Nepal dilly-dallying on OBOR is Over

24 May, 2017

Nepal Foreign Policy


The dilly-dally way of Nepal for agreeing on the Chinese proposal on OBOR has finally ended. With Nepal’s Cabinet meeting decision followed by signing ceremony of ‘Memorandum of Understanding (MOU) on Cooperation under the Belt and Road Initiative’ on May 12, 2017 in Kathmandu - clearing out the speculations and confusions of Nepal’s government position.                                 

It’s noteworthy that, Nepal had inked on preliminary agreement to join OBOR initiative by the then Prime Minister Sushil Koirala (Nepali Congress Party) on December 2014. Similarly, in March 2016, erstwhile Prime Minister KP Oli from CPN-UML had signed the Transit Transport Agreement during his visit to China, which is widely considered as the historic milestone in third country trade - with the openings of new transit facilities. Finally, under the Prime Minster Puspa Kamal Dahal-led government, who represent the Moist Centre, inked the MOU on Cooperation under the Belt and Road Initiative (BRI). It somehow resembles the emerging consistency in our conduct of foreign relations- let’s be hopeful for the continuity of consistency in future too. It is also the result of the unified voice of intellectuals and scholars who with the wide range of discourse - pressure and make government convinced about the offerings of BRI is in Nepal’s interest.                    

BRI Offerings to Nepal             

The major thrust of the MoU is to promote connectivity of trade, transit and transport, financial integration and connectivity of people. Undoubtedly, enhanced connectivity is pivotal for development and prosperity. Nepal’s participation in BRI allures tremendous opportunities in the sector like hydropower, tourism and enhances its trade with China and other countries. During Nepal Investment Summit in March of this year, China had pledged US$ 8.45 billion investment in Nepal out of total investment commitment of US.74 billion. Diversification in trade relations with other courtiers is necessary; overcoming single country dominance. its challenges and repercussions. The preponderance of evidence- blockades imposed by India under the different pretext, lessoned Nepal about the repression of single country dependence.             

China-led Economic Globalization                              

In the context of emerging protectionist approach, especially in the West, President Xi said during his address in Davos, “it is true that economic globalization has created new problems, but this is no justification to write economic globalization off completely.” Some commentator argued that, with the flagship project like BRI, China is trying to ‘refashion the global economic order, drawing countries and companies more tightly into China’s orbit.’ China, in other hand, is consistently trying to convince that the BRI is the ‘mutually inclusive cooperation’. In his speech at BRF, President Xi said “We will not follow the old way of geopolitical games during the push for the Belt and Road Initiative, but create a new model of win-win and cooperation. It will not form a small group undermining stability, but is set to build a big family with harmonious co-existence.” It is also equally true that the Chinese’s Belt and Road Initiative, at least may be from the rising Indian perspectives cannot be considered as the purely economic. Indeed, geopolitical and geostrategic interest can’t be completely undermined.                             

Whose connectivity means what to whom?                         

Connectivity is the cornerstone of Nepal aspiration ‘being bridge’ between north and south. Both India and China has strongly prioritized connectivity as one of the major elements of their foreign policy agenda. Prime Minister Modi emphasized, “A thriving well-connected and integrated neighborhood is my dream.” Not to mention, Xi Jinping’s Road and Belt Initiative- one of the largest infrastructure project in the history- expected to connect 60-70 percent of world population with US trillion promised investment. But, “whose connectivity means what to whom, is the great matter of discourse.”                                    

‘Sterile No’ of India                

With India boycotting the Belt & Road Forum (BRF), until now the official Indian government position can be read as ‘sterile no’ to its participation in Belt and Road Initiative. The issue of sovereignty is the major concerns of India, as China-Pakistan Economic Corridor (CPEC) US billion flagship project of BRI passes through the disputed territory between India and Pakistan. “Connectivity cannot override or undermine the sovereignty of other nations”, said Modi in his speech during Second Raisina Dialogue.

But wherein, as all other South Asian countries who has diplomatic ties with China had formally joined the Belt and Road initiative- some scholar arguesthat it is sensible for India to deal diplomatically and find the reasonable place and share under the BRI rather than saying ‘sterile no’.          

Focusing to Nepal, from geostrategic perspective India sees Nepal’s aspiration becoming vibrant bridge or transit economy as a menace to its pre-eminent role in the South Asian region and the threat to its economy with the flux of cheap Chinese products.          

But, Nepal can’t remain under remain in the catch-22 situation. Undisputedly, interlinking internationally proposed connectivity proposal is in Nepal’s interest. Recently, it is also reported that Nepal and China had talked about 550 Km long railway project worth of US$ 7-8 billion - expected to connect Tibet Autonomous Region and Kathmandu. The study also shows the feasibility of Kerung-Kathamandu-Lumbini Railway connectivity. Similarly, in 2011, India and Nepal had agreed for establishing the five broad gauge railway lines including Jogbani-Biratnagar (17.65km), Jaynagar-Janakpur- Bardibas(71km) and among others. Nepal needs to analyze the nitty-gritty of such proposals/agreements and forward its policy priority in political level.                        

Constructive Autonomous Engagement                         

The major paradox is, when China sees Nepal as the gateway for entering South Asia, India perceive Chinese growing assertiveness as the threat to its pre-eminent role in the region. It is natural in the international system that every emerging country wants its dominance in their respective region. But, projection and practice of Nepal’s foreign policy propensity should always prefer “constructive equal engagement” not bandwagoning. Undeniably, until now Nepal is heavily southward oriented and will remain so in near future.                               

Nepal should also equally concerns about no offering in the international system will come without interest; an offering of BRI is also may not be completely free from larger geopolitical interest. The word ‘pragmatism’ became the cliché in the domain of Nepal foreign policy discourse, what does that really signifies, yet to be explored for clearing the ambiguity. Dilly-dallying on Nepal’s participation in OBOR is over, now it’s high time for Nepal to take maximum benefits from offerings of Belt and Road Initiative. Prioritization of commencing the project under BRI frame work, study about the feasibility trade route and transit facilities, operational & procedural mechanism, financial issues, repayment mechanism of loan -areas in which discourse need to shift and analyzed thoroughly.