniversary of Independence, 20th Anniversary of Liberation, and
5th Anniversary of the ascendance of the Amir in 2011. Nepal’s
Deputy Prime Minister and Minister of Foreign Affairs was also
part of the Nepalese diplomatic entourage. The Kuwait Fund for
Arab Economic Development will extend technical assistance for
a road project and has assured of cooperation for a hydro-power
project in 2016.
2. Development Cooperation: Kuwait has provided considerable
economic assistance for Nepal’s infrastructural development.
Kuwait was the first Organization of the Petroleum Exporting
country (OPEC) to provide a soft-term loan to Nepal for two
hydroelectric projects in 1977, followed by a supplementary loan
of US$ 7.4 million (KD 2 million) in 1979. Later, Kuwait provided
US$ 20 million (KD 6 million) for the Marsyangdi Hydro Power

Project in January 1985. Another loan agreement was concluded on
26 October 1998, amounting to US$ 5.05 million (KD 1.5 million)
for the Praganna Kulo Irrigation Project in Nepal’s Dang district. In
2011, the Kuwait Fund for Arab Economic Development extended
its technical assistance for road and hydropower projects in Nepal.
Kuwait also donated funds to Nepal after the 2015 earthquake.
3. Trade Relations: Trade between the two countries is negligible and
in favour of Kuwait. Nepal exports handicrafts, woollen, pashmina,
and agricultural products to Kuwait, and imports from Kuwait
include dry fruits, chocolates, electronic goods, and petroleum
products.21
4. Labour Relations: Kuwait is the fifth most popular destination
for Nepalese migrant workers according to the data from 2014
to 201522, and more than 60,000 Nepalese nationals work in the
domestic and corporate sector in Oman.23 About half of them
are women employed in the domestic work sector while a bulk
of the male Nepalese migrants work in construction. Along with
Bahrain, an MoU was reached on 11 January 2012 between the
Nepalese General Federation of Trade Unions (GEFONT) and the
Kuwait Trade Union Federation (KTUF), with the support of the
International Trade Union Confederation. The MoU deals with
issues of worker intimidation, labour welfare, and trade union
rights among Nepalese workers.24
Importance of the Gulf Cooperation Council Nations and

Nepal’s Migration and Remittance Trends
The Gulf Cooperation Council is a regional inter-governmental political
and economic union that was formed in 1981, out of security concerns
precipitated by the Islamic Revolution in Iran in 1979. Six nations
occupying the Arabian Peninsula, namely, Saudi Arabia, Kuwait, Bahrain,
Qatar, UAE, and Oman, make up the GCC, which constitutes an important
geo-political region in West Asia. This is primarily due to its abundant
hydrocarbon resource wealth. All the GCC members are monarchies–
Qatar, Kuwait, and Bahrain are constitutional monarchies; Saudi Arabia
and Oman are absolute monarchies; and the UAE (composed of seven
member states, each with its own emir) is a federal monarchy.
As such, the GCC is characterized by two essential dependencies. One
is the region’s position at the heart of the global dependency on fossil
fuels, and the second is the region’s prolonged dependence on migrants
to fulfil its manpower needs. It is the latter aspect that has fundamentally
shaped Nepal’s engagement with the Gulf in recent years.
The discovery of oil and gas by British and American explorers
from the 1930s onwards established the fundamental economics of the
GCC nations, rendering a unique development process that, in a way,
outsourced its labour productivity to the steady inflow of foreign migrants.
The oil price shocks in 1973 accelerated national earnings in these
countries, subsequently funding an era of large-scale labour importation
to convert new revenues into physical endowments and infrastructural
modernization.25 Inevitably, a contradiction emerged, whereby the local
populace became spectators to their respective national growth and
progress, instead of being active participants in it. Rather, the native
population were catered to by the state with endless benefits and income,
from ‘womb-to-tomb’. This covered, but was not be limited to, free
education, healthcare and housing assistance, free or heavily discounted
utilities and petrol/gas, public sector employment with attractive salaries,
loans, retirement packages and the absence of taxes, the last of which
is applicable to all. This policy was labelled as ‘rentierism’ by political
economists studying the region. It described the source from which the
GCC nations distributes welfare benefits to their people–not out of income
generated from a productive population–but rather from revenue that was
accrued from fixed hydrocarbon assets. A rentier policy meant that the
national population was initially dis-incentivized from actively seeking
work, and enabled a largely tax-free environment in the Gulf region.
These reasons are principally why the GCC nations became the preferred
destinations for migrants from across the world, particularly, from Asia.
Consequently, the population in most GCC nations, like the UAE,
Bahrain, Qatar, and Kuwait, is dominated by foreigners, culminating in an
unusual and exploitative migratory policy. To better explain this, one can
say that the GCC nations have adopted a policy of importing labour, not
people, through which manpower dependency has not led to demographic

displacement. At the administrative level, this is reflected in the terminology
used; foreign migrant labour are not called ‘immigrants’ as they may never
become naturalized and permanent citizens, or partake of the economic
benefits and social privileges exclusively reserved for native Arab citizens.
This rationalization has in turn fostered and institutionalized exploitative
practices (that will be expanded later), and has been key to the region’s
political stability.
Data aggregated from the respective national statistic institutes in the
GCC nations from the period 2010 to 2014, indicate that the percentage of
non-nationals to nationals reached up to 88.5 in the UAE, 85.7 in Qatar,
68.9 in Kuwait, and 51.1 in Bahrain. It was 43.4 per cent in Oman and 32.4
per cent in Saudi Arabia, where there are larger indigenous populations.26
For perspective, refer to Table 1.
Table 1: Total Population in GCC Nations

Country Year of Survey Population
Qatar Mid-April 2010 16,99,435

Saudi Arabia Mid-2014 3,07,70,375
United Arab Emirates (UAE) Mid-2010 82,64,070
Kuwait 31 March 2015 41,61,404
Bahrain Mid-2014 13,14,562
Oman 25 March 2015 41,49,917
Sources: National Institutes of Statistics (latest data available is of 31 March 2015)
Against this background, we may understand Nepal’s out-migration

trajectory. In 2009, more than 1.13 million Nepalese were recorded to be
working in Kuwait, Qatar, Saudi Arabia, and the UAE.27 Further, a recent
report prepared by the Nepal’s Ministry of Labour and Employment
(MoLE), supported by the International Labour Organisation (ILO), states
that a total of 4 million Nepalese migrants are presently employed abroad,
mostly in the GCC countries.28
Breaking down the distribution of Nepal’s migrant workers by
destination, the MoLE report identifies the top labour destinations,
according to the migration trend between the fiscal year 2008-09 and 2014-
15 (Figure 1). It shows that around 19 per cent of Nepal’s migrant workers
are employed in Qatar, followed by 18.93 per cent in Saudi Arabia, 9.82
per cent in the UAE, 2.46 per cent in Kuwait, 0.86 per cent in Bahrain, and
0.59 per cent in Oman.29
Figure 1: Nepalese Labour Migration for Employment from 2008-09

to 2014-15
Source: Department of Foreign Employment, Ministry of Labour and Employment
(MoLE) as cited in the Report on Labour Migration for Foreign Migration: A Status Report
for Nepal, 2014-15.
Based on an analysis of the data of migrant workers applying for

labour permits on their own, the report records that 47.15 per cent or
16,214 Nepalese migrants were between the age group of 26 and 35 years.
Moreover, of the total 34,384 migrants who received permits to go for
foreign jobs on their own initiative, 21.1 per cent were aged between 18
and 25 years.30 The ILO report also observes a huge surge in migrants
obtaining labour permits for four GCC countries, namely, Kuwait, Qatar,
Saudi Arabia, and the UAE (Figure 2).
Figure 2: Trends in Labour Permits Issued for Malaysia and GCC

countries, 2008-09 to 2014-15
(MoLE) as cited in the Report on Labour Migration for Foreign Migration: A Status Report
for Nepal, 2014-2015.
Gender wise, the pattern for male Nepalese migrants follows an overall
trend. The top-ten destinations for male migrants over the 7-year fiscal
period from 2008 to 2015 were Saudi Arabia (19.8 per cent), Qatar (19.7
per cent), the UAE (9.3 per cent), Kuwait (1.9 per cent), Bahrain (0.8 per
cent), and Oman (0.5 per cent).31
The pattern for women, however, differs slightly. The top ten
destinations for female labour migrants in the last 7 fiscal years from
2008 to 2015 were the UAE (25,916 permits issued), Kuwait (17,685
permits issued), Qatar (6,179 permits issued), Saudi Arabia (2,646
permits issued), Oman (2,538 permits issued), and Bahrain (1,848
permits issued)32 (Figure 3).
Figure 3: Top-ten Destination Countries for Female Labour Migrants,

2008-09 to 2014-15
(MoLE) as cited in the Report on Labour Migration for Foreign Migration: A Status
Report for Nepal, 2014-15.
In terms of regularizing their migrant status, the Department of Foreign

Employment data indicates that previously unregistered Nepalese migrants
obtained a labour permit for employment in 136 destination countries, of
which, Qatar, Saudi Arabia, the UAE, Kuwait, Oman, and Bahrain, saw the
largest numbers of permits granted (Figure 4). Destination countries for
most of the ‘regularized’ male labour migrants were Qatar, Saudi Arabia,
and the UAE, whereas large numbers of female migrants regularizing
their labour permits were recorded for Kuwait, the UAE, and Oman in the
GCC33 (Table 2).
Figure 4: Destination Countries of Previously Unregistered Migrant

Workers who Obtained a Labour Permit, From 2012-13 to 2014-15
(MoLE) as cited in the Report on Labour Migration for Foreign Migration: A Status
Report for Nepal, 2014-15.
Table 2: Total Number of Previously Unregistered Migrant Workers

who Obtained a Labour Permit, by Destination and by Sex, From
2012-13 to 2014-15
Country Male Female Total
Qatar 47,902 402 48,304
Saudi Arabia 28,276 983 29,259
UAE 22,175 3,226 25,401
Kuwait 5,045 4,543 9,588
Bahrain 3,343 406 3,749
Oman 1,961 1,041 3,002
Source: Department of Foreign Employment, Ministry of Labour and Employment (MoLE) as cited
in the Report on Labour Migration for Foreign Migration: A Status Report for Nepal, 2014-15.
Age and gender distribution of migrant workers becomes relevant as

various labour surveys have pointed to a disproportionately male and
young foreign migrant pool in the GCC, especially in unskilled and semi-
skilled jobs, for obvious physical, social, and cultural reasons.
Given the earlier mentioned statistical mapping, it can be concluded that
migration forms a critical source of livelihood and economic development
in Nepal, which is why it has pushed the bureaucracy and policy planners
to collate necessary data34∗–an exercise that has become somewhat of
a glaring challenge for southern neighbour, India. For instance, the
economic impact of Nepalese out-migration can be gauged by the fact that
it has created the fifth largest remittance receiving country in the world in
Nepal, which has in turn increased household incomes in the country and
improved their access to education and healthcare.34 This is backed up by
the latest numbers–migrant workers sent US$ 6.6 billion to their families
in 2015, which was up 20.9 per cent year-on-year (primarily due to the
2015 Gorkha earthquake). The previous year, 2014, had seen a growth
in remittances by 3.2 per cent.35 Connecting this to the contribution of
migrants in the GCC nations, the World Bank Migration and Remittances
Recent Developments and Outlook report estimated that in 2015, the
highest bilateral remittance inflow was from Qatar with US$ 2.02 billion,
followed by Saudi Arabia with US$ 1.8 billion. The UAE was also a top
source destination, providing US$ 802 million in remittances; remittance
service operators in the country also waived fees for transferring money to
Nepal for a period, following the 2015 earthquake.36
Thus, the steady progression of labour migration underscores a vital
economic subtext to Nepal’s relations with the GCC region. The subsequent
section will now expose some of the challenges that have come with it.
Challenges in the Labour Migration System in the Gulf

Cooperation Council Nations
Gulf Labour Market – Following from the GCC’s rentier paradigm, the
Gulf nations rely on three main categories of migrant workers – low- to
mid-skilled workers in construction and low-tech industries and services;
mid- to high-skilled workers in high value added services; and the
domestic sector (as nannies, housemaids, servants, cooks, and drivers in
native homes). Working conditions in the region are differentiated, both
according to the nature of the job performed and the nationality of those
performing it. Due to the absence of employment opportunities within
Nepal and its dysfunctional domestic labour market, foreign employment
has been found to be an alternative option mainly for the unskilled and
semi-skilled labour force: 74 per cent of the labour permits issued by
the Nepalese government in 2014-15 were for unskilled labour, 25 per

cent for semi-skilled, and 1 per cent for skilled workers.37 GCC labour
markets are also divided between public and private sector jobs, with high
differentiation within the private sector. It is not uncommon for different
jobs to be dominated by workers belonging to specific nationalities and for
workers to be paid different wages according to their nationalities. Public
sector jobs are dominated by nationals who are paid higher wages.
Sponsorship System38 – At the heart of the labour migrant administrative
structure lies the ‘sponsorship system’ or kafala in Arabic. It is the means
and method through which the entry, monitoring, daily management, and
control of the vast migrant population are maintained. It emphasizes that
foreign workers are temporary, and in fact, guest labour. In the nations of
UAE, Qatar, and Kuwait, where the percentage of foreigners account for
more than half the total population, the sponsorship system is the central
regulatory institution that defines the identities, rights, and obligations
of the migrants. In these countries, the power of the sponsor may even
be considered absolute. The kafala system ensures that labour migrants
entering the GCC nations are contract workers. Their work contracts can
be renewed and are regularly done so; spanning years, if not decades, but
which will ultimately expire, resulting in return migration.
In each of the destination GCC nations, incoming labour migrants
receive an entry visa and a residence permit only upon the receipt of a No
Objection Certificate (NOC). The NOC is handed out by the government
if a citizen of that country or a GCC institution employs the prospective
migrant worker. In this system, the employer is the ‘sponsor’ or kafeel,
and assumes complete economic and legal responsibility for the employee
during the contracted period. This more or less privatizes the control
over foreigners by the nationals. The sponsor-employer is also formally
required to repatriate the employee at his own expense upon termination
of the contract, a compensation that is most often denied to low income
unskilled workers who rarely have the means to retaliate. Not just that, the
kafala system requires that the sponsor-employer must be the same person
or institution throughout. Foreign employees may be deported if they
accept employment with a second employer without the consent of the
original employer and the ministry in charge of labour affairs. Moreover,
many a times, labour contracts actively mislead prospective workers about

the nature of the job and the working conditions offered (particularly,
accommodation, work hours, and wage levels). At the same time, the
kafala’s legal provisions force labour migrants to remain with their original
employer as alternatives are impossible or require government sanction–
often reserved for Western expatriates or white collar migrants. The most
affected and vulnerable are then those who perform unskilled and semi-
skilled jobs as employers have almost free rein to dupe incoming migrant
labour or set arbitrary wage rates or offer poor working conditions.
Labour Exploitation and Other Challenges Faced by Nepalese

Workers39
It must be noted that the bulk of labour migration to the GCC nations
from Nepal occur in the unskilled jobs category. Workers often incur
substantial debts to finance their out-migration and therefore tend to
brave through some extreme hardships, rather than return home without
repatriation. More often, such decisions towards economic migration are
at the household level, where migrants hope to improve the life situation
of their dependants as well.
• Passport Confiscation: An exploitative practice that has been
facilitated by the kafala system is that of passport confiscation
(called ‘safe-keeping’). In many of the GCC nations, foreign
workers are required to surrender their passports to the sponsor-
employer for the duration of the contract, which is justified as a
crime-preventive measure due to the large foreign population.
Inevitably, this has come to mean that workers cannot quit their jobs
and leave the country before their contracts expire. In many cases,
if the sponsor-employer refuses to release the migrant employee
from the contract or the migrant workers are subjected to abuse,
the only option left is to run away and report the infraction to the
respective embassy. This is not easy and there are several cases,
aside from embassy documented ones, where migrant workers are
simply forced to suffer from poor to abusive working conditions.
• Health-risks Attached to Working Conditions: A study conducted
from 2008 to 2012 recorded the death of 1,357 Nepalese migrants.
While the reasons included road and workplace accidents, suicides,

and murder, the Foreign Employment Board noted that a number
of these deaths were preventable. Since a significant population of
Nepali migrants are employed in unskilled jobs in the GCC, they
live in labour camps that often have little facilities in the sweltering
heat of the Gulf. They also often have no control over the selection
of their dwelling. Moreover, the extreme climactic conditions
aggravate the risks for those suffering from health problems as
the temperature difference between working and living places
is extreme. Health-related problems, heat strokes, heart attacks,
accidents, improper sanitation, and the absence of insurance and
minimum safety net are some of the major recurring challenges.
They are attributed to the lack of access to medical services and
pre-departure orientation classes on workplace safety, road safety
or rules, climatic conditions, and general precautions before
migrating to the Gulf region.
• Repatriation After Death: Nepalese families find it very hard to
receive their deceased kin as most GCC countries require an exit
visa even for a dead body.
• Wages and Abuse: Numerous cases of intolerable suffering of
blue collar workers have been time and again noted in the region.
Nepalese workers are among the worst paid workers in the GCC
nations, receiving wages around US$ 125 to US$ 200 per month
due to lack of education, knowledge, and skills. Desperate and
poor, they are most vulnerable to abuse and neglect such as denial
of wages and confinement. Further, many cases of sexual abuse
and exploitation of women in domestic and low-pay work have
been highlighted in news reports, human rights surveys, and
government-sponsored studies.
• Debt Bondage40: The decision to migrate abroad can be a costly
one, particularly in the case of dubious recruitment agencies and
individual service providers, who charge exorbitant fees and escape
government monitoring. This often results in debt bondage where
poor and/or ignorant workers sold on migrant dreams desperately put
up their meagre assets as collateral debt or get burdened with loans.
Governing Foreign Employment in Gulf Cooperation

Council–Laws, Policies, and Institutional Mechanisms41
In light of the rapidly growing labour migration from the country, the
Government of Nepal has had to adapt its responses according to the
changing context of domestic and international labour markets. This
includes putting in place a legal, policy, and institutional framework that
will regulate, facilitate and monitor the migration processes for foreign
labour employment; protect the rights of labour migrants; and build an
enabling environment for investment by returned migrants as well as the
transfer of their newly acquired skills and knowledge (ILO Report, 2016).
Legal: Towards these objectives, the government’s first effort began in
1985 when the Foreign Employment Act was passed. However, it soon
emerged that migrating individuals were not taking facility of government
processes and mechanisms. Realizing the legal shortcomings, Nepal’s
government amended the Act in 1988, followed by the enactment of the
Foreign Employment Rules in 1999 to better implement the provisions
of the Foreign Employment Act. This strengthened the government’s
oversight capacity as well. The Foreign Employment Act 2007 and
the accompanying Rules (2008) and (2011) increased the scope of the
governance of migration for foreign employment from Nepal. The 2007
Act and its rules promote the security and welfare of foreign labour
migrants and contain provisions for the regularization and monitoring of
the businesses that facilitate the migration process. The provisions include
the creation of the Department of Foreign Employment, the Foreign
Employment Promotion Board, the Foreign Employment Welfare Fund,
insurance coverage, pre-departure orientation and training, compensation
to migrant workers and their families, rescue and repatriation of migrant
workers, repatriation of workers’ income, a Labour Desk at Kathmandu
International Airport, and the Foreign Employment Tribunal to settle cases
and penalize perpetrators. It has been reported that the 2007 Act is under
review to adapt to new and recurring challenges.
The government also uses some directives and manuals to regulate
the business of foreign employment–the Directive for Acquiring Labour
Permits through Individual Process in 2012, the Standard on the Enlisting
Process of the Health Examination Institution for Workers Going for
Foreign Employment 2013, the Directive on the Procedure on Individual

Labour Permission 2013, the Manual on Registration and Renewal of
Orientation Training Institutions 2014, the Manual on Extending Objective
Assistance to Skill Trained Human Resources 2014, and the Directive on
Sending Domestic Helpers for Foreign Employment 2015.
Policy: A new National Labour Policy was initiated in 1999 to develop
stronger mechanisms and structures to facilitate foreign employment and
protect the rights and security of migrating workers. As a result, this period
saw a sharp uptake in the number of labour permits issues from 27,796 in
1999-2000 to 1,04,736 in 2001-02–a trend that has since continued.
In 2012, the government introduced a new Foreign Employment Policy
to incorporate the socio-economic concerns emerging from the increasing
trends in foreign labour employment. The new policy acknowledges and
deals with the prevailing irregularities in the management of the migration
process, poor information provided that increased risk of exploitation, the
challenges associated with increased female labour migration, and the
difficulties faced by returning migrants.
In 2015, the government cabinet approved a 5-year National Strategic
Action Plan (2015-20) by the Ministry of Labour and Employment to
translate the objectives of the Foreign Employment Policy. The strategies
within the Plan are geared towards creating dignified foreign employment
opportunities that will contribute towards poverty reduction and sustainable
economic and social development through the use of remittances in the
productive sectors. The Plan has a total budget of nearly US$ 48.4 million
(NPR 5.3 billion).
Institutional: The Government of Nepal has aligned its regulation of
foreign labour migrants according to the changing international standards
and has cooperated with international agencies to identify the challenges to
employment, such as exploitive practices in recruitment, to make foreign
employment decent, safe, organized, and reliable.
(a) International level: Nepal is a member of the Colombo Process
(2003) and the Abu Dhabi Dialogue (2008), which are regional consultative
forums on the management of foreign employment and contractual labour
and the protection of migrant worker rights. The government has ratified
11 ILO conventions, including seven of the eight core conventions, such
as the Forced Labour Convention 1930 (No. 29) and the Abolition of
Forced Labour Convention 1957 (No. 105). Nepal regularly reports on
the non-ratified conventions and recommendations, such as the Migration
for Employment (Revised) Convention 1949 (No. 97) and the Migrant
Workers (Supplementary Provisions) Convention 1975 (No. 143) as well
as their respective recommendations (No. 86 and No. 151).
(b) Domestic level: The Ministry of Labour and Employment takes
the lead in the formulation, implementation, coordination, monitoring
and evaluation of policies, plans and programmes related to labour and
employment according to the Allocation of Business Rules 2012. Within
the Ministry, all matters relating to foreign employment are administered
by the Foreign Employment and International Labour Relations Division.
Following from the Foreign Employment Act and Rules, labour attachés
are appointed to all destination countries where 5,000 or more Nepali migrant
workers are based, which includes all the six GCC nations. Additionally, a
female labour attaché is appointed in all destination countries where there
are more than 1,000 female Nepalese labour migrants.
Ministerial programmes on affairs of foreign employment operating
in collaboration with international development partners include the
following: (i) Safer Migration Project 2013–2017; (ii) Promoting the
Effective Governance of Labour Migration from South Asia Through
Actions on Labour Market Information, Protection During Recruitment
and Employment, Skill and Development Impact, 2013–2016; (iii)
Partnership Programme on Fair Recruitment and Decent Work for Women
Migrant Workers in South Asia and the Middle East, 2013–2018; (iv)
Research and Policy Dialogue Initiative on Migration and Development
in Nepal, 2015-2017; and (v) Strengthening Labour Migration Capacities
for the Colombo Process Member States Countries initiative, 2013-2015.
The Ministry of Foreign Affairs is responsible for the distribution
of the indemnities of a migrant worker who died during employment
abroad to the nominated beneficiary. Further, through its efforts, the
Nepal government has signed bilateral agreements with Qatar (2005), the
UAE (2007), and Bahrain (2008) in the GCC region. The Foreign Affairs
Ministry also oversees the embassies that offer support services to the
labour migrants in destination countries. These include support in times
of distress and grievances, repatriation of the bodies of deceased migrant

workers, helping migrant workers receive compensation from an employer
and rescuing migrant workers from vulnerable situations.
Despite these multi-level mechanisms in place, Nepalese labour
migrants in the GCC nations continue to suffer from severe exploitation,
debt bondage, and forced labour. This is traced both to the failure of
domestic governance institutions in combatting coercion, fraud, or abuses
of power in the pre-departure phase of migration as well as the unique
system of receiving and managing foreign labour in the destination Gulf
Arab countries. As a result, such movement of individuals cannot be
labelled as human trafficking or fall through the cracks in Nepal’s labour
laws and their implementation.
Conclusion
Nepal’s ties with the Gulf Cooperation Council countries have steadily
grown over the last four decades, as has its labour migration to the region.
Periodic exchange of diplomatic visits and interactions has fostered a
peaceful, stable, and reliable dynamic. Strengthening this relationship
are the bilateral agreements Nepal has signed with some countries in the
region, namely, Qatar, the UAE, and Bahrain. Further, the GCC nations
have contributed to Nepal’s infrastructure development, particularly for
road and hydropower projects, and have provided necessary relief aid
during times of natural calamity.
Nevertheless, current levels of engagement with the region leave
much to be wanted. In particular, there is scope for expansion in trade
and tourism as well as investment cooperation. Nepal has a trade
deficit with all the GCC nations and has yet to successfully market
its appeal as a Himalayan ecotourism destination. Similarly, while
the GCC nations have provided financial assistance towards certain
development projects, Nepal has insufficiently explored its capacity
to co-opt the hydrocarbon wealthy states and nations as stakeholders
to its development and modernization. This may be explained by the
absence of a substantive foreign policy framework with the GCC region
and Nepal’s preoccupation with the external relations it holds with its
immediate neighbourhood.
Yet, what elevates the importance of the GCC nations is the position
they hold as favoured destinations for Nepalese foreign employment
aspirants. This was seen, for instance, in the immediate increased uptake
of labour migrants by Saudi Arabia as Malaysia temporarily halted its
hiring of foreign labour. Moreover, since the bulk of Nepalese labour
migration is unskilled, Nepal’s bilateral relations with the Gulf region
are often focused upon the welfare, dignity, and security of its nationals
working in those states. The prioritization of labour relations should affect
a more proactive diplomacy, rather than the present ad hoc arrangement.
This is more so as both international human rights watchdogs and
government records take note of the challenges embedded in the GCC’s
migration system and the recurring incidents of exploitation, abuse, and
neglect of foreign workers.
At home, addressing these issues has required Nepal to continuously
evolve its foreign employment governance system. This is particularly
so as the volume of international migration for work has rapidly grown,
and with it the country’s dependence on remittances for development of
its economic sectors. As a result, Nepal’s legal, policy, and institutional
mechanisms have either had to adapt to the changing labour market or
reform to align themselves to newer and better international standards. At
the same time, awareness and utilization of these facilities and protections
remain lacking when tracking the living and working conditions as well as
deaths of low-skilled migrant workers to the GCC region.
This has often led to direct assurance being sought by Nepal. It was
witnessed in the clarification requested from Qatar with respect to the
status of migrant workers employed on construction projects for the 2022
World Cup. It led to new minimum wage norms and legal and government
monitoring mechanisms being set up to ensure Nepalese migrant workers
are employed in secure and dignified conditions. Currently, as world
oil prices continue to be depressed, revenue slowdown will impact new
development projects and dilute the economic and hiring capacities of the
region’s governments and businesses. Anticipating these developments
presents Nepal with a new set of challenges and opportunities. It is up
to the foreign policy establishment to design a corresponding diplomatic
framework that is both intuitive, proactive, and comprehensively negotiates
the boundaries of its political, economic, and labour relations with the
Gulf Arab nations.
References
1. Embassy of Nepal, State of Qatar, ’Brief on Nepal-Qatar Relations’, 2015,
available at http://www.nembdoha.com/pages.php?cid=2, accessed on 13 May
2016.
2. To understand the importance of labour welfare concerns in the Nepal-Qatar
bilateral relationship, see A Correspondent, ‘Nepal-Qatar Relations Friends For
Cause’, New Spotlight Nepal, 8(14), 16 January 2015, available at http://www.
spotlightnepal.com/News/Article/Qatar-Nepal-good-relations, accessed on 13
May 2016.
3. Pete Pattisson, ’Revealed: Qatar’s World Cup “slaves”’, The Guardian,
Kathmandu and Doha, 25 September 2013, available at https://www.theguardian.
com/world/2013/sep/25/revealed-qatars-world-cup-slaves, accessed on 13 May
2016.
4. ‘Labor Welfare Promise’, New Spotlight Nepal, 8(19), 10 April 2015, available at
http://www.spotlightnepal.com/News/Article/Labor-Welfare-Promise, accessed
on 13 May 2016. See also, ‘Reforms to Ensure Welfare of Nepali Expat Workers’,
Gulf Times, Doha, 8 April 2015, available at http://www.gulf-times.com/
story/434086/Reforms-to-ensure-welfare-of-Nepali-expat-workers, accessed on
13 May 2016.
5. Embassy of Nepal, Kingdom of Saudi Arabia, ‘Nepal Saudi Bilateral Relations’,
2012, available at http://www.neksa.org/index.php/nepal-saudi-arabia, accessed
on 13 May 2016.
6. Himalayan News Service, ‘Nepali Job-seekers Beeline for Saudi’, The Himalayan
Times, Kathmandu, 1 March 2016, available at https://thehimalayantimes.com/
business/nepali-job-seekers-beeline-for-saudi/, accessed on 13 May 2016.
7. Embassy of Nepal, United Arab Emirates, ‘Nepal-UAE Relations’, 2014, available at
http://www.nepalembassyuae.org/en/nepal-uae-relations, accessed on 13 May 2016.
8. Lekhanath Pandey, ’UAE Opens Embassy in Kathmandu’, The Himalayan
Times, Kathmandu, 11 May 2016, available at https://thehimalayantimes.com/
kathmandu/uae-opens-embassy-kathmandu/, accessed on 13 May 2016.
9. Ibid.
10. Alexander Cornwell, ’Nepal Airlines to Resume Dubai Flights After Four-
year Hiatus’, Gulf News, Dubai, 25 July 2016, available at http://gulfnews.
com/business/aviation/nepal-airlines-to-resume-dubai-flights-after-four-year-
hiatus-1.1868343, accessed on 28 July 2016.
11. Himalayan News Service, ‘Overseas Labour Migration Fell 18.4 Per Cent in
Last Fiscal Year’, The Himalayan Times, Kathmandu, 30 July 2016, available
at https://thehimalayantimes.com/business/overseas-labour-migration-fell-18-4-
per-cent-last-fiscal-year/, accessed on 30 July 2016.
12. Embassy of Nepal, Kingdom of Bahrain, ‘Nepal-Bahrain Relations’, 2013,
available at http://www.eonbahrain.org/nepal-bahrain-relations/, accessed on 13
May 2016.
13. See note 11.

14. See Ministry of Foreign Affairs, Government of Nepal, available at https://www.
mofa.gov.np/foreign-policy/diplomatic-relation/, accessed on 15 July 2017.
15. ‘Nepal’s Ties With Oman Set To Get A Boost As Embassy Opens On November
20’, Times of Oman, re-printed in The Himalayan Glacier, Muscat, 17 November
2013, available at http://www.himalayanglacier.com/blog/nepals-ties-with-oman-
set-to-get-a-boost-as-embassy-opens-on-november-20.html, accessed on 13 May
2016.
16. Times News Service, ‘Nepal Mission Would Focus on Business Ties’, Times of
Oman, Muscat, 9 September 2013.
17. Karki, Hom, ‘Nepal, Oman to Up Flight Frequency’, The Kathmandu Post,
Doha, 31 December 2014, available at http://kathmandupost.ekantipur.com/
news/2014-12-31/nepal-oman-to-up-flight-frequency.html, accessed on 13 May
2016.
18. Times News Service, ‘Nepal Fixes Minimum Wage For Migrant Workers in
Oman’, The Times of Oman, Muscat, 23 January 2016, available at http://
timesofoman.com/article/75997/Oman/Government/Nepal-fixes-minimum-
wage-of-OMR120-for-migrant-workers-says-embassy-in-Muscat, accessed on
13 May 2016.
19. Ibid.
20. R. B. Budhathoki, ‘Nepal Kuwait Enjoy Excellent Ties—Madhuban Paudel,
Ambassdor of Nepal’, Nepalkuwait.com, 29 May 2011, available at http://www.
nepalkuwait.com/koselinews/nk/news.php?news_id=271, accessed on 13 May
2016.
21. ’Nepal-Kuwait Trade has “Huge Potential”’, The Kathmandu Post, Kathmandu,
26 June 2012, available at http://kathmandupost.ekantipur.com/news/2012-06-25/
nepal-kuwait-trade-has-huge-potential.html, accessed on 13 May 2016.
22. See note 11.
23. Mahmoud Shawqi, ‘Relations Between Nepal and Kuwait Distinct’, Arab Times,
3 August 2015, available at http://www.arabtimesonline.com/wp-content/uploads/
pdf/2015/aug/03/05.pdf, accessed on 13 May 2016.
24. International Trade Union Confederation, ‘Kuwait and Bahrain Unions Become
First in the Gulf to Forge an Official Trade Union Relationship with Nepal’, 16
January 2012, available at http://www.ituc-csi.org/kuwait-and-bahrain-unions-
become?lang=en, accessed on 13 May 2016.
25. Andrew M. Gardner, ’Migration, Labor and Business in the Wolding Cities of the
Arabian Peninsula’, Institute of Developing Economies, IDE Discussion Paper
No. 513:4, 2015.
26. Gulf Labour Markets and Migration (2010-2015), available at http://gulfmigration.
eu/total-population-and-percentage-of-nationals-and-non-nationals-in-gcc-
countries-latest-national-statistics-2010-2015/, accessed on 14 May 2016.
27. Jagannath Adhikari, ’Foreign Labour Migration and Remittance Economy’ in
Anita Bhattarai Ghimire et. al. (eds.) Nepal Migration Yearbook 2009, Kathmandu:
Nepal Institute of Development Studies, 2010.
28. International Labour Organisation, ‘Labour Migration for Employment: A
Status Report for Nepal 2014/2015’, 17 July 2016, available at http://www.ilo.
org/wcmsp5/groups/public/---asia/---ro-bangkok/---ilo-kathmandu/documents/
publication/wcms_500311.pdf, accessed on 28 July 2016.
29. Ibid.
30. See note 28.
31. Ibid.
32. Ibid.
33. Ibid.
*
For detailed information on Nepal’s out-migration trends, covering age, gender,
origin districts, and destination states, among other categories, please read the
ILO’s ‘Labour Migration for Employment: A Status Report for Nepal 2014/15’.
34. Bibek Subedi, ’WB: Remittance Inflows Soared After Earthquake’, The
Kathmandu Post, Kathmandu, 15 April 2016, available at http://kathmandupost.
ekantipur.com/news/2016-04-15/wb-remittance-inflows-soared-after-earthquake.
html, accessed on 28 July 2016.
35. Ibid.
36. Ibid.
37. See note 28.
38. AnhNga Longva, Walls Built on Sand: Migration, Exclusion, and Society in
Kuwait, Colorado and Oxford: Westview Press, 1999.
39. Shambu Ram Simkhada, ’Issues and Challenges Concerning Nepali Migrants in
the Gulf’, in Nishchal N. Pandey and TomislavDelinic (eds.) Nepal’s National
Interests–II, Kathmandu: Centre for South Asian Studies and Konrad Adenauer
Stiftung, 2013.
40. Sarah Paoletti, Eleanor Taylor-Nicholson, Bandita Sijapati, and Bassina
Farbenblum, ’The Exploitation-Trafficking Continuum in Labor Migration and
the Need for Reform in Nepal’, Policy Brief, June 2014, Centre for the Study of
Labour and Mobility, Sydney: University of New South Wales, available at http://
ceslam.org/docs/publicationManagement/CESLAM%20Policy%20Brief%204.
pdf, accessed on 29 July 2016.
41. See Note 28.
24
Impact of Foreign Aid on Nepal
Sucheta Pyakuryal and Sean Lahav
Abstract
T he chapter examines the role of foreign aid in Nepal and investigates

its overall impact on the country’s economic and political development.
Within the confines of international relations and global economics, foreign
aid is widely regarded as a powerful political instrument of diplomacy
because of its ability to strengthen bilateral relationships, influence
recipient countries to endorse specific policy positions, and foster the spread
of democratization. In regard to foreign aid in Nepal, the country receives
a considerable amount of foreign aid from powerful international actors
ranging from the United States of America and Britain to China and Japan.
While each foreign aid contribution varies in size and scope, overall, aid
contributions make up a significant amount of Nepal’s capital formation.
The present chapter argues that, despite the benevolence of foreign aid
contributions to Nepal, there are certain underlying consequences behind
the country’s continued acceptance of international aid contributions,
including negative impacts on the civil society, bureaucratic norms, and
its overall infrastructure. Through an observational analysis of existing
literature, conceptual frameworks, international contributions, and impact
assessments it illustrates the multilateral complexities behind foreign aid
in Nepal, and assesses whether or not the country directly benefits from
Impact of Foreign Aid on Nepal • 381
international contributions. First, it outlines the rudimentary components

that make up foreign aid as a concept. Second, it investigates who makes
up Nepal’s foreign aid contributions, and the intentions behind each
contribution. Lastly, it assesses the impact of foreign aid contributions to
Nepal, specifically looking at the relationship between overall foreign aid
contributions and Nepal’s annual government budget.
Introduction
The foreign aid debate manages to take a centre stage when development
and policy experts congregate. Regardless of what the economists,
philanthropists, and members of the international civil society think,
one cannot deny the fact that foreign aid, especially bilateral and/or
multilateral aid is a powerful political tool and an important instrument of
diplomacy. As Khadka (2000) notes, the United States of America was the
first country to employ international aid systematically and Nepal was one
of the first among several less developed countries to receive aid from the
United States.
Before delving into foreign aid and its impact on the overall development
of Nepal, it is imperative to understand how foreign aid is generally
perceived, especially in regard to international politics, which further
brings up the question: what exactly is foreign aid?
To be able to answer this seemingly basic question, one should take into
account several angles that the issue encompasses (Hattori, 2001). For the
realists, it is an important policy tool that originated in the Cold War period
to influence the political psyche of the recipient countries (Morgenthau,
1962). In a bipolar world post World War II, it was important to influence
recipient countries and to get them to explicitly or tacitly endorse the
donors’ political and economic positions. Liberal institutionalism uses it
as a means to promote socio-economic and hence political development
of the developing recipient countries (Opeskin, 1996). The Marxists and
the world systems theorists, on the other hand, view aid as a well thought
out strategy which constrains and controls the development of recipient
countries (Wood, 1986).
In addition, researchers have constantly scrutinized whether foreign aid
gets used to foster the process of democratization or not. According to a
study by Alesina and Dollar (2000), countries that are moving along
the path of democratization get an overall 50 per cent increase in aid.
They also point out that cross country differences are, to a large extent,
explained by political factors such as colonial links, alliances, changes
in aid in a country over time, reward democratization and strategic
interests.
Concept of Foreign Aid

Majority of theories assume that foreign aid consists of material goods or
services that are owned or controlled by donors, the allocation of which
may vary according to purpose and intent (Hattori, 2001).
According to Marshall Sahlins (1972), there are three fundamental
types of resource allocations in society, that is, economic exchange,
redistribution, and giving. In economic exchange, the reciprocation is
simultaneous between two parties; decision of allocation is mutual and
the exchange is mediated through market or market-like institutions. In
modern societies, such institutions are complex constructions with their
own set of rules and enforcement powers, and in premodern societies, third
party witnesses mediate such exchanges (Dresch, 1989). In redistribution,
however, reciprocation between involving parties is absent and the
decision of allocation is the responsibility of the central political authority.
There is a certain hierarchy that is present, as in the relationship between
the ruler and the ruled (Hattori, 2001). Giving, in contrast, occurs amidst
lack of structure, rules, and certainty and the social relation within which
it rises is largely unmediated (Hattori, 2001).
From the typology discussed above, most types of foreign aid fall
under the category of giving— commonly perceived as a gift extended
from one country to another. It is a voluntary practice by donor states.
One important point that Sahlins (1972) makes as far as foreign aid is
concerned is the fact that the condition from which foreign aid arises is
that of basic material inequality between the donor and the recipient.
A majority of IR experts endorse the thesis that foreign aid is an active
agent in mitigating, reinforcing, or worsening the underlying material
inequality over time. Therefore, one can understand foreign aid as
something of a symbolic domination (Bourdieu, 1990). According to
Bourdieu (1990), the act of giving is an effective practice of symbolic

domination because, in accepting a gift that cannot be reciprocated, a
recipient becomes grateful and it is this complicity of the recipient that
gives the practice of giving its social power. Keeping in mind the factors
discussed above, it will be interesting to see why, how, and from whom
Nepal receives aid.
Aid in Nepal: Who Gives, Why, and How

According to the most recent data from the Aid Management Platform
under Nepal’s Minister of Finance, there is a total aid commitment of
US$16,937 million, and the total disbursement amount is US$8,212.7
million (Nepalese Ministry of Finance, 2016). Among the aid givers, the
United Kingdom is the most generous with 9 per cent, followed by Japan
whose assistance sums up to 6 per cent of the total aid flown to Nepal. The
United States and India together comprise 5 per cent of the total aid flow
to Nepal, while China alone sums up to 3 per cent (Nepalese Ministry of
Finance, 2016).
According to the data published by the (Nepalese Ministry of Finance,
2016), the United Kingdom has poured its money into Nepal specifically
to expand local development and reconstruction, especially in regard to
post-earthquake reconstruction. Japan’s aid agency, Japan International
Cooperation Agency (JICA), gives aid to Nepal to boost education and
urban development. United States Agency for International Development
(USAID) currently seems more invested in Nepal’s health sector, in
addition to good governance issues (Nepalese Ministry of Finance, 2016).
India has given generously to develop infrastructure, especially roads in
the Terai region, as well as to develop the Rahughat hydro project.
On the other hand, China’s foreign aid to Nepal is dispersed more
horizontally, in that it contributes to post-earthquake reconstruction, police
force development, hydro projects, health service delivery and research,
emergency relief, and comprehensive disaster risk management (Nepalese
Ministry of Finance, 2016).
As far as the United States aid to Nepal is concerned, the two countries
signed the ‘General Agreement Technical Cooperation’ in 1951 after their
diplomatic ties were established in 1947 (Khadka, 2000). If one is to use
the realist paradigm to conclude why the United States would invest in
Nepal, there are several reasons that come to mind. One can deduce that
Nepal’s strategic importance to the United States peaked during the Cold
War. Sandwiched between a communist China and a ‘non-aligned’ India
that had robust diplomatic ties with the then USSR, Nepal was susceptible
to communism.
According to Khadka (2000), Nepal’s geopolitical location was a
major factor influencing American interests. The United States believed
that Nepal’s independence and territorial integrity were important to
the security of South Asia as a whole. The United States aid objectives
in Nepal were to help maintain Nepal’s independence and neutrality,
contain communism, and help Nepal modernize and enhance its ‘western
orientation’ (Khadka, 2000).
The United States was the largest donor to Nepal until the 1960s when its
aid contribution began to decline. According to Khadka (2000), American
aid began to decline between 1962 and 1970 when hostility between India
and China, as well as India and Pakistan peaked. The rapprochement
between the United States and China in the early 1970s, the strengthening
of ties between Nepal and China, and the growing aid-involvement of
Western European donors and Japan may have been some of the reasons
for the decline of American aid to Nepal. Realism, therefore, seems to
have substantially contributed to the American aid policy in Nepal.
As far as neoliberal institutionalism is concerned, the interest to
expand the market may not be as blatant now as it was during the late
1070s, 1980s, and the 1990s. Realization has dawned upon major donors,
including International Financial Institutions (IFIs) that good governance,
strong institutions, and effective and efficient bureaucracies are imperative
for an overall development of a country (Fukuyama, 2004). The USAID,
in its mission statement towards Nepal states that it seeks to ‘reinforce
recent gains in peace and security, stabilize the transitional government,
strengthen the delivery of essential social services, expand proven health
interventions, and address the global challenges of food insecurity and
climate change.’ Today, the United States, alongside India is the third
biggest aid contributor in Nepal with a total contribution of more than
US$ 860 million (Nepalese Ministry of Finance, 2016).
The United Kingdom, the biggest aid contributor in Nepal, cites on

its government’s webpage, that it supports ‘peaceful, democratic and
inclusive Nepal, with dynamic growth, respect for human rights and
continued strong partnership with the UK’ (UK Gov, 2016). It also states
that it seeks to continue recruitment of Gurkhas and partnership between
the Nepalese and British armed forces.
The United Kingdom funnels funds to Nepal through its Department for
International Development (DFID). Through the DFID it aims to work on
‘wealth creation, service delivery, governance, disaster response, climate
change and in the health sector in Nepal (UK Gov, 2016). Nepal’s Ministry
of Finance quotes the United Kingdom’s aid contribution to Nepal to be
US$1.54 billion. As a member of the North Atlantic Treaty Organization
(NATO) and a close ally of the United States, the United Kingdom’s
political intents, goals, and visions have never been very different from
that of United States. Containment of communism, protecting Nepal’s
sovereignty and independence for strategic and economic development
to bolster liberalism seemed to be United Kingdom’s main interest during
the Cold War. The politically reciprocal relationship between Nepal and
the United Kingdom was formed during the Great Mutiny of 1857, when
Nepal sent soldiers to aid the East India Company from warring rebel
soldiers (Majumdar, 1960). Before the Great Mutiny, the Sugauli Treaty
of 1816 had marked the start of a cordial relationship between United
Kingdom and Nepal. A treaty of friendship was signed in 1923, which
superseded the Sugauli Treaty.
The United Kingdom enjoys a special place in the political psyche of
Nepal due to their historical ties, development assistance, and long-term
support in the struggle for democratic peace in Nepal. The recruitment
of Gurkha soldiers by the British Army since the nineteenth century also
contributed to strengthening the relationship between two countries. In a
rapidly evolving unipolar world, it makes sense for the United Kingdom to
continue influencing its old allies because it funnels aid in various sectors
in Nepal.
According to Nepal’s Finance Ministry, it has spent around US$
4,344,291 on a Social Inclusion Action Program; US$ 8,029,572 for a
Post-Earthquake Reconstruction Program, although its Department for
International Development has committed around US$ 93,853,973 for

the project; and around US$ 1,997,840 for labour, women, children and
social welfare in Chitwan and Dolakha. The DFID has also funnelled
money into the health sector, especially for a Family Planning Project. It
has committed US$ 7,493,820 for the project according to the Ministry of
Finance (2017).
The second biggest contributor is Japan. According to Japanese
Embassy’s Country Assistance Policy to Nepal, Japanese aid aims to
contribute to the ‘further promotion of the bilateral relations through
supporting peace-building and poverty alleviation.’ It also states Japanese
intent to help achieve an overall stability in South Asia.(Japanese Embassy
to Nepal, 2016). According to Nepal’s Minister of Finance (2016), Japan
has given 940 million dollars in aid to Nepal which is 6 per cent of the
total aid that goes to Nepal. Majority of the aid from Japan is concentrated
in the areas of education, urban development, and food aid. (Nepalese
Ministry of Finance, 2017). The Food Aid Project, started in 2008 in
Kaski received US$ 6,706,908. The project then expanded to Dolakha in
2009, with US$ 7,572,805, and to the entire country in 2010 with the total
disbursement of US$ 12,574, 662. Japan gave US$ 8,689.44 million via
its Debt Relief Fund for the purpose of economic reform and external loan
payment (Nepalese Ministry of Finance, 2017). According to the Ministry,
Japan has disbursed US$ 791,786 for the purpose of conserving Buddha’s
birthplace, Lumbini.
Among the biggest donors, India and China and the roles their aid play
in the overall development of the country may be of particular interest to
regional, as well global political experts. Nepal is and has always been in
danger of being caught between its two large neighbours due to its physical
location. Nepal, with its landlocked properties and its open border policy
with India could have a profound impact on Nepal’s security environment
(Khadka, 2000). Although there have been a lot of confidence building
measures between the two, unsolved border disputes between India
and China continue to fuel strategic insecurities in the region. China’s
preoccupation with Tibet, its perception that Nepal could be used to launch
political unrest in Tibet, as well as India’s growing suspicion that Nepal
could be a breeding ground for Pakistani terrorists, are all components of
what keeps China and India interested in Nepal. Beside strategic interests,
India has a variety of other interests in Nepal such as trade, economic,
environmental and sustainability issues.
According to the Indian Ministry of External Affairs (2015), Nepal’s
exports to India have grown more than eleven times and bilateral trade
more than seven times since 1996; the bilateral trade that was 29.8 per cent
of Nepal’s total external trade in 1995-96 reached 66 per cent in 2013-14.
As per the Ministry (2015), exports from Nepal to India increased from Rs
2.30 billion in 1995-96 to Rs 37.135 billion (US$ 605 million) in 2013-
14. Likewise, India’s exports to Nepal increased from Rs 15.25 billion
in 1995-96 to Rs 295.456 billion (US$ 4.81 billion) in 2013-14. The
main items of exports from India to Nepal according to the Ministry are
petroleum products, motor vehicles, and spare parts machinery and spares,
medicines, hot rolled sheets, wires, coal, cement, threads and chemicals.
The Ministry stated in its bilateral brief (2015) that Indian firms are the
biggest investors in Nepal, accounting for about 38.3 per cent of Nepal’s
total approved Foreign Direct Investments (FDIs). According to the
Ministry (2015), as of 15 July 2013, the Government of Nepal had approved
a total of 3,004 foreign investment projects with proposed FDI of Rs 72.694
billion. There are about 150 operating Indian ventures in Nepal engaged
in manufacturing, services (banking, insurance, dry port, education and
telecom), power sector, and tourism industries (Indian MEA, 2015).
As far as water resources are concerned, the Indian Ministry states that a
three-tier mechanism was established in 2008 to discuss all bilateral issues
relating to cooperation in water resources and hydropower. The Ministry
of External Affairs (MEA) (2015) also mentioned that in the area of river
training and embankment construction, the Government of India (GOI)
has been providing assistance to Nepal for the strengthening and extension
of embankments along the Lalbakeya, Bagmati and Kamla rivers and has
proposed to extend this assistance for construction of embankments on
other rivers as well.
Likewise, a Development Authority was set up in September 2014 to
carry out the Pancheshwar Multipurpose project. India and Nepal signed
an agreement on ‘Electric Power Trade, Cross Border Transmission
Interconnection and Grid Connectivity’, popularly known as the Power
Trade Agreement (PTA) in October 2014. A Power Development

Agreement (PDA) for the 900 MW Arun-III hydroelectric project between
India’s Satluj Jal Vidyut Nigam Limited and the Investment Board of
Nepal (IBN) was concluded in November 2014 (MEA, 2015).
Therefore, in addition to various political and strategic interests, India
also has other existential interests in Nepal. Maybe due to this India’s keen
interest in Nepal is seen by majority in Nepal as ‘micro-meddling’. On
15 September 2016, The Hindu, one of India’s leading national dailies
published an article that talked about how India needs to ‘let Nepal be’. The
daily discussed how the Indian MEA needs to delve deeper and educate
itself properly about changing priorities in the Nepal-India relationship.
According to The Hindu (2016), New Delhi needs to realize sooner
than later that political instability in Nepal would eventually seep into
‘dispossessed’ northern regions of Bihar and Uttar Pradesh. According to
the daily, ‘the open border creates such an interconnected socio-cultural
web that a stable and prosperous Nepal will be a catalyst for these regions,’
and the dearth of Nepal studies in Indian academia is probably the result
of overwhelming preoccupation with traditional geopolitics, with ‘little
interest in the welfare of India’s own peripheral populations’ (The Hindu,
2016).
One cannot overlook the fact that India is often showcased as one of
the success stories of globalization and has successfully accelerated its
economic growth since it went through substantial economic reforms
in 1991 (Basu, 2008). The country is host to some of the largest
foreign investment inflows in recent years (Banerjee, 2010). Despite its
progress, India has a large domestic constituency of people suffering
from underdevelopment, chronic poverty, and mal-governance (World
Bank, 2015). According to World Bank’s estimates, India ranks below
its neighbours Bangladesh, Bhutan, Nepal, Pakistan, and Sri Lanka
in terms of life expectancy, access to sanitation, infant immunization,
and underweight children. It ranks below Bangladesh, Bhutan, and Sri
Lanka in controlling the infant mortality rate (Dreze and Sen 2011), and
below Sri Lanka in terms of the literacy rate and access to education
(UNESCO, 2011). Therefore, it is not surprising to note that India still
receives development aid (Fuchs, 2013). However, India engages in aid
delivery to other needy nations. With India emerging on the world stage
as a significant provider of development assistance, critics of its aid
programme question the diversion of resources away from its internal
development, given the chronic socio-economic problems troubling
India (Fuchs, 2013). It is also natural for these critics to assume that
importance of ‘self-interest’ is larger in India’s case and that the ‘poor’
donor who lags behind the ‘rich donor’ in terms of wealth consequently
has more incentives to provide strategic aid than the rich donor does.
Therefore, Indian aid for Nepal is often looked upon with suspicion by
the Nepalese.
As far as Chinese aid is concerned, the situation poses for similar
questions. Although China’s systemic weaknesses are less compared to
India, its aid infrastructure is much more developed than India’s; China’s
interests in Nepal are as keen as India’s and are as important to her as
they are to India. In 2015, Time Magazine wrote that a small, landlocked
Nepal is a foreign policy priority for China and is a buffer state between
herself and India. Although India has long seen Nepal as part of its sphere
of influence, China has in recent years stepped up efforts to increase its
role across Central and South Asia, an effort President Xi Jinping calls
the ‘One Road, One Belt’ initiative (Time, 2015). With better road links
between Tibet Autonomous Region and Nepal, Beijing will be better
placed to access markets in South Asia. As per Time, China, like India,
also claims to be the largest player in terms of FDI in Nepal.
There is one major area of concern for China in Nepal, that is, the Tibetan
refugees. Since 1959, Nepal has been both a passageway, as well as a safe
haven for Tibetans fleeing Chinese rule. However, as China is expanding
its influence in Nepal, the country’s attitude towards the refugees has
changed. Time Magazine (2015) quotes a US embassy cable released by
WikiLeaks in 2010, which stated that ‘Beijing has asked Kathmandu to
step up patrols’, and was providing ‘financial incentives’ to those who
apprehended would-be exiles.
In 2014, The Hindu published an article written by Damakant Jayshi
which discussed how China was increasing the aid package for Nepal.
Jayshi’s piece (2014) noted how China’s Foreign Minister pledged to
increased support to Nepal for its socio-economic development and how
the Chinese aid package for Nepal had increased to 80 million Chinese
yuan from the earlier package of 15 million yuan.
China has repeatedly expressed its support to help Nepal in areas
including trade, investment, infrastructure development, increasing
energy generation from hydropower, agriculture, tourism promotion,
science and technology, and law and order, and was willing to provide
all the help needed by Nepal in graduating from the Least Developed
Country (LDC) status to a developed one by the target year of 2022
(The Hindu, 2014). In 2016, Finance Ministry of Nepal published details
that China disbursed a total of US$129,241,702 for Upper Trishuli 3A
Hydropower Project in Bidur Nuwakot; committed US$ 32,544,379 for
the Syapurbesi Rasuwagadi Road Project, disbursed US$28,999,984 for
procurement of aircraft from China, and as a budgetary support of US$
20,000,000 for the energy sector. As The Hindu writes, ‘If neighborly
sentiment means more aid, few will complain, but Nepal has reason to
wonder if this assistance will also bring a push for greater control.’ In
addition, some wonder about the impact foreign aid has on a developing
country’s overall progress.
Impact of Foreign Aid

There have been numerous research studies on the effectiveness of aid since
1970s and majority of those studies have found a weak correlation between
aid and development (Bhaven et. al, 2011). Most observers agree that
foreign aid has been, at best, only partially successful in promoting growth
and overall progress (Alesina and Dollar, 2000). Among the reasons cited,
the oft-quoted one is the poor performance of bureaucracies of the recipient
countries (Fukuyama, 2004; Easterly and Williamson, 2011). According to
Gulrajani (2011), the neoliberals and neo-Marxists perspectives align as
far as perspectives on foreign aid are concerned. According to economists
like Easterly (2006) and Moyo (2009), not only does aid fail to achieve its
developmental aims, it creates dependencies that keep countries poor and
exacerbate poverty, it crowds out investments by hindering the operation
of free market, encourages corruption, and increases dependency on
foreign charity, which in turn erodes independence and progress. The
neo-Marxists, on the other hand, argue that the discourse on foreign aid
lead by the experts belonging to the aid industry tout developing countries
and their constituents as entities that need Western assistance to achieve
advancement and modernity, and that they are incapable of directing their
own social and political transformation (Gulrajani, 2011).
The mission of poverty reduction justifies the existence, intervention,
and perpetuation of the aid industry and its elites, who depend on foreign
aid as a source of power and via aid planning, an effective network of
power is established over the members global South via aid planning
(Abrahamsen, 2000).
Along with bilateral aid agencies, IFIs, such as the International
Monetary Fund (IMF), and the World Bank have also expanded their role
in matters of governance in additional to more traditional roles related
to economic development (Abrahamsen, 2000). These organizations
demand measures of government practice as a condition for development
aid. Unfortunately, these new demands are premised on a set of a priori
assumptions about the capacity of the governments seeking aid. The
dominant assumptions are that these aid seeking governments are incapable
of offering public services at low cost; that government bureaucracies
pose obstacles to socio-economic changes; and that they are essentially
antithetical to anti-collectivist sentiments coupled with their belief in the
market as an ultimate criterion of efficiency, skill, and professionalism
(Pierre, 1995). Thus, majority of Western aid agencies have been pressing
public institutions of the developing world to become leaner and more
accessible at the same time. Often, in the name of ‘Structural Adjustment’
there have been pressures to reduce the role of the state in relation to the
market and to cut civil service by reducing the number of civil service
employees and wages despite various studies depicting no relation
between larger bureaucracies and weaker development performances
(Hyden, Julius and Mease, 2004).
From late 1970s onwards, the policies of western aid agencies and IFIs
were increasingly shaped by a free-market ideology that easily generated
into ‘economist’ (de Alcantara, 1998). Armed with the capacity to provide
desperately needed capital to the developing countries, these development
specialists have been insisting on ‘progressive liberalization’ by which is
meant reducing the scope and capacity of the state in social and economic
affairs and relegating socio-political issues to a secondary status within the

developmental debate.
The notion that the international aid industry has about governments
has been most pervasive in moulding the perception of government
policy makers, Non-Governmental Organizations (NGOs) and pressure
groups all over the world. Such practices have the potential to have
serious political repercussions as they erode the sovereignty of the
government and the public which delegated authority to their political
representatives and the state as a whole. In eroding the scope of
newly established democratic governments, these aid agencies pose a
fundamental ethical challenge to the democratic governance framework
according to which the power to put pressure and make policies belong
exclusively to democratically elected government, various civil society
groups, and the people of that country.
According to Huntington (1966), the process of democratization
typically involves the rationalization of authority, that is, the replacement
of a large number of traditional, religious, familial, and ethnic political
authorities by a single, secular, national political authority. Rationalization
of authority, according to him, was national integration and centralization
or accumulation of power in recognized national law-making institutions.
The rational understanding of democracy typically retains the important
liberal claim that freedom is a matter of individuals making decisions that
are generally their own, and to counter the difficulties that occur when
free choice is identified with political chaos it relies on the framework of
democratic nation-state that balances order and chaos using its delegated
sovereignty (Hummel, 2008). The framework of liberal democracy as a
system of governance classically upholds democratic political authority,
territoriality, and autonomy (Wilson, 2008). Democratic political authority
is exercised over a defined geographic space. No external actors enjoy
political authority within the borders of the state. However, violation of
the principles of autonomy in which an external actor is able to exercise
some authoritative control within the territory of the state has been frequent
(Krasner, 1995-96), especially after the Cold War. Aid agencies under the
façade of charity or giving have been placed in positions of power and
authority simply because they hold the purse strings.
According to Krasner (1995), the most modest way in which autonomy

can be compromised is if some external actor alters conceptions of
legitimate action that are held by groups within a given polity. An
already established example of erosion of autonomy is the aid agencies’
conditionality accepted by developing countries since 1960s. In addition
to all these concerns, the fact that despite the transfer of over US$ 4.6
trillion in gross Official Development Assistance (ODA) to developing
countries from 1960 through 2008, a substantial amount of the world
remains in extreme poverty and stagnant growth is disheartening (Easterly
and Williamson, 2011).
P T Bauer (1976) had argued that aid to poor countries can perpetuate
corruption, significantly undermining their institutional infrastructure
instead of building it. There is now a growing consensus that weak
governance and institutions decelerate growth, while good policies with
effective institutions enhance growth by making aid effective (Sharma and
Bhattarai, 2013). There is another emerging consensus which states that
aid is more effective in countries with good governance and institutions
that protect property rights and ensure rule of law (World Bank, 2003).
Keeping in mind the findings mentioned above, an effective bureaucracy
appears to be a prerequisite to funnelling aid in order to negate the harmful
impacts of aid on a fragile developing state, as well as to fully utilize the
aid money for development purposes.
Impact of Aid in Nepal

Foreign aid has been a main source of capital formation, comprising a total
of 60 per cent to 95 per cent of the government’s annual budget (Sharma and
Bhattarai, 2011). Since Nepal was one of the highest recipients of foreign aid,
its political journey has been constrained by the benevolence of the donors.
It had to abide by the wishes of aid givers. Since Nepal started receiving
aid from the West in 1950s, the aid that trickled into the country was tacitly
laced with neo-liberal conditions. A large public sector was regarded as
cumbersome by the aid experts, therefore there were instructions to reduce
the size, as well as the scope of public bureaucracies (Heady, 1995).
As Devendra Raj Panday (1999) discussed in his book, Nepal’s Failed
Development, foreign aid contributed to forming the political and fiscal
psyche of the bureaucrats, as well as the members of the civil society in Nepal.
The emergence of the non-governmental sector as a recipient of foreign aid
had serious implications. Not only the government, but also the nascent
civil society became extremely dependent on foreign aid. From legislative
and judicial branches to the functioning of election commission, from social
scientists to medical and legal professionals to media persons, all tried and
accessed aid for improving their sectors, their fields (Panday, 1999).
As the human rights movement is funded by foreign sources, as are various
campaigns for protection of the environment, human rights, education and
infrastructure, a question that frequently comes to mind is, If there is a
sudden decline in the aid flow, how will it not impede the overall progress?
Despite all the aid that Nepal has received, it remains an impoverished
state. Sharma and Bhattarai (2011), through their study, reiterate an
earlier finding of P T Bauer (1976), which discusses how an easy access
to foreign aid discourages ruling elites from establishing and fostering
institutions and taking up policy reforms needed for growth and overall
progress. Studies show that sound economic policies positively impact
aid effectiveness, whereas there are no statistical evidences to show that
democratic governance has any positive impact on aid effectiveness
(Sharma and Bhattarai, 2011). A significant improvement in governance
and institution building is needed in order to make foreign aid effective.
However, it has also been realized that foreign aid impedes institution
building; so, should Nepal be wary of foreign aid, especially if foreign aid
can be an instrument of strategic realism for the donors and an impediment
to institution building for the recipient?
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25
Landlocked Nepal and SAARC
Chokey Namgyal Bhutia and Pravhat Lama
Abstract
E stablished in 1985, the South Asian Association for Regional

Cooperation (SAARC) is a recent regional organization with aims and
objectives to accelerate economic growth, social progress, and cultural
development in the South Asian region by promoting cooperation in these
areas, strengthening collective self-reliance among countries of the region,
cooperating with other developing countries and with organization having
similar aims, and also cooperating with each other at the international
forums on matters of common interests.
However, there are lots of criticisms against SAARC; some have
criticized it for failing to achieve the objectives for which it was formed,
while others have criticized saying that SAARC has been slow in meeting
the objectives. Despite criticism and a slow start SAARC has been a
platform for the member countries, particularly for the small landlocked
countries in promoting their various aspects of foreign policy.
Nepal, one of the members of SAARC, is one of the smallest and
geographically landlocked countries of the region, and through SAARC
it got a platform to create its identity, as well as to diversify its external
relations. On this backdrop the present chapter takes a glimpse to the
challenges being faced by Nepal as a landlocked country. Further, along
with delving into the major factors involved for Nepal joining SAARC, the
chapter also shows the contributions made by the Nepal in SAARC and the
contribution made by SAARC in Nepal.
Introduction
Machiavelli, an Italian philosopher defined state as the power which has
authority over men. It was on his notion that the modern concept of state
had its origin, as he was the one who first mentioned a national territorial
and a sovereign state. The modern nation state had a long evolution; it
evolved from the Greek city states to the Roman Empire to the feudal state,
ultimately culminating to the modern nation state. Today, any modern
nation state comprises four important constituents, which are population,
territory, sovereignty, and the government. Apart from these universal
constituents of states which are common to all states, the states also
differ in various forms, for example, there are developed states, then the
developing states, etc., which all constitute different features. Similarly,
states also differ in their size and geography, topography, etc. Some states
are small, some are big, some are landlocked, and some are not, due to
which every state has different forms of advantages and disadvantages.
However, technically, small and landlocked states are always in a
disadvantageous position compared to the big and open routed states due
to a lot of factors involved in it, such as the geographical condition, small
population, or lack of economic strength, etc.
There are 42 landlocked countries in the world today. Except for the
relatively wealthy landlocked countries in Western and Central Europe,
the rest are all poor and 31 landlocked countries can be accurately
classified as Landlocked Developing Countries (LLDCs). The LLDCs, as
a group, are among the poorest countries in the world. Landlockedness
often coincides with other factors, such as remoteness from major
markets and difficult topography, as well as tropical or desert ecology.
In addition, poor infrastructure, inefficient logistics systems, and weak
institutions compound the adverse effects of geography, leading to high
trade transaction costs. These challenges not only affect economic growth,
but also have ramifications for social and environmental aspects of
development (UN-OHRLLS, 2016).
Landlocked Nepal and SAARC • 399
Further, a distinguishing feature of LLDCs is their comparatively poor

economic and social performance when compared with other developing
country groups. The LLDCs are among the poorest of the developing
countries, with the weakest economic growth rates and the direst
social development records. Moreover, the development gap between
the LLDCs and coastal developing countries appears to be growing
rapidly (UN-OHRLLS, 2014). The small and landlocked states all over
the world are facing their own burnt in varied ways. In the South Asia
region, there exist two small and landlocked states, Nepal and Bhutan.
Officially, the Federal Democratic Republic of Nepal, nestled among
the Himalayas, is a landlocked country in South Asia. Nepal is bordered
by China to the north and India to the south, east, and west. It is separated
from Bangladesh by a narrow Indian corridor and from Bhutan by the
Indian state of Sikkim. About three quarters of the country is covered by
mountains. Nepal is home to Mount Everest.
A monarchy for hundreds of years, Nepal was declared a republic
in June 2008. In November 1990, King Birendra promulgated a new
constitution and introduced a multiparty parliamentary democracy in
Nepal. Under pressure amid massive pro-democracy protests in April
2006, King Gyanendra gave up direct rule and reinstated the Parliament,
which then quickly moved to diminish the King’s power. In December
2007, the Parliament voted to abolish the monarchy and become a federal
democratic republic. The transition to a republic was completed in May
2008, when the Constituent Assembly voted to dissolve the monarchy.
Challenges to Landlocked Nepal

Nepal’s geography is a major constraint to realizing its trade potential.
It is a landlocked country of 23 million people, nestled in the southern
slopes of the Himalayas, bordering China to the north and India in all other
directions. Most of the country’s terrain is mountainous or hilly, with only
20 per cent arable land. Nepal’s per capita income of US$ 250 in nominal
terms or US$ 1,450 in Purchasing Power Parity (PPP) terms makes the
country one of the world’s poorest outside sub-Saharan Africa, further
constraining the development of domestic trade networks. Distance to
the nearest port, located in India, is 660 miles. All of these factors make
transport costs high, hinder the development of markets, raise the costs of
expanding agriculture, and create a huge dependence on India for transit
routes (World Bank, 2003). Being landlocked between two Asian powers
China and India, it has a bearing not only on Nepal’s security concerns,
but also on Nepal’s economic development. Lack of regional cooperation
has been an obstacle to develop Nepal’s extensive water resources. Given
the difficulties associated with the landlocked nature of the country, Nepal
ranks low in terms of infrastructure development indicators. In the World
Bank’s Doing Business Survey 2013, Nepal dropped significantly in the
overall ease of doing business rankings, falling from the 55th position, out
of 155 countries in 2006 to the 108th position out of 185 countries (Rana
and Karmacharya, 2014). Since Nepal is a landlocked and mountainous
country, it has high trading costs, which reduce competitiveness
domestically and externally. Connectivity problems facing Nepal on its
northern border with the People’s Republic of China (PRC) are related
to the Himalayan mountain range, which has eight out of the 10 highest
mountain peaks in the world. Nine points of connectivity with Tibet
have been identified, of which only several are economically feasible at
present. The one that is operational and used for trade with the PRC is
in Kodari along the Friendship Road connecting Kathmandu with Lhasa
or the Kodari, Barhabise, Kathmandu, Hetauda Birgunj road (Rana and
Karmacharya, 2014). Landlocked and small nations all over the world
cannot change their geographical structures, but they can adjust to their
position by adapting to certain factors, which all the landlocked nations do.
Similarly, Nepal, as a landlocked country has tried to take many initiatives
in order to overcome its challenges as a landlocked state.
From mid 1980s, Nepal began to implement its economic reforms in
order to integrate with the world by opening up its economy to trade in
goods and services, technology, and investment. The economic reform
process was furthered in 1992, when the government brought many
changes in economic and trade policies. The government tried to put
new life into the economy by adopting many liberal and private sector-
friendly policies; enacting new rules and regulations and establishing new
institutions; privatizing public enterprises; and giving greater importance
to the private sector in the economy.
Seeing the importance of trade in the development of the economy,

Nepal has also reviewed many of its trade policies since 1990s. In 2009
it issued its first new trade policy since its accession to the World Trade
Organization (WTO) in 2004, fully consistent with the principles of the
WTO, and adhering to the principles of a liberal, open, and transparent
economic system. This new policy contained a variety of export promotion
and trade facilitation measures to enhance Nepal’s competitiveness. In
2010, Nepal came up with the Nepal Trade Integration Strategy (NTIS) to
enhance the competitiveness of its exports and seek opportunities abroad.
This strategy seeks to improve market access and build domestic support
institutions for exporters, and enhance the government’s capacity to
coordinate trade-related institutions and development partners. (Rana and
Karmacharya, 2014) Likewise, Nepal also made and reviewed many of its
policies in the energy sector, the customs sector, the transport sector, etc.,
in order to overcome the problems it faces in being a landlocked nation.
Challenges before the landlocked countries are numerous and they,
at all times, are striving to look to solutions to improve their situation
and see to it that their status of being landlocked does not hamper their
development process. One such relief to such nations comes from the
process of regional cooperation. Cooperation among countries of a
particular region for creating an exclusive economic group, or pursuing
a broad based agenda within that group has become the norm of the day.
Both political and economic factors influence the formation of such
groups. Even among those groupings which claim to focus solely on
the economic agenda, there is a definite influence of political and other
strategic factors. However, the economic agenda in regional groupings
primarily involves the removal of trade impediments. Moreover, the
formation of such regional groupings are not a new phenomenon; there
has been proliferation of late, as they are an effective vehicle to address
the social, economic, political challenges faced by nations which respect
no national boundaries and can be dealt with through a coordinated effort
only. Formation of such regional organizations or cooperation among
nations is beneficial for the region as a whole, but it becomes even more
beneficial for the small, underdeveloped, and the landlocked countries;
therefore, they know the importance of such cooperation.
Similarly, Nepal, a small and a landlocked country having no territorial

access to seas and with limited border crossing has also tried to accelerate
cooperation with its neighbours like India, Bangladesh, and China. Nepal
also supported regionalism, for which it played an active role in the
formation of the economic development-oriented South Asian Association
for Regional Cooperation (SAARC) and hosts its secretariat.
Regional Cooperation in South Asia

Regional cooperation was initiated formally in South Asia with the
establishment of the SAARC in 1985. Since its inception regional
cooperation has further advanced and extended, especially in preferential
trade areas. In the beginning the idea to form the SAARC was initiated by
Bangladesh, one of the smaller states in South Asia, in 1977. It was the
late President Zia Ur Rahman of Bangladesh who made a pioneering effort
and initiated the process to form a regional organization, namely SAARC,
in 1977. This proposal was promptly endorsed by Bhutan, Nepal, and Sri
Lanka, but there was reticence on the part of India and Pakistan.
However, SAARC was formed in 1985 at Dhaka by seven countries
comprising Bangladesh, Bhutan, India, Nepal, Maldives, Pakistan and Sri
Lanka with the objective to provide a platform for the people of South
Asia to work together in a spirit of friendship, trust, and understanding,
and to accelerate social and economic development through the concept
of collective self-reliance, cooperation, and harmony in certain areas of
development. In 2007, at the 14th SAARC summit held in New Delhi,
Afghanistan was inducted as its eighth member. The objective of SAARC
is to accelerate the process of economic and social development in
member states through joint‐actions in the agreed areas of cooperation.
The SAARC policies aim to promote welfare economics, collective
self‐reliance among the countries of South Asia, and to accelerate socio‐
cultural development in the region. (Pant, Pradhan and Gartuala, 2014)
Initially SAARC’s primary focus was on technical cooperation; covering
agriculture, environment and meteorology; communications; education;
health and population activities; culture and sports; prevention of drug
abuse and trafficking; tourism; transport; science and technology; rural
development; and women’s development. With the one-fifth of world
population, SAARC countries realized that economic, as well as other

social and cultural cooperation will create an opportunity for powerful
developmental strategies for these nations while maintaining the territorial
integrity and political independence (Chowdhury, 2005). Cooperation in core
economic areas is the major focus of this bloc from the early 1990s. South
Asian Preferential Trading Agreement (SAPTA) was launched by SAARC
in April 1995. This agreement is considered to be the major stepping-stone
towards higher level of intra-regional trade liberalization and economic
cooperation among the member countries. The SAPTA was initiated by Sri
Lanka’s proposal of strengthening the intra-regional economic cooperation,
focusing mainly on the intra-regional preferential trading arrangements in
terms of greater product coverage and deeper tariff cuts.
The SAFTA has become a parallel initiative to the multilateral trade
liberalization commitments of the South Asian countries. The final goal
of this trading bloc is intended to reach towards the South Asian Free
Trade Association (SAFTA) to form a free trade area in South Asia with
a favourable treatment towards the Least Developed Countries (LDCs)
comprising Bangladesh, Maldives, Bhutan, and Nepal. The SAFTA came
into existence in 2006, with the objective of strengthening the regional
economic cooperation. Its draft treaty framework was based on abolishing
the customs duties among the member countries, preferably by year 2000,
but not later than 2005. The signing of agreement of SAFTA has increased
considerable interest in regional economic integration in South Asian
countries. The association will facilitate the free movement of goods and
services across the member nations by dismantling all tariff and non-tariff
barriers to trade in the region (Chowdhury, 2005). The main objective of
SAPTA was to promote regional cooperation for the benefit of the people
of the region by strengthening intra-regional economic cooperation
and development of national economies. The SAPTA was expected to
provide all the SAARC member countries preferential treatment by way
of reducing import tariffs on eligible items. This arrangement provides
special and the most favourable treatment to the least developed countries
in the region (Pant, Pradhan and Gartuala, 2014). The SAFTA has become
a parallel initiative to the multilateral trade liberalization commitments of
the South Asian countries.
Although the SAFTA progression has spawn some degree of interest

in the region, some concerns about the very usefulness of SAFTA have,
however, been mounting in recent years in light of more liberal bilateral
Free Trade Agreements (FTAs), as well as preferential access that could
conceivably be granted through alternative trading arrangements among
SAARC countries. The inability of the member countries to diversify their
export structure in favour of more modern products has resulted in slower
export growth and lower value realization (Pant, Pradhan and Gartuala,
2014). The formation of SAARC has been beneficial and advantageous to
a certain level for all the member countries, but it has helped landlocked
countries, like Nepal and Bhutan to a major extent, in overcoming
challenges and increasing their prospects in all the areas.
Nepal and SAARC

Nepal had been an active participant in the various meetings of SAARC
and the issues involved since its inception. At the first meeting of SAARC,
Nepal was elected as the coordinator for cooperation in the field of
population and health. The secretariat office of the SAARC was also
established in Katmandu.
Two major considerations guided Nepal’s deep interest in the growth of
regional cooperation in South Asia, SAARC; firstly, the desire to promote
the country’s security through multilateral diplomacy and secondly the
desire to promote balanced interdependence as opposed to an absolute
dependence on India (Iqbal, 2005). Landlocked between India and
China, Nepal has been dependent on India for its security and economic
development since the signing of the Indo-Nepal Treaty of Peace and
Friendship in July 1950. Due to this over dependence on India and India’s
overpowering influence in the political and economic life of Nepal, major
irritants have emerged between the India-Nepal relationship as Nepal
holds the view that India has been dominating and controlling her. Some
instances of such irritants are the declaration of Nepal as a ‘Zone of Peace’
and India’s unwillingness to support this proposal as Nepal’s Zone of
Peace plan is evidently a strategy to distance itself from India in defense
and security matters. Likewise, other forms of irritants also developed
over the passage of time between the two countries (Iqbal, 2005). With one
of the world’s lowest per capita incomes of US$190 and Gross Domestic
Product (GDP) growth of about 4 per cent over the past decade, Nepal
desperately needs economic development. Nepal has no strong industrial
sector and its export base is quite narrow. The country is gravely dependent
on foreign assistance for its imports, including oil, petroleum, cement, and
coal. More than 7,00,000 Nepalese are employed in India in addition to
some 20,000 Gurkha armed personnel in the Indian army. Nepal’s India-
centric economy has also occasionally produced tension in the Indo-Nepal
bilateral relationship. In 1989, when India cancelled the supply of essential
commodities to Nepal as a result of serious disagreement between the two
countries over the trade and transit issues, the limited nature of Nepal’s
economic autonomy was exposed. Nepal is, therefore, eager to diversify
its trade and increase trade links with other South Asian countries in
order to reduce its dependence on India (Iqbal, 2005). Such a situation
could be dealt by Nepal, by maintaining the existing bilateral economic
relations with India and, at the same time, working for promoting regional
interdependence in South Asia, through SAARC. Through SAARC, Nepal
has been able to overcome certain of its impediments, like diversifying its
trade links with other South Asian countries apart from India through a
structured economic cooperation with the implementation of the SAARC
Preferential Trading Agreement (PTA) and the SAFTA.
Nepal joined the forum of SAARC without any hesitation and
reluctance as it had an advantage on its side. Nepal joined SAARC to
expand its foreign relations with the other South Asian nations without
offending India. It always had a relationship with India even prior to the
birth of SAARC, which has seen many ups and down; however, India
does keep Nepal at its goodwill prior and after the origin of SAARC. In
the region, Nepal’s trade is highly skewed with India. Of the total trade
with SAARC, import share with India was 78.52 per cent, 62.39 per
cent and 82.24 per cent in 1990-91, 2000-01 and 2009-10, respectively.
Similarly, export share with India was recorded as 17.18 per cent, 35.92
per cent and 15.31 per cent in the years 1990-91, 2000-01 and 2009-10,
respectively.Nepal borders India from three sides and it makes India the
most important trading partner of Nepal (Pant, Pradhan and Gartaula,
2014).
After the formation of SAARC, Nepal’s relations have diversified with

the other member nations along with the furtherance of its relations with
India. Nepal’s relations with India have undergone many ups and downs,
pre and post the formation of SAARC, though India always keeps Nepal
in goodwill and tries to guide and help her in all ways possible. Nepal
has not been progressing so well on the trade front; however, the transit
facilities have seen some form of growth in Nepal with the South Asian
countries, like in India. An agreement between India and Nepal was signed
on 1997 to provide an additional route from Kakarvita, Panipokhari, Nepal
to Banglabandha, Bangladesh via Phulbari, India. According to the Nepal
India Transit Treaty signed on 5 January 1999, India provides port facilities
at Kolkata and Haldia for the country’s overseas trade. Besides, India has
agreed in principle to provide transit facilities through its Khandala and
Mumbai port. The latest treaty between the two countries was signed in
2009 (Bashyal, 2011).
Dry ports have also come into operation in Birgunj, Biratnagar, and
Bhairahawa to facilitate import and export transaction. Birgunj dry port
is directly linked with broad gauge railway to Kolkata so that cargoes
from Kolkata arrive directly to Birgunj dry port, thus reducing the cost of
transportation and delivery time of goods to Nepal. The construction of
dry ports in additional two places also is getting started; one is in Larcha of
Sidhupalchowk district under the financial support of the government of the
People’s Republic of China. After completion of this port, the Government
of Nepal has planned to construct another such port in Rasuwa district
(Bashyal, 2011).
A transit agreement has been signed between Nepal and Bangladesh
to conduct third country trade through Bangladesh ports and its other
territories. Accordingly, Nepal has been allowed to use six entry/exit and
transshipment points for the movement of traffic-in transit for her bilateral
trade with Bangladesh and the third country trade via Bangladesh. These
are Khulna Chalna Port, Chitagong Port, Biral, Banglabandh, Chilhat, and
Benapole Port (Bashyal, 2011).
Similarly, Bangladesh is the second largest trading partner of Nepal in
the SAARC region. Economic and commercial relations between Nepal
and Bangladesh have been growing steadily over the years. There is
tremendous potential for expanding and diversifying trade between the

two countries. Nepal’s exports to Bangladesh constitute mainly yellow
lentils, oil cakes, cardamom (large), wheat, vegetable seeds, handicrafts,
pashminas, etc. Imports from Bangladesh include industrial raw materials,
chemicals, fabrics and textile materials, jute products, electric and
electronic items.
Nepal established diplomatic relations with Bangladesh on 8 April
1972. Since the establishment of diplomatic ties, the bilateral relations
between Nepal and Bangladesh have been characterized by goodwill,
mutual understanding, and shared values and aspirations of the people.
Nepal and Bangladesh share similar views on various issues of common
interests and work closely in various regional and international forums,
including the United Nations (UN), Non-Aligned Movement (NAM),
SAARC, and Bay of Bengal Initiative for Multi-Sectoral Technical and
Economic Cooperation (BIMSTEC). Exchange of visits at various levels
has consolidated close bond of relations between the two neighbours.
The Government of Bangladesh has provided transit facilities to Nepal
in Chittagong and Mongla ports. The overland trade route to Bangladesh
from Kakarbhitta, Phulbari, and Banglabandha has been operational since
September 1997. Bangladesh has also provided additional rail corridor to
Nepal via Rohonpur, Sighbad, for transit.
As per the air service agreement between the two countries, Biman
Bangladesh Airlines and United Airways, a private airline of Bangladesh,
have been operating their flights in Dhaka-Kathmandu sector on a daily
basis, which have contributed tourism promotion and people-to-people
contact between the two countries.
Under the Technical Cooperation Agreement signed between Nepal
and Bangladesh in April 1976, Bangladesh offers some scholarships every
year to Nepalese students in the field of Medicine. Besides, every year
hundreds of Nepalese students come to Bangladesh to study medicine,
nursing, dentistry, engineering, and other courses. At present, more than
2,500 hundred Nepali students are engaged in higher studies in various
cities in Bangladesh.
Similarly, SAARC also helped in facilitating relations between Nepal
and Sri Lanka. Originally, the relationship between Nepal and Sri Lanka
was based on Buddhism. Nepal and Sri Lanka established diplomatic

relations in 1957. High level visits started after the visit of late King
Mahendra to Sri Lanka. After that, there have been several state visits by
the leaders of both countries. Nepal has always enjoyed a very close and
warm relationship with Sri Lanka. With the opening of Resident Missions
in Nepal and Colombo in 1993 and 1995, respectively, the relationship
between the two countries has expanded to many areas of cooperation
(Hewage, 2011).
Interaction between the two countries at bilateral and regional levels under
the umbrella of SAARC has further enhanced the relations. The SAARC
priority of promotion of regional welfare and prosperity through collective
effort is beyond dispute. The association has brought Nepal and Sri Lanka
closer to work in concert with other member countries for a common objective,
which is the wellbeing of the people in the region (Hewage, 2011).
The establishment of the SAPTA in 1995 and the SAFTA in 2006
further strengthened the regional economic cooperation. The signing
of the SAFTA has increased considerable interest in regional economic
integration in South Asian countries (Pant, Pradhan and Gartaula, 2014).
The second round of Trade negotiations under SAPTA, which concluded
in November 1996, was substantial with 1975 tariff lines covered under
concessional tariffs out of 2,034 items, where India offered concession
for 911, Bangladesh for 206, Pakistan for 386, Sri Lanka for 102, Nepal
for 377, Bhutan for 47, and Maldives for 5 items (Chowdhury, 2005). The
fourth round of negotiation was undertaken by SAPTA on a product-by-
product basis by November 2002. During this negotiation, Bangladesh
agreed to reduce up to 20 per cent tariff on 13 products exported by Nepal.
Sri Lanka agreed to cut tariff by 10 to 20 per cent for 57 export items from
Nepal, whereas Pakistan agreed to provide customs concession up to 30
per cent for over 200 Nepali products (Chowdhury, 2005).
The SAFTA aims to reduce tariffs to 0 to 5 per cent over a 10-year period.
It requires member countries like India, Pakistan, and Sri Lanka to set their
custom tariff under 5 per cent by 2013, whereas, it has allowed the least
developed countries of the region like Nepal, Afghanistan, Bangladesh,
Bhutan, and Maldives, longer time frames to reduce or eliminate tariffs by
2016 (Chowdhury, 2005).
Although there are no extra benefits in terms of tariff preferences, there

could be potential benefits in other areas from SAFTA for Nepal’s trade with
India. Compared to a bilateral agreement, a regional agreement, though
the negotiation process may be slower, can provide a more predictable
trading environment for the smaller party. An effective dispute settlement
mechanism under SAFTA which can be moved to also resolve disputes
under bilateral trade treaties can help ensure better implementation of
treaty provisions (Adhikari and Kharel, 2011).
Through SAARC, Nepal has been able to have a deeper regional
integration process. Nepal used SAARC to develop intimate relations
with the other neighbouring states other than India. The regular ministerial
meetings, summit meetings, and other joint activities under SAARC have
helped Nepal to deepen her relation with the other nations in South Asia,
which in turn have largely contributed to the consolidation of Nepal in the
region and beyond, and today with the induction of several observers along
with Afghanistan into SAARC, Nepal sees the possibility of widening its
relationship with them and to extract some substantial gains out of it.
Nepal is a LLDC which hindered its growth in trade leading to a weak
economy, but SAARC bought it an opportunity to embark on the path of
economic progress. After the inception of SAARC, Nepal has managed
to expand its trade relations with its neighbours to a considerable extent,
especially with Bangladesh and India. Apart from the trade development,
Nepal, being a member of SAARC, gets a lot of aid and beneficiaries from
the world around, especially from countries that have been given observer
status in the SAARC. The SAARC holds great significance for Nepal as
it sees SAARC as a forum for furtherance of its economic and political
interest. From economy to ecology, information to identity, development
to distance ridging, society to security, SAARC has been a facilitator to
Nepal.
Nepal has also equally been an active participant in the activities of
SAARC in spite of being a small member nation; it has extended its
support and cooperation in all levels of activities undertaken in SAARC.
Nepal has indeed played an active role in both the cultural and social,
and economic and political spheres. Nepal has proposed that its successful
community forestry management programme be taken up by all SAARC
member states, as it has received worldwide fame and acclamation in this

regard. Nepal, as the incumbent Chair of SAARC, floated this idea during
the regional bloc’s 52nd Programming Committee (PC) meeting that
concluded on 14 March 2016 in Pokhara (The Himalayan Times, 2016).
In the meeting Mani Prasad Bhattarai, who had chaired the PC
meeting attended by joint-secretaries of all SAAARC countries, namely,
Afghanistan, Bangladesh, Bhutan, India, Nepal, Maldives, Pakistan, and
Sri Lanka, said, ‘We would like to gift this programme and we are ready
to share our experience, expertise and know-how in community forestry
management with our fellow SAARC members’. Furthermore, Nepal also
proposed engaging SAARC observers including China, the European
Union (EU), United States (US), and South Korea, to implement this
project across the region.
In addition, SAARC Regional Dialogue on Promoting Youth
Participation in the Implementation of Sustainable Development Goals
officially began in Nepal. The event aimed at exploring ways to promote
effective youth engagement mechanisms at national and sub-national levels
in South Asia. A total of 19 youths and 13 government representatives
from the SAARC member states participated in the two-day regional
dialogue that will make recommendations on future plans and strategies
to strengthen youth participation within SAARC countries in achieving
the Sustainable Development Goals (SDGs) (The Katmandu Post, 2016).
Conclusion
Landlocked countries have greater disadvantage as compared to countries
that have access to seas and oceans. It hinders the process of social and
economic development, as well as hampers the landlocked countries in
integrating into the global economy. There are many landlocked countries in
the world; apart from few wealthy landlocked states in Western and Central
Europe, the rest are all poor. Nepal is one of the landlocked countries which
are small and in the process of development. Landlockedness has been the
most important factor acting as a big obstacle on its path for development.
However, to overcome its landlockedness Nepal joined the forum of
SAARC without any hesitation and reluctance as it saw vantage on its
side. Nepal joined SAARC to expand its foreign relations with other South
Asian nations. Within the umbrella of SAARC, Nepal has been able to
establish stronger relations with the member nations of SAARC and its
relation with these countries has been growing. Prior to SAARC inception,
India was only the sole country among the SAARC nations who had a
major share in Nepal’s foreign trade. However, since the formation of
SAARC, Nepal’s trade relationship has diversified with the other member
nations, though India is still the major trading partner of Nepal.
Apart, from economic cooperation, cooperation in the field of
agriculture, environment, meteorology, communications, education,
health and population activities, culture and sports, prevention of drug
abuse and trafficking, tourism, transport, science and technology, rural
and women’s development, and social cooperation with the members of
SAARC has helped Nepal in the process of development. SAARC as a
regional organization is still growing; as it grows, SAARC can further
provide a platform for Nepal to overcome its landlockedness.
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26
Mass Media Coverage, Public Opinion
and Effect on the Foreign Policy of
Nepal: An Anthropological Outlook
Prakash Upadhyay
Abstract
A fter the promulgation of a new constitution and the consequent terai

turmoil, Nepal in a significant way has been tormented by political
instability. The terai turbulence has a great prospective to deteriorate
the currently existing rifts and plunge the country into open conflict with
Madhesis and India. Ethnic and regional unrests, the vicious cycle of feudal
reminiscences, development failure, political tensions, and the possible
regional linkages are key concerns. In such state of affairs, how mass
media covers the terai issue, the alleged Indian border blockade, Nepali
public opinion, Indo-Nepal relations, and the Nepalese foreign policy
has become increasingly significant. Media does not inevitably influence
foreign policymakers straightforwardly, but works through public opinion
that facilitates the policy makers to design foreign policy. Public opinion
on any issue, personified in major political views, can have substantial
effect on foreign policy. Media coverage, peoples power of interpreting the
media, and public opinion has been increasingly important in influencing
the Nepalese foreign policy and Indo-Nepal relation in the aftermath of the
constitution promulgation and terai unrest. Media provoked Nepali public
sentiment which was one of the dynamics that thumped Nepali leaders
to sense that India is not their solitary neighbour and brought Nepal
close to China—a paradigm shift in the Indo-Nepal foreign policy. The

theoretical frame of the analysis in the present chapter is coherent within
the multidisciplinary field of conflict perspectives and media discourse
analysis based on interpretative and structured interpretation models of
media anthropology methodically focusing on structures and functions of
media text and media effects on public opinion and foreign policy.
Prolegomena
Media and democracy is an idea focused on media reforms, strengthening
the public media broadcasting, and developing and increasing citizen’s
participation in media and reporting. Calvin (2010) argues that the purpose
for doing so is to create a mass media system that informs and empowers
all members of the society and enhances democratic values. Sen (1999)
argues that democracy has to be seen as creating a set of opportunities,
and their effectiveness would depend on how they are exercised. In broad
spectrum, the triumph of democracy depends on an extensive involvement
of the public opinion which is possible only through a free and neutral mass
media. Baum and Potter (2008) argue that democracy requires the citizens
to play some role in shaping policy outcomes, including the foreign policy.
However, scholars have reached no agreement concerning what the public
thinks about, with respect to foreign policy; how it comes to hold those
opinions; or whether those opinions influence foreign policy.
Soroka (2003) argues that mass media content is the most likely source
of over-time changes in individuals’ foreign policy preferences, and mass
media is the primary conduit between the public and policymakers. Soroka
argues that policymakers follow media reports on public opinion, and that
the media is the public’s chief source of information on what policymakers
are doing. In addition, media is the principal means by which the vast
majority of individuals receive information about foreign affairs, an
issue for which personal experience is unlikely to provide much useful
information.
Regarding the field of studies which have addressed the relationship
between media, public opinion, and foreign policy, media anthropology
is a specialized area of inquiry within social and cultural anthropology,
emphasizing ethnographic studies as a means of understanding producers,
Mass Media Coverage, Public Opinion and Effect on the Foreign Policy... • 417
audiences, and other cultural and social aspects of mass media. (Kelly
and Wilk 2002) It is an inter-disciplinary area, with a wide range of other
influences from other disciplines as sociology, political science, etc. Moy
and Bosch (2013) argue that popular discourse about public opinion
tends to revolve around key issues of the day. Individuals consume news
stories and read blogs on the internet, later taking advantage of comment
boxes to share their perspectives. They examined the process by which
information gets presented, how citizens learn about issues, and the
effects of information on attitudes, thoughts, and behaviours. McQuail
(2005) is of the view that the media may be viewed either as dependent
on society and mirroring its contours, or as primary movers and moulders.
Nevertheless, media freedom is perceived as an indicator of democratic
reform (McConnell and Becker, 2002), or as a precondition for democratic
institutions to work properly (Berman and Witzner, 1997).
After the popular movement of 2006, and the end of Maoist insurgency
with a peace treaty, post-conflict democratic Nepal has been in serrated
transition with drastic changes, viz., State transformation into democratic
republic, frequent changes of government, and constitutions of 2006 and
2015 that institutionalized democratic republic. Terai turbulence and the
alleged Indian embargo, scarcity of goods and inflation, social unrest and
impunity proved to be the major barriers in proper implementation of the
new constitution and in pacifying the disgruntled conflicting populace in
the terai and hills.
In a flawlessly functioning stable democracy, political issues, social and
political unrests are solved without the unnecessary use of violence, yet
when the line is crossed it basically changes the dynamics and usually
makes conflict resolution more complicated. Galtung (1975) presented a
multidimensional approach to conflict as original or root causes, direct
causes and perpetuating ethics of greed. The original or root causes relate
to causes that stem from long-term, large-scale ‘structural factors’ in
arrangement of hierarchical divisions/discriminations and are not always
manifested. Bigoted social, cultural, economic, religious, and political
structures are the typical original or root causes. On the other hand, direct
causes are related to events such as abrupt alteration in state system and
policy, economic slump, or an emblematic menace or political threat.
From a historical stance, Nepal has undergone extremely lofty levels

of what Galtung (1975) describes as ‘structural violence’ embedded
with original or the root causes. Building on Galtung’s multidimensional
approach to unrests and conflict and its different representations, the
notion of structural violence in Nepal is meant to cover different forms
of domination, exploitation, deprivation, and humiliation in the historical
phase that originated from societal structures. This conceptualization refers
to portray the historical pervasiveness of caste, class, regional, ethnic/
racial inequalities, power relations, the unrepresentative and unresponsive
nature of the State, corruption and hierarchical structural divisions of
Nepalese society in the hills and terai, and the perceived ‘development
failure’. The prototypes of disparities, poverty, and structural violence
are assorted, astonishing, and convoluted with diverse historical, social,
cultural, economic, regional, and other issues of the terai and hill
societies. Semi-feudalistic and semi-colonial social, cultural, economic,
and dependent political structures are foremost. Topographical curves and
both historical and contemporary factors have contributed to shape and
carry on deformities and disparities in the terai and hills. Many disparities
were often compounded and made shoddier by social deformities and
structural violence. Abrupt sprouting of social and political unrest in the
terai after the promulgation of the new constitution in Nepal in 2015 may
be an example of original or root causes which stemmed from long-term,
large-scale structural factors.
Zartman (1995) argues that internal conflicts are often more complex
and difficult to solve than inter-state conflicts. Gurr (2000) articulates
that latent ethnic conflicts are most likely to escalate to violence when the
autonomy of a group is removed. In the historical phase, many groups in
the terai were marginalized or excluded from participating in the social,
cultural, economic, and political system, hence internal conflicts gushed
up in the region occasionally, either in manifest or latent form. The forms
of social unrest observed there can be ascribed to the forms of ‘structural
violence’ (the failure of the state institutions to provide ‘equal rights and
opportunities’ to the Madhesies of the terai) and ‘sociocultural violence’
(i.e. regional, caste, ethnic, and gender based discrimination) carried
out by the state intentionally and unintentionally in the past and in the
present. In broad-spectrum, one main cause of the terai unrest is a unique,

but complex combination of original or root and direct causes, that is,
relative deprivation of major terai populace for a very long period of time
and dissatisfaction with the state system and policy. In fact, Nepal has
been geographically united, but psychologically fragmented and isolated
throughout its history owing to the greed and selfish motive of its rulers.
Perpetuating ethics of greed of the rulers accelerated the process of internal
colonization of the terai.
In the aftermath of the new constitution, the Madhesies of terai avowed
that their demands were not met in the new constitution and hence
demanded constitution amendment. The Indo-Nepal border was blocked
amid political protest by terai-centric political parties. It was alleged that
India was indirectly involved with border blockade and was engaged in
transit war with Nepal. India’s alleged blockade and grudges that the new
constitution failed to support a federal, democratic, republican inclusive
nation, proved a turning point in Indo-Nepal relation. On the contrary,
China welcomed the constitution by expressing pleasure that Nepal’s
Constituent Assembly (CA) endorsed the new constitution.
The failure to address the demand of the Madhesies and many other
factions for constitution amendment stretched the social unrest and
increased divergences between the national political parties and created
tension in Indo-Nepal relations. Additionally, there were groups or actors
in the terai and Kathmandu principally motivated by prospects of political
power only for their greed and self benefit. Pervasive frustration was
successfully used by ill-willing people to mobilize groups of people, as
in the cases of armed insurgent groups in the terai, many of which were
separatists and involved in kidnapping and ransom.
Amid the sadistic cycle of predicaments in Nepal, the issue of how
mass media covers the terai issue and Indo-Nepal relations, impact of
media information on public opinion formation and the consequent
Nepalese foreign policy towards India has become increasingly important.
As a watchdog of right to information, mass media can facilitate in
renovating trust and confidence between nations, facilitate build strong
foreign policy, affect the formation and exercise of foreign policy, assist
the nation building process, and diminish elitist forces and unconstructive
characteristics of hostile relations between nations. A neutral, responsible,

liberal, efficient, and specialized media can bring trustworthy information
on relations between the nations, uphold human rights, and augment
people’s access to real information helpful in designing effective foreign
policy. Livingston (1997) argues that for many journalists, policymakers,
and scholars there really is little doubt that media profoundly affects the
foreign policy process. This chapter analyzes media coverage of Nepali
political issues, the terai unrest, the alleged Indian blockage after the
promulgation of the constitution, and consequent impact on Nepalese
public opinion and foreign policy.
Objectives and Methods

The key objective of this chapter is to analyze the relationship between mass
media, public opinion, and the foreign policy of Nepal. The main focus is on
what effect media messages have on Nepali public opinion and its influence
on Indo-Nepal relations in the aftermath of constitution promulgation and
the alleged Indian blockade. The chapter has information based on secondary
data congregated from secondary sources—books, journals, and internet
sources. The theoretical foundation of analysis is pedestalled on conflict
perspectives and media discourse analysis pedestalled on interpretative and
structured interpretation models of media anthropology.
Conceptualizing Correlations between Mass Media, Public

Opinion, and Foreign Policy
Mass media usually refers to media communicated through mass mediums
such as radio, press, television, internet sources, viz. social sites, etc. Social
scientists have integrated the study of the mass media as an instrument
of control into the study of political and economic developments in
undeveloped countries. Lerner (1964) has emphasized the general pattern
of increase in standard of living, urbanization, literacy, and exposure to
mass media during the transition from traditional to modern society. In
the underdeveloped politically volatile Nepal, and with public exposure
to mass media in the process of transition from traditional to modern
democratic society, mass media can play the potential role as a watchdog
to support stabilization efforts and build sustainable foreign policy.
Media may not inevitably manipulate policymakers straightforwardly,

but may work through public opinion by determining what people know
and believe about foreign policies. The opinion of the public on any issue,
personified in major political views, can wield substantial influence on the
foreign policy of Nepal. Chomsky’s propaganda model of media (2002),
however, affirms that the private interests in control of media outlets will
shape news and information before it is disseminated to the public. A
more inclusive and democratic media entails re-conceptualizing the way
common mass define the information, news, its principles, programmes,
foreign policy that is an expansive policy, principles, and decisions for
conducting international relations. In fact, foreign policy is a means to
be used for achieving the goals of national interest or the set of principles
adopted and followed by a nation for securing goals of national interest in
international relations through the exercise of national power. A nation’s
foreign policy is formulated and implemented by its policy makers. In
doing so, they take into consideration the national interest of the nation, the
internal and external environment, the national values, the foreign policy
goals, decisions of other nations, and the nature of international power
structure. These constitute the factors/elements of foreign policy which may
be geo-physical location and size of state, economic development of the
nation, historical/cultural/social structure, internal situation, personalities
and political liability of leaders, ideology, diplomacy, international power
structure, alliances/international treaties, media and public opinion, etc.
There is a great argument about the correlation between the mass media
and the foreign policy decision-making process, and mass media impact
on foreign policy and relations between nations. Studying the nature and
degree of media influence on public opinion and foreign policy, Page,
Shapiro and Dempsey (1987) note that it would be premature to celebrate
the triumph of democracy before knowing how and by whom the public
is itself influenced. Numerous studies have examined media effects on
public opinion about foreign policy issues. Mueller (1994), Pan and
Kosicki (1994) and Sigelman et al. (1993) investigated media effects on
American individuals’ foreign policy preferences during the Gulf War.
Baum and Potter (2008) argue that media is engaged in a constant process
of framing the news in response to the often competing requirements of
leaders and the public, but mass media is nonetheless more accurately
characterized as a discrete strategic actor. As such, the media’s framing
of elite rhetoric has an independent causal effect on public perceptions of
conflict characteristics and, through this process, on foreign policy. Indeed,
Baum and Potter (2008) argue the media influences nearly every aspect
of the relationship between public opinion and foreign policy. Hence, an
attempt to conceptualize either public opinion regarding foreign policy, or
the effects of public opinion on foreign policy requires interdisciplinary
approaches from anthropology, sociology, cultural studies, history, and
political science that incorporate public opinion, elite preferences, cultural
ethnography, and mass media as independent strategic actors with different
penchants and enticements.
Mass Media Coverage, Public Opinion formation and

Effect on Nepalese Foreign Policy after Constitution
Promulgation
Calvin (2010) argues that media should be used to promote democracy, as
well as the conviction that media should be democratic itself. Right to
convincing correct information and freedom of expression are obligatory
to ensure accountable and transparent governance and to make it doable
for populace to have access to and participate in the foreign policy
formulation. Usually Nepali mass media, for example, newspaper, radio,
television contents, viz. commentaries, news, documentaries, and other
informational programmes are focused on subjects like constitution
implementation, political issues, peace restorations, and politicians’
views; however, the major portion of mass media offerings are designed to
serve the hilarity function. This course is followed by television networks,
whose investment and production costs are high, for example, private
television channels like Sagarmatha, Kantipur, and Image television. In the
aftermath of the constitution and blockade, nevertheless, these electronic
media communicated with diverse groups, viz. common public, leaders,
political activists, decision-makers, journalists who represented the
political structures existing in the Nepali society at large. Their activities,
to a great extent created an impact on Nepali public sentiment and Nepal’s
foreign policy towards India.
Amid Roti and Beti Sambandh (Bread and Daughter relations) between
dwellers of Nepal terai and North India, there is an unlocked border and
an open border treaty between Nepal and India. Citizens of both countries
can travel, work, and live across borders without passports. But after the
alleged India blockade, it was expressed in Nepali media that India was
interfering in the terai and had demanded specific changes to the new
Nepali constitution which was shorn off by India. Nepali print, electronic,
and social media took to instantaneous protest against the alleged Indian
interference with the hashtag ‘BackOffIndia’ amid street protests by
major political parties and common public. This hashtag became viral in
social sites, viz. Twitter and Facebook. Support was collected from Nepali
diaspora overseas against the alleged Indian interference in the terai.
Many Nepali political leaders from communist parties claimed in
public that India had infiltrated the Madhesies agitation with Indian
protestors. This allegation was denied by Madhesi political leaders and
India, which claimed that the blockade was not because of India, but
due to dissatisfaction of Madhesies of Nepal. Owing to the failure of the
Nepalese politicians to make consensus with major Madhesi groups, India
saw the constitution as a top-down, inequitable initiative that would be
unable to stabilize Nepal and ensure the rights of all its citizens. Nepalese
politicians responded to public protests against India in Kathmandu and
consequently reacted vehemently against Indian interference in Nepalese
matter. Indian television channels and movies were banned in Nepal.
This created bitterness in Indo-Nepal relations. Conditions were such that
Nepalese foreign policy makers responded to the public sentiment and the
public responded to the media.
Historically, the elite and political activists have always played a vital
role in influencing Nepalese society. In the new republican democracy
they are dominant because of their easy access to resources and also
because they have the know-how and ability to effectively make use
of the resources not only in daily life, but also within political parties
and parliament. In a situation where significant parts of qualified youth
population are migrating abroad either for jobs or higher education and
more preoccupied with fulfilling basic needs, traditional elites and neo-
elites (business moguls, political leaders, and high profile bureaucrats)
are hegemonic in consolidating their supremacy. These privileged are

not acting in void, but are subject to the cultural and societal structures
within which they operate and often from where they themselves come.
The Nepalese media is susceptible to their encroachment. The owners of
private media and the authorities of state-owned media have a hold on
media presentation and analysis.
The power of the mass-media can be possibly used to help resolve rather
than provoke unrest and hate speech. In the past, there was a practical use
of radio, television, newspaper, and the social media to help the complex
process of conflict management and transformation of Nepal to become
a peaceful, liberal, and inclusive democracy. With the mushrooming
growth of frequency module radios and social media, viz. Facebook/
Twitter, a two-way relationship between mass media and public changed
in Nepal. It helped in attitude formation and reinforcement of information
in the perspective of the audiences. In a plural world of multiple media,
the Nepalese audiences chose and interpreted the media information
accordingly. Barnard, Burgess and Kirby (2004) argue that there are
three main dimensions to this: selective exposure, whereby the audiences
choose what they want to watch, read, or hear and avoid what they don’t;
selective perception, where they choose to interpret a media message
in a way they are comfortable with; and selective retention, where they
choose to retain or forget aspects of a media. The process of interpretation
existed at different levels, according to Nepalese people’s media literacy
with selective perception, when they interpreted media message on Indian
blockade in a way they felt comfortable. Amid scarcity of necessary goods
owing to blockade, Nepalese people linked and interpreted media message
with their sufferings as imposed by India. Hence, televised reporting
of Nepali public’s anger on the Indian role in the blockade completely
changed the opinion of Nepali public. Editorials in Nepali newspapers
claimed that the Indian blockade was no longer about the Madhesies and
the constitution, but rather that India seemed to be opposed to Nepal, and
has a whole host of demands on security and other issues that the Nepalese
haven’t even noticed. The Madhesh-centric parties disparaged the Nepali
media reports blaming the blockade on India, claiming that the blockade
had been done by the Madhesies and that India had nothing to do with it.
Madhesi protesters stepped up attacks against Nepali media outlets during

the blockade, with many media vans being torched in the cities of the terai.
It was extensively expressed in Nepali media that India’s undeclared
blockade of Nepal was an attempt of India to force Nepal to compromise
India’s demands, as well as display India’s ability to manipulate Nepal’s
internal politics. This expression enraged public opinion in Nepal and
helped in bringing a turning point in the foreign policy of Nepal, detaching
Nepal from India. Nepali media demonstrated that India’s hegemony
to other neighbouring countries would weaken India’s future position
in South Asian Association for Regional Cooperation (SAARC) and
international forums. All this negativity had at least one thing in common:
unresponsiveness and hostility in Indo-Nepal relations, which like no other
means was destroying centuries-old Indo-Nepal relations, cultural and
religious ties, Nepalese society, infrastructures, hope, positive thinking,
and trust between two nations.
The extent to which listeners, readers, and viewers of the media are
influenced in public-opinion formation and reinforcement is crucial.
To explain the problem of unrest, tension, and conflict in the terai, it is
necessary to commence with that tension, conflict, social unrest, and the
alleged Indian involvement that seek to explain with reference, quite
obviously, to those who engage in it: their identity, backdrop, personality,
and so on. But, objects defined as sadistic in media may not be judged as
such in the minds of the viewer/listener and tend to be viewed in artificial
circumstances as claimed by the interpretive model of media posing
an alternative conception of humans as rational, critical subjects who
are alert to genre norms and adroit at interpreting and critiquing media
representations, instead of passively absorbing them. The interpretative
and structured interpretation model methodically focuses on the structures
and functions of media text, media effects, and converse in ethnographic
social, cultural, economic and political contexts. It is indispensable to
disburse attention to the structures, strategies of media messages and
discourses, as well as to the ways these relate to Nepalese social institutions
arrangements, on the one hand, and to social pattern and audience opinion
on the other hand with a credence that the audiences seek media messages
based on their backgrounds that reinforce what they already think
(congruent change) rather than search out programmes and messages that
challenge their deep-rooted attitudes. However, where people’s awareness
level was low, political parties used the media to influence the common
Nepalese to support their protests on the Indian blockade. The agenda-
setting process was an almost unavoidable part of news gathering by large
organizations as state-owned Radio Nepal and many other networks with
extensive national coverage.
During the blockade, some Nepali media produced materials which
often were impartial and serious with a high degree of respect and
authority for Nepali and Indian masses. But, in general practice many
ethics of the Nepali press and television were closely related to that of the
hegemonic establishment of few selected media, providing vital support
to the existing order embedded with past legacy. In such cases, the Nepali
public was forced into an acceptance of the biased, the misleading, and
the status quo. Public sentiments and agitation were demonstrated in
picketing against India which was largely successful and colossal. The
government media, like Nepal T.V. and Radio Nepal, were engaged in
reiterating that Indian involvement was visible in the terai protest. Nepali
public interpreted and structured the media message in their way. News
was filtered through people’s belief systems and previous experiences of
the 1989 Indian blockade and in relation to other information on the Indian
involvement during the massive earthquake of 2015. However, during
the blockade, Nepalese media also played the role to inform, to alert, to
convince, and to entertain the people in the difficult situations of scarcity
of commodities and medicines. Determining what people think about was
not less important than influencing opinions, particularly in a situation of
scarcity, unrest, and insecurity.
The study by Slone (2000) that focused on the emotional responses
of individuals living in a society wracked by violent conflict showed
that television broadcasts of political violence and national threats
considerably increased levels of anxiety. This has important implications
for acceleration for social tensions and disbeliefs. The mass media might
sensitize the public and can play a role in magnifying anxiety and feelings
of insecurity among dominating groups, hence making them reluctant to
abandon powers and rights in favour of marginalized protesting groups.
It may insist on security issues and threats on formerly dominant groups

and that may act as a catalyst and create an involuntary build-up of caste/
ethnic/regional federations, transforming an imaginary threat into a reality.
The moral panis created by media may accelerate conflicts and distrust and
manipulate the public sentiment. It may occur when a condition, persons,
groups of persons, region or nation emerges to become defined as a threat
to the societal values and interests when the moral barriers are manned
by journalists, editors, news readers, social sites, bloggers, politicians,
and other so called right thinking nationalist people. Few strictures can be
fundamental in such situations, viz. in what ways or to which magnitude
the media add to or make worse the potential divergence state of affairs
between nations and foreign polic, and contribute in role setting agendas for
potential interveners? It is also imperative to ponder on the discrepancies
between international media and the local media in news dissemination,
analysis, and reporting— or not reporting— on ongoing events neutrally.
The media may play a role in social control and the degree to which media
is a root cause of conflict itself is crucial.
International media sources usually swivel around the ideological
apparatus of political divergences, conflicts, change, and more distinctively
the way major actors seek to manoeuver public perceptions. The major
force behind rapid social, cultural, and political change in Asia and Africa
was the westernMmedia BBC and CNN. Even in authoritarian countries the
role of mass media is imperative. In the Nepalese context the unswerving
effect of international media on seeking public perception related to the
terai issues, constitution, Indian blockade, and intervention was noticeable.
The international media, like CNN and BBC, gave wide coverage to issues
like shortags of goods, Indian blockade, and sufferings of Nepalese people.
They reiterated to the United Nations (UN) concern over the obstruction
of essential supplies on the Nepal-India border and acute shortages in fuel
supplies that impeded planned deliveries to earthquake-affected villages
in Nepal. These western media highlighted Nepal’s right of free transi,
as a landlocked nation, as well as for humanitarian reasons, and called
on all sides to lift the obstructions without further delay. BBC’s telecasg
of European Union’s (EU’s) statement that the unofficial blockade at the
Nepali border only serves to hurt the Nepali people still recovering from
the devastating earthquakes earlier this year, helped in creating anti-India

sentiment in Nepal.
Nepalese media reported Bangladesh’s urge to end the blockade and
commented that such blockades hit trade agreements. The local media
played a key role in creating public opinion on the Indian blockade
with far reaching consequences on Nepalese foreign policy, increasing
Nepal’s intimacy to China with the then Prime minister’s visit to China,
and various trade agreements made which impaired India’s long-term
goals, as it forced Nepal to re-evaluate its reliance on India. This
made Nepali leaders realize that India is not their solitary neighbour
and brought them in proximity to China- invariably a noticeable shift
towards China away from New Delhi. This shows the powerful effect
of media content on the salience of Nepalese foreign affairs—a result of
alteration in Nepali public opinion. It illustrates that mass media plays
a vital role in determining the relationship between public opinion and
foreign policy.
The positive media thwarts the circulation and broadcasting of
propaganda misinformation, provocative material, hate-media, or
damaging rumors which destroy communities and prevent the building of
trust between countries. Media in Nepal is capable to help avoid stereo-
typing of groups, populations, region, parties, and nations and can help
in the process of social reconstruction and building smooth Indo-Nepal
relations in the aftermath of the terai unrest and blockade by providing a
positive and participatory forum for the common mass of both countries
united by ‘bread and daughter’ ties. Likewise, it ought to be taken into
consideration that Nepal’s foreign policy, with focus on its relations with
mighty India, depends on its geo-physical veracity of sandwiched status
between India and China. Managing its sovereignty and autonomous
decision-making status depends on smoothly managing its foreign policy
with these two emerging superpowers.
The open border and cultural ties with India and rugged mountains
between Nepal and China’s autonomous region of Tibet creates conditions
for relations between Nepal and these two countries. With the rapid
development of Tibet under the Chinese regime, Sino-Nepal trade may
flourish in future, which will hamper the Indian interest of expanding its
investment in natural resource rich country Nepal. On the other hand,

Nepa, may try to develop its capability to make policy choices without
Indian approval and interference. Deterioration of Indo-Nepal relations
may incite other neighbouring countries, especially Pakistan which
may use this opportunity as a testimony of Indian hostility towards its
weak neighbours. Other smaller weak countries of SAARC may take
this opportunity to minimize India’s influence in their countries and in
the process develop closer relations with China which, in turn, will make
China a dominant country of the region.
Conclusion
Although media anthropology has played a relatively diminutive part in
the research concerned to linking public opinion and foreign policy, the
current research work took a stride toward understanding the media’s
role in the Nepali public opinion formation that consequently influenced
foreign policy relationship between Nepal and India. The local and
international mass media played a significant role in determining Nepalese
public opinion to foreign affairs and Indo-Nepal relation. Bitterness in
Indo-Nepal foreign relation in the aftermath of constitution promulgation
and blockade is almost indubitably the product of media coverage despite
an increasing debate on the ethics of reporting of the Indian blockade and
terai wrangle in Nepalese media. Hence, understanding the nature and
magnitude of local and international media effects on foreign affairs issues
is an important endeavour, particularly in the light of evidences from
Nepal suggesting that Nepali public opinion affected the Nepali foreign
policy towards India.
In a plural world of multiple media, the Nepalese audiences interpreted
media information on the terai unrest and Indian blockade accordingly.
Their process of interpretation existed at different levels, according to
people’s media literacy with selective perception, when they interpreted
media message on Indian blockade in a way they were comfortable. Amid
scarcity of necessary goods owing to the blockade, Nepalese people linked
and interpreted the media message with their sufferings which they thought
was created by India. Hence, media reporting of Nepali political leaders
and publics’ anger on Indian role in the blockade completely altered the
Nepali public opinion that, accordingly, assisted policy makers in shaping

Nepalese foreign policy toward India.
There are other facets too. When more asymmetrical is the internal
sharing of political rights, social, cultural, and economic resources within
a nation, the greater is the conflict of interest between governing and
subjugated segments in a system preparing for more turbulenc, and, in
the process, conditions for external foreign interference emerge. Amid
the interference (may be hypothetical or real), the more the members of
protesting groups can pass information to each other through mass media,
the more probable the foreign policy makers become responsive to their
demand, and, in the process, more the media plays an active role, higher
the chances of leverage on foreign policy.
Nepal’s foreign policy depends on its geo-physical veracity of a
sandwiched status between India and China. Hence, managing its
sovereignty and autonomous decision-making status depends on tactful
management of its foreign policy with these two countries. The local
media in Nepal played a role in creating public opinion on the Indian
blockade with far reaching consequences on Nepalese foreign polic-—
detaching it from India and bringing in proximity to China-invariably a
noticeable paradigm shift towards China away from India. This illustrates
the extremely powerful effect of media content on the salience of Nepalese
foreign affairs. It shows that mass media plays an imperative role in
determining public opinion and shaping the foreign policy. As Nepali
media are the part of the local history, social, cultural, regional, and
political contexts, therefore, it is difficult to be totally impartial, but this
does not mean that they cannot behave objectively with credibility and
truthfulness.
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Revisiting Nepal's Foreign Policy in Contemporary Global Power Structure

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Revisiting Nepal’s Foreign Policy

in Contemporary Global Power Structure

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First published 2017

Composing and Printing in India

of International Studies, Jawaharlal Nehru University, New Delhi, India.

CSCs China study centers

IEA International Energy Agency

NDFB National Democratic Front of Bodoland

ULFA United Liberation Front of Assam

F oreign Policy consists of self-interest strategies chosen by the state

International politics is the realm wherein great powers are continually

Objectives of Foreign Policy in International Relations

examine the foreign policy-making institutions and the role of political

The goals of foreign policy are a function of the processes by which

According to George Modelski, foreign policy is ‘the system of activities

Small States and International Politics

a theorisation of the behaviour of small states. However, the fading of the

Small and buffer states, thus, can influence international politics in a

Foreign Policy of Small States

been studied much, because of the focus of the discipline of International

The theoretical stream that informs most of these studies is realism

Relationship Between Small and Big States

Rothstein’s definition of a small power seems outdated in today’s

collective protection. During the 1950s communist states saw international

military assistance. In addition to this, language and ideology have been

informal relations existing between patrons and clients. For example,

W ith the promulgation of the Constitution in September 2015, Nepal

with the challenges in the regional and international environment, but on

superpower. This location provides Nepal both with the opportunities

Nepal’s Elusive Autonomy

regime, amongst others, stood out in terms of practising some form of

Imposing Blockades: The Harshest of the Indian Foreign

which helped him to diversify Nepal’s foreign policy to certain extent.

occasioned by Nepal’s decision to import weapons from China in June

and growth.34 India used blockade as a means to establish its long-term

Regime Overthrow: Recent Attempt for Autonomy, Same

In the Further Quest for Autonomy, Nepal’s Actual Choices

supporting the Madhesh-centric parties, who had reacted violently, using

23 September 2015, available at http://thewire.in/11430/indias-nepal-policy-

T he foreign policy of small states requires a systematic study. There are

Nepal has people from hills (Prabatiya) in majority while in Terai

Nepal is a landlocked country, surrounded on three sides by India and

Topographically, Nepal can be divided into three regions: (1) “The

Small States Challenges to Foreign Policy

Societal arguments, which view state behavior as a function of

On the other hand, state-centred approaches, which view foreign policy

Determinants of Foreign Policy

recognized as the naturalized citizen. The involvement of India was seen

Objectives of Foreign Policy of Nepal

• To play an active role in the promotion of regional cooperation

The State shall pursue the following policies relating to international

sovereign in terms of forging alliances in the international arena without

co-existence among the countries. The Five Principles of Peaceful Co-

Apart from our sympathetic interest in Nepal, we are also interested

fairly effective. We cannot allow that barrier to be penetrated because

The two governments hereby undertake to inform each other of any

in the Constitution. The Indian response to the adoption of Constitution

Nepal’s Foreign Policy Towards India

…balance Indian influence in Nepal by establishing an equitable

to enhance national prestige; and to make efforts to diversify Nepal’s

The economic blockade imposed in 1989 on Nepal by India, compelling

trade, utilization of water resources, and promotion of capital investment