The Prime Minister, Dr. Manmohan Singh, met Nepal’scaretaker Prime Minister Girija Prasad Koirala on the margins of the summitconference of the South Asian Association for Regional Co-operation (SAARC) atColombo on August 3, 2008, and reportedly assured him of India’s continuedsupport to Nepal’s democratic transition. During the meeting, Manmohan Singhtold Koirala that he was impressed by the steps taken by Nepal to usher indemocracy, including the conduct of the Constituent Assembly elections on April10.
At the time Koirala went to Colombo to attend the summit, an agreement on theformation of a new government continued to elude the major political formationsin the newly-elected Constituent Assembly. In fact, the decision taken byKoirala without allegedly consulting the Communist Party of Nepal (Maoist) andthe Communist party of Nepal (United Marxist-Leninist) to represent Nepal at thesummit had become a matter of major controversy. The Maoists, who constitute thelargest single grouping in the Constituent Assembly, and the CPN-UML felt thatNepal should have been represented by the newly-elected President Ram BaranYadav and not by the caretaker Prime Minister, whose days in office werenumbered. Ultimately, the Maoists and the CPN-UML had agreed to Koiralaattending the summit after he reportedly apologised for not consulting them inthe matter in advance. This controversy brought into focus once again thesuspicion and distrust, which continued to mark the relations among the majorpolitical formations after the elections to the Constituent Assembly, with theMaoists smelling an Indian-inspired conspiracy to deny them the fruits ofoffice.
However, after the return of Koirala to Kathmandu from Colombo, the mainpolitical parties agreed on August 5, 2008, to form a national unity governmentled by the Maoists, who will be joined by the Nepali Congress, the CPN-UML andthe Madhesi Janadhikar Forum (MJF) that represents the people of the Terairegion bordering India. The Maoists reached an agreement with the leaders of theother three parties to head the coalition after what was described as"breakthrough" talks by Jhala Nath Khanal, the General Secretary of theCPN-UML. According to Khanal, the leaders of the four parties agreed that thecoalition will remain in office at least until the Assembly approved a newconstitution, a process that may take two years to complete.
The talks on government formation had gone through so many ups and downs duringthe last four months that any optimistic conclusion that the suspicions anddistrust, which had dogged the talks till August 5, would now be a matter of thepast could be misplaced. Before the controversy relating to Koirala’sparticipation in the SAARC summit, there was another controversy caused by theelection on July 24,2008, of Ram Baran Yadav, an ethnic Madhesi, as Nepal’sfirst President defeating a Maoist candidate. Following this, the Maoists hadwithdrawn from the talks on government formation in a huff. It took some timeand efforts to cajole them back into the talks. The interim government, whichpaved the way for the elections to the Constituent Assembly and the declarationof Nepal with a population of 26.4 million as a Republic on May 28,2008, afterending 240 years of the monarchy, had earlier this year agreed to give theMadhesis greater representation in state and local administration in order toend 16 days of strikes and protests that paralyzed Terai and led to fuel andfood shortages in Kathmandu. The Terai region is Nepal’s agriculturalheartland and, according to the Madhesi leaders, it accounts for 48 per cent ofthe country’s population and 80 per cent of its commercial and industrialactivities. It is the main transport link to India, Nepal’s biggest tradingpartner.
If the latest agreement does not break down, Puspa Kamal Dahal, the Maoistleader known as Prachanda, is expected to lead the national unity government asPrime Minister for the next two years. The CPN (Maoist) holds 220 seats in the601- member Constituent Assembly, double the number of its nearest rival, theNepali Congress. With less than forty per cent of the seats, its role inpolicy-making--whether in relation to the new Constitution or in relation toNepal’s domestic and external issues--should normally be limited. But what itlacks in terms of seats in the Constituent Assembly will be sought to be madegood by it through its well-motivated and well-trained cadres, who would try toenable the party to have its way in matters relating to its agenda throughmuscle and street power when the voting power is found inadequate.
In the list of the irreducible minimum of its agenda is the integration ofsuitable members of its trained army into the Nepal Army, thereby giving Nepalfor the first time an ideologically indoctrinated army. A People’s LiberationArmy (PLA) of Nepal will be the dream of Prachanda. Will the other threepolitical formations be able to resist the Maoists’ plans to reorganise theArmy and make it the tool of the ultimate capture of total state power by theMaoists? That is the first question, which ought to be worrying Indianpolicy-makers.
In the new government, which would guide the initial steps in Constitution andpolicy-making, the Maoists will be in the driving seat of power, but not yet intotal control of it, but total control will be their ultimate aim. The Maoistshave reached where they are now through a mix of the Chinese and Soviet tactics.Through Chinese-style armed peasant power, they established control over largeparts of the rural areas, but when control of Kathmandu and theIndian-influenced Terai region eluded them, they joined the other politicalformations in a democratic street agitation, which gave them their present shareof power. In Russia, the Bolsheviks led by Lenin rode to power piggy-back on theMensheviks. After having got a share of the power and the exit of the Tsar, theykicked the Mensheviks out and established a dictatorship of the proletariat,which was to last for nearly 74 years. Is a similar scenario possible in Nepal?That is the second question which should preoccupy our policy-makers. Would sucha scenario be in India’s interest? If not, should India actively, butdiscreetly work to prevent it? Who could be its objective allies if it decidesor is forced to do so?
Prachanda has taken pains to reassure India that it willhave nothing to worry about due to the rise of the Maoists to power. Politicalequidistance between India and China, but not economic equi-dependence has beenthe central theme of his pronouncements. Nepal’s economic links with India areso strong that there would be no danger of their dilution as a result ofNepal’s closer relations with China, he says. He told Karan Thapar of the CNN-IBNin an interview on May 20, 2008 when he was asked what sort of relations hewould be looking at with India:
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"A new relation on a new basis. The new base has been laid down with theunderstanding from Delhi. A new unity with Delhi is already in process. A newrelation means better relations, understanding and cooperation. We want to comecloser to New Delhi on the basis of new relations. I always said that there is aspecial relationship with India, geographical and cultural, and therefore weshould have a special relationship with New Delhi. No one can ignore thishistorical, geographical and cultural fact. What I am saying is that we will notside up with one country against the other. We will maintain equidistance inpolitical sense and not in terms of cooperation and other things. The culture,history and geographical relationship that Nepal has with India will remainintact. It is a historic fact and we will have to strengthen thisrelationship."
However, there are two issues relating to India on which his heart and mind areset. The first relates to the re-negotiation of the 1950 Indo-Nepal treaty and ageneral review of all other bilateral agreements with India. He told KaranThapar: "Our people have put forward this concern that they feel thatthe treaty (of 1950) lacks in equality and that it is not beneficial for Nepal.We thus want to review all the points of the 1950 treaty. And we want to reviseit according to new necessity."
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When asked whether he wanted to drop the provisions for open border and thenational citizenship status for the people of Nepal in India, he was evasive andsaid:
"Not exactly right now. There are other provisions that we want todiscuss in detail." He indicated that one of these provisions requiringre-negotiation would be the defence purchase provision which requires Nepal toconsult Delhi and only then acquire arms. He added: "That also should bereviewed and should be made according to the necessity of the 21stcentury."
Karan Thapar then drew his attention to a statement made by Babu Ram Bhattarai,his party colleague, to the Nepal Telegraph on May 10, 2008, that it wasonly because of the open border that Nepal could not achieve economic prosperityand asked him whether he agreed with that. He was again evasive in his reply. Hesaid: "In the transitional phase, right now with the processes going on, it(Bhattarai’s view) is not correct." Prachanda added: " I want to have ageneral review on all the treaties. But specifically I want to review the 1950treaty. We want changes in the 1950 treaty, others may be okay, or may berevised, but we want to generally review them. We want to strengthen relationsby re-negotiating."
The other issue relating to India on which his heart and mind are set is there-examination of the question of recruitment of Gurkhas to the Indian and otherforeign armies. He told Karan Thapar:
"We want to discuss this issue. We don’t want to stop it right now. Wewant to review the whole history of the development and the implication on bothcountries. What kind of relation is created through this institution is what wewant to review. We want to review and discuss it. I think this will be debatedin our Constituent Assembly. It is an important topic. Now we are about to drafta new constitution and that will guide us for Nepal’s vital interest. Theseare historical questions. We will have to review it in that perspective. Here inNepal there was feudal autocracy as a political system. Now we are changing thatinto a democratic system, and we are looking at rapid economic development sothat our youth don’t have to look for employment in other countries. We wantto change the political and economic scenario."
What are the present ground realities regarding Nepal’srelations with India and China? Nepal’s exports to India constitute about 55per cent of its total exports and its imports from India about 44 per cent ofits total imports. There are over 265 approved Indian joint ventures in Nepal ofwhich over 100 are operational, with a cumulative total Indian investmentamounting to between 36-40 per cent of the total Foreign Direct Investment inNepal. The total project cost of these 265 projects is around Rs.28.5 billion,with fixed investment amounting to Rs. 21.9 billion and the foreign investmentcomponent amounting to Rs. 7.427 billion. These joint ventures are inpractically every sector, including tourism, infrastructure, consumer durables& non-durables and export oriented industries like garments and carpets. Anumber of Indian companies, including Dabur, Hindustan Lever, Colgate, etc.,have established their manufacturing base in Nepal with the objective to exporttheir finished products to India. It needs to be added that these statisticstaken from the web site of the Indian Embassy in Kathmandu relate to the periodtill 2002-03. The figures must have further gone up since then.
The initial focus of India’s economic assistance was on infrastructuralprojects, involving the construction of roads, bridges, hospitals and airports.While infrastructure continued to remain the priority focus, projects also beganto include health, industrial estates and other sectors. About 80 per cent ofthe Mahendra Raj Marg, a highway that runs the entire length of Nepal (1024 kms.)from the east to the west along the southern terai, has been constructed byIndia. In addition, roads from Kathmandu to Dakshinkali, Trishuli, Balaju,Godavari and Raxaul via Hetauda, Sunauli to Pokhara, Rajbiraj to Koshi Barrageand the Janakpur town road are contributions of Indian assistance. India hasalso constructed a number of bridges on these roads and separately two bridgeson the river Bagmati at Kathmandu and one on the river Mohana. The bridge on theriver Sirsiya between the towns of Raxaul on the Indian side and Birgunj on theNepalese side has also been completed and opened for traffic. Twenty-two otherbridges were constructed with Indian assistance on the Kohalpur-Mahakali Sectorof East West Highway.
The total value of trade (exports plus imports) between India and Nepal is about48 per cent of the total trade of Nepal with foreign countries as against about10 per cent only in the case of Nepal and China. The total number of Chineseinvestment projects in Nepal was 44 only till 2003-04 for which statistics areavailable as against nearly 300 in the case of India. Of these, 25 wereoperational, six under construction and the remaining 13 licensed. Chineseinvestments have been mainly in hotels and restaurants, electronics, radiopaging services, readymade garments , nursing homes, hydropower, civilconstruction, etc. China has helped Nepal in the construction of 11 roads with atotal length of about 600 Kms as against nearly 1500 kms in the case of India.China has also been helping Nepal in the construction of one hydel project, oneirrigation project and two electrical transmission projects.
In 2001, China and Nepal signed a Memorandum of Understanding on TourismCooperation, including Nepal into the list of the tourism destinations foroutbound Chinese travelers. Subsequently, the two countries signed an "AirService Agreement", according to which, Air China opened a direct air linkbetween China and Nepal in 2004, by the route of Chengdu-Lasha-Kathmandu. Inaddition, the China Southern Airline has also started operating an air servicebetween Guangzhou and Kathmandu since February, 2007. Likewise, the NepalAirline is operating air services between Kathmandu and Shanghai and Kathmanduand Hongkong.
Military-military relationship has been given increasing attention since 1998,when the the Nepal Army started sending officers and soldiers to study inChinese military universities. In the academic year 2006/2007 , 21 officers andsoldiers of the Nepal Army went to China for training. China has sent militaryofficers to participate in the adventure trainings organized by the Nepal Armysince 2002.
While China’s relations with Nepal have been expanding over the years, theyare nowhere near the multi-faceted relationship between Nepal and India. Interms of value and usefulness, Nepal’s relations with India have been moresignificant than its relations with China. Nepal has benefited far more from itsprivileged economic relations with India than vice versa. If a Maoist-dominatedNepal tries for equidependence in its economic relations with India and China,it will be lifting a huge boulder and throwing it on its own feet. Prachandagives the impression of realising this, but not many others in the CPN(Maoist).Bhattarai blames the open border with India for Nepal’s backwardness. One doesnot know how sincere is Prachanda when he talks of the importance attached byhim to Nepal’s relations with India.
Pro-China intellectuals in Nepal make no secret of their dislike for India.Chinese officials and diplomats keep emphasising that China’s relations withNepal are based on the three principles of trust, equality and sincerity. Theythereby hint that while China treats Nepal as an equal partner, India does not.
Addressing the Nepal Council of World Affairs at Kathmandu on August 5,2008, theChinese Ambassador to Nepal Zheng Xianglin said: "Nepal is situated in afavorable geographical position in South Asia, and is a passage linking Chinaand South Asia." That is the reason for the Chinese interest in Nepal--as apassage to South Asia and as an instrument for strengthening the Chinesepresence in South Asia. China has a Look South policy to counter our Look Eastpolicy. As we try to move Eastwards to cultivate the countries of South-EastAsia, it is trying to move southwards to outflank us. China is not a South Asianpower, but it already has a growing South Asian strategic presence--in Pakistan,Sri Lanka and Bangladesh. It is hoping to acquire a similar presence in Nepalwith the co-operation of a Maoist-dominated government. It has already acquiredthe status of an observer in the SAARC. Some in the SAARC would ultimately liketo make it a SAARC member to counter the presence and influence of India. Nepalin the past refrained from joining those working for the inclusion of China inthe SAARC. A Maoist-dominated government may do so in future.
China has already given indications of its interest in strengthening the valueof Nepal as a passage to South Asia by connecting the road network in Tibet withthat in Nepal and by extending the railway line to Lhasa to Kathmandu. If Chinasucceeds in concretising these ideas, the threats to our security will beenhanced. China has other reasons to welcome the rise of the Maoists to power inNepal. It is hoping with reason that Nepal would stop the anti-China activitiesof the 1000-strong community of Tibetan refugees in Nepal. They have been in theforefront of the agitation against the Han colonisation of Tibet. Some of themare being used by the US government funded Radio Free Asia for producingprogrammes directed to the Tibetans. China apprehends that if there is unrest inTibet after the death of the Dalai Lama, these refugees might be utilised by theUS--with the complicity of India-- to destabilise the Chinese presence in Tibet.It is hoping to pre-empt this with the co-operation of a Maoist-dominatedgovernment in Kathmandu.
India will find itself in Nepal in a situation notdissimilar to the situation in Myanmar--all the time having to compete withChina for political influence and economic benefits. Till now, India almostmonopolised the strategic playing field in Nepal. Now, there will be a secondplayer in China. In Myanmar, whenever the military government had to choosebetween Indian and Chinese interests, it always chose the Chinese interestsbecause of its fear of China and its gratitude to China for the support extendedby it to the military junta in international fora such as the UN SecurityCouncil.
