The US has been making concerted efforts at cultivating the Himalayan countries Nepal and Bhutan in a bid to strengthen its Indo-Pacific strategy in recent days and build a resolute response to China’s Belt and Road Initiative (BRI) as well as mitigate strategic concerns emanating from Beijing’s connectivity projects.

For instance, while a report from the US Department of Defense stated that Washington sought to “expand” its defense relationship with Kathmandu under the State Partnership Program in the Indo-Pacific, Nepal’s reported inclusion in the US-led Indo-Pacific strategy was claimed by the US after Nepalese Foreign Minister Pradeep Gyawali and US Secretary of State Mike Pompeo met during the former’s visit to Washington in December last year. Later, two US representatives visited Nepal in order to discuss and pitch the strategy with the Himalayan state. However, the report of Nepal’s inclusion drove China to enlist the Himalayan country’s continued support for its BRI and the US sought clarifications from Nepal as to its stance on Indo-Pacific policy.

The enhanced Chinese footprint in South and Southeast Asia through BRI and that of the US through its Indo-Pacific strategy have raised possibilities of enhanced strategic activities in the larger geographical landmass that includes the Himalayan states as well. Meanwhile, India is focusing on ways and means to keep the Himalayan countries within its sphere of influence and seems poised to throw its weight behind the American Indo-Pacific strategies to counter Chinese influence, considering the fact that New Delhi has not been able to match Beijing’s sway through connectivity and infrastructure.

A new great-game scenario is a more likely scenario for Nepal than Bhutan, which is not a part of BRI, as the former wants to overcome limitations imposed by its India-locked geography and diversify its relations with many significant state actors outside the South Asian region. While the Nepal-China Trans-Himalayan Multidimensional Connectivity Network, including the Nepal-China cross-border railway, have been named in a list of projects under the BRI, the recent upshot in Nepal-China relations is likely to brew tensions among the countries seeking greater influence in the Indo-Pacific region, for instance the US and the other members of the Quadrilateral Security Dialogue (India, Japan and Australia).

Nepal and China sought to forge strategic ties in recent months as is apparent from frequent bilateral visits to discuss the construction of trans-Himalayan multidimensional connectivity and Nepal’s unflinching commitment to the one-China policy, which underlined that Nepal would never allow any forces to make use of its soil for anti-China activities.

Apart from strategic influence in South Asia and the Indo-Pacific region, China also aims at closer ties with and involvement in Nepal in a bid to consolidate its control in Tibet. It is worth noting that Nepal has been a host to Tibetan exiles for decades and is currently home to about 20,000 Tibetan residents and refugees. Indicating its desire to strengthen strategic ties with China, Kathmandu has permitted the China International Development Cooperation Agency (CIDCA) – an agency that was set up in August 2018 to look after strategic planning and overall coordination of the Chinese aid to Nepal – to provide development assistance in 15 northern districts of Nepal sharing a common border with Tibet “to meet their developmental needs.”

It is worth mentioning that during a visit to Beijing by Nepalese Prime Minister K P Sharma Oli in June, the two sides sealed eight deals worth US$2.4 billion pertaining to connectivity, infrastructure and energy projects. The agreements included the targets to develop hydropower projects, cement plants and agri-food parks.

China is pouring massive economic capital into Tibet specifically targeting infrastructure projects that could facilitate connectivity, infrastructure and energy projects in Nepal. Nepal’s commitment to the Chinese projects and its one-China policy can be inferred from the unequivocal support that the Nepalese Consulate in Lhasa lends to Beijing’s claims to both Tibet and Taiwan.

The Chinese foray into Nepal is becoming deeper and more entrenched, and Beijing is currently Kathmandu’s largest source of foreign direct investment and its second-largest trading partner. Even while some criticisms have surfaced in certain quarters from within Nepal as to the ways Nepali politicians have transcended the legal limits to their authority in gratifying Chinese companies through concessions, procurements and privileges and the contractors with unholy alliances with political leaders and bureaucracy are gaining most from the projects, the strategic ties seem irreversible. Nepalese President Bidhya Devi Bhandari has been quoted saying in Beijing that “the BRI is offering new opportunities for Nepal and she hopes Chinese investors and enterprises can invest more in Nepal.”

Strategic concerns expressed by both India and the US that Nepal must be cautious against opaque loans and financing conditions offered by China that were directed at spawning debt traps and seizing control of strategic assets seem to have failed to had any significant impact on Nepal.

Meanwhile, National Reconstruction Authority chief executive officer Sushil Gyawali informed the Xinhua news agency that around 80% of the reconstruction work carried out under Chinese aid had been successfully completed in Nepal. He said: “There are 25 reconstruction projects under China aid including roads, schools, hospitals and heritage sites, among others. [The] majority of them are either completed or under construction process; their performance is really good.”

India’s opposition to the BRI has exacerbated the strategic climate in South Asia and the Indo-Pacific region and precluded the possibility of sub-regional cooperation within the BCIM (Bangladesh, China, India and Myanmar) Corridor. For instance, indicating that it would forge ahead with infrastructure projects in the larger region bilaterally, China shifted the China-Myanmar Economic Corridor project away from the BCIM and named it under the BRI.

India, Nepal under Indo-Pacific strategy

On the other side, while India has been supplying significant aid and soft loans to Nepal with development as a priority, poor infrastructure on the Indian side has not only prevented both countries from strengthening bilateral connectivity, the Himalayan country has been unable to harness the full potential of transit facilities to third countries through India. India has directed much of its aid and investment in the neighborhood toward soft areas such as housing and shelter, water and sanitation, livelihood, education, research and training, health care, industrial development, arts, culture and sports, with a thrust on “grassroots-level development.” However, it failed to float a coherent strategy that could interlink infrastructure-building and regional connectivity.

Both India and Nepal have walked extra miles to overturn the lows in bilateral relations precipitated by an unofficial economic blockade by India in 2015. They inaugurated the first cross-border petroleum-products pipeline in South Asia, the 69-kilometer Motihari-Amlekhganj energy pipeline that will facilitate the supply of fuel from the Barauni refinery in Bihar to Amlekhgunj in southeastern Nepal.

New Delhi is poised to focus on connectivity and building necessary infrastructure in a bid to counter rising Chinese influence. While India commissioned a series of border roads, rail links, integrated check posts and roads in southern Nepal’s Terai lowlands over the past decade, most of these projects were delayed beyond their initial deadline over issues of statutory approvals by Nepal, land acquisition, and political unrest.

Whereas New Delhi’s role in influencing internal political dynamics within Nepal has been often viewed as hegemonic, occasional measures such as economic blockades preventing vital supplies have further pushed the Himalayan country into the Chinese ambit. Bilateral border issues such as Kalapani and Susta cast their shadows over the bilateral relations with India. As Nepal’s profile is rising on the American Indo-Pacific strategic map, New Delhi will be seen as a strategic partner to deepen Quad members’ strategic imprint in the Himalayan country.

A Carnegie India research paper notes: “New Delhi has been slow in identifying, initiating, and implementing a coherent approach to connectivity in the South Asia and Indian Ocean region. Although India has identified countries such as Japan as key partners in formulating a response, there has been little progress on a plan of action.” However, this lethargic response from India is bound to change as China and the US invigorate their efforts to enhance strategic influence under the BRI and the Indo-Pacific strategy respectively.