Can Nepal be a bridge between China and South Asia?

Nepal's new Prime Minister Pushpa Kamal Dahal alias Prachanda (the Fierce One) on return from his first official trip to New Delhi said that he would try to make his country a bridge between China and South Asia, including India. When he was angrily questioned by some critics about a certain clause in the agreement he had signed during the visit, he attempted to bypass it by saying that he discussed with Indian Prime Minister Narendra Modi about the possibility of Nepal's playing a role to help develop closer ties between its two giant neighbours.
Describing his India visit as "highly successful and fruitful" and claiming that it has taken "Nepal's ties with India to a new height, he said: "The dynamics of Nepal's relations with India and China are different and ties with one will not affect the other." He also asserted, "The joint communiqué issued in Delhi would not affect relations with Beijing." Historically, however, India played a dominant role in Nepal's politics because of its proximity to China and that has given rise to anti-Indian feelings amongst the majority of the Nepalese.
When Prachanda, as he is popularly known, after becoming Nepal's prime minister first time in 2008 and true to the tag attached to him as being a 'Maoist revolutionary', paid his first official visit to Beijing much to New Delhi's chagrin. But as he grew more accustomed to power politics and transformed himself from an idealist to a realist, he decided to visit New Delhi first as a balancing act. Geopolitical compulsions make a head of a government in Nepal learn quickly.
However, he also sent a special envoy to Beijing to assure China that he would honour bilateral agreements made by his immediate predecessor, though some analysts were sceptic.
Narendra Modi apparently understood Prachanda's dilemma and after warmly welcoming him in Delhi, offered to help in the reconstruction of Nepal's devastating earthquake losses and agreed to provide first a mandatory dollar credit line and a new dollar credit line of $750 million for the post-quake reconstruction in Nepal.
NEPAL'S RECORD TRADE DEFICIT: Nepal Rashtra Bank (NRB or central bank) in its latest report discussing its last fiscal year (ending in mid-July) says that during the year exports fell by 17.8 per cent to $655.3 million while imports grew by a modest 0.1 per cent to $7.2 billion. This means trade deficit grew to a record $6.5 billion. It appears grim considering that the nation is trying hard to recover two earthquakes last year killing over 9,000 and causing widespread destruction and economic losses.
Nepal being a landlocked country chiefly depends on India for transit of overland cargo to third countries. For five months its southern ethnic minority Madesis, mostly of Indian origin, blocked movements of goods - critics say with Delhi's encouragement - objecting to the new constitution.
 Nepal's divisive revolving door politics - eight changes of government in as many years - since the abolition of monarchy in 2008, makes the prime minister's job most difficult. No wonder foreign investors have steered clear of the country leaving only the Indians in the field.
However, the country has one advantage. Its perennially large foreign trade gap has traditionally been bridged by remittances from the millions of workers abroad who help keep its balance of payment in surplus. NRB says, remittances received last year rose by 7.7 per cent to $6.2 billion.
One notable exception to Nepal's normal foreign trade is the biennual trade fair in Tibet, China offering a rare opportunity to the people living in the country's remote Upper Mustang across the border, which usually remains closed. A news agency report quoting a trucker Pasang Gurung driving to the fair said: "This trade is very important for us because we live in such an isolated area…. Access to Chinese customers and products makes our lives much easier….I wish the border is open all the time."
Upper Mustang has history of a base for Tibetan resistance and the border usually remains closed for security reason. Nepalese authorities have lately been looking to strengthen economic ties with China to reduce dependence on India. But it is not an easy task. For example, bilateral Indo-Nepal trade during July 2014 and June 2015 amounted to $4.5 billion compared to China's $882 million.
NEW TIBET-NEPAL ROAD MAKES TRADING EASY: French news agency AFP recently reported from Nepal's remote northern Korala border town, a normally deserted checkpoint, throngs with activity high on the Tibetan Plateau twice a year as Nepali traders flock to do business with China. Over thousand visitors a day use the checkpoint during the fair, trading in everything - from carpets and clothing to tea and biscuits.
The journey has been made easier by a new road to the border, built by China and opened this year. This has made the locals immensely happy. Nepali businessman Tshering Phuntsok Gurung, travelling to the border with friends told AFP: "The road has made transportation of goods much easier… Earlier everything had to be carried on horses and the costs involved in hiring and feeding animals meant that the prices of goods also go up."
The thriving cross-border trade in Upper Mustang is particularly remarkable because the region was once the base for a CIA-funded guerrilla campaign to oust the Chinese forces from Tibet after a failed uprising in 1959, the agency reported. China's new road, however, has made it very accessible from across the border in Tibet.
Analysts say, it would be difficult for any government in Kathmandu to extricate itself from Delhi's influence while the latter has the will and the means to intervene into Nepal's domestic politics. So it is reasonable for Prachanda to quickly try and repair ties with India.
There is, of course, nothing new for Nepal to follow a balancing act that has become the country's basic diplomatic strategy since the 1990s. This is because Nepal fears that it might lose independence like its former sister kingdom of Sikkim. Despite this, any minor problem with India has a propensity to trigger Nepalese nationalism.
Apparently, China understands it too. China's official English-language weekly Global Times said: "China is not competing with India for influence in Nepal, but hopes its neighbouring countries, including Nepal, will benefit from China's development. Beijing also hopes that Kathmandu can be a bridge between China and India and to promote China-Nepal-India Economic Corridor, which will bring development and prosperity for all three economies."
NEPAL & CHINA'S BELT AND ROAD INITIATIVE: Nepal's immediate past government under Prime Minister KP Oli, who openly expressed his pro-China leanings, had repeatedly said that it hoped to join China's "One Belt, One Road" (OBOR) initiative, but India strongly opposed.
Obviously Delhi's strategic thinkers looked at it through their prism of geopolitical competition in which they calculated that only China gains. Chinese investment proposals of about $20 billion in India made over a year ago has not made much progress perhaps because of this negative mindset.
Economic analysts say the OBOR initiative has also been linked with quite a few economic corridors including BCIM, CPEC, China Central Asia, Middle East, Europe, Mekong region, Southeast Asia and talked about financing of mega infrastructure projects through China-initiated Asian Infrastructure Investment Bank (AIIB) in these regions for greater connectivity and development. The theme, they say, is primarily economic development and poverty alleviation, though geopolitics cannot be divorced from it altogether.
If Nepalese Prime Minister Prachanda becomes successful in his attempt to talk Indian PM Narendra Modi into revamping the Bangladesh-China-India-Myanmar (BCIM) corridor, all the member countries would be immensely benefited. This will result into a win-win-collaboration between all the countries of the region.
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