Book StrategicHimalaya
Book StrategicHimalaya
Book StrategicHimalaya
NIHAR R. NAYAK
PENTAGON PRESS
Strategic Himalayas: Republican Nepal and External Powers / Nihar R. Nayak
ISBN 978-81-8274-761-6
Disclaimer: The views expressed in this book are those of the authors and do not
necessarily reflect those of the Institute for Defence Studies and Analyses, or the
Government of India.
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The cover shows Machapuchare (Fish Tail in Nepali) in the Annapurna range of the
Himalayas located in north-central Nepal. The photograph was taken from Dhulikhel
by Dr Ashok K. Behuria in November 2013.
Foreword xi
Acknowledgements xiii
List of Tables and Figures xv
List of Abbreviations xvii
1. Introduction 1
Significance of the Study 8
8. Conclusion 176
Nepal’s Options 181
APPENDICES
I Road Network of Nepal, Proposed Dry Ports by China, Transit
Points at India-Nepal Border 187
II Chinese Engagements in Hydro Projects in Nepal 188
III Sino-Nepalese Treaty of Peace and Friendship, Kathmandu,
April 1960 189
IV Treaty of Peace and Friendship Between the Government of India
and the Government of Nepal 191
V Basic Operating Guidelines agreed to by Undersigned
Agencies in Nepal 194
Index 204
Foreword
Acknowledgements
This book would not have been completed without constant support and
encouragement of well wishers. I am deeply indebted to many people, who
supported me during the various stages of the writing of this book.
First and foremost, I am deeply grateful to Dr Arvind Gupta, Director
General, Institute for Defence Studies and Analyses (IDSA), for his constant
encouragement and support in bringing out this volume. He very generously
extended the deadlines whenever I approached him. Without his personal
interest and support, this book could not have been completed. I would also
like to express my sincere thanks to Brigadier (Retd) Rumel Dahiya, Deputy
Director General, IDSA, for his help in bringing this volume in time. I thank
Prof. S.D. Muni, Visiting Research Professor at the Institute of South Asian
Studies, National University of Singapore, for his selfless guidance in the
formative stages.
The book would not have seen the light of day without the constant
supervision and support of Dr Ashok K. Behuria, Coordinator, South Asia
Centre, IDSA, and Dr Smruti S. Pattanaik, both of whom painstakingly edited
the initial draft and offered valuable suggestions on it.
Mr Post Bahadur Basnet, Visiting Fellow at IDSA (March-November
2013) also offered valuable suggestions during various stages of the writing of
the book.
My colleagues in the South Asia Centre and Vivek Kaushik, Associate
Editor, IDSA, deserve thanks for their timely and valuable support. I would
like to express my special gratitude to all the scholars, policymakers and
journalists, who shared valuable insights with me during my interactions with
them, and helped me in formulating my thoughts and ideas.
My deepest appreciation to Prof. Lok Raj Baral, Prof. Bishwambher
Pyakuryal, Ambassador Dinesh Bhattarai, Trailokyaa Aryal, Josy Joseph, Dr
Nishchalnath Pandey, Prashant Jha, Dr Uddhab Pyakurel, Akanshya Shah,
Mahesh Acharya, Pramod Jaiswal and the anonymous referees for their valuable
xiv Strategic Himalayas: Republican Nepal and External Powers
comments and suggestions. I must thank Shri Rajan Arya of Pentagon Press
and his staff for their support in publishing the volume.
A special note of thanks to IDSA library staff and the many others who
have contributed to this volume at various levels.
It would be unfair not to acknowledge the sacrifice and support extended
by my wife Swetalina (Jolly) and daughter Jenny during the writing of this
book.
I hope this volume will benefit all stakeholders and will provoke a healthy
debate on the role of external forces in ensuring peace and stability in Nepal.
Any oversights in the book are mine.
Nihar R. Nayak
Introduction xv
Table 4.1: High-Level Visits from China and India to Nepal during
2006-2012 87
Table 4.2: China and India Development Assistance to Nepal 93
Table 4.3: Sector-wise Development Assistance to Nepal from India
and China (FY 2006/07 to 2010/11) 94
Table 4.4: Nepal’s Trade with China from 2010 to 2012 95
Table 4.5: Joint Ventures in Nepal with India, US and China 96
MW megawatt
NA Nepalese Army
NAM Non-Aligned Movement
NC Nepali Congress
NCDR Nepal Council for Development Research
NCHFS Nepal China Himalayan Friendship Society
NDC National Defence Course
NDFB National Democratic Front of Boroland
NMSP National Madhes Socialist Party
NPTF Nepal Peace Trust Fund
NPR Nepalese Rupee
ODA Official Development Assistance
OHCHR Office of the High Commissioner for Human Rights
PIA Pakistan International Airlines
PoK Pakistan occupied Kashmir
PW People’s War
RMB Renminbi (Chinese currency)
RNA Royal Nepal Army
RoO Rules of Origin
RPP Rashtriya Prajatantra Party
SAARC South Asian Association for Regional Cooperation
SPA Seven Party Alliance
TAR Tibet Autonomous Region
TEL Terrorist Exclusion List
TIFA Trade and Investment Framework Agreement
TRC Truth and Reconciliation Commission
UCPN(Maoist) Unified Communist Party of Nepal (Maoist)
ULFA United Liberation Front of Asom
UN United Nations
UNCTAD United Nations Conference on Trade and Development
UNMIN United Nations Mission in Nepal
UNPFN United Nations Peace Fund for Nepal
UPA United Progressive Alliance
USAID United States Agency for International Development
WTO World Trade Organisation
ZoP Zone of Peace
CHAPTER 1
Introduction
effect, have further enhanced its value in Nepal. Both countries supported
the Nepalese establishment in its fight against the Maoist insurgents. Despite
this, the Maoists still view China as a benign power that does not interfere in
the internal affairs of Nepal. The Nepalese elites believe that the presence of
China makes their economy more competitive and reduces the country’s
dependence on India. Referring to the West Seti project which was allotted to
China, some Nepalese officials argue that “[t]here are Indian companies and
individuals [who] control [projects of ] around 10,000 MW directly or
indirectly, and the cost of opportunities and deadlines missed has been huge
for Nepal”.3 In reality, Nepal has been responsible for these projects not being
able to take off.
As regards the US; it has never been a direct threat to Nepal, but Nepal
expects it not to pressurise Kathmandu over the Tibet issue. Ever since the
beginning of diplomatic relations between Nepal and the US, the latter has
been mostly considered as protector of the former in case of any kind of military
threat and political interference from China and India. The Nepalese elites
are aware that the US will never be able to ignore Nepal because of the China
and India factors. China also cannot neglect Nepal as long as the Tibet issue
and its border disputes with India are alive.
From India’s point of view, given the topographical similarities and
contiguity, Nepal is part of its northern security system. It feels vulnerable in
case of external powers presence on Nepalese territory beyond the normal
diplomatic activity. It, therefore, expects Nepal to remain sensitive to its security
concerns. This expectation of India has been misinterpreted in Nepal as an
attack on Nepal’s sovereignty and independence. On the other hand, Nepal
understands that India could take care of both its economic development and
security concerns more effectively than any other country. This feeling of inter-
dependency has been reflected in the 1950 Treaty and also during official
visits. The Treaty worked as deterrent to Chinese territorial interests in the
Himalayan region. Despite historical and strong people-to-people contacts,
open border and the Treaty(ies), the insecurity of Nepal against India continues.
This sense of insecurity on many occasions has been responsible for
uncomfortable bilateral relations between both the countries.
In the post-Cold War period, Nepal attracted the attention of the US
because of the rise of the Maoist4 movement since 1996, and the rise of China
and India as economic powers. In 2001, the Maoists came on the US radar
of the ‘Global War on Terrorism’. Despite being aware that the Maoists did
not pose any global threat and they could not harm US interests beyond Nepal,
4 Strategic Himalayas: Republican Nepal and External Powers
the two arose over India’s decision to engage with the Maoists who had sent
feelers for joining the mainstream politics by then. The US took an independent
view on the situation rather than following India’s policy towards Nepal.7
This was further confirmed when President Obama during his visit to Beijing
in November 2009 remarked that China should play a greater role in resolving
disputes in South Asia.8 Although some believe that the remark was made in
the context of India and Pakistan, Scott H. DeLisi, the then US Ambassador
to Nepal, while deposing before the Senate Foreign Relations Subcommittee,
echoed Obama’s views in the Nepal-China context.9
The post-conflict political transition in Nepal coincided with large-scale
anti-China protests between March and August 2008 by Tibetan refugees
living in Nepal—the most organised demonstrations in the past 50 years. In
2008 Tibetan separatists in fact tried to cross the border into the TAR to
disrupt the journey of the Olympic torch to the Mount Everest and the summer
Olympic Games in Beijing. This forced China to redraft its Nepal policy that
year. Several reasons might have contributed for this shift in the Chinese policy.
For China, Nepal is important because of its strategic location and the presence
of a large number of Tibetan refugees; there is also a fear that these anti-
China elements may take advantage of the prolonged instability in that country.
Since Nepal is a major transit point for the Tibetans coming to India, China’s
particular concern is its (Nepal’s) open border with India and the Tibetan
refugees living in Dharamshala in India. The abolition of monarchy, which
was the most reliable ally of China in Nepal over time, may have increased
China’s anxieties. Therefore, China considered it necessary to re-affirm its
presence in Nepal to secure its interests, which, it felt, were threatened because
of its encirclement by the big powers. From the Chinese point of view, both
Tibet and Nepal are part of its integrated ‘peripheral policy’. Because of its
geographical location and as a minority area, the TAR has remained a vulnerable
periphery for China since the Qing dynasty. Therefore, “China’s Tibet policy
is essentially driven by strategic considerations and periphery security.”10 Nepal’s
northern border being an easy gateway to TAR, increases China’s worries that
political instability in Nepal could lead to enhanced anti-China activities in
Nepal. This also increases the possibility of the Tibetan separatists entering
the TAR using Nepal’s northern border. Moreover, the restoration of Parliament
in June 2006 with a Nepali Congress-led interim government and the electoral
victory of the CPN (Maoist) in April 2008 were other influencing factors for
the change. China adopted a wait and watch policy towards political
developments in Nepal and Beijing sent a number of delegations to Kathmandu
to assess the situation and discuss matters of mutual concern.11 Subsequently,
6 Strategic Himalayas: Republican Nepal and External Powers
Zone of Peace (ZoP). His successor King Gyanendra purchased weapons from
China and Pakistan, proposed China candidature as an observer member of
SAARC, played the ‘China card’ against India and last, but not the least, turned
a blind eye to active operations of the Inter-Services Intelligence (ISI), Pakistan’s
external intelligence agency, operations in Nepal. Nepal’s apathy towards India’s
obvious security concerns changed its view towards monarchy. At the same
time political parties remained divided and that made king powerful. Rather
than resolving the crisis through negotiation; king’s strong hand tactics
exacerbated the political crisis in Nepal and resulted in widespread violence.
Continuing violence threatened the stability of Nepal with whom India shared
an open border. India facilitated the 12-point agreement between the Maoists
and the Seven-Party Alliance (SPA) in November 2005. An interim constitution
was agreed and the Maoists came to power after the Constituent Assembly
elections and among the first things they did was the abolition of constitutional
monarchy. In absence of monarchy and shifting of power center to political
parties, major powers also developed their constituency within the parties.
That brought dilution in India’s sphere of influence. India’s further shift in its
foreign policy towards Nepal from active support to the democratic transitions
(until 2008) to encouraging indigenous approach of generating consensus to
draft a new Constitution created space for other countries to have major say
in the domestic politics of Nepal.
The study also analyses Nepal’s foreign policy towards these powers. It
traces the involvement of India, China, the US, the major European countries
and Pakistan in Nepal since 2006; the interests of external powers in Nepal
and their stakes in its political transformation. It seeks to answer the following
questions: Is Nepal going to face a new round of strategic competition in the
Himalayas? Does the policy of equidistance reintroduced by the Maoist
government (2008-09) impact China’s Nepal policy in any manner? What
will be China’s policy towards the radical faction within the Maoists in Nepal?
Has there been any visible change in China’s relationship with Nepal after the
abolition of the monarchy? Given the geographic barriers, can China play a
decisive role in Nepal? Will the renewed Chinese interest in Nepal affect India’s
relationship with Nepal in the future? How does the US look at the political
transition in Nepal? Does the US look at Nepal as a possible partner in its
long-term strategy to tackle a rising China? What is the strategic relevance of
Nepal for major European countries? Do major European countries synchronise
their Nepal policy with the US policy towards sub-Himalayan region? How
will China and India manage their economic interdependence and strategic
competition in the region? How will India balance the Chinese and US presence
in Nepal? What is the role of Pakistan in Nepal in post-conflict period? Does
Nepal figure in Pakistan’s look east policy to counter-balance India’s look west
policy? How will Nepal deal with the competing strategies of the major
powers—regional and extra-regional?
The topic was identified after a diligent monitoring of political
developments in Nepal over a considerable length of time. The present study
is based on information collected both from primary and secondary sources.
Government documents, foreign policy reports, statements of senior leaders
and interviews have been used as primary sources. Secondary research inputs
have involved constant monitoring of day-to-day developments and events
from open sources. Books, research articles, commentaries, reports of private
research institutes and relevant websites have also been referred to.
Chapter 1 introduces the volume and lays down the broad parameters
and the research questions, which the study has attempted to grapple with.
The scope of the study is focused on the ever-increasing influence of the
external powers in Nepal’s contemporary politics. The study also emphasises
that the role of the external power is not limited to politics alone but also has
a bearing on the country’s society and economy. The active involvement of
the external powers in Nepal not only influences its domestic policy but also
regional political dynamics as a whole.
10 Strategic Himalayas: Republican Nepal and External Powers
Chapter 2 examines the relationship between small and big powers and
analyses the foreign policy of Nepal and its approach to big powers. The chapter
argues that Nepal took advantage of the strategic competition and mistrust
between the big powers during the Cold War. In the post-Cold War era it has
taken advantage of the communication gap between China and India. Nepal
has striven to maintain an equal distance with the two countries, but it has
not antagonised India, in the light of the geographic reality. Nepal managed
this due to the fact that before 1990 the monarchy was the only power centre.
In the 1990s political parties emerged as major players. But political
fragmentation and rivalry between them led to frequent change of government
and the monarchy retained its dominant status. After the decline of the
monarchy, although the Maoists declared that they would continue with the
policy of ‘equidistance’, their tactics have not succeeded so far. In the changing
geopolitical situation, Nepal will avoid pitting regional powers against each
other, and be considerate of their sensitivities rather than supporting the
interests of any power in the region to the disadvantage of the other.
Chapter 3 focuses on Nepal-India relations in the post-monarchy period.
Despite a century-old relationship, there have been many ups and downs due
to several factors. Since 1955, the ruling elites of Nepal have adopted an anti-
India posture because of various reasons—psychological, geographical, political,
economic and social—apart from some other external factors. This Chapter
analyses construction of anti-Indianism and the actors engaged in perpetuating
such perception. Since the demise of the monarchy in 2006 and emergence
of the CPN (Maoist) as the largest party in the CA elections in 2008 there
has been a spike in anti-Indianism. The political instability and growing
influence of major powers in Nepal is of concern to India.
Chapter 4 seeks to highlight the increased Chinese presence in Nepal and
the shift in China’s foreign policy with regard to its southern border. This
shift coincides with political changes in Nepal, and the chapter tries to
objectively assess these developments and their implications for the region.
There are two schools of thought on the increasing Chinese presence in Nepal.
One school believes that China’s presence in Nepal is driven by Tibet issue.
It wants to take care of its security concerns by deepening its economic
engagements with Nepal. However, this economic engagement is not just
happening with Nepal; rather this is a global phenomenon. Another school
believes that China’s Nepal policy is not limited to Tibet policy. It wants to
neutralise India’s influence by taking advantage of equidistance policy of the
Maoists. That is why China has diversified its engagements from state level
to people-to-people level. The chapter also attempts to identify and analyse
Introduction 11
new trends in China’s policy towards Nepal with the overall objective of
providing a comprehensive understanding of China’s policy towards Nepal
from 2006 onwards.
Chapter 5 examines the US interests in the region. Since 1950, US policy
towards Nepal has been influenced by three factors—Nepal’s strategic location;
containment of the domino effect of Communist permeation in South Asia
and emergence of China and India as economic and military powers. Most
importantly, from the US point of view, Nepal could also be an ideal place to
extend support to the Tibetan refugees. Washington also considers Nepal as
the gateway between India and China and understands their influence in South
Asia. While the first two factors dominated US foreign policy towards South
Asia till the early 1970s, the last factor has dominated its Nepal policy since
the late 1990s. However, the US reframed its Nepal policy in 2001 when the
Maoist movement acquired greater influence in Nepal. Despite some
improvement in Sino-US relations, the US still have sympathy towards the
Tibetan refugees and wants Nepal to allow them free passage between
Dharamshala and Tibet. The US presence, with its inclination to facilitate (if
not enable) the Tibetan resistance, may force both the countries into a turf
war in Nepal.
Chapter 6 deals about role of the EU and the major European countries
in Nepal. It looks at their engagements with Nepal both at bilateral level and
at the EU level. Like the US and other big powers, some European countries
strategic interests in the region are influenced by the US policy towards South
Asia and other global issues. Although EU members are collectively engaged
in community development, governance and peace building, some member-
countries had supplied arms and ammunition to the monarchy to fight the
Maoist insurgency. There has been a perception in Nepal that the demand of
ethnicity-based federalism was promoted by some EU member countries.
Chapter 7 discusses Pakistan’s relationship with Nepal. From Pakistan’s
point of view, Nepal is strategically an important country because of its location,
widespread anti-India sentiment and the sense of insecurity prevalent within
the country. Despite remaining economically fragile and politically unstable,
Pakistan has been consistently providing development assistance to Nepal.
An inventory of Pakistan’s sector-wise annual aid assistance to Nepal indicates
that it was more focused on the Nepalese districts that border India. Pakistan
took advantage of an open border between Nepal and India and used Nepalese
territory as a launching pad for ISI activities against India. A conflict-ridden
and politically unstable Nepal suits Pakistan’s interests in the region. In the
12 Strategic Himalayas: Republican Nepal and External Powers
*
NOTES
1. A country has the ability to influence world politics substantially because of its geography,
population, strong economy and military capacity. Although many sovereign countries
meet these criteria, this study discusses only the role of India, China, the US, major
European countries and Pakistan because of their greater involvement in this part of the
world.
2. Among the external powers, the US, China, India, the UK and Germany are considered
Introduction 13
as ‘major powers’ present in Nepal. Given their influence in international politics, economy
and strategic issues, the book has dealt extensively on the objectives and role in Nepal.
Terms like ‘external powers’, ‘major powers’ and ‘big powers’ are used interchangeably.
In this study, these major powers are treated as external forces for Nepal. Since Nepal
is situated in South Asia, other than India, these powers are also referred to as ‘extra-
regional powers’. It may also be noted that geographically, China is a neighbour of
Nepal; however, it is categorised as an ‘extra-regional power’, because it is not part of the
South Asian region.
3. Yubaraj Ghimire, “Big Power Deal Gives Chinese a Foothold in Nepal”, Straits Times
Indonesia, 10 March 2012, at http://www.thejakartaglobe.com/economy/big-power-deal-
gives-chinese-a-foothold-in-nepal/503811 (accessed on 2 July 2013).
4. The Communist Party of Nepal (Maoist), hereinafter referred to as ‘CPN (Maoist)’,
merged with the Communist Party of Nepal (Unity Centre-Masal) on 12 January 2009,
to form the Unified Communist Party of Nepal (Maoist), hereinafter referred to as
‘UCPN (Maoist)’. The UCPN (Maoist) witnessed a vertical split on 18 June 2012 which
led to the formation of the Communist Party of Nepal-Maoist (CPN-Maoist), hereinafter
referred to as ‘CPN-Maoist’. The CPN-Maoist is headed by Mohan Baidya ‘Kiran’ and
functions strictly in adherence with Marxism-Leninism-Maoism (M-L-M) principles.
Pushpa Kamal Dahal alias Prachanda, hereinafter referred to as ‘Prachanda’, is chairman
of the UCPN (Maoist). The names of the Maoist Party (ies) are mentioned in the book
according to their actual names during a particular period or year.
5. Some Chinese scholars suspect that the US presence in Nepal was for intelligence
purposes. However, there is no credible evidence in this regard. Rather, Senator Jim
Webb before the Senate Foreign Relations Committee in February 2010 viewed Nepal
as something of an interesting gateway between India and China. Interestingly Jane’s
Intelligence review in 2001 analysed that future Nepal governments would try to become
close to Beijing. That would give an opportunity to China to use Nepal as listening
posts about foreign presence including India in the sub-Himalayan region. For details
see Nishchal Nath Pandey, Nepal’s Maoist movement and implications for India and China,
Manohar Publications, Delhi, 2005, p. 126.
6. Kunda Dixit, “A New Himalayan Game”, The Fletcher Forum of World Affairs, 34(1),
Winter 2010. Also see Percy Fernandez, “Lost Horizon: China-Tibet Conflict Nowhere
Near Resolution” The Times of India, 14 March 2005. C. Raja Mohan, “Tibet static in
China,” The Hindu, 22 June 2003. Srinath Raghavan, “The boundary dispute with
China”, Seminar (584), 2008, at http://www.india-seminar.com/2008/584/
584_srinath_raghavan.htm (accessed on 2 July 2013).
7. Siddharth Varadarajan, “U.S. and India part company on Nepal”, The Hindu, 22 February
2006. Also see “Region: Calling the shots,” Himal Southasian, Kathmandu, April 2011,
at http://www.himalmag.com/component/content/article/4365-region-calling-the-
shots.html (accessed on 2 July 2013).
8. The White House, “U.S.-China Joint Statement”, 17 November 2009, at http://
www.whitehouse.gov/the-press-office/us-china-joint-statement (accessed on 26 July
2012).
9. “China too has a role to play in Nepal,” The Indian Express, Delhi, 4 February 2010,
at http://www.indianexpress.com/news/china-too-has-a-role-to-play-in-nepal-us/575463/
0 (accessed on 2 July 2013).
10. Abanti Bhattacharya, “China and its Peripheries: Strategic Significance of Tibet,” Issue
14 Strategic Himalayas: Republican Nepal and External Powers
Brief, No. 220, May 2013, Institute of Peace and Conflict Studies (IPCS), New Delhi,
p.01.
11. Kunda Dixit, “A New Himalayan Game”, n. 6, pp. 125–34.
12. Prashant Jha, “A Nepali Perspective on International Involvement in Nepal”, in Sebastian
v. Einsiedel, et al. (eds), Nepal in Transition: From People’s War to Fragile Peace, Cambridge
University Press, Cambridge, 2012, pp.356-357.
13. AI Ping, Vice-Minister at the International Department of the Communist Party of
China (CPC), during an unofficial visit to Kathmandu from 30 June - 2 July 2012,
expressed Chinese concern over prolonged debate on ethnicity-based federalism in Nepal.
For details see, “Focus on economy, not ethnicity”, The Himalayan Times, Kathmandu,
30 June 2012. Also see, Prashant Jha, Editorial: “The message from the north”, The
Hindu, 5 October 2012.
14. “US national interest determines Nepal policy”, ekantipur, Kathmandu, 12 December
2011, at http://www.ekantipur.com/the-kathmandu-post/2010/12/12/oped/monday-
interview/215969/ (accessed on 2 July 2013).
15. Siddharth Varadarajan, “U.S. and India Part Company on Nepal”, n.7.
16. Since all European countries are not members of the European Union (EU), the book
discusses the EU’s engagement with Nepal separately, alongside that of the major European
countries.
CHAPTER 2
like Cuba and Taiwan, have taken advantage of the competition between big
powers, but very few of them have the ability to manoeuvre or influence world
politics. In the post-Cold War period, small states have more international
visibility and feel secure because of the UN and other multilateral organisations
that are playing active international role to defuse crises. However, some small
states, which had played key roles during Cold War period, have lost their
influence in the post-Cold War period. Nepal could be one of them. Although
it did not play any major role internationally, it certainly played a major role
at the Himalayan sub-regional level. It managed to leverage its own interests
by engaging both India and China—sometimes playing one against the other.
It also invited super powers to neutralise their influence.6
There is a dominant view (Neo-Realism) in IR that the foreign policies
of small states are affected more by international politics and less by domestic
developments. M.L. Elman observes that: “The received wisdom in the field
[International Relations theories] is that domestic determinants will be less
salient when studying small state behaviour because external constraints are
more severe and the international situation is more compelling.”7 This premise
may not, however, apply to all small states. In the case of Nepal, its foreign
policy is determined by its domestic requirements and regional political
developments, especially those relating to China and India. Their strategic
rivalry benefits Nepal much more than the other states of the same size and
capability.8
A small state’s ability to pursue an independent foreign policy further
declines if it is landlocked and economically dependent exclusively on one
country. Even a third power is less effective in terms of becoming a balancer
or protector due to its physical remoteness.9 Although Nepal tried to diversify
its foreign policy during the 1960s by establishing relationships with other
countries, it did not yield the desired results. Nepal established diplomatic
relations with the US in 1947, before it did with any of its neighbours.
Interestingly, on several occasions, both China and the US expressed their
inability to offer any help to Nepal when its relations with India were strained.
Informally, both recognised the southern Himalayas as India’s sphere of
influence.
S.D. Muni has observed that both internal and external variables have
determined the foreign policy of Nepal. As far as external variables are
concerned, it has been observed that the small countries in South Asia,
including Nepal, took advantage of the big power politics in the region during
the Cold War and enhanced their bargaining power vis-à-vis India. As far as
18 Strategic Himalayas: Republican Nepal and External Powers
internal variables are concerned, Nepal’s internal politics has influenced the
country’s India policy more than India’s policy towards Nepal. This is because
of the frequent conflict between the forces who wanted to retain status quo
and those have wanted change at the internal political level since the 1950s.
The regimes in Nepal took advantage of international developments rather
than influencing them in any manner.10 At the same time, its dependence on
India forced Nepal to take cognisance of India’s sensitivities about its
relationship with China. Thus, the foreign policy of Nepal has been operating
at three levels: domestic/regime interests, sub-regional power politics, and
global developments. The big powers have failed to bring peace and stability
to Nepal and South Asia despite their presence in the region since the 1950s.
High High
Input Input
Minimal
Absorber Absorber
Input
Source: Author.
The impact diagram (figure 2.1) explains that small and landlocked
countries located between two big powers are less affected by international
developments because the big powers surrounding it absorb the pressure.
However, since small countries are part of the international system and regional
sub-system, they are more influenced by their immediate neighbours rather
than any extra-regional powers. In the case of Nepal (Y), this model explains
the foreign policy behaviour of Nepal. Since Nepal is situated between India
(X) and China (X), its foreign policy is mostly affected by its immediate
neighbours and less by international developments. According to Barry Buzan
Foreign Policy Challenges of the Republic of Nepal 19
and Ole Waever: “Smaller states will usually find themselves locked into an
RSC [Regional Security Complex] with their neighbours, great powers will
typically penetrate several adjacent regions, and superpowers will range over
the whole planet.”11 There have been occasions, when small states have invited
third parties to counter-balance their neighbours. But even if Nepal takes the
help of a third power, it may not be effective vis-à-vis India, and at the same
time its geostrategic location would demand that it maintains a non-
antagonistic relationship with China. For example, Western countries have
been trying to influence Nepal on the Tibet issue for the last 50 years. But
Nepal has ignored them and adopted a policy that has largely suited the Chinese
interests. Similarly, despite the pro-monarchy policy (especially against the
Maoists) followed by the US since 2001 and its opposition to the 12-point
agreement, the US felt necessary to support India’s 2005 peace initiative in
Nepal given its influence in this region. As one Nepalese analyst observed
“On regional issues, with exception of those related to Pakistan, the US
administration was content to give India the lead,”12 for larger strategic gains.
Moreover, given the complexity of the regional power-play and asymmetry of
Nepal with its neighbours, Nepal is well-placed to take advantage of the
economic development of both India and China without having to play them
off against each other.
restoration of the monarchy was to do away with the unpopular ‘Rana’ regime
and gradually facilitate the rise of democracy or some sort of representational
elected government that embodies the will of the people. Till 1955, India
largely influenced the foreign policy of Nepal.18 However, after 1955 the
monarchy became increasingly assertive and was reluctant to allow the
democratic forces to function independently. The monarchy perceived India
as being inimical to its interests as it feared that India’s support to democratic
forces would dilute its power.
Nepal’s foreign policy took a new shape after King Mahendra assumed
power in 1955. He deviated from his father’s India-dependent foreign policy
and formulated an independent foreign policy by diversifying Nepal’s
relationship with other countries. The major driver for this change was his
desire to consolidate the monarchy, weaken the democratic movement and
mobilise international support for the monarchy. Since India was proposing
a mixed (constitutional monarchy) political system, he tried to neutralise India’s
influence by signing a parallel Treaty of Peace and Friendship with China in
1960. He also tried to reduce Nepal’s dependence on India by seeking more
development aid from Western countries. In all these efforts he took advantage
of the differences between China and India and at the same time he was not
hesitant to play a role in the ‘containment policy’ scripted by the Western
powers. His policy was compatible with the interests of external forces in the
Himalayas. China appreciated Nepal’s efforts towards neutralising India’s
influence and offered “political support for the Nepal king’s domestic policies
together with generous economic assistance” (details of the Chinese
engagement with Nepal are discussed in Chapter 4).19 China in fact took
advantage of the rift between King Mahendra and the then Indian
establishment. China did not react immediately after King Mahendra’s
dissolution of the first democratically elected government and the royal coup.
Its silence was a signal that the monarchy was a stable power centre. Its support
to the authoritarian regime was reflected when the Chinese Vice-President
Chen Yi praised King Mahendra’s leadership while welcoming the Nepalese
delegation to the Joint Committee on Nepal-India Boundary Commission to
Beijing in February 1961. Subsequently, China also assured King Mahendra
of all kinds of economic and military support.20 Moreover, being a small
country under constant threat to its survival, Nepal adopted the principle of
non-interference in the internal affairs of others and articulated it at the UN
and in other international fora.
King Mahendra’s son Birendra, who assumed power in 1972, followed
his father’s domestic and international policies, but went one step ahead by
22 Strategic Himalayas: Republican Nepal and External Powers
declaring Nepal a Zone of Peace (ZoP) in 1975. Pakistan and China endorsed
this seven-clause declaration which was immediately accepted by more than
70 other countries who endorsed it on the condition that it should be accepted
by Nepal’s neighbours. India, however, did not endorse it. A major objective
of the ZoP proposal was to neutralise India’s influence in Nepal by undermining
the 1950 Friendship Treaty. Despite knowing that India would not endorse
the proposal, the king went ahead with the plan to consolidate his regime by
fomenting anti-India feelings. The ZoP remained a major objective of Nepalese
foreign policy till the establishment of multi-party democracy in 1990, but
did not figure prominently in Nepalese foreign policy articulation because
India ignored it altogether. The proposal, it may be noted, was made soon
after the formation of Bangladesh. The US was among the countries that
were interested in pressurising India in the aftermath of the emergence of
Bangladesh. 21 The king was also worried about India’s support to the
democratic forces in Sikkim. He might have been apprehensive that the
Nepalese monarchy could face a similar future. Moreover, the proposal came
while the monarchy was facing stiff resistance from the Nepali Congress, which
was using Indian territory for its campaign for restoration of democracy. Under
Clause 5 of the ZoP proposal, India would have been forced to take action
against the NC and the monarchy would have maintained the status quo
forever. The proposal was also similar to Pakistan’s proposal for declaring South
Asia as a nuclear weapon-free zone.
forces and multilateral agencies, ganging up against India for reducing Indian
influence in the region by forming regional organisations like SAARC and
portraying India as a hegemonic power.24
Nepal has, on many occasions, successfully utilised multilateral forums
and the UN to neutralise and minimise the influence of neighbouring countries
in its internal matters. For example, Nepal was a founding member of both
the Non Aligned Movement (NAM) and SAARC. In both these multilateral
arrangements, Nepal has successfully raised the concerns of small states and
has sought to establish that it is not influenced by any country; that being a
sovereign country, it has created a space for itself at the international level.
According to Muchkund Dubey, for example, Nepal and Bhutan, with the
“support of other smaller member countries have used the SAARC forum to
put pressure on India to provide transit through the Indian territory to trade
with Bangladesh, and to the ports of Chittagong and Mongla for their trade
with other countries.”25 Pakistan and other major powers have taken advantage
of the prevailing India phobia in Nepal.
powers in the internal matters of small states. Moreover, the subsequent rulers
of Nepal had almost followed the policy laid down by King Mahendra.27
In the era of globalisation, Nepal felt that the world was becoming
interdependent. However, the NAM continued to provide a platform to Nepal
to express its concerns, which it could not do at a bilateral level. The importance
of NAM for Nepal was once again apparent when Prime Minister Baburam
Bhattarai ignored the advice of some Western diplomats to not attend the
16th NAM summit in Tehran in August 2012. Addressing the Tehran summit,
Bhattarai appealed to his audience to make “NAM a voice for the voiceless
and power for the powerless and asking to make a pledge to work in a coherent,
cooperative and concerted manner for justice and peace at home and more
importantly for justice and peace in the world.”28 Given the changing
geopolitical scenario and suspicion of interference by external powers in the
internal politics of Nepal in the post-monarchy period, Deputy Prime Minister
and Minister for Foreign Affairs Narayan Kaji Shrestha emphasised the need
to strengthen the UN and NAM so that they could work to ensure “a country’s
[emphasis on small state] sanctity of sovereignty” and uphold its “political
independence”, and “unequivocally resist” any “interference in the internal
affairs of other countries”.29
principles cannot and should not be made subject to political test under
any circumstances.
He also argued that given the global political scenario, “the UN must ensure
that it works for the advancement of the world’s poorest and most vulnerable
countries”.35
India’s suspicions in this regard turned out to be true. The UNMIN failed
to distinguish between the original and duplicate cadres of the Maoists. While
the UNMIN finally verified 19,602 armed cadres of the PLA, Prachanda
disclosed to cadres at the Shaktikhor cantonment on 2 January 2008 that the
party had only 7000-8000 armed cadres in July 2006.47 This suggests that
many of the cadres who surrendered to the UN were not members of the
Maoist army. There was also a gap between the number of armed cadres and
number of weapons deposited before the UNMIN by the CPN (Maoist).
One researcher who is very close to top Maoists leaders disclosed to this author
(in Delhi in October 2012) that a large chunk of sophisticated weapons seized
during the armed struggle period by the Maoists are still with the Prachanda
faction; he also claimed to know where the weapons were stashed. An inventory
of the Maoists’ attacks on the state armoury since 2001 indicates that the
rebels had “seized more than 12 trucks of sophisticated arms and ammunition
… [which] included Israel-made Galil ARM 5.56 mm rifles, 81 mm mortars,
shoulder-propelled grenade launchers, self-loading rifles, light machine guns,
AK-47s, INSAS 5.56 rifles, wireless sets and tons of ammunition”48 in a single
attack on army barracks in Dang district on 23 November 2001. In an interview
to Naya Patrika, Kathmandu, 13 January 2008, Prachanda said, “The day we
captured the barracks in Dang, I was told that the weapons were sufficient to
continue fighting for four years.”49 The Maoists launched eighteen major
attacks on the security forces from February 1996 to March 2005 and seized
an unspecified number of weapons.50 Besides, their poor management of the
former Maoists and their arsenal, the UN officials were also reportedly in
touch with some Terai-based armed groups and crossed over to the Indian
side to interact with them to find evidence about their linkages with India.
They did this without taking formal permission from the Indian government.
The Times of India reported that three officials from UN agencies visited the
Muzaffarpur district of Bihar in September 2007 to hold secret talks with the
Janatantrik Terai Mukti Morcha and the faction led by Jwala Singh. The Indian
Embassy in Kathmandu objected to this visit.51
other countries in economic, social and other spheres on the basis of equality.
Nevertheless, the IC largely followed the foreign policy parameters of the 1990
Constitution.
The objective of its foreign policy as defined by the IC was to “enhance
the dignity of Nepal in the international arena by maintaining the sovereignty,
integrity and independence of the country.”52 Nepal agreed to follow the basic
principles of international law such as:
1. Mutual respect for each other’s territorial integrity and sovereignty;
2. Non-interference in each other’s internal affairs;
3. Respect for mutual equality;
4. Non-aggression and peaceful settlement of disputes; and
5. Cooperation for mutual benefit.53
The Interim Constitution also provided for ratification and approval of
previous Treaties and agreements in Parliament. According to Article 156(2),
The laws to be made pursuant to clause (1) shall, inter alia, require that
the ratification of, accession to, acceptance of or approval of treaty or
agreements on the following subjects be done by a two-thirds majority of
the total number of members of the Legislature-Parliament existing:
(a) peace and friendship;
(b) security and strategic alliance;
(c) the boundaries of Nepal; and
(d) natural resources and the distribution of their uses.
Article 156(4) says that “Notwithstanding anything contained in clauses (1)
and (2), no treaty or agreement shall be concluded that may be detrimental
to the territorial integrity of Nepal.”
From August 2008 to March 2013,54 Nepal has had four governments—
the UCPN (Maoist) and CPN-UML both leading two of each. There has
been a perception in Nepal that India was sympathetic to the governments of
Madhav Kumar Nepal and Baburam Bhattarai. It may be noted that India’s
bids were ignored for most of the mega projects in Nepal during these two
regimes. For example, the machine-readable passport project was given to
France by Madhav Kumar Nepal’s government. Three mega projects—
Lumbini, Pokhara airport and West Seti—went to Chinese companies during
Baburam’s premiership. Also, while Indian companies55 were facing difficulties
in operating in the hydro, garment, hotel and infrastructure sectors in Nepal
on account of the unfavourable business environment there, Chinese
companies started investing in those sectors. All the four governments, instead
32 Strategic Himalayas: Republican Nepal and External Powers
Like the kings in the past, the democratic governments since 2008 too
sought to reduce India’s influence in Nepal, with the Maoists (before the split)
even projecting India as an enemy state in their manifesto. The Maoist demands
mentioned therein are: (i) regulated or closed border, (ii) more trade and transit
facilities, (iii) formation of Greater Nepal, (iv) civilian nuclear units with help
from China, (v) demarcation of borders, and (vi) diversification of trade and
free arms import.
After becoming prime minister and breaking the tradition of visiting India
first, Prachanda visited Beijing to underscore Nepal’s sovereignty and
independence. Although he undertook first official visit to India, his first
foreign trip to Beijing had indicated that the Maoists would prefer China to
India. During his visit to the Nordic countries in March 2009, Prachanda
articulated the view that sustainable peace was not possible in Nepal without
economic prosperity and support from the international community. He
requested Norway to invest in hydropower development and other sectors of
mutual interest. 59 Even after his resignation, the Maoists mobilised
international support to come back to power and projected India as an
interventionist power.
The Maoist policy of equidistance was also followed by the succeeding
coalition government led by Madhav Kumar Nepal of the CPN-UML, but
with some moderation in policies vis-à-vis India. The new prime minister
visited India soon after assuming office. Interestingly, his visit to Beijing in
December 2009 was a high-profile one and the two countries agreed to further
strengthen their relationship. China took the visit very seriously since this
was the first official visit of the Nepalese prime minister to China after it
became a Republic. One of the longest and most detailed joint statements
was issued at the end of that visit. The two countries agreed to “lift their
bilateral relationship to a higher level by establishing a comprehensive
partnership of cooperation”,60 which hinted at taking the relationship to a
higher level from the previously stated “good-neighbourly partnership” to
“closer ties between China and Nepal”. China’s top legislator Wu Bangguo,61
during an interaction with Madhav Nepal clarified that the objective of the
comprehensive partnership was “strategic”. The joint statement further
widened the window of opportunities for China in Nepal.
Madhav Kumar Nepal’s successor Jhalanath Khanal further facilitated
Chinese presence in Nepal. One scholar observed that: “Although both Madhav
Nepal and Prime Minister Khanal belong to the same party [CPN-UML],
the latter, who became prime minister through a secret deal with Maoist
34 Strategic Himalayas: Republican Nepal and External Powers
the impression that such a regime might not take strong action against Tibetan
refugees in Nepal. Since China had limited options of replacing the Baburam
Bhattarai government, it expressed its displeasure by not responding positively
to the Nepal Government’s request to fix a meeting between Bhattarai and
Wen Jiabao on the sidelines of the UN Conference on Sustainable
Development at Rio in June 2012. The message was repeated thereafter when
China reportedly facilitated Netra Bikram Chand’s visits before the split in
the UCPN (Maoist) in June 2012 and during an unofficial visit of Ai
Ping.64 During his visit, surprisingly, Ai Ping did not meet the prime minister.
Although China claimed that it was against the split in the party, surprisingly,
it did not put serious pressure on the Baidya faction to merge with the parent
party during Baidya’s China visit in July 2012. Rather, China acknowledged
that the CPN-Maoist party was a “nationalist force”.65
Since the Maoists’ declared equidistance policy had been a non-starter
because of both the domestic situation in Nepal and the regional power balance
between India and China, the Maoists had moderated their policy by
emphasising on economic and development programmes. They proposed a
‘trilateral cooperation’ between Nepal-India-China. The proposal came initially
as a triangular strategic dialogue from the UCPN (Maoist) chairman,
Prachanda, on 26 October, after his five-day visit for attending the Shanghai
Expo 2010.66 The proposal was reiterated by Prachanda after signing the MoU
with the Asia Pacific Exchange and Cooperation Foundation (APECF) on 7
November 2012 for the Lumbini development project and again during his
official visits to Beijing and New Delhi in April 2013. India was lukewarm
about the proposal even before Prachanda could formally discuss with Indian
decision makers. Sensing India’s negative response, Prachanda modified his
proposal during an interaction with Indian intellectuals at ICWA on 29 April
and said, “trilateral cooperation in various mutual projects in Nepal is very
much possible. It is our vision for the future. Let me also clarify that by no
means do I wish to undermine or replace our centuries-old bilateral relations.”67
In the same meeting, he also emphasised that a prosperous and developed
Nepal can address the security concerns of the region effectively. Although
India did not respond to the proposal, it certainly cannot ignore it, given the
changing geopolitical dynamics in the sub-Himalayan region. India will also
benefit economically in case of joint investments in the hydro and agriculture
sector. Most importantly, it could be a challenging task for Nepal to identify
project areas given the strategic sensitivity of the region.
36 Strategic Himalayas: Republican Nepal and External Powers
Conclusion
It has been observed that small countries have seldom challenged any big
powers without the support of a powerful country. Rather they have utilised
the presence of big powers to their advantage. “These states relied for security
upon their strong neighbours or the balance of power among the mammoth
states. The small states are consumers rather than producers of security.”69 In
the case of Nepal, it has been seen that various regimes have linked their
own insecurity with the country’s sovereignty and territorial integrity to ensure
their own survival. This has created anarchy in society and these leaders have
resorted to blaming Nepal’s neighbours to cover up for their own omissions
and commissions.
A cursory analysis of Nepal’s foreign policy behaviour indicates that Nepal’s
foreign policy has become more neighbourhood centric. Nepal has reiterated
its intention to address security concerns of India and China. While earlier
Nepal was looking West for development aids, it now looks for more
investments from its immediate neighbours. Barring the early 1950s and 60s,
the external power has been less effective in neutralising the influence of China
and India in Nepal. Often it is seen that after national security and interests,
Nepal has given priority to its neighbours security concerns.70 Quoting
Yadunath Khanal, a Nepalese diplomat, one Nepalese scholar has observed
that: “[Nepal’s] foreign policy will break down at the point where either India
or China loses faith in us [Nepal] and concludes that her [Nepal’s] vital national
Foreign Policy Challenges of the Republic of Nepal 37
1. Many scholars do not consider Nepal as a buffer state because they believe that Nepal
is not a neutral country. John Chay and Thomas E. Ross (1986, pp. 25-30) observed
that a “country with buffer state status is the result of two powerful states desiring a
stable or neutral zone located between them. The buffer serves to keep the peace by
functioning as physical barrier between the potential combatants.” Since its formation
Nepal has behaved as a neutral country. It did not take sides during 1962 Sino-India
conflict. It has been adhering to Panchsheel as part of its foreign policy. It does not have
any military alliance with its two neighbouring countries. Nepal was also one of the
founder members of the non-alignment movement. However, geographically, it does
not act as a major physical barrier between the two countries given the long borders
between China and India towards the east and west of Nepal. Since Nepal’s role as a
buffer is limited to separating the two rival powers and it mainly acts as a political and
cultural buffer between India and China in the sub-regional context, it could be regarded
as a ‘semi-buffer’.
2. Scholars have defined small states in terms of geography, economy, population and military
capability. For example, Miriam Fendius Elman (1995) has projected the US as a small
state prior to the mid-1800s. Elman uses the word small in the context of economy and
power. Geographically, demographically and economically in comparison to India and
China, Nepal is a small state but not in comparison with the Maldives and Bhutan. In
terms of military capability and economics it is a small state. Therefore, Nepal is deemed
38 Strategic Himalayas: Republican Nepal and External Powers
as a small state in terms of geography, military and economic size in this study.
3. Jeanne A.K. Hey, (ed.), Small States in World Politics: Explaining Foreign Policy Behavior,
Lynne Rienner Publishers, London, 2003, pp.2-3.
4. Commonwealth Secretariat, The Commonwealth, London, at http://
www.thecommonwealth.org/Internal/180407/ (accessed on 11 July 2013). Also see
Baldur Thorhallsson “Small States in the UN Security Council: Means of Influence?”,
The Hague Journal of Diplomacy, 7 (2012) 135-160, at http://uni.hi.is/baldurt/files/2012/
08/Small-States-UN-Security-Council-by-Thorhallsson.pdf (accessed on 11 July 2013).
Also see “The Position of Small States in the 21st Century”, 2 September 1983, Ministry
for Foreign Affairs of Iceland, at http://www.mfa.is/news-and-publications/nr/1983
(accessed on 3 March 2014).
5. Annette Baker Fox, “The Power of Small States: Diplomacy in World War II,”, in
Christine Ingebritsen et at. (eds), Small States in International Relations, University of
Washington Press, Seattle, 2006, p. 40.
6. Jeanne A. K. Hey, (ed.), Small States in World Politics: Explaining Foreign Policy Behavior,
n.3, p. 1.
7. Miriam Fendius Elman, “The Foreign Policies of Small States: Challenging Neorealism
in its Own Backyard”, British Journal of Political Science, 25, 1995, p. 172.
8. M.G. Partem, “The Buffer System in International Relations”, Journal of Conflict
Resolution, 27 (1), March 1983, p. 5.
9. Ibid.
10. S.D. Muni, India and Nepal: A Changing Relationship, Konark Publishers Pvt Ltd, Delhi,
1992.
11. Barry Buzan and Ole Waever, Regions and Powers: The Structure of International Security,
Cambridge University Press, Cambridge, 2003, p. 46.
12. Prashant Jha, “A Nepali Perspective on International Involvement in Nepal,” in Sebastian
v. Einsiedel, et al. (eds), Nepal in Transition: From People’s War to Fragile Peace, Cambridge
University Press, Cambridge, 2012, p.356.
13. S.D. Muni, Foreign Policy of Nepal, National Publishing House, Delhi, 1973.
14. Lok Raj Baral, “Nepal’s Security Policy and South Asian Regionalism,” Asian Survey, 26
(11), November 1986.
15. S.D. Muni, Foreign Policy of Nepal, n. 13. Also see Sangeeta Thapliyal, “Mutual Security:
The Case of India-Nepal,” Lancer Publishers, New Delhi, 1998, pp.6-8.
16. S.D. Muni, “The Dynamics of Foreign Policy,” in S.D. Muni (ed.), Nepal: Assertive
Monarchy, Chetana Publications, Delhi, 1977.
17. S.D. Muni, India and Nepal: A Changing Relationship, n.10, p.33. See A.S. Bhasin,
Documents on Nepal’s Relations with India and China, 1949-1966, Academic Books Ltd,
Bombay, 1970, pp. 1-22. Also see “A Report on Emerging Challenges of Nepal’s Foreign
Policy”, National Level Seminars (Report), Institute of Foreign Affairs, Kathmandu, June
2012, p.29.
18. S.D. Muni, Foreign Policy of Nepal, n. 13.
19. S.D. Muni, India and Nepal: A Changing Relationship, n.10, p. 24.
20. Lok Raj Baral, Oppositional Politics in Nepal, Himal Books, Kathmandu, 2006, p. 188.
Also see Leo E. Rose, Nepal: Strategy for Survival, Mandala Book Point, Kathmandu,
1971 (reprint 2010), p. 235.
21. S.D. Muni, India and Nepal: A Changing Relationship, n. 10, p. 71.
Foreign Policy Challenges of the Republic of Nepal 39
22. The UCPN (Maoist) party until its split on 18 June 2012, identified India as its ‘principal
enemy’. While the new faction called the CPN-Maoist (Baidya) has identified India as
its ‘principal enemy’, the UCPN (Maoist) changed its political line by not branding
India as its enemy in the Hetauda Convention in February 2013. For details see “CPN-
Maoist names new principal enemy” Republica, Kathmandu, 1 November 2012, at http:/
/www.myrepublica.com/portal/index.php?action=news_details&news_ id=44215
(accessed on 13 July 2013). For details on political debate see Prashant Jha, Editorial:
“Maoists in Nepal: the differences within,” The Hindu, 6 December 2010. Also see
Nihar Nayak, “Maoist’s New Political Line and Challenges,” IDSA Comment, 18
February 2013.
23. Author’s interaction with Baburam Bhattarai in Kathmandu in June 2009.
24. Muchkund Dubey, India’s Foreign Policy: Coping with the Changing World, Pearson, Delhi,
2013, pp. 58-59.
25. Ibid., p. 59.
26. Kirti Nidhi Bista, “Getting it right”, Republica, Kathmandu, 17 September 2012, at
http://www.myrepublica.com/portal/index.php?action=news_details&news_id=41841
(accessed on 13 July 2013).
27. See “Speeches of Heads of the Nepalese Delegation to the Non-Aligned Movement
(1961-2009)”, Institute of Foreign Affairs, Kathmandu, 2011, pp. 06-16.
28. “In Iran‚ PM reiterates Nepal’s loyalty to NAM principles”, The Himalayan Times, 31
August 2012.
29. “Nepal for stronger UN and NAM: DPM”, ekantipur, 30 August 2012, at http://
www.ekantipur.com/the-kathmandu-post/2012/08/29/nation/nepal-for-stronger-un-and-
nam-dpm/238980.html (accessed on 13 July 2013).
30. Deputy Prime Minister and Foreign Minister Narayan Kaji Shrestha’s keynote address
at the conference on “Institutionalisation of the Foreign Policy of Nepal” on 17 August
2012 in Kathmandu. For details visit at http://ifa.org.np/seminar-on-institutionalization-
of-nepals-foreign-policy/ (accessed on 12 February 2014).
31. “BIMSTEC,” Ministry of Foreign Affairs, Government of Nepal, at http://
www.mofa.gov.np/en/bimstec-170.html (accessed on 12 July 2013).
32. “Bimstec members partly solve ROO issue,” The Financial Express, Delhi, 6 October
2005, at http://www.financialexpress.com/news/story/150379 (accessed on 12 July 2013).
33. S.D. Muni, India and Nepal: A Changing Relationship, n. 10, p. 33.
34. Ibid. Also see A.S. Bhasin, Documents on Nepal’s Relations with India and China, 1949-
66, Academic Books, Bombay,1970, pp.1-22.
35. Deputy Prime Minister and Foreign Minister Narayan Kaji Shrestha’s keynote address
at the conference on “Institutionalisation of the Foreign Policy of Nepal”, no. 30.
36. “Nepal and the United Nations (1955-2012),” Ministry of Foreign Affairs, Government
of Nepal.
37. “DPM Shrestha calls for international support for LDCs”, The Himalayan Times, 28
September 2012.
38. Nepal and the United Nations (1955-2012), n. 36.
39. Sita Shrestha, “Nepal in the United Nations,” in S.D. Muni (ed.), Nepal: Assertive
Monarchy, Chetana Publications, New Delhi, 1977, p. 174.
40. Recognising the need of landlocked countries for adequate transit facilities in promoting
international trade, the General Assembly on 20 February 1957 invited the Governments
40 Strategic Himalayas: Republican Nepal and External Powers
of Member states to give full recognition to the needs of landlocked Member states in
the matter of transit trade. For details see “Land-locked countries and the expansion of
international trade”, The General Assembly, UN, 1028 (XI), 20 February 1957.
41. Sita Shrestha, “Nepal in the United Nations,” n. 39, pp. 172-03.
42. Until 1971, Nepal tried to use East Pakistan as a transit route as an alternative to India.
43. “DPM addresses LLDCs meeting, holds talks with world leaders”, Republica, 27
September 2012. Also see Deputy Prime Minister and Foreign Minister Narayan Kaji
Shrestha’s statement at the 10th Annual Ministerial meeting of the Landlocked
Developing Countries in September 2011, at http://www.unohrlls.org/UserFiles/File/
LLDC%20Documents/10th%20ministerial %20meeting%202011/nepal.pdf (accessed
on 13 July 2013).
44. On 24 July 2006, Prachanda wrote to the UN Secretary-General that “the letter [of 2
July 2006] was written and sent unilaterally and secretively without any consultation
with us [the Maoists] in utter violation of the spirit of ongoing negotiation between the
Government of Nepal and the C.P.N. (Maoist).” For details see “CPN-Maoist Chairman
Prachanda’s Letter to the UN Secretary-General”, South Asia Terrorism Portal, at http:/
/www.satp.org/satporgtp/countries/nepal/document/papers/cpn_maoist.htm (accessed on
12 February 2014).
45. Author’s interaction with a senior official of India’s Ministry for External Affairs in Delhi
in September 2012.
46. Ibid.
47. On 11 July 2006, the Maoists claimed that they had 36,000 “real” fighters. See Prachanda’s
Shaktikhor speech on http://www.youtube.com/watch?v=6EoQYZ2oa6M (source:
Nepalnews.com, accessed on 28 February 2014).
48. Anirban Roy, Prachanda: The Unknown Revolutionary, Mandala Book Point, Kathmandu,
2008, p. 71.
49. Ibid., p. 72.
50. Details of the attacks are available in Nanda Kishor Pun alias Pasang, Red Strides of the
History, Agnipariksha Janaprakashan Griha, Kathmandu, 2008. Pasang was chief of the
People’s Liberation Army (PLA), the military wing of the CPN (Maoist).
51. “India sees red over UN officials’ meet with Nepal Maoists”, The Times of India, 7
November 2007, at http://articles.timesofindia.indiatimes.com/2007-11-09/india/
27989022_1_nepal-maoists-kathmandu-janatantrik-terai-mukti-morcha (accessed on 4
December 2012).
52. Ministry of Foreign Affairs, Government of Nepal, at http://www.mofa.gov.np/en/nepals-
foreign-policy-102.html (accessed on 12 February 2014).
53. Ibid.
54. Baburam Bhattarai, elected in August 2011, was the fourth Prime Minister of Nepal
after the Constituent Assembly elections.
55. The list of Indian joint ventures or companies, whose business was affected adversely in
Nepal are: Surya Nepal (Garment), Nepal Lever, Manipal Medical, GMR (hydro), ITC
Surya, Satluj Jal Vidyut Nigam (holding expansion plan) and Soaltee Hotels Limited.
56. C.P. Gajurel, “No Special relation between Nepal and India,” The Telegraph Weekly,
Kathmandu, 25 December 2008, at http://www.telegraphnepal.com/backup/telegraph/
news_det.php?news_id=4576 (accessed on 16 July 2013). The paper was formally
submitted at the Institute of Foreign Affairs-FES (Friedrich Ebert Stiftung, Germany)
Foreign Policy Challenges of the Republic of Nepal 41
70. Yuba Nath Lamsal, Editorial: “Nepal’s Foreign Policy In 21st Century,” The Rising Nepal,
Kathmandu, date of Publication is not available, see at http://www.gorkhapatra.org.np/
rising.detail.php?article_id=57960&cat_id=7 (accessed on 13 July 2013). Also see Jay
Raj Acharya, “Foreign policy Priorities of New Nepal”, The Telegraph Weekly, Kathmandu,
7 January 2009, http://www.telegraphnepal.com/backup/telegraph/news_det.php?news_
id=4645 (accessed on 28 February 2014).
71. Shambhu Ram Simkhada, “Nepal’s National Interest and Foreign Policy,” Major Policy
Issues, Nepal Constitution Foundation, Kathmandu, see at http://www.ncf.org.np/
upload/files/507_en_Nepals%20national%20interest%20&%20foreign%20policy.pdf
(accessed on 13 July 2013). Nepal Constitution Foundation is an independent, non-
governmental, not-for-profit civil society organisation based in Kathmandu.
CHAPTER 3
border with Nepal. Therefore, “[t]he political instability and adverse security
situation in Nepal [has been] a cause of deep concern to India.”4 There is
evidence that anti-India elements have taken advantage of the chronic political
instability and poor governance in Nepal.
The Himalayas as a natural frontier may have become less relevant in an
era of nuclear weapons, globalisation, technology and the improvement in
the Sino-Indian relationship in recent years. The Chinese have also shattered
the myth of the Himalayas as a natural barrier by extending the Qinghai–
Tibet railway line till Lhasa. Beijing plans to extend it to Nepal in the near
future and later further into the South Asian hinterland.5 Moreover, in the
post-monarchy period, Nepal wants to become a transit country rather than
a semi-buffer between China and India. It also wants to benefit from the
economic growth taking place in its neighbourhood.
Despite this, Nepal will undoubtedly continue to be of strategic importance
for India for various reasons. Nepal is the only country in South Asia whose
citizens are given national treatment in India. It also has topographical
similarities with the northern borders of India. Therefore, India’s “heartland
is vulnerable to Chinese attacks during a conflict situation. The Chinese Army
can negotiate Himalayan barriers in Nepal without much resistance”6 and it
would have a clear advantage by occupying strategic heights in the mountainous
terrain. The Rasuwagadhi-Syabrubesi-Kathmandu-Birgunj road could be the
shortest route across Nepalese territory between India and China. According
to Nepal government sources, technically, the Syabrubesi-Rasuwagadhi road
is “more reliable than the Kodari Highway”.7 The Syabrubesi-Rasuwagadi
highway runs at a height of around 6,000 ft across the Himalayan range and
is almost unaffected by snow and landslides. This route could emerge as an
alternative to the Arniko Highway, which is narrow, vulnerable to landsides
and snows for ferrying large oil tankers and containers. Once this road is
opened, Nepal will be able to transport gas and petroleum products from
China through this route.8
India has built physical defences all along the India-China border but it
remains vulnerable along Nepal’s border with China. Moreover, given the
Chinese security build-up in Tibet over the last 15 years, India’s vulnerability
has increased even further. China has vastly improved the roads and improved
military infrastructure on its side of the border in Tibet. It has reportedly
deployed nuclear-capable intermediate missiles in the area and around 300,000
troops across the Tibetan plateau.9 Apart from the huge road connectivity to
TAR, China reportedly set up 23 airfields in TAR exclusively for military
Protecting the Sphere of Influence 45
instrument of Indian influence. The Treaty has been politicised over time to
serve the political interest of the particular constituency that draws it support
from the anti-India sentiments in Nepal.
With the introduction of multi-party democracy in Nepal in 1990, other
issues such as border encroachment and hydro projects, etc, were taken up by
some political parties. In 1994, for example, the CPN-UML campaigned
vigorously on these issues. The 40 demands of the CPN (Maoist) in 1995
also focused on the 1950 Treaty and aroused intense anti-India feelings during
the People’s War. However, except for King Mahendra, no other monarch,
raised this issue with India. During the constitutional monarchy period, the
Nepalese Foreign Minister Kamal Thapa of the royalist Rashtriya Prajatantra
Party (RPP)—a coalition partner of the Nepali Congress which led the
government—visited India in August 1998 with a ‘non-paper’, which for the
first time, made some suggestions for its revision. The CPN (Maoist), in its
manifesto for the 2008 Constituent Assembly (CA) elections, promised to
abrogate the Treaty and maintain equal distance between India and China.
The CPN-UML also promised to review ‘all unequal Treaties’, while the NC
manifesto remained silent on the matter.12 Yet, even after India expressed its
willingness to revise the Treaty, there has been a lack of political consensus in
Nepal over the issue and no alternative or specific proposal has been given by
Nepal regarding the provisions they want to revise. The politicisation of this
Treaty is also evident from the fact that no political party wants to abrogate
it.13
In September 2008 India and Nepal agreed to form a high-level committee
headed by foreign secretaries to examine the Treaty and suggest possible
revisions. There is a view in India, however, that this issue is being needlessly
hyped. For instance, former Indian ambassador to Nepal Deb Mukherjee in
an interview to The Telegraph in May 2008 said:
This demand has been raised several times in the past and we [India] have
said, fair enough, renegotiate or restructure. In fact, Clause 10 of the treaty
clearly says it can be abrogated by either side on a year’s notice. And I
remember that during the Foreign Secretary-level talks in 2001, we had
reminded the Nepali delegation of the clause and said, why don’t you do
it? We should be prepared to discuss all options.14
India’s former Foreign Secretary Shyam Saran also dismissed the contention
of Prachanda that the Treaty was an ‘unequal pact’, and pointed out that under
the pact “Nepali citizens enjoy special privileges in India”.15 The issue figured
prominently in the joint statement during the visit of Prachanda to New Delhi
Protecting the Sphere of Influence 47
acquiring power. Lok Raj Baral has observed that these ‘strained relations’
highlighted in the name of ‘nationalism’ have been useful for regime continuity.
Even so, Nepal’s rulers have never lost sight of the geopolitical reality.19
Nepal feels vulnerable and insecure because it is landlocked, and its sense
of insecurity is, ironically, fuelled by the very cultural affinities that are also
touted as the greatest asset of the bilateral relationship. Trailokya Raj Aryal
argues that: “With so many similarities between Nepal and India, naturally,
Nepal had no other options but to contrast itself with India.”20 There is a
tendency to define Nepalese identity as distinctly different from that of India.
In Nepal, it is fashionable to be anti-India, especially in Kathmandu, as a
mark of nationalism and patriotism. In fact, some political parties in Nepal
turn anti-India when they are in the opposition, and accuse the government
of being guided by ‘foreign elements’. In Nepal, foreign elements indirectly
implies India. But once in power, they change their position.21 Many of the
political parties whether in power or in opposition seek India’s indulgence to
retain or gain power.
The monarchy used anti-Indianism as a rallying point, both to create a
popular support base for itself and to generate a sense of national unity amongst
the people. The monarchy viewed India’s latent support for democracy with
suspicion, even though it benefited immensely from India’s support to the
democratic movements in early 1950s, as it led to the removal of the Ranas.
Unfortunately, later, King Mahendra and his successors thought that India
was playing the ‘democracy card’ in Nepal to protect its security interests. On
several occasions, both the right and left-wing political forces in Nepal (the
royalists, communists and the Maoists) have promoted anti-Indianism for
their own political benefit. Since the mid-1950s, they have been frequently
using the 1950 Treaty, the Koshi and Gandaki Treaties, and since 1990s the
Mahakali Treaty—to foment anti-India sentiments. Similarly, the alleged border
encroachments by India, poor treatment of Nepalese workers in India and
unresolved trade and transit issues have also been used for the purpose of
fomenting anti-Indianism. Some Kathmandu-based intellectuals and journalists
too indulge in anti-India rhetoric to take benefits from other countries known
for their adversarial stance towards India.22
the elites in Kathmandu, it has since become more visible in rural areas due
to the constant anti-India propaganda by the Maoists and especially after the
resignation of Prachanda as prime minister in May 2009. Some Nepalese Army
officers and royalists even believe that India is responsible for the abolition of
the monarchy and the rise of the Maoists. Senior army officers argue that
India’s refusal to supply arms in 2005 after the royal coup indirectly
strengthened the Maoists. The Maoists on their part accused India of not
trusting them and also hold it responsible for the ongoing political instability
in Nepal and the delay in the drafting of the Constitution under the first
CA. They believe that the bureaucrats in South Block lack a clear
understanding of Nepalese politics. Interestingly, although some leaders in
the NC and the CPN-UML share similar feelings, they do not want to
antagonise India by going public on the issue.
There has been a general perception that India could not accept the
emergence of the CPN (Maoist) as the largest party. Some other sections argue
that India tried to cultivate the Maoists just after the CA elections but was
betrayed by them.23 After Prachanda’s resignation the pro-Maoist political
pundits were of the view that India was not comfortable with Maoists as the
largest political party given the ideological differences between them. The
Maoists accuse India of interfering in the internal affairs of Nepal and
encouraging encroachments into Nepalese territory along the borders. They
have also tried to convince the people that India does not want political stability
in Nepal.24 They say that India played a role in the pulling down of the Maoists
government headed by Prachanda. It is often said that the Madhesi parties
reportedly supported the Madhav Kumar Nepal government (that succeeded
Prachanda’s in May 2009) at India’s behest. It was also alleged during this
period that India was against the integration process of the Maoist combatants
into the security forces. Such arguments completely disregard the fact that
major political parties like the NC, the CPN-UML, and the Nepalese Army
were also opposed to integration despite inter-party agreements. It would be
worth mentioning that India was blamed for the May 2009 developments
which led to various anti-India demonstrations by the Maoists. This damaged
India’s reputation at the international level. Interestingly, Prachanda confessed
later on 7 August 2013 that the “[Former Nepalese Army Chief General]
Katawal saga was the result of his immature working style after taking [over]
the reins of government. Obviously, it was our [the Maoists] mistake to take
action against the Army Chief who was due to retire in three months.”25
The Maoists’ resolutions against India and their ploy to take advantage of
PLA cadres’ integration into the Nepalese Army for capturing state power in
50 Strategic Himalayas: Republican Nepal and External Powers
also failed to convince the CNP-Maoist and other political parties for discussing
their opposition to the elections under the CJ-led government.
At the same time, certain sections in Nepal believe that India should play
a constructive role in the peace and Constitution-drafting process rather than
being involved in petty politics. The political forces in Nepal also do not rule
out the importance and necessity of India for Nepal’s political stability and
economic prosperity—in fact, every political party wants India’s support for
its own benefit.34 Ramesh Nath Pandey, former foreign minister of Nepal,
observed: “India has very good relationship with many leaders of Nepal cutting
across the party line. But it is yet to introduce a comprehensive policy towards
Nepal focusing on economic engagements.”35 Therefore, there is a strong view
in Nepal that India needs to take advantage of its leverage in the country and
help to forge consensus on government formation and critical constitutional
matters.
The Nepalese want India to accept the changes in the demographic and
economic profile of Nepal over the last decade. With remittances from foreign
countries including the Gulf, Nepal now has an expanding middle class and
is less dependent on India for employment. The Nepalese middle class has
undergone sea change over the years because of exposure to the outside world,
access to knowledge, and information technology. They have few personal or
familial relationships across the border, unlike the past when only the feudal
elites and the poorer Madhesis in the southern plains used to have such
relations.
Madhes Loktantrik Party (TMLP) to weaken us. In fact, one of the reasons
the pre-election alliance did not happen was because India was trying to
boost up TMLP.40
One senior leader of the Sadbhavana Party told this author that: “Eighty
per cent of India’s aid is being utilised in the hilly region.” The Madhesis have
also accused India of engineering divisions in the MJF in June 2009. Keshav
Mainali, president of the Chure Bhawar Ekta Samaj, observed that: “It is
only…when India wants controversial issues to erupt [it uses]…Madhesh [to
its advantage]….India’s stand on the Nepalese Madhesi issue is self-
contradict[ory].”41 There is already a debate in the Terai region that the Madhesi
groups have failed to take any concrete decision about their future because of
India’s support to the liberal democratic parties, who have been opposing
ethnicity-based federalism.42 One scholar observed that:
Even the Madhesi political and rebel leaders are not happy with Indian
intervention because such intervention can hurt their own political future
in their constituencies. Some consider Madhes issue as a solely internal
issue/conflict of Nepal because there is nothing to do with a bilateral
matter.43
Given the rigid positions taken by the major political parties in Nepal
over the demands raised by the Madhesi groups, the region may witness some
serious ethnic unrest—the pointers are already there. According to Keshav
Mainali:
Some scholars identify pre-symptoms of civil ethnic war in a case like
this. Already, there is serious aggression in Madhesh against any people of
hill origin. Pahadi officials are not able to work in Madhesh. Most of
them are being transferred from the region. Some of them have already
been killed, tortured, displaced, their houses burnt. They are no longer
safe there and are treated as enemies of Madhesh and Madheshi.44
It is estimated that around “300 people have lost their lives in the (Madhesi-
Pahadi) conflict”45 since 2006. Given the cultural and familial linkages between
the Madhesis and the Indians in the region, the absence of a clear Indian
response to the suffering of Madhesis could destabilise governments in New
Delhi and at provincial levels, especially in Uttar Pradesh (UP) and Bihar.
Upendra Yadav has said on record:
We are people of Indian origin, but remember we are Madhesis and
Nepalis. This is our struggle. India can give us moral support, which is
not forthcoming at the moment. The people of Bihar and UP are with
us, but the Government of India is not taking any notice. If the situation
Protecting the Sphere of Influence 57
both the skilled and unskilled labourers of Nepal and is ranked second in the
remittance contributor countries/destinations for Nepal. There are around
40,000 Gorkhas serving in the Indian Army and another 5000 in the
paramilitary forces of India. There are also 150,000 pensioners, including their
dependents. Their pay and pensions make a significant contribution to the
Nepalese economy. A GEFONT-Note prepared by Umesh Upadhyaya, entitled
“Issue of Protection of Migrant Workers and their Families”, states that there
are around seven million Nepalese workers in India. The All India Migrant
Nepali Association estimates that most of them have merged into the
population of India while about 50 per cent of them retain their official
Nepalese citizenship.49
India is the biggest and most easily accessible market for Nepalese finished
industrial goods and is the cheapest source of raw material for Nepalese
industries. Table 3.1 shows that India still remains the largest trade partner of
Nepal with around US$2 billion worth of business. At the same time, it cannot
be denied that India is gradually being overtaken by China in the Nepalese
economy. The prolonged political instability and growing anti-India sentiment
in Nepal has affected the bilateral economic cooperation and has shrunk the
inflow of FDI from India (see Table 3.2). In fact, in the last one decade, India
has been struggling to uphold its old position in the major sectors.
Infrastructure
During 2004-2013, India provided assistance worth NPR 118 crore to Nepal
for laying the 904 km optical fiber cable along the East-West Highway. It
has built 807 kms out of the 1024 km of the East–West Highway. Twenty-
two bridges were constructed by India on the Kohalpur-Mahakali section of
60 Strategic Himalayas: Republican Nepal and External Powers
the East–West Highway. India supported construction of eight roads and one
bridge at a cost of NPR 32.83 crore. It also funded the upgrading of the road
from Dakshanikali (Kathmandu) to Kulekhani (Makwanpur) and Gaur
Municipality to Sukhdeo Chowk in Rautahat district at a cost of approximately
NPR 25 crore. In the Terai region, India proposed to construct 19 link/postal
roads. It had also been providing assistance for electrification, provision of
drinking water, strengthening of cross-border linkages, cross-border railway
links, flood control and preservation of the unique cultural heritage of Nepal.52
Mumbai attack, disclosed during interrogation that funds for the attack were
supplied by Nepal-based traders. Based on that information, the police
arrested Aslam Ansari (Pakistani) and Nasim Ansari (Nepali) in the border
town of Birgunj in December 2008.62 The LeT generates half of its annual
budget of about $10 million63 from the illegal trade across the India-Nepal
border.64
Other separatist movements in India such as secessionist outfits from
Punjab during the 1980s also used Nepalese territory as shelter zone and for
training camps. In the late 1980s, these outfits also used this soft border to
infiltrate into India as the border between Pakistan and India is now fenced.
Since 2003 many Northeast-based insurgent outfits like the ULFA and the
NDFB too have been crossing over to Nepal. According to an Indian
intelligence report, the ULFA, the Kamtapur Liberation Organisation (KLO)
and NDFB had linked up with the CPN (Maoist) to work out a joint strategy
for operations in the region.65
The Nepalese Maoists’ links with Indian Maoists were a major concern
for India until the former joined the peace process in 2006. The same
concerns have re-emerged after the split of the UCPN (Maoist) in June 2012
and Mohan Baidya faction openly declared its ideological linkage with the
Indian Maoists. They are members of Coordination Committee of Maoist
Parties and Organisations of South Asia (CCOMPOSA) and have vowed to
fight jointly against “Indian expansionism” in the region.
The links between these outfits go back to 1995, when some senior
leaders of the CPN (Maoist) visited Maoist-affected areas of India. Prachanda
acknowledged in 2000 that since Indian Maoist groups such as the PW, the
MCC and others had experience of an armed struggle, “we made some
investigation of [areas] in Bihar in India. We went to Andhra Pradesh to look
at the struggle there and we tried to understand the practical situation and
practical problems of armed struggle.”66 As the relationship deepened, the
Nepalese Maoists and the PW formed the “India-Nepal Border Regional
Committee to coordinate their activities in areas along the India-Nepal border
in Bihar”.67 They were also reportedly acquiring arms through the rebel
groups active in Northeast India. The links between Indian and Nepalese
Maoists were reduced from strategic level to ideological level after the Nepalese
Maoists joined mainstream politics. Despite that Mohan Baidya faction of
the UCPN (Maoist) had been in touch with Indian Maoists.68
64 Strategic Himalayas: Republican Nepal and External Powers
Trafficking
The border has become a major hub for trafficking in fake currency, small
arms, narcotics and humans. The Indian Intelligence Bureau (IB) has estimated
that around INR 1690 billion worth of fake currency is in circulation all
over India.69 A large part of the money used to fund the terror operation in
Mumbai in November 2008 was obtained through the fake currency and
hawala channels. Sabahuddin, an accused in the Mumbai attack, who was
also the chief of operations for the LeT in Nepal, confirmed that it takes just
INR 5000 to cross over from Nepal into India.70 Although the border is open
and does not require any documents for common people to cross over,
sometimes suspicious and anti-national elements have to find backdoor
channels for safer entry. Some instances of pumping of fake Indian currency
are given below.
• 7 May 2013: Police arrested Shaikh Muhammad Fukran, a Pakistani
national, with fake Indian currency notes from Tribhuvan
International Airport. He had arrived from Qatar on a Qatar Airlines
flight.
• 15 April 2013: Police arrested Julekha Bano, a Pakistani woman and
her son Denish Essa, with fake Indian currency notes worth 4.7
million at Tribhuvan International Airport.
• 10 August 2010: Nepal Police arrested a Pakistani national,
Muhammad Farooq, with fake Indian currency notes worth of 2.5
million.
• 9 July 2010: Nepal Police arrested three men, including an Indian
and a Bangladeshi with counterfeit currency.
• 26 May 2010: Pakistani national Mohammed Jamil from Rawalpindi
arrested from Tribhuvan International Airport with INR 1.55 million
worth of counterfeit Indian currency notes. He had arrived in
Kathmandu from Bangladesh.
• 15 March 2010: A 55-year-old Pakistani woman was arrested at the
Tribhuvan International Airport with fake Indian currency worth INR
3 million.
• 1 September 2009: The Madhya Pradesh police arrested two
Nepalese—Rajesh Gupta and Ateeq Ahmad—with fake Indian
currency notes. They disclosed that the kingpin of the racket was
Nepal’s former crown prince, Paras, and the son of a former Nepalese
minister, Salim Mian Ansari.
• 14 April 2008: A Pakistani diplomat, Naushad Alam Khan, was
caught with fake Indian currency notes.71
Protecting the Sphere of Influence 65
Illegal Trade
Both India and Nepal lose huge amounts of revenue due to illegal trade
through the open border. The leakage of transit goods imported by Nepalese
traders from third country through Indian territory is another concern for
India. The trading items depend on demand and supply, subsidies, high
transaction costs of official trade and tariff differentials. Gold, sugar, rice, motor
vehicle parts and fertiliser are among the main items being smuggled to Nepal
from India. According to an Indian Council for Research on International
Economic Relations (ICRIER) document, “In 1990, informal exports from
Nepal to India were US$626 million. In 2000-01, the estimates of informal
trade show[ed] a two-way informal trade flow of $408 million.”73 A study
conducted by the Nepal Council for Development Research (NCDR) suggests
that Nepal’s informal trade of agricultural commodities with India stands at
around NPR 65 billion—more than 21 per cent of the total formal trade.
The study estimated that informal imports of agro products from India are
worth over NPR 54.75 billion a year.74
India’s then External Affairs Minister Pranab Mukherjee during his visit to
Kathmandu in November 2008. Interestingly, the Maoist-led government in
Kathmandu did not contradict this. The issue regained prominence only after
Prachanda’s resignation. The Maoists have also accused Indian security forces
of encroaching on Nepalese territory in Dang district. However, such
allegations are more political in nature and are raised by some political parties
only to score points. It can be noted here that no concrete measures were
taken by the Maoists when in power.
There are similar concerns on the Indian side also. Some groups in West
Bengal have begun to demand the abrogation of the 1950 Treaty with Nepal
in order to restrict movement of people from Nepal into Darjeeling and Siliguri.
They want a passport-visa system and that citizenship rights should be granted
only to those Nepalese who had entered India before the Treaty was signed.
It is their belief that if the border is not regulated, new Nepalese migrants
might outnumber the original inhabitants, and lead to a serious law-and-order
problem in the hills and plains of Darjeeling district. Some sections of the
Indian establishment have expressed concerns regarding the ‘Greater Nepal’
demand76 in the Indian states bordering Nepal. Although these demands are
not likely to escalate into a full-fledged separatist movement, anti-India agencies
may use these groups for creating trouble in the border region.
The Nepalese, on the other hand, apprehend that India may capture
Nepalese territory. Their insecurities arise from vast differences in territory
size, population, military and economic strength of the two countries. The
Pahadis of Nepal believe that the demand for Madhesh Pradesh is supported
by India, and Nepal in the future may have to deal with a situation that Sikkim
faced in 1974. Some, therefore, believe that any such Indian designs can be
prevented only by closing the border, and by making changes in the 1950 Treaty.
According to the Treaty, neither country can unilaterally impose
restrictions on the free movement of peoples across the border. However,
Nepalese analysts allege that India has unilaterally imposed restrictions on
Nepal in the past and that India has deliberately kept Nepal dependent and
created insurmountable difficulties in the way of implementing a market-
based development policy because it was not ideologically palatable to India
between 1950–1990. Objectively, however, India has not violated the Treaty
at any time. India did impose trade restrictions in 1989 when Nepal bought
arms and ammunition from China in 1988 and restricted Nepalese trade to
two points on the border as per international law and closed 20 other trading
points. But, India never restricted civilian movement in the border areas.77
Protecting the Sphere of Influence 67
Conclusion
The growing anti-India sentiments in Nepal indicate that India has to some
extent failed to manage the public perception in Nepal. There is also a decline
in India’s economic engagement with Nepal vis-à-vis China. Existing
controversial Treaties, border disputes, political resistance to Indian hydro
68 Strategic Himalayas: Republican Nepal and External Powers
projects, attack on India’s business houses, trade and transit issues, perceived
Indian interference in internal affairs of Nepal, etc., are major irritants in India-
Nepal relations. India believes that the contentious issues can be better resolved
by a popular and strong government in Kathmandu. Therefore, there is a
need for sustained multi-dimensional engagement with Nepal by taking into
account the political transition there and adapt its Nepal policy to the new
realities in the sub-Himalayan region. At the same time, India also needs to
enhance its assistance to Nepal with greater focus on socio-economic and
development programmes, and promote unhindered trade and investment.
*
NOTES
the Government of Nepal was signed on 31 July 1950, says “This Treaty shall remain
in force until it is terminated by either party by giving one year’s notice.”
14. “Nepal to Delhi: Junk sentiment and special ties,” The Telegraph, Kolkata, 3 May 2008.
15. “India ready to renegotiate 1950 treaty with Nepal”, Oneindia News, 6 May 2008, at
http://news.oneindia.in/2008/05/06/india-ready-to-renegotiate-1950-treaty-with-nepal-
1210072316.html (accessed on 8 August 2013).
16. K.V. Rajan, “Should the 1950 treaty be scrapped?”, The Hindu, 3 May 2008, at http:/
/www.thehindu.com/2008/05/03/stories/2008050352481000.htm (accessed on 8 August
2013).
17. “Nepal won’t jeopardise any genuine Indian interest”, former Nepal Prime Minister
Baburam Bhattarai’s interview to Prashant Jha, The Hindu, 3 September 2011, at http:/
/www.thehindu.com/opinion/interview/article2419048.ece (accessed on 8 August 2013).
18. K. Majumdar, “Indo-Nepal Relations: The Past, The Present and The Future”, in Lok
Raj Baral (ed.), Looking to the Future: Indo-Nepal Relations in Perspective, Anmol, New
Delhi, 1996, p. 31.
19. Lok Raj Baral (ed.), Looking to the Future: Indo-Nepal Relations in Perspective, Anmol,
New Delhi, 1996, p. 7.
20. Trailokya Raj Aryal writes that Nepalese politicians do fuel “anti-Indianism to safeguard
our [Nepal’s] own interests”. For details see “Rethinking anti-Indianism in Nepal”,
Republica, Kathmandu, 25 April 2010, at http://www.myrepublica.com/portal/
index.php?action=news_details&news_id=17877 (accessed on 8 August 2013).
21. Dipendra Jha, “Uprising ahead”, Republica, 13 May 2013.
22. This view was expressed during the author’s interview with some Nepalese scholars in
Kathmandu in June 2011 and November 2013.
23. Author’s interaction with Pradeep Giri, central committee member of the Nepali Congress
in Kathmandu in June 2011. Also see Prashant Jha, “A Nepali Perspective on International
Involvement in Nepal,” in Sebastian v. Einsiedel, et al. (eds), Nepal in Transition: From
People’s War to Fragile Peace, Cambridge University Press, Cambridge, 2012, pp.337-
339.
24. The UCPN (Maoist) had sent its senior leaders in January 2010 to the border points
allegedly encroached upon by India to foment anti-India sentiments. Before that the
party on 22 December 2009, had declared months-long protests against India’s
interference in Nepal and encroachment of Nepal’s territory. For details see “UCPN-
Maoist announces fourth phase of protests”, The Rising Nepal (The Gorkha Patra in
Nepali), Kathmandu, 22 December 2009, at http://www.gorkhapatra.org.np/
detail.php?article_id=28513&cat_id=4 (accessed on 1 August 2013). Also see “India
expresses displeasure over Maoists’ anti-India campaign”, Asian Tribune, 19 January 2010,
at http://www.asiantribune.com/news/2010/01/19/india-expresses-displeasure-over-
maoists%E2%80%99-anti-india-campaign (accessed on 1 August 2013).
25. For details see “Dahal concedes his three mistakes,” ekantipur, 7 August 2013, at http:/
/www.ekantipur.com/2013/08/07/top-story/dahal-concedes-his-three-mistakes/
376050.html (accessed on 7 August 2013). UCPN (Maoist) Chairman, Prachanda said
this at a programme organised in Pokhara, Nepal.
26. “Nepal parliament to look into Indian Embassy ‘threat’”, The Times of India, 9 August
2010. Also see Siddharth Varadarajan, “The danger in India’s Nepal policy”, The Hindu,
16 August 2010.
70 Strategic Himalayas: Republican Nepal and External Powers
27. List of high level visits between Nepal and India during 2006-2012:
Nepal
• Prime Minister G.P. Koirala visited India in 2006. A comprehensive economic
package of INR 1000 crore was announced during this visit.
• Prime Minister Pushpa Kamal Dahal visited India from 14-17 September 2008.
India agreed to implement the Naumure hydroelectric project on Rapti river, besides
providing INR 20 crore assistance for Koshi breach relief.
• Prime Minister Madhav Kumar Nepal visited India from 18–22 August 2009. India
allowed the Visakhapatnam port to be used for movement of transit traffic to and
from Nepal. He assured India that it would not allow Nepalese territory to be used
for any activity against India, which was reciprocated by India.
• President Ram Baran Yadav visited India between 15-18 February 2010 during
which four MoUs/agreements were signed.
• Prime Minister Baburam Bhattarai visited India from 20-23 October 2011. A
number of agreements, including BIPPA were signed.
• President Ram Baran Yadav visited India between 24-28 December 2012.
India
• India’s Minister of External Affairs, S.M. Krishna, visited Nepal from 15–17 January
2010.
• S.M. Krishna visited Kathmandu in April 2011 and raised concerns over the
deteriorating law-and-order situation and its possible repercussions in Indian
investments in Nepal.
• Finance Minister Pranab Mukherjee visited Kathmandu on 27 November 2011
and signed the Double Taxation Avoidance Agreement (DTAA).
28. In the UPA-I, the Communists were part of the coalition, while the UPA-II was formed
without them.
29. Author’s interaction with Prashant Jha in Kathmandu on 29 June 2009.
30. Other bilateral developments in 2012:
• 6 January 2012: India decided not to pursue the demand for placing sky marshals
on flights originating in India and signing of a revised Extradition Treaty and the
Mutual Legal Assistance.
• 18 January 2012: India agreed to allow Nepal to make direct transshipment of
goods from its custom stations and dry ports.
• 16 February 2012: Nepal and India concluded first-ever Nepal-India energy minister-
level talks.
• March 2012: India declared to give INR 2.7 billion in grants to Nepal in 2012-
13.
• 3 March 2012: India consented to open all forms of railway cargo to facilitate
Nepal´s trade with its southern neighbour and third countries.
• May 2012: Nepal and India signed a Letter of Exchange for the final implementation
of the Railway Service Agreement.
31. “Indian envoy secretly calls on prez”, ekanipur, 17 February 2013, at http://
www.ekantipur.com/2013/02/17/top-story/indian-envoy-secretly-calls-on-prez/
367230.html (accessed on 8 August 2013).
32. In March 2013, the 7th General Convention (GC) of the UCPN (Maoist) party
(Prachanda faction) at Hetauda adopted that the party will adhere to competitive politics
Protecting the Sphere of Influence 71
(democracy) and work towards consolidation of peace and the drafting of the
Constitution. It also pledged its commitment to republicanism and ‘economic revolution’
(development oriented pro-people policy in line with party ideology). For the fist time
since the unset of Maoist armed struggle in 1996 in Nepal, one Maoist faction, the
UCPN (Maoist), did not include name of any ‘principal enemy’ (earlier India, the US
and some political parties were termed as enemies that the party had to constantly work
against).
33. “CPN-UML picks nationalism as party’s election agenda”, ekantipur, 12 May 2013, at
http://www.ekantipur.com/2013/05/12/editors-pick/cpn-uml-picks-nationalism-as-
partys-election-agenda/371498.html (accessed on 8 August 2013).
34. Author’s interaction with Uddhab Pyakurel in Kathmandu on 21 June 2009. Pyakurel
is a Kathmandu-based political analyst and faculty of Kathmandu University, Nepal.
35. Author’s interview with Ramesh Nath Pandey, former Minister for Foreign Affairs, Nepal,
in Kathmandu on 24 June 2009.
36. Siddharth Varadarajan, “The danger in India’s Nepal policy,” The Hindu, 16 August
2010, at http://www.thehindu.com/opinion/columns/siddharth-varadarajan/the-danger-
in-indias-nepal-policy/article572789.ece (accessed on 2 August 2013).
37. Gopal Khanal, “The Saran doctrine”, ekanipur, 19 August 2010, at http://
www.ekantipur.com/the-kathmandu-post/2010/08/18/oped/the-saran-doctrine/211736/
(accessed on 2 August 2013).
38. Krishna Hari Pushkar, “Seeds of ethno-civil war in Terai”, Nepal Monitor, 20 December
2007, at http://www.nepalmonitor.com/2007/12/seeds_of_ethno-civil_war_in_nepal_
terai. html (accessed on 8 August 2013).
39. Lok Sabha calling attention notice on “Anti-Indian riots in South Nepal”, 29 June 1971.
40. Prashant Jha’s interview with Upendra Yadav, “Koirala must resign”, Nepali Times, Issue
401, 23–30 May 2008.
41. Keshav Prasad Mainali, “India’s stand on Madhesh issue is self-contradicting,” The
Telegraph Weekly, Kathmandu, 1 July 2008, at http://www.telegraphnepal.com/
news_det.php?news_id=3654 (accessed on 8 August 2013). Manali is President Chure
Bhawar Ekta Samaj.
42. Author’s interaction with a senior leader of the NSP (Nepal Sadbhavana Party) in Patna
on 29 February 2009.
43. Krishna Hari Pushkar, “India’s Neighbourhood Intervention in Madhesh”, Nepal Moni-
tor, 14 February 2008, at http://www.nepalmonitor.com/2008/02/inviting_indias_
neighbourhood_intervention_in_madhesh.html (accessed on 20 January 2014).
44. Keshav Prasad Mainali, “India’s Stand on Madhesh issue is self-contradicting,” n. 41.
45. Ibid.
46. “I will talk, but not to compromise”, Upendra Yadav’s interview to Tehelka, Delhi, 14
July 2007.
47. Keshav Prasad Mainali, “India’s Stand on Madhesh issue is self-contradicting,” n. 41.
48. Maitree, August 2011 ( a monthly journal published by Indian Embassy in Kathmandu).
49. Umesh Upadhyaya, “Issue of Protection of Migrant Workers and their Families,” General
Federation of Nepalese Trade Unions (GEFONT), Kathmandu, pp.269-276.
50. “Nepal events hitting India Inc: FICCI”, Hindustan Times, 6 May 2009, at http://
www.hindustantimes.com/StoryPage/StoryPage.aspx?sectionName=HomePage&id=
f72535b7-ed67-45c6-bf91-cd8493bba7a3&ParentID=c9fcc197-033e-4766-8a19-
72 Strategic Himalayas: Republican Nepal and External Powers
9b9128b5bdfe&Headline=Nepal+events+hitting+India+Inc%3a+Ficci (accessed on 8
August 2013).
51. “Nepal crisis may hit Pancheshwar dam”, Business Standard, Delhi, 07 May 2009, at
http://www.business-standard.com/india/news/nepal-crisis-may-hit-pancheshwar-dam/
357257/ (accessed on 8 August 2013).
52. For more information see “Economic Cooperation”, Embassy of India, Kathmandu,
Nepal, at http://www.indianembassy.org.np/ (accessed 2 May 2014).
53. Ibid. Also see “Over 800 Nepalese students benefit from Indian scholarships”, NDTV,
26 December 2013, at http://www.ndtv.com/article/india/over-800-nepalese-students-
benefit-from-indian-scholarships-463525 (accessed on 11 January 2014).
54. See n. 52.
55. For information about the presence of armed groups in Nepal, see Narayan Manandhar,
“Nepal’s armed groups”, Republica, 29 August 2009, at http://www.myrepublica.com/
portal/index.php?action=news_details&news_id=9156 (accessed on 8 August 2013).
56. Pushpita Das, “Towards a Regulated India-Nepal border”, Strategic Analysis, 32 (05),
September 2008, p. 884.
57. For details see “1900 madrassas mushrooming along Indo-Nepal border,” rediff, 24 March
2006, at http://www.rediff.com/news/2006/mar/24border.htm (accessed on 25 October
2013).
58. SSB chief Arun Chaudhary disclosed this during an interaction with journalists before
the 50th Raising Day celebrations of the force on 18 December 2013. For details see
“Numbers in Pak’s Nepal mission increasing: SSB chief,” Deccan Herald, 18 December
2013, at http://www.deccanherald.com/content/375461/numbers-paks-nepal-mission-
increasing.html (accessed on 11 January 2014).
59. Maloy Krishna Dhar, Fulcrum of Evil: ISI-CIA-Al Qaeda Nexus, Manas Publications,
New Delhi, 2006, p. 207.
60. “IM has shifted to Nepal after Bangladesh crackdown”, The Times of India, 10 March 2010.
61. Jason Miklian, “Illicit Trading in Nepal: Fueling South Asian Terrorism”, PRIO South
Asia Briefing Paper #3, 2009, International Peace Research Institute, Oslo (PRIO).
62. “Terror-Funding Pak Kingpin in Nepal Police Net,” The Times of India, 21 December
2008. Also see “Nepal Nabs Fake Money Kingpin,” The Telegraph, Kolkata, 21 December
2008.
63. “Lashkar-e-Toiba,” Terrorist outfit profile, South Asian Terrorism Portal, at http://
www.satp.org/satporgtp/countries/india/states/jandk/terrorist_outfits/lashkar_e_toiba.htm
(accessed on 8 August 2013).
64. Jason Miklian, “Illicit Trading in Nepal: Fuelling South Asian Terrorism,” n. 61.
65. “Militant Groups”, Frontline, Delhi, 21 (01), 03-16 January 2004.
66. “Red Flag Flying on the Roof of the World”, Li Onesto interview with Prachanda,
General Secretary of the Communist Party of Nepal (Maoist), Revolutionary Worker,
No.1043, 20 February 2000, at http://www.revcom.us/a/v21/1040-049/1043/interv.htm
(accessed on 8 August 2013). Also see at http://www.rwor.org
67. P.V. Ramana, “South Asia’s Maoist Web”, rediff, 14 October 2004, at http://
www.rediff.com/news/2004/oct/14spec2.htm (accessed on 8 August 2013).
68. “Split in Nepal Maoists spells trouble for India”, The Times of India, 2 July 2012, at
http://articles.timesofindia.indiatimes.com/2012-07-02/india/32507561_1_nepal-
maoists-maoist-army-indian-maoists (accessed on 3 August 2012).
Protecting the Sphere of Influence 73
69. “Secret template leak responsible for fake notes”, Zee News, 12 August 2009, http://
zeenews.india.com/news/business/secret-template-leak-responsible-for-fake-
notes_554751.html (accessed on 8 July 2011).
70. “How terror travels to India in a bus”, rediff, 02 April 2009, at http://www.rediff.com/
news/2009/apr/02how-terror-travels-to-india-in-a-bus.htm (accessed on 8 July 2011).
71. List of Pakistan activities in Nepal are collected from English language newspapers
published both in Nepal and India.
72. Joginder Singh, “Fake currency and its linkage with crime Origin of fake currency and
its use”, Organiser, India, 6 September 2009. Singh is former Director, Central Bureau
of Investigation (CBI).
73. Nisha Taneja, et al., India-Nepal Economic Cooperation, Indian Council for Research on
International Economic Relations, November 2009, p. 36.
74. “Informal trade of farm products with India estimated at Rs 65b,” Republica, 20 February
2012, at http://www.myrepublica.com/portal/index.php?action=news_details&news_
id=32020 (accessed on 8 August 2013).
75. Pushpita Das, “Towards a Regulated India-Nepal border”, n. 56, p. 883.
76. The Maoists had raised the issue of Greater Nepal until 2005. They had even floated
a map of Greater Nepal which included the Indian towns of Varanasi, Ballia, Bahraich,
Pilibhit and Jaunpur, mostly in the Indian state of Uttar Pradesh. They had brought out
a book, Nepal: Teesta Dekhi Satlej Samma (Nepal: From Teesta to the Sutlej) and published
calendars featuring a map of Greater Nepal (in 2005). However, Maoist leader Prachanda
had called it a “media stunt”.
77. Smruti S. Pattanaik, “Indo-Nepal Open Border: Implications for bilateral Relations and
Security”, Strategic Analysis, 22 (3), June 1998, p. 475.
78. Former India’s Ambassador to Nepal and Foreign Secretary, Shyam Saran’s interview on
Dishanirdesh, Nepal Television, 12 July 2004, www.south-asia.com (accessed on 26
October 2007).
79. “CPN-Maoist bans Hindi movies, Indian plate vehicles”, Republica, 27 September 2012.
80. Highlights of political document:
International situation
1. Indian expansionism is main exploiter of Nepal while American imperialism is
increasing in South Asia;
2. Main obstruction and threat to revolution is American imperialism;
3. Rightist revisionism is main threat to world revolution;
4. Imperialist countries including USA are weak, dependent on financial capital;
5. To form front against imperialist and expansionist forces;
6. To develop brotherhood among parties that follow Marxism, Leninism and Maoism.
National Situation
1. Nepal is neo-colonial and national sovereignty is in great danger;
2. Principle enemy are stooges, bureaucrats and feudal class directed and mobilised by
Indian expansionism;
3. To form people’s constitution through struggle;
4. To form a front and working alliance among leftist, nationalist, federalist and
democratic forces;
5. Objective reality for revolution is forming in Nepal but subjective reality is weak;
6. The nature of Nepal’s revolution is long-run;
74 Strategic Himalayas: Republican Nepal and External Powers
It has been noted with some anxiety in India, especially by the wider strategic
community, that China has taken deliberate steps to improve its relations
with almost all of India’s neighbours—after the improvement in Indo-US
relations since 2000 in general—especially with Nepal after the fall of the
monarchy.1 China’s growing interest in Nepal is being viewed with particular
concern by India. The increase in the number of visits by Chinese officials
and leaders to Nepal, since the end of the monarchy and reinstatement of
democratic government in that country in 2006-07, indicates that China is
trying to scale up its engagement with Nepal. The concern in India arises
from the hypothesis that the growing Chinese presence in Nepal could
undermine both India’s influence and its strategic equations with the
Himalayan country.
who often cross over to Tibet to protest against China. It is also worried about
a large number of Western funded NGOs and INGOs operating in Nepal.
These funds are reportedly being used to convert the hill Janajatis to
Christianity and create awareness about ethnicity-based federalism.16 In
Chinese perception, this is part of the long term strategy of Western forces to
destabilise its southern territory.
The other factors that influence Chinese foreign policy in South Asia are:
(i) the strategic location of South Asia in terms of a market for acquiring raw
materials and selling finished goods, (ii) the region’s proximity to international
sea routes in the Indian Ocean and also to the two disturbed provinces of
China, i.e., to Xinjiang and Tibet, (iii) its strategic ally—Pakistan—can be
used to counter-balance India in case of a conflict situation, and (iv) supplying
of military hardware to India’s neighbours, which both fuels and sustains
regional antipathy vis-à-vis India.17 Therefore, over the period of time, China
has improved its bilateral relations with Sri Lanka and Maldives to secure its
supply lines in the Indian Ocean.
The Sri Lankan government, under Mahinda Rajapaksa, has almost
endorsed China’s concept of establishing a 21st Century ‘Maritime Silk Route
Economic Belt’ in the Indian Ocean. It feels that the concept would reinforce
the ‘Strategic Co-operative Partnership’, with China which was singed between
the two countries in May 2013. The new Maldivian government led by
President Yameen Abdul Gayoom has also hinted that many development
projects of the country would get Chinese assistance. Further, China has used
its passive presence in the strategically located Bay of Bengal region to monitor
Indian Navy and ICBM programmes at Wheeler Islands and Chandipur by
supplying two Ming-class submarines to Bangladesh. The nature of Chinese
engagements in the region indicates that it wants to reduce India’s influence
in the region and secure its core interests. In this context, Nepal occupies a
special place in China’s South Asia policy. Chinese scholars specialising in
South Asia and Nepal affairs are optimistic that the new leadership in China
will continue to strengthen its relationship with South Asia, especially Nepal,
because of Tibet and the presence of external forces in that country. Therefore,
the new leadership will “definitely want to build [a] strong relationships with
Nepal which shares border with Tibet.”18
following a modest policy towards Nepal ever since the two countries
established diplomatic relations in 1955. However, even if Nepal may not
have figured prominently in China’s broad foreign policy, it has certainly
assumed importance in China’s neighbourhood policy over the past few years.
There are several concerns that underpin the Chinese policy towards Nepal.
Because Nepal shares the longest border with China—after India—and a large
part of this border remains unguarded due to mountainous terrain. In their
many joint statements the two countries have stressed on strengthening ‘border
area management’.
Geographically, Nepal has remained the southern gateway to Tibet and
has had closer economic and cultural linkages with Tibet than China since
times immemorial. For China, Nepal is a geographic and cultural buffer
between Tibet and Tibetan refugees living in India. Beijing fears that Nepal
could be used by other powers as a frontline state to challenge China’s security
interests. It suspects that the CIA and Indian intelligence agencies support
Tibetan refugees who are trying to cross into China—the Himalayan mountain
range does not always provide a natural defence against infiltration. Some
Chinese analysts are in agreement with Maoist leaders that the US agenda in
Nepal is basically designed to encircle China.19 Wang Hongwei, a Chinese
expert on Nepal, believes that India and the US are using Nepalese territory
to act against China.20 Expressing China’s security concerns, in May 2001,
the Chinese ambassador to Kathmandu confirmed that China had a vital
interest in securing its strategic southern border by nurturing a credible
relationship with Nepal.21 Again in March 2006, Tang Jiaxuan, former Chinese
Foreign Minister, while commenting on the deepening political crisis and the
role of external forces in Nepal, said: “Beijing has always stuck to the approach
of non-intervention towards Nepal’s inside affairs, fully respecting any model
of national development that the Nepalese people chose.”22 Some analysts
also suggest that even if China does not expressly mention the role of external
forces in Nepal, it is insecure about India’s leverage in Nepal as well as the
influence of the United States, the United Kingdom, and the European Union
in that country. Therefore, China would always look for a credible nationalist
force in Nepal, amenable to its influence, for political stability.23 It also
consistently emphasises that the government of Nepal must stick to the one-
China policy and should not allow Tibetans to indulge in any kind of anti-
China activities.
From the economic point of view, overall, China is the second largest
trading partner of Nepal after India. Despite the economic boom in China,
China in Nepal: From Political to Strategic Engagement 81
Guihong, China has adopted a fourfold policy to strengthen its relations with
Nepal: “First, accommodate each other’s political concerns. Second, enhance
the economic cooperation on the basis of mutual benefit. Third, boost people-
to-people and cultural exchanges. Fourth, strengthen coordination and
cooperation in international and regional affairs.”32 China has sought to engage
Nepalese political actors at all levels, primarily to secure its strategic interest
and increase coordination in managing Nepal-Tibet Border.
When the Maoists emerged victorious in the April 2008 elections, China
was uncertain about its approach towards them. There was a perception that
the Maoists were backed by India and were catapulted on to the political
center stage only after a comprehensive peace agreement in which India played
a substantial role. However, media reports revealed that after several interactions
with Maoist leaders, China began to feel quite comfortable with the Maoist-
led government. In fact, in order to cope with the changing political landscape
in Nepal and build contacts with the Maoists, in December 2007, Beijing
had sent an unofficial delegation headed by Wang Jiarui, director of CPC
Central Committee’s International Department, to interact with Maoist
leaders. The Maoists’ ideological linkages with China and their keenness to
neutralise India’s influence in the region perhaps facilitated the process of
engagement between the two.33
It has been reported that in their discussions with the Chinese, the Maoist
leaders had given the impression that the future of democracy in Nepal could
be guided by democratic centralism model of the CPC. Indeed, many in Nepal
argue that the very fact that they have retained their Maoist tag despite joining
competitive politics indicates that the party may be working towards a single-
party system in the future, given that dictatorship of the proletariat has pride
of place in the Maoist lexicon. Even after the Maoists joined the political
mainstream, some hardline leaders of the Maoist party in Nepal had on a
number of occasions suggested a people’s republic similar to that of China.
These ideas might have encouraged Chinese attempts to consolidate its position
in Nepal continuously engaging the Maoists at various levels, to secure its
strategic interests in the region.
2008, assured the Nepalese people that: “any foreign conspiracy to disintegrate
Nepal will be appropriately dealt with by China”.43
Table 4.1: High-Level Visits from China and India to Nepal during 2006-2012
Year Official Unofficial^ Total
are not reported in media. This phenomenon might have begun before 2012.
Quoting Chinese official sources, Xinhua said in 2010 the number of bilateral
personnel exchanges with Nepal touched 74,000.46
These visits served to broaden cooperation by identifying various areas of
mutual interest in the fields of security, trade, infrastructure development,
tourism, etc. China repeatedly promised economic, technological and military
aid to Nepal. The Nepalese Government(s) was reportedly asked to follow
the one-China policy, not to allow Nepalese soil to be used for anti-China
activities, take strong action against Tibetan refugees and grant special facilities
for Chinese investments in strategic sectors. A Chinese scholar has observed
that “through these high-profile engagements, Beijing urged the Nepalese
government to follow China’s Tibet policy and at the same time, assured
Kathmandu of a non-intervention approach toward the Himalayan neighbour
regardless of the prevailing volatile political climate.”47 Beijing has also increased
Track-II diplomacy with Nepal and invited Nepalese scholars to visit and
undertake research work at Chinese think-tanks since 2008.
Some of the important visitors from China to Nepal were:
• 25 June 2013: Chinese State Councilor Yang Jiechi led a 19-member
delegation for a two-day official visit to Kathmandu.
• 30 June 2012: Vice Minister of the International Department of the
CPC, Ai Ping, led a delegation to Kathmandu.
• 2 April 2012: A 16-memeber Chinese delegation led by Vice
Chairman of Standing Committee of the 11th National People’s
Committee Chen Zhili visited Nepal.
• 22 February 2012: Chinese Minister of State Forestry Administration
Jia Zhibang undertook a four day official visit to Nepal.
• 14 January 2012: Prime Minister, Wen Jiabao, paid an official visit
to Nepal.
• 23 March 2011: A 15-member military delegation headed by People’s
Liberation Army (PLA) chief, Chen Bingde.
• 6 December 2010: A cultural delegation led by Culture Minister Cai
Wu.
• 17 September 2010: A high-level 40-member business team led by
All-China Federation of Industry and Commerce (ACFIC) first Vice-
Chairman Quan Zhezhu.
• 11 September 2010: He Yong, Vice-Premier and Secretary at the
Secretariat of the 17th Central Committee of the CPC, led a 21-
member delegation.
China in Nepal: From Political to Strategic Engagement 89
Political Engagements
In addition to engaging the Maoists, China wants to maintain good relations
with other political parties as well. It is open to working with any political
90 Strategic Himalayas: Republican Nepal and External Powers
Committee. Although the leaders had denied any kind of pressure from China
about their participation in the elections and for re-unifying with the UCPN
(Maoist), the party, interestingly, softened its conditions for dialogue with the
HLPC after the visit. Further, on 5 January 2014, Republica reported that
Chinese Vice-Minister Ai Ping during his visit to Kathmandu in December
2013 had discussed with the top leaders of both the Maoist factions about
their merger and suggested to the Baidya faction to cooperate in the
Constitution-drafting process. There was a perception in Nepal that Chinese
mediation over merger of both the factions might actually succeed in future.
Strategic Partner
The Chinese engagement in Nepal goes beyond the political domain. At a
meeting between the then Defence Minister Ram Bahadur Thapa and the
Deputy Commander of the PLA, Lieutenant General Ma Xiaotian, held in
Kathmandu in December 2008 and signed an agreement on military assistance
worth US$ 2.6 million, which was discussed in September 2008, for the
modernisation of the NA. That was the first such military assistance to the
Maoist government. Beijing had keenly supported the Maoist government’s
proposal to integrate some 19,000 Maoist guerrillas into the Nepalese Army.
During Prime Minister Wen Jiabao’s visit to Nepal in January 2012, China
announced a one-time grant of $20 million, for the rehabilitation of former
Maoist combatants. During Madhav Nepal’s regime Defence Minister Bidya
Devi Bhandari visited China in March 2010 and the Chinese reiterated their
keenness to provide military modernisation assistance to Nepal. During the
then Chinese Army Chief General Chen Bingde’s visit to Nepal in 2011,
China signed an agreement for providing military aid to the tune of US$7.7
million to the Nepalese Army in an effort towards deepening the military
relations. China’s engagement with the Nepalese Army, which has been
traditionally close to the Indian and the US Armies, “underlines that China
has no ‘favourites’ on the Nepalese political landscape and has only ‘interests’
and Beijing will advance its interests no matter who it has to deal with or
what it takes.”51
China’s wooing of Nepal as a new strategic partner has been confirmed by
various Chinese officials. For example, on 16 February 2009 Foreign Minister
Yang Jiechi said that China would prefer to work with Nepal on the basis of
‘strategic partnership’. During former Prime Minister Madhav Kumar Nepal’s
visit in December 2009 President Hu Jintao vowed to enhance the bilateral
relations to a ‘comprehensive partnership of cooperation’ and the two countries
agreed to further strengthen political and economic ties. They agreed to
92 Strategic Himalayas: Republican Nepal and External Powers
promote exchange of high-level visits and contacts at all levels and make full
use of the existing mechanisms.52 China also proposed to strengthen the
relationship through cooperation in five different areas for mutual benefit
and peace and stability in South Asia during Zhou Yongkang’s53 visit to Nepal
in August 2011. The areas identified were:
(1) exchange of high level visits;
(2) cooperation in trade and investment, agriculture, transportation,
information technology, infrastructure development, hydropower
construction and poverty alleviation;
(3) cooperation in areas of security, education, human resource
development, tourism and cultural exchanges;
(4) cooperation between the CPC and various political parties of Nepal;
and
(5) close coordination and cooperation on major global issues like global
financial crisis, climate change, energy, food security, security and
SAARC.54
China, in fact, immediately after the second CA election results,
reconfirmed continuation of its strategic partnership relations with Nepal.
Speaking at a programme organised by Nepal World Relations Council Chinese
Ambassador Wu Chuntai stated “China has accepted Nepal as a strategic
partner,” and wanted to expand its relationships with Nepal in diverse fields.55
As part of the comprehensive partnership of cooperation programme, China
had been trying to compete with India in Nepal by offering scholarships to
Nepal Police and Armed Police Force (APF) officers for the National Defence
Course (NDC) at the National Defence University of the People’s Liberation
Army. This is besides the regular quota of a few Nepalese Army officers. For
the first time, China granted a scholarship to a civilian officer of the then
Kathmandu Chief District Officer (CDO), Jaya Mukunda Khanal. In April
2009, Chinese authorities took a ten-member team of Nepal Police, APF and
National Investigation Department to China on a 15-day tour. A 20-member
Nepalese team comprising bureaucrats and security officials went on a China-
sponsored visit to Lhasa on 7 August 2009.56 The main objective of this
initiative could have been to win over the officials of the security agencies
who could help in quelling anti-China activities in Nepal and to influence
the deployment of security forces in the northern districts to curb the Tibetan
movement in that region.
In view of the protracted political deadlock in Nepal over the formation
of a new government and the adoption of a new constitution, China expressed
its concerns that anti-China elements might exploit the prevailing political
China in Nepal: From Political to Strategic Engagement 93
Economic Engagements
Aid and Assistance
China58 has expanded its financial assistance to Nepal to cover several sectors
in the country. There has also been a significant increase in grant-in-aid since
2006/07 when Nepal underwent political transition.59 Table 4.2 shows how
China has increased its annual aid assistance to Nepal from US$0.14 million
in 2005/06 to $35.48 million in 2010/11, while Indian aid went up from
$4.75 million in 2005/06 to $92 million in the same period. After regime
change Chinese aid assistance to the country has increased more than 200
times and India’s more than 19 times. The figure shows the China’s growing
interests in Nepal. Interestingly, when former Chinese Premier Wen Jaibao
visited Nepal in January 2012, he committed $1.18 billion in aid to be spent
over three years. As already discussed China has been providing annual food
assistance especially in the northern districts that borders Tibet. This
programme was started in 2008, following the Tibetan uprising.
Table 4.3: Sector-wise Development Assistance to Nepal from India and China
(FY 2006/07 to 2010/11)
(US$ million)
Year Country Agriculture Infras- Public Social Trade Total
tructure Service/ Sector Industry/
Security Finance
2010/11 India 14.16 59.34 … … 19.06 92.55
China 0 35.04 0.44 35.48
2009/10 India 7.55 75.10 18.06 100.70
China … 29.41 29.41
2008/09 India 95.03 0.42 95.45
China 36.60 36.60
2007/08 India 32.36 0.97 4.86 0.42 38.61
China 1.39 1.39
2006/07 India 50.16 11.39 0.36 61.91
China 1.88 10.20 12.07
Source: Chandra Ghimire, “New Age of South-South Development Cooperation: A Case Study
of Nepal” (unpublished paper).
Table 4.3 reflects that China has also increased its development assistance
for the public security sector. Earlier, it was only India that had provided aid
for this sector. The second highest development assistance from these two
countries went to the trade, industry and finance sectors. Interestingly, during
this period, China provided limited aid for social development projects like
schools and hospitals in Nepal, while India contributed US$ 4.86 million in
2007/08.
Ziyiing’s visit, China also agreed to provide NPR 547 million to Nepal as
part of bilateral economic and technical cooperation and as assistance for the
upgrading of the 27.4 km-long Kathmandu city ring road.61 Six months after
the Upper Trishuli 3A project deal, the two countries again signed a $50
million economic and technical cooperation agreement—which provided for
a $24 million soft loan for a hydropower transmission line project and $2.5
million security project for enhancing the capabilities of the Nepal Police,
besides an understanding to provide other concessional loans.62
Trade
The China-Nepal bilateral trade as of 2012 stands at NPR billion 72418.82
with China selling goods worth about NPR 69910.83 billion and Nepal
exporting goods worth a mere NPR 2507.99 billion. Table 4.4 indicates that
there is trade deficit of NPR –67402.84 billion. To bridge the trade deficit,
China had agreed in April 2009 to provide zero tariff facility to 497 Nepalese
goods to the Chinese market and it further increased to 7,787 products in
November 2012. Despite the zero tariff facilities, Nepal is yet to utilise that
in its favour. As a result, the trade gap has increased consistently since 2010.
The traders in Nepal believe that poor implementation of zero-tariff barriers,
lack of facilities for export of Nepalese goods, and poor trade related
infrastructure have been major hurdles in reducing trade deficit.63
Investments
It is interesting to note that the number of joint ventures (JVs) with China
have increased since 2008 after the political change took place in Nepal and
96 Strategic Himalayas: Republican Nepal and External Powers
the emergence of Maoists as largest party in the CA elections that very year.
As Table 4.5 indicates, China was the third top investor by July 2008. The
number of Chinese JVs in Nepal surpassed those with the US by July 2010.
A further year-wise comparison shows that number of Chinese JVs surpassed
Indians JVs in Nepal by July 2009-10. In terms of volume of investments,
there were more investments from India than China in Nepal during the same
period, but the number of projects from India shrunk. Between July 2008-
09 and 2009-10, while India had added only 27 JVs, China had added 59
JVs in Nepal. Similarly, while only 39 Indian JVs were added by July 2011,
around 69 JVs were added to the existing Chinese JVs during the same period.
The same trend continued in the following fiscal year (July 2011-12).
However, the only solace for India was that even though Nepal had fewer
joint ventures with India, the investments were much higher than those with
China till 2012.65 Interestingly, for the year 2012-13, China had committed
NPR 5.99 billion FDI, around 30.89 per cent of the total amount committed
by foreign investors to Nepal. According to the Department of Industry (DoI),
Government of Nepal, China surpassed the investments commitment from
India, which dominated the FDI sector in Nepal, until the year 2011-1266.
Apart from the political, strategic and the Chinese ‘go global’ policy factors,
bilateral institutional arrangements like the Nepal-China Non-governmental
Cooperation Forum, established in 1996, have also been playing a major role
in promoting Chinese investments in Nepal.
It is believed that Chinese trade and investments in Nepal can grow with
better connectivity between the two countries in the future. In this regard,
Nepal government has requested Chinese government to extend its railways
China in Nepal: From Political to Strategic Engagement 97
and improve the roads in the border areas. The objective of this is mostly to
reduce dependence on India and take advantage of the economic growth in
the neighbourhood. Not surprisingly, the concept of Nepal being a ‘vibrant
bridge’, as reiterated by former Prime Minister Baburam Bhattarai, has become
dominant in Nepal’s foreign policy discourse. Therefore, a friendly Nepal
provides China with an open overland gateway into South Asia, which is
exclusively under New Delhi’s sphere of influence. To consolidate this
connection, Beijing has tried to make headway by increasing its economic
engagement with this area.68
Interestingly, historic evidence suggests that China has had limited trade
activities with Nepal. The China-Nepal trade is dominated by the trade between
TAR and Nepal because of inhospitable trade route and the distance from the
mainland. Nepalese traders find it too expensive to import goods overland
from mainland China. Durga Lal Shrestha, president of the Nepal Trans-
Himalayan Traders Association, says: “Importing through ship via Kolkata is
some 40 per cent cheaper than importing via Khasa.”69 However, given the
Chinese determination to cross the Himalayas by building railway lines (Lhasa-
Shigatse) to the border with Nepal and opening two more new transit routes—
the Syafrubesi-Rasuwagadhi and the Baglung Beni highway to Jamsom
(Mustang)—Nepal could well become an important gateway for China to
establish links with other countries in the subcontinent. China in fact has
proposed to offer financial support to Nepal to connect the same railway line
with Kathmandu.
Infrastructure Development
Development of infrastructure is an integral part of China’s economic
diplomacy. In the case of Nepal, China can also use it for strategic purposes.
As noted earlier, China agreed to upgrade Kathmandu city ring road. China
also agreed in 2011 to construct a dry port at Larcha in Sindhupalchowk,
followed by a similar port in Rasuwagadhi. The Larcha dry port is being
“constructed on turn-key basis with grant assistance worth Rs [NPR] 270
million from China.”70 Media reports said China had proposed to develop
dry ports and cargo terminals on both sides of Yari-Pulam, Rasuwa-Jilong,
Kodari (Tatopani)-Zangmu (Khasa) and Olangchung Gola-Riwu customs.
The first three are proposed as international ports and Olangchung Gola-
Riwu as a bilateral port. The two sides have already opened six customs
points—Olangchung, Kimathanka, Tatopani, Rasuwagadhi, Mustang and
Yari—for bilateral trade and movement of people (See Map-Appendix-I).71
98 Strategic Himalayas: Republican Nepal and External Powers
People-to-People Contact
China has started encouraging, and in many instances funding, the
establishment of front organisations74 in Nepal to spread Chinese language
and culture. The latest in the series is the establishment of Nepal China
Himalayan Friendship Society (NCHFS) and the Nepal-China Media Forum.
China in Nepal: From Political to Strategic Engagement 99
Fourth, there is a concern in India that strong Chinese presence may reduce
India’s influence in Nepal. Moreover, Nepal may seek China’s active engagement
to balance India. While India has been coping with growing Chinese influence
in Nepal, Pakistan’s proven anti-India activities in Nepalese soil complicates
the situation further. Although there is no explicit understanding between
both the countries on working together in Nepal, India feels uncomfortable
with the possibility of the presence of two traditional adversaries consolidating
their strategic presence in its backyard. In recent years, Nepal is believed to
have become a haven for terrorists, smugglers and anti-India elements
sponsored by the ISI. For example, around 20 terrorists had entered India
from Nepal and fake Indian currency worth almost INR 2 crore was seized
from them in 2009.86 (for details see Chapter 3 and 7).86
In India’s perception, a democratic, stable and peaceful Nepal will be in
India’s interest. As a result, India has played a major role in resolving the
political deadlock and furthering the peace process since February 2005. Any
external force acting as a spoiler of this process, would be unacceptable to
India. Indian policy makers believe that its understanding on Nepal will be
somewhat different from that of other countries because of India’s
comprehensive relationship with that country.87
Finally, China’s growing influence in Nepal could come at the expense of
India and key Western players, such as the United States and the United
Kingdom.88 Some Nepalese scholars argue that the UN’s role in Nepal could
promote Chinese influence in Nepal because most countries view the UN as
an extension of US foreign policy.89 The competition between the major powers
for influence in South Asia in general and Nepal in particular may disturb
regional peace and stability.
Conclusion
Historically, China has been seen as a hegemon in its dealings with its
neighbours, especially when it believes that it cannot control peripheral
developments. “Great powers suffer from survival anxieties no less than weak
states, and it is this concern for survival that drives them toward regional
hegemony. The result is the paradoxical logic of “expand to survive”.90 Of
late, China is not quite comfortable with the developments in its external
periphery. Although the Chinese Defense White Paper which was released in
early 2013, does not mention Tibet and Xinjiang, those issues remain China’s
soft underbelly, and of late, it has been feeling insecure due to the absence of
a credible political partner in Nepal. That was underscored by Prachanda’s91
China in Nepal: From Political to Strategic Engagement 103
official visit to Beijing in April 2013 and his meeting with top political leaders
of China including President Xi Jinping. He was the first South Asian leader
to meet President Jinping after he assumed office in March 2013.
One Chinese scholar has observed that: “China’s new leadership decided
to invite Dahal as the first guest from South Asia as per its policy to give
priority to neighbouring and developing countries.”92 Moreover, China re-
confirmed Nepal’s importance to its internal security and stability in Tibet by
sending the State Councilor of the People’s Republic of China Yang Jiechi on
a two-day official visit to Nepal from 25-26 June 2013. This was the first
high ranking official visit to Nepal after leadership change in China in March
2013. During the visit, Jiechi discussed Nepal’s support for the one-China
policy with the new Chief Justice-led election government. To add to Chinese
worries, the Tibetan refugees have taken advantage of the situation in Nepal
and have held several protests against China. Most importantly, one Tibetan
refugee immolated himself in Kathmandu on 13 February 2013. This was
second incident after a monk set himself afire in November 2011. If the
Nepalese political instability is prolonged, Chinese micro-management and
intervention in Nepal might increase in future.
China is in favour of a powerful, stable and neutral government in
Kathmandu no matter what its ideology, more so if it is sensitive to China’s
concerns. Given the economic and people-centric diplomacy in Nepal, it seems
China does not want any confrontation at this moment in this region. For
the time being, China would prefer to concentrate on developmental
programmes in its western region.
In the short-term, China will continue its diplomatic engagement in Nepal
as part of the comprehensive partnership policy at various levels to keep external
forces away from the Tibetan refugees’ issue. For its long-term benefit Beijing
will expand its economic engagement and people-to-people relations with
Nepal. Moreover, Chinese policy towards Nepal is expected to acquire greater
importance in the coming days both because of the twin factors of Tibet and
India, and its official emphasis on external periphery.
*
NOTES
1. Several important developments in South Asia (SA) might have influenced China to
revamp its policy towards this region by late 1990s and early 2000. These include Pokhran-
II (May 1998), US President Clinton’s visit to India (March 2000), emergence of India
as a favourite investment destination in the post-1991 economic reforms, implementation
of its own Western Development Strategy, India-Pakistan border stand-off (December
104 Strategic Himalayas: Republican Nepal and External Powers
19. Zhang Li, “To manage conflict in South Asia: China’s stakes, perceptions and inputs”,
Asia Paper, Institute for Security and Development Policy, Stockholm, October 2009,
p.81.
20. “China concerns over Nepal”, The Red Star, a publication of the then CPN (Maoist),
Kathmandu, I (01), 8 November 2007, p.1, at http://www.bannedthought.net/Nepal/
RedStar/TheRedStar-vol1-01.pdf (accessed on 12 February 2014). Also see, Sharad
Adhikary, “Here’s how Beijing is scanning Kathmandu”, Kathmandu Newsline, 15 July
2008.
21. Zhang Li, “To manage conflict in South Asia: China’s stakes, perceptions and inputs”,
n. 19, p.76.
22. Ibid., pp.77-78.
23. Kunda Dixit, “A New Himalayan Game”, The Fletcher Forum of World Affairs, 34(1),
Winter 2010, pp. 125–34.
24. “Nepal becomes Tibet’s most important trading partner: Official”, Xinhua (English), 15
July 2012, at http://news.xinhuanet.com/english/business/2012-07/15/
c_131716978.htm (accessed on 17 July 2013).
25. B. Raman, “China’s Strategic Influence in South Asia,” n. 12, p. 136.
26. Prime Minister, Atal Bihari Vajpayee during his official visit to Beijing in June 2003,
acknowledged: “The Indian side recognises that the Tibet Autonomous Region is an
integral part of the People’s Republic of China”. For details see G. Parthasarathy, Editorial:
“Vajpayee visit—Foreign policy lessons from China,” Business Line, Delhi, 18 July 2003.
27. Rukmini Gupta, “National Interests and Threat Perceptions: Exploring the Chinese
Discourse,” n.4, p. 06.
28. Quoting Indian Government sources, NDTV reported that “three Chinese army officers
had been denied visa after the [Lt Gen (Retd)] Jaswal incident and pointed out that
J&K was as important to India as Tibet was to China,” 27 August 2010, at http://
www.ndtv.com/article/india/china-in-damage-control-mode-after-stopping-indian-
general-s-visit-47573 (accessed on 16 July 2013).
29. Ross H. Munro, “China’s Relations with its Neighbours”, International Journal, Spring
2006, p. 323.
30. Interview of Ai Ping, Vice-Minister at the International Department of the Central
Committee of the Communist Party of China, to The Kathmandu Post, 19 September
2011, at http://www.ekantipur.com/the-kathmandu-post/2011/09/18/oped/monday-
interview/226470.html (accessed on 25 March 2012).
31. Zhang Li, “To manage conflict in South Asia: China’s stakes, perceptions and inputs”,
n. 19, p. 75.
32. “Nepal and China have win-win ties”, interview of Chinese ambassador to Nepal, Qiu
Guohong, Nepali Times, Kathmandu, [weekly] Issue 448, 24–30 April 2009.
33. Zhang Li, “To manage conflict in South Asia: China’s stakes, perceptions and inputs”,
n. 19, p. 85. Also see Sudeshna Sarkar, “China cements ties with Nepal Maoists,” Two
Circles, 3 December 2007, at http://twocircles.net/2007dec03/china_cements_ties_
nepal_maoists.html (accessed on 16 July 2013). The news was originally reported in
Indo-Asian News Service.
34. For more information about the US observations on post-February 2005 political
developemtns in Nepal, see “United States Interests and Goals in Nepal”, Principal Deputy
Assistant Secretary Donald Camp’s statement before the US House of Representatives
106 Strategic Himalayas: Republican Nepal and External Powers
51. M.K. Bhadrakumar, “China courts Nepalese army leadership”, rediff (blogs), 31 March
2011, at http://blogs.rediff.com/mkbhadrakumar/2011/03/31/china-courts-nepalese-
army-leadership/ (accessed on 17 July 2013).
52. “Joint Statement of the People’s Republic of China and the Federal Democratic Republic
of Nepal”, Ministry of Foreign Affairs of the People’s Republic of China, 31 December
2009, at http://www.fmprc.gov.cn/eng/wjdt/2649/t649608.shtml (accessed on 1 March
2014).
53. Yongkang is member of the Standing Committee of the Political Bureau of the CPC
Central Committee and Secretary of the Political and Legislative Affairs Committee.
54. Jainendra Jeevan, “Suspicious minds”, Republica, 18 August 2011, at http://
www.myrepublica.com/portal/index.php?action=news_details&news_id=34843 (accessed
on 17 July 2013). Also see Prashant Jha, “China proposes cooperation with Nepal”, The
Hindu, 19 August 2011.
55. “China’s topmost priority is Nepal-China relations: Envoy Wu”, The Himalayan Times,
7 January 2014, at http://www.thehimalayantimes.com/fullNews.php?headline= China’s+
topmost+priority+is+Nepal-China+relations%3A+Envoy+Wu&NewsID= 402181
(accessed on 14 January 2014).
56. Kosh Raj Koirala, “China trying to match India in Nepal”, Republica, 18 August 2009.
Also see Prashant Jha, “China proposes cooperation with Nepal”, The Hindu, 19 August
2011.
57. Kiran Chapagain, “Anti-Tibet activities in Nepal unacceptable: China”, Republica, 28
July 2010, at http://www.myrepublica.com/portal/index.php?action=news_details&news_
id=21528 (accessed on 8 January 2011).
58. According to White Paper: China’s Foreign Aid, April 2011, China’s foreign aid mainly
falls into tree types: grants (aid gratis), interest free loans (tenure is 20 years-five years
of use, five years of grace and 10 years of repayment) and concessional loans (Export-
Import Bank of China). The data provided in the Table 4.2 are mainly development
assistance.
59. A report by Ivan Campbell, et al., notes that according to Government of Nepal statistics:
It is possible to trace a steady increase in Chinese aid to Nepal from NR [s] 10 million
($128,200) in fiscal year 2005/6 to NR 2.55 billion ($32.5 million) in 2010/11. The
increase in 2011 is particularly notable: China had reportedly pledged loans and grants
worth more than NR 10 billion ($127.4 million) by August 2011. This included a
sizeable concessional loan for the Trishuli hydro-power construction and $19 million for
assistance to the Nepal Army. For details see Ivan Campbell, et al., “China and conflict-
affected states: Between principle and pragmatism,” n. 45, p. 67.
60. Bikash Sangraula, “Projects for 105mw with Chinese funds”, ekantipur, 6 March 2008,
at http://www.ekantipur.com/the-kathmandu-post/2008/03/07/related_articles/projects-
for-105mw-with-chinese-funds/139879.html (accessed on 13 January 2014).
61. “China agrees to provide assistance to Nepal for different projects,” People’s Daily Online,
1 March 2011, at http://english.peopledaily.com.cn/90001/90776/90883/7303824.html
(accessed on 13 January 2014).
62. “China’s Nepal engagement tempo steps up; neighbourhood a priority,” ekantipur, 18
August 2011, at http://www.ekantipur.com/2011/08/18/editors-pick/chinas-nepal-
engagement-tempo-steps-up-neighbourhood-a-priority/339285.html (accessed on 13
January 2014).
108 Strategic Himalayas: Republican Nepal and External Powers
63. “Non-tariff barriers affect trade with China”, Republica, 23 June 2013, at http://
www.myrepublica.com/portal/index.php?action=news_details&news_id=56642 (accessed
on 18 July 2013).
64. “Tibet’s foreign trade up 63% in 2011”, People’s Daily Online, 1 February 2012, at
http://english.people.com.cn/90778/7717054.html (accessed on 18 July 2013).
65. Also see “China surpasses India in JV projects”, Republica, 16 September 2010, at http:/
/www.myrepublica.com/portal/index.php?action=news_details&news_id=23356
(accessed on 1 August 2012).
66. For details see “China commits highest FDI in 2012-13: Nepal,” China Daily, 21 August
2013, at http://www.chinadaily.com.cn/bizchina/chinadata/2013-08/21/
content_16910101.htm (accessed on 05 March 2014).
67. “2009 Investment Climate Statement-Nepal”, Bureau of Economic, Energy and Business
Affairs, US Department of State, February 2009, at http://www.state.gov/e/eb/rls/othr/
ics/2009/117847.htm (accessed on 28 July 2012).
68. Zhang Li, “To manage conflict in South Asia: China’s stakes, perceptions and inputs”,
n. 19, p. 81. Also see Jagannath P. Panda, “Dragon Looks South: Current drives in
China’s South Asian neighbourhood policy”, n. 17.
69. “Importers divert cargoes to Kolkata from Khasa,” reported by Prabhakar Ghimire,
Republica, 29 November 2010, at http://www.myrepublica.com/portal/
index.php?action=news_ details&news_id=25668 (accessed on 18 July 2013).
70. “China will start construction of Larcha Dry Port this year”, Republica, 31 August 2011.
71. “Customs infrastructures high on agenda”, Republica, 4 May 2011, at http://
archives.myrepublica.com/portal/index.php?action=news_details&news_id=30951
(accessed on 18 July 2013).
72. “Nepal, Chinese contractor to sign agreement for Pokhara airport,” Xinhua, 31 May
2013, at http://news.xinhuanet.com/english/business/2013-05/31/c_132423005.htm
(accessed on 18 July 2013).
73. “Chinese entrepreneurs meet PM Nepal”, Nepal News, Kathmandu, 17 September 2010,
at http://www.nepalnews.com/main/index.php/business-a-economy/9231-chinese-
entrepreneurs-meet-pm-nepal.html (accessed on 18 July 2013).
74. China Study Centre, China Information Centre, Nepal-China Mutual Cooperation
Society, Nepal-China Executive Council, Nepal-China Friendship Association, Nepal-
China Youth Friendship Association, Nepal-China Investment Promotion Centre, Nepal-
China Himalayan Friendship Society and Nepal-China Media Forum, China-South
Asia Friendship Organisations’ Forum.
75. Kosh Raj Koirala, “China trying to match India in Nepal”, Republica, 18 August 2009,
at http://www.myrepublica.com/portal/index.php/thweek/slc/?action=news_details
&news_ id=8755 (accessed on 18 July 2013).
76. “Bilateral Relations (Nepal-China),” Ministry of Foreign Affairs, Government of Nepal.
77. Rajesh Joshi, “Why China’s influence on Nepal worries India”, BBC (Hindi), Kathmandu,
8 May 2013. For more information visit http://www.bbc.co.uk/news/world-asia-
22365488 (accessed on 14 May 2013).
78. Siddharth Srivastava, “Delhi knocked out over China,” Asia Times, Hong Kong, 16
November 2005, at http://www.atimes.com/atimes/South_Asia/GK16Df03.html
(accessed on 9 January 2014).
79. See “Nepal Maoists start anti-Dalai Lama”, Hindustan Times, 16 October 2007.
China in Nepal: From Political to Strategic Engagement 109
80. Sangeeta Thapliyal, “Mutual Security: The Case of India-Nepal,” Lancer Publishers,
New Delhi, 1998, p.63. See Kunda Dixit, “A New Himalayan Game”, n. 23, p. 127.
Also see C. Raja Mohan, “Tibet static in China,” The Hindu, 22 June 2003.
81. T. Karki Hussain, “China’s Role in Indo-Nepal Relations”, in Lok Raj Baral (ed.), Looking
to the Future: Indo-Nepal relations in perspective, Anmol Publications, New Delhi, 1996,
p.147.
82. Ibid.
83. “China Pays Nepal Police to Catch Tibet Refugees”, AFP, 20 December 2010, at http:/
/www.google.com/hostednews/afp/article/ALeqM5gAcJ673go50URtzW2B9jl3owe10g
(accessed on 18 July 2013).
84. Lin Meilian, “Nepal entrapped,” Global Times, 7 March 2013, at http://
www.globaltimes.cn/content/766645.shtml (accessed on 18 July 2013).
85. Jagannath P. Panda, “Dragon Looks South: Current drives in China’s South Asian
Neighbourhood Policy”, n. 17.
86. “Nearly 20 terrorists entered India via Nepal: Indian envoy,” NDTV, 29 April 2010, at
http://www.ndtv.com/news/india/nearly-20-terrorists-entered-india-via-nepal-indian-
envoy-21997.php (accessed on 18 July 2013).
87. Shyam Saran’s interview on Dishanirdesh, Nepal Television, on 12 July 2004, www.south-
asia.com (accessed on 26 October 2007).
88. David G. Wiencek, “China’s geopolitical manoeuvring in the Himalayas”, China Brief,
7 May 2005, Jamestown Foundation, www.asianresearch.org (accessed on 26 October
2007).
89. Suman Pradhan, “Long and Winding Road to UN Mediation”, South Asia Intelligence
Review, Weekly, 04(02), 25 July 2005, at http://www.satp.org/satporgtp/sair/Archives/
4_2.htm#assessment1 (accessed on 12 February 2014).
90. Amitav Acharya, “Theoretical Perspectives on International Relations in Asia,” in David
Shambaugh and Michael Yhuda (eds), International Relations Asia, Rowman & Littlefield
Publishers, Inc., Lanham, 2008, p. 63.
91. Dahal visited Beijing as Chairman of the UCPN (Maoist).
92. Interview of Wang Hongwei of the Institute of Asia-Pacific Studies to Republica, 22
April 2013. For details see http://www.myrepublica.com/portal/index.php?action=news_
details&news_id=53519 (accessed on 18 July 2013).
CHAPTER 5
Nepal’s strategic location makes it natural for external powers to take interest
in its domestic as well as foreign policy. Moreover, its sense of insecurity vis-
à-vis its neighbours and occasional uneasy relations with them, the 10-year
long spell of Maoist insurgency and the prolonged periods of political
uncertainty have attracted the attention of external powers for many years.
Nepal has assumed even greater salience for extra-regional powers—particularly
the US, the UK, the European Union etc.—since the Jana Andolan-II of 2006
which initiated the difficult process of political transition in Nepal—from
monarchy to democratic republic.
Amidst tumultuous political developments in Nepal, these powers have
made efforts to secure their strategic objectives, which might have also, directly
or indirectly, influenced the political transition. However, their interests in
Nepal do not make their engagement a one-sided affair. It is also true that
Nepal needed their support to overcome its economic challenges, particularly
when India—as a dominant partner in Nepalese economy—was not in a
position to deliver by itself. At a strategic level also, Nepal has been seeking
the support of external powers to neutralise the interference of its neighbours
in its internal affairs ever since its formation as a sovereign entity. Some
observers in Nepal note that for Kathmandu, “US influence could be used to
counter undue outside influence on the part of India and China.”1 Such policy
measures are deemed natural in the case of smaller countries to secure their
sovereignty and territorial integrity. According to Amitav Acharya:
Since weak powers are structurally incapable of maintaining order and
achieving security and prosperity on their own terms and within their
own means (there can be no such thing as a “regional solution to regional
problems”), the best way to manage the security dilemma is to keep all
Return of the Super Power: The US in Nepal 111
the relevant great powers involved in the regional arena so that they can
balance each other’s influence.2
This approach is generally successful if the small state has a strong political
and economic base and is not completely dependent on its bigger neighbours.
However, in the case of Nepal, it is overly dependent on India and has limited
access to its northern neighbour—China. Against this setting, the engagement
of external powers with their divergent interests in Nepal has complicated
matters even further. The political forces are also divided in terms of their
links or association with external powers who are furthering their own interests.
Both China and India have been concerned about the proactive involvement
of Western forces in the domestic politics of Nepal. In this context, this chapter
examines the US engagement with Nepal.
also have been an important objective of its Nepal policy. From mid-1970s,
US interest in Nepal diminished due to its engagements in other regions.
However, in post-9/11 period, US concerns regarding political instability in
Nepal increased. When the Maoist movement gained momentum, the US
reframed its Nepal policy. Bruce Vaughn observed that “American foreign policy
interests in Nepal seek to prevent the collapse of Nepal which, should it become
a failed state, could provide operational or support territory for terrorists.”7
American aid to Nepal was reduced between 1970 and 2001, but was increased
when the Maoist movement gained traction and began to target US citizens
in Nepal. The United States declared that: “...it has a strong interest in helping
the people of that country overcome the serious political problems they face,
and the developmental problems from which much of their current political
crisis derives.”8
the conflict. The US support for the monarchy could have been one of the
major reasons for the Maoists deviating from their traditional political line
from 2002 onwards and entering into negotiations with India and some
communist parties of Nepal, which resulted in the 12-point agreement in
November 2005 and a comprehensive peace agreement in November 2006.
The number of fatalities came down in 2007 after the CPN (Maoist) entered
into a comprehensive peace agreement.
As the US-led Global War on Terrorism intensified, the nature of conflict
changed in Nepal. Kathmandu’s policy of “internal militarisation with US
support did not yield the intended results; instead, the [conflict] spread rapidly
to districts previously unaffected.”19 The US opposed the peace talks between
the Maoists and government in January 2003. Despite that, the peace talk
began and collapsed in August 2003. The civil society groups in Nepal held
the US responsible for the failure of the peace talks in August by instigating
the army not to cooperate with the government.20 Since the Maoists vowed
to continue their political and military campaign after the collapse of the peace
talks, the US included the Maoists in its terrorist list in October 2003. US
Department of State on 31 October 2003, under “Determination Pursuant
to Section 1(b) of Executive Order 13224 Relating to the Communist Party
of Nepal (Maoist)”, proscribed “the Communist Party of Nepal (Maoist), also
known as the United Revolutionary People’s Council, also known as the People’s
Liberation Army of Nepal, also known as CPN(M)”, which “committed, or
poses a significant risk of committing, acts of terrorism that threaten the
security of U.S. nationals or the national security, foreign policy, or economy
of the United States.”
Not only the August 2003 peace talks but also several attempts
subsequently to initiate peace talks between the Maoists and the state were
supposedly sabotaged by the US, which wanted to suppress the movement by
undertaking military action with the support of the then RNA.21 In this regard,
the US supplied sophisticated arms and equipment to the RNA under the
anti-terrorist agreement signed with Nepal on 25 April 2003. Around 50 US
special forces trainers were providing training to 20 battalions of 700-800
men each through a 12-week counterinsurgency programme. Washington had
supplied the then RNA with 5,000 M-16 sub-machine guns, (to be followed
by another 5,000); Belgium sold 5,500 machine guns to Nepal while Britain
and India helped them by sending military advisers.22
The Maoists blamed the US for the failure of the peace talks in August
2003. Top Maoist leaders like Baburam Bhattarai, Ram Bahadur Thapa alias
116 Strategic Himalayas: Republican Nepal and External Powers
Badal and Prachanda criticised US activities against the Maoists in Nepal and
determined to drive the US away from Nepalese soil.23 During this period the
Maoists, in fact, sought support from China and India as both the countries
would be affected by the US military support to the RNA.24 With no options
left, the Maoists sought to exploit India’s anxieties regarding the US presence
in Nepal. As S.D. Muni observes: “India has been very sensitive to the strategic
presence in Nepal of intraregional powers like the United States and of its
known adversaries like China and Pakistan”25 given the misuse of the open
border between both countries. Interestingly, this was a period when China
remained neutral regarding the US military assistance to Nepal while India to
some extent endorsed the US policy against Maoists because of its own
domestic experience. However, later India realised the implications of the US
presence in Nepal and tried to resolve the conflict by bringing the Maoists
and the political parties together. Given Nepal’s geostrategic location and the
uneasy state of US-China relations, Beijing was concerned about growing US
interest in Nepal. It was perhaps India’s belief that the extended presence of
the US might force China to readjust its policy across the south of Himalayas.
The EU was divided over US approach to the conflict resolution. While
some EU members, including the UK, supported US military intervention as
long as it did not lead to serious human rights violation, others became critical
of US policy when the Nepal government tried to set up “Village Defence
Volunteers”, modeled on the Latin American paramilitary “Death Squads”.26
After the February 2005 political change, in which the king assumed absolute
power, India, and the US along with its Western allies suspended arms supplies
to the RNA. The king then looked to China for supply of arms and
ammunition. China agreed to king’s request in exchange for strong action
against Tibetans.
The US opposed the 12-point agreement between the Maoists and seven
political parties in November 2005. Although the US admonished King
Gyanendra for his February 2005 action, it suggested the king to initiate
dialogue with major parties. With no progress in negotiation between the
king and major political parties after making repeated suggestions, in the
aftermath of the 12-point agreement, Washington worked with New Delhi
and other powers to counter-balance the king by supporting other political
parties against him.27 After the king abdicated power in April 2006, the US
Ambassador to Nepal, James Moriarty, told the media that the king had no
choice but to give in to the opposition’s demand for a return to democratic
rule.28 Contrary to Moriarty’s position on the 12-point agreement, Secretary
of State Condoleezza Rice acknowledged that the US was working “very closely
Return of the Super Power: The US in Nepal 117
with the Indian government” to resolve the crisis in Nepal. However, wary of
American manipulation, the Maoists observed that this maneuvering was not
about bringing democracy to Nepal. Rather, it was about trying to ensure
that the “resolution of the current crisis” would be in the interest of the US
and India and that would not translate into any gains for the Maoists.29
Moriarty had repeatedly urged the king and the parliamentary parties to
work together to defeat the People’s War, while criticising the opposition parties
for working in tandem with the Maoists. Before the monarchy withdrew from
power, Assistant Secretary of State for Central and South Asian Affairs, Richard
Boucher, remarked:
We need to work as much as we can to pressure the king to restore
democracy, to encourage the parties to stay together and to come up with
a workable, functioning democracy. And be able to expunge the Maoists
from Nepali society. What the US cannot accept is a revolution that takes
up arms in order to overthrow a regime that serves US interests. What
the US cannot allow is a revolution which aims to fundamentally change
the current economic, political, and social relations under which the masses
of Nepalese people are oppressed.30
Interestingly, while the entire US administration was against peace talks
with the Maoists, the Carter Center, an Atlanta-based NGO, was supporting
the peace initiative with the Maoists. The Center’s attempts to establish linkages
with the Maoists and mediate, contrary to the US policy, made policy-makers
in India and Nepal suspicious.31 Barring the initial phase of the democratic
movement in Nepal in the 1950s, the US had supported the monarchy against
communism. In fact, after the dissolution of the first democratically elected
government in December 1960, the US believed that monarchy would be a
much stronger bulwark against communist uprising in Nepal.32
An analysis of US relationship with Nepal in the initial phase of conflict
indicates that it adopted multi-pronged strategy to resolve the civil conflict in
the Himalayan country of which, four strategies were most significant. First,
like other Western countries, the US also initially perceived the conflict as an
ideological movement arising from underdevelopment and bad governance.
The Maoists wanted to capture power by military means and set up a single
party communist state by exploiting these issues. On this the US initially
increased its development assistance to Nepal to counter the ideological
movement in rural areas. Second, it encouraged mainstream political parties
to come together to strengthen democracy. The US was worried about the
frequent change of prime ministers and lack of consensus between the political
parties and the king for countering the radical Maoist movement. After the
118 Strategic Himalayas: Republican Nepal and External Powers
collapse of two rounds of truce and negotiations in the later part of 2001, the
US found that the Maoists had been using the ceasefire for regrouping and to
re-coup. The US concerns depended further with the Maoists policy of
upgrading the movement by adopting Khmer Rouge tactics to achieve their
political objective in 2003. The US gathered that Nepal could quite easily
turn into a failed state which could become a potential haven for terrorists
like Afghanistan.33 As a third strategy to contain the Maoists militarily, the
Bush administration supported the RNA by increasing security aid. Lastly,
the US gathered global support and mobilised international community against
the Maoists by regular consultations with other missions in Kathmandu,
including India and the UK to “prevent the Maoists from attaining [military]
victory”.34
There was a marked change in the US policy towards Nepal after the
Democrats came to power under the leadership of Barack Obama in January
2008. Although the Obama administration continued the Global War on
Terrorism, it perhaps analysed the global conflicts on the basis of local
dynamics. Therefore, the administration probably decided not to pay heed to
conflicts in Nepal because of the active peace process and also since the Maoists
were not posing any serious threat to the US. It also probably did not want
to interfere in the India-led peace initiative. Moreover, one of the key features
of the Obama administration has been to engage the rebels in negotiations.
These US policy changes were immediately reflected in the appointment of
Scott H. DeLisi as the new ambassador to Nepal in November 2009. Instead
of looking at Nepal through the Indian perspective, the US decided to extend
its engagement with Nepal. In fact, by 2009, the US had to some extent
changed its views on the Maoists commitment to peace and democracy. In a
discussion with the Vice-Chairman of the UCPN(Maoist) party Narayan Kaji
Shrestha, DeLisi said that the “US was positive towards formation of a National
Unity Government under the leadership of [the Maoists].”40 The US appeared
to be convinced that a major section of the top Maoist leadership, except for
the Mohan Baidya faction, were committed to multi-party democracy and
were willing to institutionalise the peace process.
While articulating US policy towards Nepal, the then US Ambassador to
Nepal, Scott DeLisi, said that US policy goals in Nepal include: successful
completion of the peace process; the acceptance of a democratic Constitution;
security sector reform; enhancing the rule of law and human rights;
development; economic growth; and disaster preparedness in the post-conflict
period.41
The effect of the restructured US foreign policy as articulated by the
Democrats, became visible with the diversion of its annual aid assistance to
the social sector and consolidation of the peace process in the post-conflict
period. Earlier the military capacity building programmes dominated. Table
5.2 details the US aid to Nepal during the fiscal years 2001-2010. Since 2006,
a major portion of the US assistance has been for health, economic support,
military education and training, and food aid programmes. US funding for
the Nepalese Army and security forces was reduced drastically. Until February
2005, the US provided Nepal Government(s) with light weaponry and other
military assistance to fight against the Maoists.42 Surprisingly, in 2011, the
US announced a ‘peace process support’ of US$2 million while clarifying that:
“this amount is an additional Foreign Military Financing (FMF) and
International Military Education and Training (IMET) funding made available
120
specifically to provide technical and training support for the new Nepal [ese]
Army directorate,”43 and that its policy on the army remained unchanged.
The US also enhanced its annual financial assistance to $80 million in 2011
from the earlier average of $54 million since 1951.44
Defining US policy objectives and interests in Nepal, the CRS Report
2011 indicated that the US wanted “promotion of democracy and regional
stability in Nepal.”45 The same Report also spoke of the radical transformation
underway in Nepal and of the substantial progress made in the ongoing peace
process. The Maoists’ commitment to their previous political line (one-party
Republic) was not clear. Therefore, Nepal’s peace process might have to
overcome multiple challenges.46
Nepal however remains a vital part of the US policy towards the region,
given its proximity to Tibet. The US wants to maintain psychological pressure
on China by remaining engaged in Nepal. Having a friendly regime in
Kathmandu is therefore a priority for any US administration. The CRS Reports
since 2005 consistently mentions that China’s key interests in Nepal revolve
around anti-China activities organised by the Tibetan refugees. It further
observed that China has made “significant inroads in developing ties with
South Asian states.”47 Therefore, the US also seems to have understood that
the Maoists (reformed) are the future of Nepal. As Walter Andersen observes,
it is, “almost certain that the United States would not refuse to deal with
Maoists ... because they have gained power in democratic elections.”48
It seems the US policy towards Tibet has changed and it has renewed its
economic engagement with Nepal to justify its presence. After keeping a low
profile in Nepal affairs for around three years—2007-2010, it [US] has begun
to consolidate its presence in Nepal by leveraging its soft power. Over the past
one-and-a-half years the US has taken some significant steps such as: enhancing
its annual assistance to $80 million; signing a Trade and Investment Framework
Agreement; withdrawing the travel advisory issued in January 2011; selecting
Nepal for Millennium Challenge Corporation (MCC); reviving Peace Corps
operations after nearly eight years; sanctioning $2 million for a new directorate
in the Nepalese Army; and setting up a disaster management cell with support
of the NA and the US Pacific Command. The US interest in Tibet is reflected
by its proposed investments in Tatopani, the border town between Nepal and
China, where China is already developing infrastructure. According to US
embassy sources in Kathmandu the US wants to invest in the construction,
agriculture, and hydropower sectors in the (Tatopani) area.49
122 Strategic Himalayas: Republican Nepal and External Powers
Conclusion
In the absence of any serious conflict in Nepal, the US policy towards South
Asia seems to be pre-occupied with Afghanistan, Pakistan and India. For the
rest of the South Asian countries, the US has to some extent relied on India’s
regional leadership. Interestingly, this was reflected at the 6th IISS-NESA
South Asia Security Conference held in Muscat, Oman, on 1 December 2012
on “US-South Asia Relations: A Vision for the Future.” During the conference,
Geoffrey Pyatt, Principal Deputy Assistant Secretary, Bureau of South and
Central Asian Affairs, spoke about US engagements in the region. There was
no mention of Nepal or sub-Himalayan region in the presentation although
Pyatt touched upon Bangladesh, Pakistan, Afghanistan and India. He in fact
mentioned that US bilateral relations with each country in South Asia are
“intended to strengthen our [US] respective ties, address impediments, and
increase security and prosperity”. Surprisingly, Nepal did not figure in the
US-proposed India linked ‘New Silk Road’ and the Indo-Pacific economic
connectivity agenda.64
Return of the Super Power: The US in Nepal 127
1. Narayan Khadka, “US Aid to Nepal in the Cold War Period: Lessons for the Future”,
Pacific Affairs, 73(1), Spring 2000, p. 78. Also see Narayan Khadka, Foreign Aid and
Foreign Policy: Major Powers and Nepal, Vikas Publishing House Pvt. Ltd, New Delhi,
1997.
2. Amitav Acharya, “Theoretical Perspectives on International Relations in Asia,” in David
Shambaugh and Michael Yhuda (eds), International Relations Asia, Rowman & Littlefield
Publishers, Inc., Lanham, 2008, p. 64.
3. It should be mentioned here that the US had supported the Khampa resistance movement
against China in 1959 and later the Tibetan rebels were trained by the CIA during
1959-64.
4. Madhab P. Khanal, “Nepal-U.S. Relations: A Historical Overview”, in Nepal’s Relations
with United States of America, Policy Study Series-4, Institute of Foreign Affairs,
Kathmandu, 2004, p. 2.
5. The Peace Corps members were mostly working in the rural areas of Nepal. Their primary
task was to provide technical assistance to peasants and promote education in rural areas.
They also tried to understand the local culture and familiarise the people with American
128 Strategic Himalayas: Republican Nepal and External Powers
culture. Moreover, the information provided by the Peace Corps members greatly helped
the US in shaping its foreign policy towards the country. Since 1962, over 4,000
Americans have served as Peace Corps Volunteers in Nepal. The Peace Corps was
established on 1 March 1961.
6. Eugene B. Mihaly, Foreign Aid and Politics in Nepal: A Case Study, Himal Books,
Kathmandu, 2009, pp. 30-31. Also see Joel M. Isaacson, et al., Half-a-Century of
Development: The History of U.S. Assistance to Nepal 1951-2001, published by the United
States Agency for International Development (USAID) in Kathmandu, Nepal, 2001.
7. Bruce Vaughn, “Nepal: Background and U.S. Relations”, Report for Congress,
Congressional Research Service Report, The Library of Congress, 2 February 2006, p.
17.
8. Donald Camp, Principal Deputy Assistant Secretary, “United States Interests and Goals
in Nepal”, statement before the US House of Representatives Committee on International
Relations, Washington, DC, 2 March 2005, at http://www.state.gov (accessed on 13
July 2008).
9. Narayan Khadka, “US Aid to Nepal in the Cold War Period: Lessons for the Future”,
n. 1.
10. Evan M. Duncan, “Chronology of relations between the United States and Nepal, 1947-
87”, at http://findarticles.com/p/articles/mi_m1079/is_v87/ai_5278931/ (accessed on
29 July 2013).
11. Vinod Kumar, “Great Powers and Nepal”, in S.D. Muni (ed.), Nepal: An Assertive
Monarchy, Chetana Publications, New Delhi, 1977, p. 152.
12. Narayan Khadka, “US Aid to Nepal in the Cold War Period: Lessons for the Future”,
n.1, p. 82.
13. Evan M. Duncan, “Chronology of relations between the United States and Nepal, 1947-
87”, n. 10.
14. Country Studies, Nepal, available at http://countrystudies.us/nepal/70.htm (accessed on
24 October 2007).
15. Narayan Khadka, “US Aid to Nepal in the Cold War Period: Lessons for the Future”,
n.1, pp. 84-86.
16. Patterns of Global Terrorism 2002 - April 2003, Office of the Coordinator for Counter-
terrorism, US Department of State p.10.
17. Peter Burleigh, “Nepal: Western Views of the Maoist Insurgency and the Royal Takeover,”
Working Paper, 9 July 2005, Institute of Governmental Studies, University of California,
Berkeley.
18. Ramtanu Maitra, “US jittery over Nepal”, Asia Times, Hong Kong, 16 March 2005, at
http://www.atimes.com/atimes/South_Asia/GC16Df01.html (accessed on 29 July 2013).
19. John Mage, “The Nepali Revolution and International Relations”, Monthly Review, 59
(1), 1 May 2007, at http://monthlyreview.org/commentary/the-nepali-revolution-and-
internationalrelations (accessed on 29 July 2013). This also appeared in Economic and
Political Weekly, Mumbai, 19 May 2007 issue.
20. Ibid.
21. In an interview to Janadesh Weekly, Kathmandu, on 2 June 2006 the then CPN (Maoist)
Chairman, Prachanda, alleged “attempts by America to sabotage the historic 12-point
agreement between the Maoists and Seven Party Alliances (SPA). Also see Baburam
Bhattarai, “On Moriarty’s Pontification” The Kathmandu Post, 23 February 2006, at
Return of the Super Power: The US in Nepal 129
Nepal’s diplomatic relations with the European Union (EU)1 and European
countries are at regional, bilateral and multilateral levels. At the multilateral
level many international organisations including the EU and the UN have
played important roles to further the peace process. Since the EU and the
UN have been involved in the various stages of the peace process in Nepal,
the book discusses the role of these two multilateral bodies separately. While
the role of the UN in Nepal peace process has been discussed in Chapter 2,
the role of EU is covered in detail in this chapter. The role and influence of
individual European countries have also been discussed separately in this
chapter.
European countries have contributed to Nepal’s socio-economic
development as part of the EU’s framework and also at the bilateral level in
various ways. The role of the four most significant of these countries namely,
the UK, Norway, Switzerland and Germany (hereinafter referred to as ‘major
European countries’) has been taken up for discussion in this chapter. These
countries are important because of the quantum of financial aid, their support
for the peace building process and conflict resolution efforts, and their enduring
interest in Nepal. Although some other European countries—Denmark,
Finland, Sweden, France and Belgium—are part of the conflict resolution
process in Nepal, their involvement has not been discussed in this chapter.
and hand them over to the UN bodies in Nepal. Therefore, China has been
very suspicious of the presence of international NGOs and their support to
the ethnic groups in Nepal.
There were also economic and security interests behind Western aid
assistance to Nepal. The western donors including EU members “since the
late 1970s started making their aid programme conditional behind the veil of
good governance and structural adjustment policies. Their objectives were to
carry out market oriented neo-liberal policies that would promote their
economy and shape their long-term political interests.” 8 The Nepal
government, therefore, initiated policy changes as instructed by the donors.
In fact, there have been occasions when Western donors9 have financed projects
directly without channelising the funds through the government mechanism.10
Some Nepalese analysts shared with this author that these funds might have
been utilised for empowering Tibetan refugees and other ethnic groups.
Interestingly, Thomas Gass, Ambassador of Switzerland to Nepal and co-chair
of the 13 Basic Operating Guidelines (BOG) signatories and Robert Piper,
UN Resident and Humanitarian Coordinator, another co-chair of the 13 BOG
group, during a media interaction on 23 November 2012 accepted that some
60-70 per cent of the aid is routed through government channels.11 In the
post-9/11 period, aid was leveraged to co-opt countries into the Global War
on Terrorism.12 As part of their security concerns, some European countries
had reformulated their aid assistance policy in line with Nepal’s counter
insurgency policy against the Maoists.
Until the king’s takeover, the international community was mostly divided
over the root cause and nature of the conflict. For example, while some
European countries analysed the conflict as a structural problem and appealed
to both parties to stop human rights violations and resolve the conflict through
negotiations, others, including, the UK, Germany, Belgium, in tandem with
US policy, supplied arms and ammunition to the Nepalese Army as part of
their commitment to the Global War on Terrorism. Since the onset of the
Maoist insurgency, the donor agencies believed that “an effective development
strategy would mitigate and ultimately resolve a conflict that was fundamentally
political in nature.”13 Though the donors’ generosity with funds supposedly
aggravated the conflict (because some donors are regarded as ‘conflict-
insensitive’, a term used in some UN documents), on the positive side, they
“prevented major displacement of people and kept the social fabric of villages
and rural communities largely intact”14 and also checked human rights
violations. Since most of the development aid from India, China and the US
were invested in locations strategically important to these countries, the EU
136 Strategic Himalayas: Republican Nepal and External Powers
funding penetrated into areas neglected not only by these countries but also
by the state agencies. The EU countries continued their activities in these
areas, either by paying security money or by taking both the conflicting groups
into confidence. For example, in 2003, the Maoists decided to allow the NGOs
funded by European countries to operate in the districts under their control
in an effort to seek their support. At the same time, they prevented US funded
NGOs from operating in remote areas because the US was supporting the
Nepalese Army in its counter insurgency strategy against the Maoists.
Interestingly, for smooth operations in the conflict zones, “all bilateral Western
aid agencies—with the exception of USAID—and the UN agencies adopted
basic operating guidelines (BOG)15 in October 2003.”16
Role in Negotiations
Throughout the Maoist insurgency period, the parties to the conflict
maintained Track II channels for communicating with each other. Before the
palace massacre in June 2001, the Maoists were in touch with King Birendra.
In fact, there was some information that the king wanted the Maoists to
counter the democratic forces. The conflict took a new turn with the killing
of King Birendra and assumption of power by King Gyanendra. Sensing an
external design to quell the movement and given their disagreements with
King Gyanendra, the Maoists intensified their armed struggle. King Gyanendra
deployed the army to suppress the movement. But when this did not bring
results, Prime Minister Sher Bahadur Deuba offered peace talks. After three
rounds of talks, the negotiation process collapsed in November 2001. The
negotiations started again in January 2003 and collapsed in August 2003.
During this period, some European countries, especially Switzerland and
Norway, tried separately to mediate by using their contacts with civil society
groups. European Union member countries like Denmark, Finland, Germany,
Sweden and the UK organised workshops for comparing these peace initiatives
with those in other conflict theatres in the world.17 The EU delegation
representative in Nepal, the EC, was not involved directly in any negotiations.
It condemned human rights violations by both parties to the conflict and
appealed to them to resolve the conflict through peaceful negotiations. In
the post-conflict period, the EC was concerned about the delay in the
completion of the peace process and promulgation of the new Constitution.
As part of the peace-building strategy, the EC along with EU member
countries was also anxious about the delay in the establishment of a Truth
and Reconciliation Commission (TRC).
Institutionalise Peace and Democracy 137
As Trading Partners
Apart from being a dependable development partner, the EU has also proved
to be a reliable trade partner of Nepal. It is the largest importer of Nepalese
goods. According to the data available with the European Economic
Community, the EU exported 84,056,326 worth of goods and services and
imported 73,116,955 during 2003-04. According to government sources:
Around 37 per cent of the total overseas exports of Nepal are with the
EU, whereas the imports are to the tune of 10.27 per cent. Nepal’s total
trade with EU in the fiscal year 2007/2008 was worth 150 million, of
which exports were worth 62 million and imports worth 88 million.21
Germany is the largest exporter (mechanical tools) among the EU countries
to Nepal. Nepal’s exports include woollen carpets, readymade garments, hides
and goatskin, woollen and Pashmina goods.22 Nepal’s balance-of-trade deficit
with the EU is much less than that with India and China. However, Nepal
receives very little FDI from the EU region compared to what it gets from
India, China and the US. Out of a total 619 joint venture companies operating
in Nepal, only around 48 joint venture industries or firms have their origins
in the EU.23
138 Strategic Himalayas: Republican Nepal and External Powers
EU notes that the democratic state has the sole right to use legitimate
force to preserve the rights and security of its citizens. The EU believes
that the authorities in Nepal must seek to establish basic security and an
environment in which developmental efforts to overcome poverty can be
pursued, and that the insurgency hinders the development process.27
Other EU members condemned the supply of arms, alleging that these might
possibly be responsible for killing thousands of innocent Nepalese caught in
the crossfire. However, the EU in general endorsed such transfers on grounds
that “Nepal was a democratic state fighting an illegal Maoist rebellion, not a
country engaged in civil war.”28 It also upheld Nepal’s right to defend its newly
established democracy in countering terrorist insurgency.29 In fact, the EU
remained silent while Belgium tried to supply 5,500 automatic rifles to Nepal.
This led to confusion in international community about EU’s role in the peace
building process in Nepal. Commenting on this state of affairs [during the
conflict phase], Kanwal Sibal, the then foreign secretary of India, noted that
“Europe [was] unified economically but not in the defence domain.”30 But
despite this, EU member countries were known to be exchanging their views
on political developments and consulted each other regularly on peace building
in Nepal.
Post-Conflict Approach
In the post-conflict period, the EU and some of its member countries
supported the peace process, the 2008 CA elections and the Constitution-
drafting process by providing technical and financial assistance. EU member
countries were the largest donors for the integration and rehabilitation of the
former Maoist combatants. As part of the conflict resolution programme, they
had put pressure on the then interim government(s) for the setting up of a
Truth and Reconciliation Commission (TRC) and Commission for the
Investigation of Disappeared Persons (CIDP) in accordance with international
norms in order to deliver justice to the Maoist insurgency (13 February 1996
to 21 November 2006) victims. Despite the setting up of the TRC through
an ordinance on 14 March 2013, the EU member countries found that the
Nepal government had failed to implement the main objectives of the TRC
as per international standards due to the vested interests of the political class
of Nepal. The bill was perceived to be heavily focused on amnesty. The Nepal
Peace Trust Fund (NPTF),31 which was established in January 2007, also did
not conform to international standards as claimed by the then government.
They also felt that some provisions of the bill in fact were in violation of
international law. Therefore, the EU decided not to fund the TRC and CIDP.32
140 Strategic Himalayas: Republican Nepal and External Powers
Like the US, the UK was a leading arms supplier to Nepal and a strong
supporter of the monarchy. The military assistance increased after the terrorist
attack on the US mainland on 11 September 2001 and deployment of the
NA against the Maoists in November 2001. Military assistance from both
the US and the UK was initially in the form of training for security forces and
logistical support, and was a “gift”.38 Peter Burleigh observed that both “publicly
and privately the US (and UK) strongly advised the Government of Nepal
that there [had] to be a political solution to the Maoist challenge; a solution
that would include the Maoists, the democratic political parties, and the
king.”39 Despite that the UK supplied 6780 assault rifles in 2001; two MI-
17 helicopters in 2003; and two Islander short-takeoff-and-landing aircraft in
2004. According to Whitehall’s official export figures, Britain exported
142 Strategic Himalayas: Republican Nepal and External Powers
Norway
Norway, which is a non-EU country, is the fourth-largest bilateral donor to
Nepal. The bilateral relationship was established in 1973. Before the Maoist
insurgency, Norway was engaged in community development and capacity
building programmes in the rural areas. Most of the projects were prioritised
according to the requirements of the Nepalese government. Contrary to the
UK’s perspective, Norway was open to negotiations with the Maoists and
has consistently maintained that the Maoists were the agents of social
transformation in Nepal. It criticised both the government and the Maoists
for human rights violations and appealed for resolution of the conflict through
political dialogue.
Given its experience in conflict theatres across the globe and its engagement
in the Sri Lankan conflict, Norway had indicated during the conflict period
that it was willing to be a mediator in Nepal in case the government required
its services. In 2003, the Norwegian Ambassador to Nepal, Ingrid Ronnaug
Ofstad had stated: “Norway would mediate peace talks in Nepal if both parties
showed genuine interest in its involvement.”45 The initiative was not, however,
taken further because of India’s strong objections on third-party extra-regional
mediation in its neighbourhood, and also because of the lack of support from
the US and the UK.
After the king took over in February 2005, the Norwegian Government
reduced its financial aid to Nepal and declared that it would re-start it when
democracy was restored in that country. The Norwegian Ambassador played
a leading role in raising the issue of delay in the completion of the peace
process and lack of consensus on the contentious issues. Norway supported
peace-building programmes initiated by multilateral agencies like the UNMIN
and other UN agencies and also appointed its former Ambassador to Nepal,
Tore Toreng, as a special envoy for the peace process in Nepal. It has been
reported that Toreng was sympathetic towards the Maoists and facilitated
meetings between US embassy officials and Maoist leaders. He also coordinated
a dialogue between the international community and the political leaders of
Nepal in 2010.46 The Norwegian Minister for Development Cooperation,
Erik Solhem, also undertook several visits to Kathmandu between 2006-2012
to end the political stalemate and to ensure the establishment of peace.
Switzerland
Switzerland offered to mediate in the peace process in Nepal in early 2000.
This offer was generally related to four factors: (1) the Swiss experience in
mediation in other conflict areas; (2) its reputation and acceptance as a neutral
144 Strategic Himalayas: Republican Nepal and External Powers
Germany
Bilateral relations between Nepal and Germany were established in 1967. As
mentioned earlier, Germany is Nepal’s largest trading partner from the
Institutionalise Peace and Democracy 145
It was estimated that by the year 2000, the number of Christians in Nepal
crossed 800,000. The growth rate of Christians in Nepal has been rising
sharply after Nepal became a republic and a secular state. There are
unverified reports that in the recently conducted population census, the
number of Christians is between 1.5 and 2 million which is more than 5
[per cent] of the total population.57
Interestingly, there have been conflicting reports about the rise in the
numbers of the Christian population in Nepal. Since the Christian population
was not included in the 2001 Census, the exact percentage of its increase in
the last ten years has been ambiguous. While the ultra-rightist groups argue
that the number of Christians is between 1.5 and 02 million, according to
the 2011 Census, the Christian population in Nepal is 3,75,699, which is 1.4
per cent of the total population of 26,444,504.58 Interestingly, one private
source indicated that the Christians constituted 0.4 per cent of the total
population in 2007.59 In fact, challenging the 2011Census, the Federation of
National Christians-Nepal (FNCN) claimed that “there are more than 8,500
churches and over 2.5 million Christians across the country [Nepal].”60 Yubaraj
Ghimire, a journalist and security analyst observed that since donor countries
such as “Denmark, Norway, Switzerland and Britain have provided assistance
to ethnic organisations that espouse extreme views in the name of ethnic
empowerment. Such assistance has increased the danger of social and ethnic
tension and social violence.”61 Similarly, Dirgha Raj Prasai argued: “There is
increasing concern among foreigners in promoting ethnic federalism.”62
In an effort to curb external support to the armed groups, in May 2010,
the government of Nepal objected to a meeting planned between visiting
European parliamentarians and the armed Limbuwan and Khumbuwan
groups. In a statement, the Ministry of Foreign Affairs (MoFA) said: “The
EU parliamentarians should abstain from meeting the armed groups as they
were illegal and they did not represent any social or political groups.”63
Moreover, on many occasions, China has expressed concerns about the EU-
supported INGOs allegedly extending support to Tibetan refugees.
Although these allegations are unsubstantiated, on 23 November 2012,
the UN Resident and Humanitarian Coordinator and 13 signatories of BOG,
issued a statement reiterating their impartiality and gave the assurance that
aid would not be misused by any civil society organisations to support activities
that would lead to violence during the election period.64
The hyperactivity of the EC and other European countries for establishing
the TRC in the post-CA dissolution period and their meetings with political
148 Strategic Himalayas: Republican Nepal and External Powers
leaders have been criticised by the government of Nepal. The MoFA criticised
such activities as “foreign interference into Nepal’s internal affairs. This is
against diplomatic decorum and has been perceived as an attempt to drag the
constitutional head of state into political issues.”65 This reaction came after
representatives of the EC and the ambassadors of some European countries
met President Ram Baran Yadav on 7 September 2012 despite MoFA
disallowing such a meeting. There is a perception in the Nepalese media that
the CA was dissolved due to the external support for the Janajatis and Madhesis
on the federalism issue.
Conclusion
Although there has been a consistent effort and support by the international
community to complete the peace and Constitution-drafting process in Nepal,
the community is divided over the means to be adopted to achieve the goal.
There are three distinct approaches—Western, Indian and Nepalese–for
resolving the political stalemate. The Western approach is further divided
between the US and Europe and the latter is again divided between
Scandinavians and non-Scandinavian countries.
Despite the comprehensive peace agreement of November 2006, the
completion of integration programme and formation of a new government
after the second CA elections in an attempt to draft the Constitution,
uncertainty prevails in Nepal. Furthermore, external interventions and
conflicting political interests have also added to these uncertainties. Since Nepal
is heavily dependent on European countries for the development budget, they
can influence the Constitution-making process in future. The continuous
engagement of the US, the UK and other Western powers and their support
for the Tibetan movement would convert Nepal into a conflict region.
Therefore, instead of promoting individual country formulas for conflict
resolution, an effort needs to be made to evolve a homegrown solution.
*
NOTES
separate data available about how much of this assistance was provided during the
establishment of the EU (1993). Also see “The EU’s relations with Nepal – An Overview,”
at www.ec.europa.eu.
4. Ibid., p.02. For more information, see http://eeas.europa.eu/nepal/docs/07_13_en.pdf
(accessed on 12 August 2013).
5. “European Initiative for Democracy and Human Rights/Non-Governmental
Organisations,” European Union, at www.ec.europa.eu. (accessed on 9 March 2014).
6. “The EU’s relations with Nepal—An Overview,” at www.ec.europa.eu. Also see “Nepal:
EU Troika,” Press Release, Kathmandu, 15 December 2004, Council of the European
Union, at http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/er/
83197.pdf (accessed on 12 August 2013).
7. “MEPs Give Nepal a Helping Hand”, New Europe, at http://www.neurope.eu/article/
meps-give-nepal-helping-hand (accessed on 12 August 2013).
8. Yam Prasad Chaulagain, “Official Development Assistance in Nepal: A Development
Perspective”, e-International Relations, 28 August 2012, at http://www.e-ir.info/2012/
08/28/official-development-assistance-in-nepal-a-development-perspective/ (accessed on
24 November 2012). Also see “A little help from our friends”, ekantipur, 20 November
2012, at http://www.ekantipur.com/2012/11/20/opinion/a-little-help-from-our-friends/
362949.html (accessed on 24 November 2012).
9. Media reports indicated that three donor agencies—Department for International
Development (DFID), Swiss Agency for Development and Cooperation (SDC) and
Finnish International Development Agency (FINNIDA)—had pledged a sum of
US$61.8 million for the four-year multi-stakeholder forestry programme. For details
see “Submit documents on foreign aid, forest ministry told”, Republica, Kathmandu, 25
March 2012, at http://www.myrepublica.com/portal/index.php?action=news_details&
news_id=33221 (accessed on 24 November 2012).
10. Yam Prasad Chaulagain, “Official Development Assistance in Nepal: A Development
perspective”, n.8.
11. “Donors not to allow use of aid for violence, political gains”, Republica, 23 November
2012, at http://www.myrepublica.com/portal/index.php?action=news_details&news_
id=45260 (accessed on 24 November 2012).
12. Bishwambher Pyakuryal, “What is aid for?” Republica, 26 January 2011.
13. Jorg Frieden, “A Donor’s Perspective on Aid and Conflict”, in Sebastian v. Einsiedel, et
al.(eds), Nepal in Transition: From People’s War to Fragile Peace, Cambridge University
Press, Cambridge, 2012, p. 101.
14. Ibid., p. 108.
15. For details, see Appendix-V.
16. Jorg Frieden, “A Donor’s Perspective on Aid and Conflict”, n. 13, p. 103.
17. Teresa Whitefield, “Nepal’s Masala Peacemaking”, in Sebastian v. Einsiedel, et al.(eds),
n. 13, p. 161.
18. CHD is a Switzerland-based mediation organisation mostly engaged in peace process in
conflict-ridden countries.
19. Teresa Whitfield, “Nepal’s Masala Peacemaking”, n. 17, pp. 158-9.
20. Author’s interaction with one senior Government of India official, who was closely
associated with Nepal affairs in 2006, in October 2012 in New Delhi.
21.“Nepal-EU Relationships in Brief,” Embassy of Nepal, Brussels, at http://
150 Strategic Himalayas: Republican Nepal and External Powers
with the CPN-UML, made the CPN-UML critical of external support to the federalism
issue.
37. Peter Burleigh, “Nepal: Western Views of the Maoist Insurgency and the Royal Takeover,”
Working Paper, 9 July 2005, Institute of Governmental Studies, University of California,
Berkeley, p. 1.
38. UK government’s reply to the questions raised in the UK Parliament concerning arms
supplies to Nepal. For more information, see “Nepal: Military assistance contributing
to grave Human Rights violations,” Amnesty International Report 2005.
39. Peter Burleigh, “Nepal: Western Views of the Maoist Insurgency and the Royal Takeover,”
n.37, p. 4.
40. Richard Norton-Taylor, “British arms supplies fuelling abuses in Nepal, says Amnesty”,
The Guardian, 15 June 2005, at www.politics.guardian.co.uk. For more information,
also see “Nepal: Military assistance contributing to grave Human Rights violations,”
n.38.
41. “DFID Nepal Portfolio Review 2012/13”, DFID, British Embassy Kathmandu, at https:/
/www.gov.uk/government/uploads/system/uploads/attachment_data/file/237274/Nepal-
portfolio-review-2012-13.pdf (accessed on 31 January 2014).
42. International Crisis Group, “Nepal Crisis: Mobilising International influence,” Crisis
Group Briefing, 19 April 2006, p. 5.
43. “UK announces $26 mn support for Nepal quake preparedness”, Zee News, 28 June
2012, at http://zeenews.india.com/news/south-asia/uk-announces-26-mn-support-for-
nepal-quake-preparedness_784418.html (accessed on 12 August 2013).
44. British Embassy, Kathmandu, Press Release, 30 August 2012.
45. “Norway offers to mediate in Nepal”, The Hindu, 30 January 2003, at http://hindu.com/
2003/01/30/stories/2003013001811200.htm (accessed on 12 August 2013).
46. “Nepal: Norway appoints Special Envoy”, Cablegatesearch, confidential Kathmandu
000077, E.O. 12958: DECL: 01/26/2020, charge d’Affaires, a.i., John M. Ordway 1.4
(b/d), released on 30 August 2011, at http://www.cablegatesearch.net/
cable.php?id=10KATHMANDU77 (accessed on 12 August 2013).
47. “Bilateral relations between Switzerland and Nepal”, Federal Department of Foreign
Affairs, Switzerland, at http://www.eda.admin.ch/eda/en/home/reps/asia/nnpl/
bilnep.html (accessed on 12 August 2013).
48. “Switzerland establishes closer ties with Nepal”, swissinfo.ch, 17 August 2009, at http:/
/www.swissinfo.ch/eng/politics/foreign_affairs/Switzerland_establishes_closer_ties_
with_Nepal.html?cid=983622 (accessed on 12 August, 2013).
49. Swiss Agency for Development and Cooperation, Swiss Embassy in Kathmandu. For
more information, see http://www.swiss-cooperation.admin.ch/nepal/en/Home/
Swiss_Cooperation_in_Nepal/The_Swiss_Embassy_in_Nepal (accessed on 12 August
2013).
50. Teresa Whitfield, “Nepal’s Masala Peacemaking”, n. 17, pp. 155-74.
51. Ram Pratap Thapa, German NGOs and Political Strife in Nepal, Friedrich Ebert Stiftung,
December 2003.
52. “Nepal: Military assistance contributing to grave Human Rights violations”, n. 38.
53. United Nations Development Group. For more information, see http://mptf.undp.org/
factsheet/fund/npf00 (accessed on 2 March 2013).
54. UN Office of the Resident and Humanitarian Coordinator Nepal, Press Release, 29
152 Strategic Himalayas: Republican Nepal and External Powers
June 2012. For details see “Nepal receives $8 million from UN peacebuilding fund”,
UN News Centre, 29 June 2012, at http://www.un.org/apps/news/story.asp/html/
www.unicef.org/story.asp?NewsID=42362&Cr=nepal&Cr1=#.UvxSIGJ6WtE (accessed
on 13 February 2014).
55. Author’s interaction with political leaders, civil society activists and media personnel in
Kathmandu in June 2011 and November 2013.
56. “EU Nations funding for Religious Conversion in Nepal: Kamal Thapa”, The Telegraph
Weekly, Kathmandu, 23 May 2010, at http://www.telegraphnepal.com/
news_det.php?news_id=7720& PHPSESSID= 8e2636e8c32b7e8bff63c389bd244d9d
(accessed on 12 August 2013).
57. K.B. Rokaya, “Nepal: Christmas and Christianity”, The Telegraph Weekly, Kathmandu,
1 February 2012, at http://www.telegraphnepal.com/views/2012-01-02/nepal:-christmas-
and-christianity.html (accessed on 12 August 2013). Rokaya is General Secretary of the
National Council of Churches of Nepal (NCCN), Executive Committee member of
United Christian Alliance of Nepal (UCAN), Founding Vice-President of Inter-Religious
Council of Nepal (IRCN), President of Nepal Intellectuals Forum and member of the
National Human Rights Commission of Nepal (NHRC).
58. National Population and Housing Census 2011, National Report, Volume 01, Central
Bureau of Statistics, Government of Nepal.
59. “Nepal’s First-Ever Census Reveals Good News for Christians”, Christianity Today, 30
November 2012, at http://www.christianitytoday.com/gleanings/2012/november/nepals-
first-ever-census-reveals-good-news-for-christians.html (accessed on 19 August 2013).
60. “FNCN: Christian population below actual size,” The Kathmandu Post, 6 December
2012, at http://www.ekantipur.com/the-kathmandu-post/2012/12/05/metro/fncn-
christian-population-below-actual-size/242499.html (accessed on 19 August 2013).
61. Prakash A. Raj, “Money for nothing”, The Kathmandu Post, 5 March 2012, at http://
www.ekantipur.com/the-kathmandu-post/2012/03/05/oped/money-for-nothing/
232309.html (accessed on 12 August 2013).
62. Ibid.
63. “There was no plan to meet armed groups: EU”, Republica, 5 May 2010, at http://
www.myrepublica.com/portal/index.php?action=news_details&news_id=19227 (accessed
on 12 August 2013).
64. “Donors not to allow use of aid for violence, political gains,” Republica, 23 November
2012.
65. “Diplomatic headache as envoys try to reach President”, The Himalayan Times, 7
September 2012, at http://www.thehimalayantimes.com/fullNews.php?headline=
Diplomatic+headache+as+ envoys+try+to+reach+prez&NewsID=346480 (accessed on
12 August 2013).
CHAPTER 7
Nepal figured prominently in Pakistan’s foreign policy since the late 1950s.
Especially during the monarchy period, India was a major factor in the
consolidation of this relationship. After deciding to diversify Nepal’s foreign
policy, King Mahendra was also seeking international and regional support
for his regime to reduce Nepal’s dependence on India. Pakistan took advantage
of King Mahendra’s unhappiness over India’s support to the democratic forces
in Nepal and his craving for international recognition. The monarchy perceived
India as the greatest challenge to its power and legitimacy. Pakistan, taking
advantage of India-Nepal tension and also because of its enduring rivalry and
strategic competition with India, sought a new ally in the neighbourhood.
For Pakistan, no other country could have been more attractive in the region
than Nepal, with whom India shares an open border. Apart from these factors,
the two countries had many other commonalities—asymmetry vis-à-vis India
in terms of territory, economy and military power, and similar apprehension
regarding New Delhi’s intentions. The anti-India stance of the elites in both
the countries led to a deepening of relationship through high-level visits and
discussions relating to their common concerns in South Asia.
Compared to other countries like India, China, the US and European
countries, Pakistan’s presence1 in Nepal as a development partner, has been
low key; but its diplomatic success rate in Nepal has been disproportionate to
its presence. In spite of its limited contribution to the socio-economic
development and also despite having played almost no role in the post-conflict
period in Nepal, Pakistan has continued to be one of Nepal’s friendliest
neighbours. It is considered to be a benign neighbour by Nepal. On many
occasions people in Nepal express their anti-India feelings by praising Pakistan.
Most importantly, Pakistan has also managed to keep India’s repeated allegations
regarding its nefarious anti-India operations from Nepalese territory off the
154 Strategic Himalayas: Republican Nepal and External Powers
agenda of its bilateral meetings with Nepal. This is because some Pakistani
leaders, in the past, have maintained good relations with the power centers—
including the monarchy—in Nepal and have thus managed to achieve their
limited strategic objectives. Since 1961, Pakistan has been asking Nepal to
support its regional initiatives to limit India’s influence both regionally and
globally. One scholar wrote that Zulfikar Ali Bhutto, former prime minister
of Pakistan, had equated Nepal with Afghanistan by saying:
Nepal is to Pakistan what Afghanistan is to India–Nepal’s proximity to
East Pakistan and the vital states of Sikkim and Bhutan and the province
of Assam with its Naga and Mizo freedom fighters give Nepal a high place
in the calculations of Pakistan’s foreign policy.2
Therefore, after India, Pakistan is the second South Asian country that
considers Nepal to be of strategic importance. While for India the concern is
cross border linkages, which can be easily penetrated by elements inimical to
India’s security; for Pakistan, Nepal is important because of its proximity to
China and conflict theatres in the north-eastern flank of India. In fact, the
open border between Nepal and India has been used to launch a proxy war
against India by Pakistan.
Nepal is also much more comfortable with Pakistan and other smaller
SAARC neighbours because it does not have any problems arising from identity,
security and geographic proximity with them as it has with India. And the
most important factor has been that Nepal does not share a border with any
other South Asian country except with India. These countries are not engaged
with Nepal on a day-to-day basis. In terms of people-to-people contact, India
has the largest Nepalese Diaspora among SAARC countries. Since the 1960s,
to counter India’s influence, Nepal engaged with some external powers, who
had adversarial relations with India.
In the post-monarchy period, Pakistan has been trying to readjust and
expand its constituency in Nepal, especially among the Terai-based minority
groups. Media reports indicated that during November 2013 CA elections
some Terai based political parties’ claimed having support from Muslims.3
From field visits in Nepal, one gathers that Pakistan has established links with
many Muslim groups in the region and even funded some of the candidates
during elections. Therefore, Pakistan’s links with other political groupings
among the Terai-based minority groups cannot be ruled out. Moreover,
Pakistan has also been reportedly funding some NGOs operating in southern
Nepal for the recruitment and training of anti-India fundamentalist groups.4
Pakistan’s Engagement with Nepal 155
insurgents, who had crossed over to Pakistan occupied Kashmir (PoK) in the
early 1990s with the objective of fighting to liberate Kashmir, returned to
India via Nepal. In September 2012, for example, some Kashmiri dissidents,
while returning from PoK, disclosed that after arriving in Kathmandu they
destroyed their Pakistani passports and crossed the Nepal border to go to
Kashmir.9 As per media reports—based on intelligence sources—around 107
men and 43 women, the highest number in last five years, have crossed into
India through the Nepal-India border till October 2012. The sources also
reportedly said that between 2007 and 2011, around 188 men and 20 women,
all Kashmiris, who had been living in PoK for over 15 years, had crossed over
to India from Nepal. Indian security agencies suspect that there is a grand ISI
design to carry out subversive activities in India through such easy movement
of people and materials through the porous India-Nepal border.10
reports, the Outlook said that “apart from his [Beg] role in patronising
international criminals and providing them logistical support, the don [Beg
was] also associated with ISI activities in a big way.”14
Moreover, ISI operations in Nepal have not been confined to the Terai
region only. It has spread its tentacles across Nepal. For example, on 9 January
1994, the Nepalese police had conducted a raid at Hotel Karnali, Kathmandu,
and seized many secret documents relating to ISI operations (Operation Tufail)
against India from Nepalese territory.15 Despite that raid, the ISI operations
revived from the same hotel in 1996. Further, on 12 April 2001, Nepalese
Police seized a large quantity of RDX explosive from the house of Muhammad
Arshad Cheema, first secretary in the Pakistan embassy in Kathmandu. Besides,
the mosques in Nepal are reportedly used by Islamist terrorists as shelter. For
example, the NA had shot dead two Muslims inside a mosque at Mahalwari
in Nawalparasi district of Nepal on 5 May 2008. An unspecified amount of
explosives were seized from the mosque during the operation. Several
interactions during a fieldtrip and media reports, also indicated that LeT and
IM members take shelter in Mosques located in western and central districts
of Nepal.16
Some media reports have indicated that the ISI has been regularly funding
madarsas17 in these districts (Terai, western and central) and providing training
to IM, LeT activists and other terrorist groups. The activities of these groups
have increased due to political instability in Nepal since 2006. The ISI
reportedly prints counterfeit Indian and Bangladeshi currencies in Pakistan,
and circulates it through its organised networks in Nepal and Bangladesh. A
major portion of the money received from this business is used to fund terrorist
and jehadi outfits like LeT, IM, Hizbut Tahrir, Hizbut Towhid and separatist
movements in Jammu and Kashmir.18
India expressed its concerns over the operations of Islamist fundamentalist
groups in the border regions at the home secretary-level bilateral talks in January
2012 and also in June 2013. During the 2013 meeting, Indian officials raised
the issue of jehadis using Nepal as a new route for infiltration into India through
the porous border between two countries. India also informed Nepal that
madarsas located in the border region have been receiving illegal funding and
that there has been an increase in the smuggling of fake Indian currency notes
by Pakistani nationals through Nepal to India.19 Within seven months of this
meeting the Nepalese Police arrested three persons, two of them Pakistani
nationals, and seized INR 29 lakh in counterfeit Indian currency from them.
According to the police, the currency was brought to Kathmandu from Karachi
by the two Pakistani nationals.20
Pakistan’s Engagement with Nepal 159
Business Council
Apr 2010 PM, Yousaf R. Gilani Prospects of investments
*Led SAARC delegation and also discussed bilateral issues. NA—Not available, PM—Prime Minister, FS—Foreign Secretary.
Source: Hiranya Lal Shrestha, Golden Jubilee-Nepal-Pakistan Relations, Janamaitri Prakashan, Kathmandu, December 2010.
161
162 Strategic Himalayas: Republican Nepal and External Powers
which brought the two countries together again. This, to some extent, led to
a slump in Pakistan-Nepal relationship.29 Pakistan also insisted that Nepal
openly support it on the Kashmir issue, condemn India during its wars with
Pakistan and not allow the Gorkhas to fight against Pakistan. Pakistan did not
like Nepal’s neutrality on these issues. The emergence of Bangladesh altered
the geopolitical calculations in South Asia and both Pakistan and Nepal realised
the limited scope for external forces, including China and the US, to play a
role in the subcontinent. 30 India’s image in Nepal changed after this
development. The leadership in Nepal felt that India was more influential
than other countries in the region, and therefore it was not wise on their part
to antagonise India by supporting Pakistan on the Kashmir issue.
The relationship was consolidated further by the visits of President Yahya
Khan and Zia-ul-Haq in September 1970 and May 1983 respectively. Yahya
Khan offered transit and port facilities to Nepal. The officials of the two
countries also discussed cooperation in trade and economic matters. Pakistan
increased the number of scholarships for Nepalese students for higher and
professional studies in Pakistan. Zia-ul-Haq signed an agreement for the setting
up of a Joint Nepal-Pakistan Economic Commission (JEC). The 5th minister-
level meeting of the JEC was held in Kathmandu in March 2005. The two
countries signed a Free Trade Agreement (FTA) at the end of the meeting.
Nepal became the second country in South Asia to enter into an FTA with
Pakistan after Sri Lanka. Pakistan also offered a US$5 million credit facility
to Nepal for furthering bilateral and economic relations.31
Many official meetings also took place during this period on the sidelines
of the SAARC summit and en route to other countries via Pakistan. For
example, King Mahendra undertook an unofficial visit to Pakistan in 1967.
King Birendra attended the fourth SAARC summit in Islamabad in December
1988. During the 1960s and 1970s, the kings of Nepal used Pakistan airports
to visit other countries, thus proclaiming their independence from India.32
deliberately ignored the ISI operations in their jurisdictions since India did
not act upon their intelligence input to arrest Maoist leaders during their stay
in India. Gyanendra perhaps wanted to follow in his father’s footsteps by
bringing foreign powers in Nepal to neutralise India’s influence. Pakistan took
advantage of this opportunity to regain lost ground by reactivating ISI stations
and supporting the opening of new madarsas in the Terai region of Nepal to
target India.
fund raising and as a shelter. The arrest of Mehrajuddin alias Javed Ahmad in
September 2012, Abdul Karim Tunda42 on 16 August 2013 and the arrest of
IM founder Yasin Bhatkal on 28 August 2013 from the Nepal-India border
are glaring examples of Pakistan using Nepalese territory for anti-India activities.
During his interrogation by the Indian police on 12 September 2012,
Mehrajuddin admitted that he had returned from Pakistan via Nepal and was
“recruiting youth for militant attacks”. He was allegedly involved in the hijack
of Indian aircraft IC-814 in 1999 from Kathmandu.43 He disclosed that a
diplomat of an unspecified embassy (in Nepal) was closely involved in the
plot. Police suspect that he was involved in smuggling weapons, ammunition
and fake currency into India with the help of the diplomat.44
The ISI operation against India from Nepalese soil was further confirmed
by David Coleman Headly, the American terror mastermind. He disclosed to
the National Investigation Agency (NIA) in June 2010 that apart from a
‘Karachi set up’ the ISI also has a ‘Nepal set up’, which manages ISI networks
in India. Abdur Rehman (retired Major of the Pakistan Army) had set up the
Nepal station in the eastern part of the country and both Karachi and Nepal
stations work closely.45
Trade
Pakistan and Nepal signed a trade agreement in October 1962, which
provided for most-favoured-nation (MFN) status. Until December 1971,
Pakistan was Nepal’s second-largest trade partner after India. Pakistan
exempted customs duty and other charges on goods transiting through East
Pakistan. After the formation of Bangladesh, bilateral trade declined due to
absence of any direct physical trade route.57 Table 7.3 presents the status of
current trade levels.
170 Strategic Himalayas: Republican Nepal and External Powers
The Table shows that the trade relationship between Nepal and Pakistan
is hardly impressive. Except in 2003/4 and 2004/5, the trade balance has
been in favour of Pakistan. Amongst the SAARC countries, Pakistan is the
third largest trading partner of Nepal after India and Bangladesh. Nepal
imports surgical equipment, salt, cotton, leather goods, and sports items and
exports cardamom, mustard seed, tea, Pashmina, raw hides and skins and
handicrafts. The absence of direct trade and transit routes is a major factor
limiting the scope of trade between two countries. They have been seeking
alternative trade routes like highway linkages through the Karakoram-Tibetan
Autonomous Region. Therefore, both support the role of China in developing
trade connectivity in South Asia. Both countries have also been supporting
SAARC trade routes for uninterrupted trade.58 Speaking at the Lahore
Chamber of Commerce and Industry (LCCI) on 21 June 2012, then Nepalese
Ambassador to Islamabad, Bharat Raj Paudyal, indicated that economic
cooperation between both the countries should be further enhanced because
Nepalese businessmen feel comfortable in dealing with Pakistani traders.59
Commenting on Pakistan-Nepal trade relations, one Pakistani scholar
observed that there are two major hindrances affecting the free flow of trade
between Nepal and Pakistan. The first constraint is the landlocked territory
of Nepal and second is Nepal’s dependence on India. Therefore, Pakistan’s
efforts since the 1960s have been to reduce Nepal’s heavy dependence on
India and to help Nepal find alternative trade routes.60 However, Pakistan’s
strategy did not work after the formation of Bangladesh. While continuing its
Pakistan’s Engagement with Nepal 171
effort, Pakistan has been asking Nepal to look for alternative routes either in
the north (through TAR) or explore SAARC trade routes.
Conclusion
Pakistan’s relationship with Nepal is mainly driven by its strategic interests
rather than any genuine inclination to forge close ties with the people of Nepal.
It is clear from the discussion above that Pakistan backed the authoritarian
regimes in Nepal and sought to secure its interests. While the international
community supported peace and reconciliation in Nepal through
mainstreaming of the Maoists in 2005, Pakistan chose to supply weapons to
the king, who was rather looking for a military solution. While India was
sympathetic to the democratic forces in Nepal, Pakistan sought to negate
India’s efforts and tarnish its image among the region’s smaller countries. In
the post-conflict period, Pakistan has tried to make amends and it is seen to
be expanding its political and economic engagements with Nepal. In the
absence of the monarchy, it is seeking to strengthen its engagement by building
relations with like-minded political groups and adopting a wait-and-watch
policy to consolidate its strategic interests in Nepal.
*
NOTES
1. Primary and secondary data in this area is scarce. Given this fact, the author has had to
depend heavily on a single publication of the Pakistan Embassy in Kathmandu. A future
study on this area would require consultation of detailed archives.
2. M.D. Dharamdasani, “India as a Factor in Pakistan-Nepal Relations”, in Ramakant, et
al., (eds), Contemporary Pakistan: Trends and Issues, Vol. II, Kalinga Publications, Delhi,
2001, p. 244. Z.A. Bhutto was prime minister of Pakistan from 1973 to 1977.
3. “Analysis: Mushrooming blocs on which ‘politics will revolve”, ekantipur, Kathmandu,
3 October 2012.
4. Author’s interactions with Madhesi leaders and common people during a research trip
to Nepal in June 2011 and November 2013.
5. M. D. Dharamdasani, “India as a Factor in Pakistan-Nepal Relations”, n. 2, p. 243.
6. Ibid.
7. Hiranya Lal Shrestha, Golden Jubilee-Nepal-Pakistan Relations, Janamaitri Prakashan,
Kathmandu, December 2010, p. 2.
8. Zulfikar Ali Bhutto’s interview to the media in April 1975. For more details, see Hiranya
Lal Shrestha, Golden Jubilee-Nepal-Pakistan Relations, n.7.
9. “Rebuilding lives in Kashmir”, BBC News (India), 12 August 2012. Abdul Rashid Khan
in an interview to BBC said “We traveled on Pakistani passports to Nepal. The first day
we checked into a hotel in Kathmandu as Pakistani citizens. The next day, we destroyed
our passports and drove up to the Indian border near Gorakhpur in Uttar Pradesh state”.
172 Strategic Himalayas: Republican Nepal and External Powers
Another group also did the same thing before crossing over to India. For more information
see “40 flee Pak-Occupied Kashmir for Dubai, enter India via Nepal”, The Indian Express,
11 May 2012.
10. “Pak infiltration through Nepal border increases alarmingly”, The Times of India, 25
October 2012.
11. Pitamber Sharma, Unravelling the Mosaic, Himal Books, Kathmandu, 2008, p. 18.
12. Mollica Dastidar, Understanding Nepal: Muslims in Plural Society, Har-Anand publications
Pvt. Ltd, New Delhi, 2007, p.168.
13. LeT senior member Tunda disclosed this to Indian security agencies after he was held
from India-Nepal border on 16 August 2013. For details see “Dawood in Karachi under
ISI protection, says Tunda,” Hindustan Times, 18 August 2013, at http://
www.hindustantimes.com/India-news/NewDelhi/Dawood-in-Karachi-under-ISI-
protection-says-Tunda/Article1-1109417.aspx (accessed on 25 August 2013).
14. Rajesh Joshi, “Dawood’s Man In Nepal”, Outlook India, New Delhi, 15 June 1998, at
http://www.outlookindia.com/article.aspx?205702 (accessed on 25 August 2013). For
more details about the ISI operations in Nepal see Josy Joseph, “Twilight zone”, rediff,
at http://www.rediff.com/news/2000/jan/18jos.htm (accessed on 25 August 2013).
15. Josy Joseph, “Twilight zone,” n. 14. Also see Srikanta Ghosh, Pakistan’s ISI: Network of
Terror in India, APH Publishing Corporation, New Delhi, 2000, p.148.
16. Ravi Sharma, India and Nepal: “The playground of the spies,” Frontline, Delhi, 18
(09), 28 April - 11 May 2001. See “Nepal army kills two people inside mosque,”
Yahoo.com, 6 May 2002, at https://groups.yahoo.com/neo/groups/ProletarianNews/
conversations/messages/5905. Also see “Two Muslims killed in Nepal Army attack on
mosque”, Muslim Population, at http://www.muslimpopulation.com/asia/Nepal/
Two%20Muslims%20killed%20in%20Nepal%20Army%20attack%20on%20mosque.php
(accessed on 6 May 2014).
17. For detailed information about madarsas, see “Intelligence alarm as Bihar govt soft on
SIMI”, The Times of India, 6 October 2001, at http://articles.timesofindia.
indiatimes.com/2001-10-06/patna/27253191_1_madarsa-saudi-arabia-simi (accessed on
13 January 2014).
18. Kartikeya Sharma, “Pakistan officially printing fake Indian currency notes,” India Today,
New Delhi, 6 November 2013, at http://indiatoday.intoday.in/story/nia-fake-indian-
currency-notes-pakistan/1/321768.html (accessed on 13 January 2014). Also see
“Pakistani ISI circulating counterfeit currency in India and Bangladesh”, Weekly Blitz,
Dhaka, 3 November 2012, at http://www.weeklyblitz.net/2720/pakistani-isi-circulating-
counterfeit-currency-in (accessed on 24 November 2012).
19. “Nepal-India security summit: ‘Criminals using Nepal to push fake notes to India’ ”,
The Kathmandu Post, 17 January 2012.
20. “Fake IC note smugglers made public”, The Himalayan Times, Kathmandu, 8 August
2012.
21. Josy Joseph, “Working on the Gurkhas”, rediff, at http://www.rediff.com/news/2000/
jan/19jos.htm (accessed on 20 January 2014). IM operative Yasin Bhatkal disclosed to
Indian Police that Pokhara has been the major shelter zone of the IM and the ISI as
Kathmandu has come under the surveillance of international intelligence agencies. For
details, see Ramashankar, “Nepal casino city turns jihadi hub”, The Telegraph, Kolkata,,
31 August 2013.
Pakistan’s Engagement with Nepal 173
22. The cable was signed off by the US Ambassador to India, Frank Wisner. For more
information, see “ISI used Nepal as a hub for terror inside India: WikiLeaks”, The Indian
Express, New Delhi, 7 September 2011.
23. “JKLF chief appears before court”, Daily Excelsior, 11 March 2005, at http://
www.dailyexcelsior.com/web1/11mar05/news1.htm (accessed on 13 January 2014).
24. Hiranya Lal Shrestha, Golden Jubilee-Nepal-Pakistan Relations, n. 7.
25. S.D. Muni, “The Dynamics of Foreign Policy”, in S.D. Muni (ed.), Nepal: An Assertive
Monarchy, Chetana Publications, New Delhi, pp.131-132. Also see S.K. Jha, “Policy
Towards India: Quest for Independence,” in S.D. Muni (ed.), Nepal: An Assertive
Monarchy, Chetana Publications, New Delhi, p.206.
26. M. D. Dharamdasani, “India as a Factor in Pakistan-Nepal Relations”, n. 2, p. 245.
27. Hiranya Lal Shrestha, Golden Jubilee-Nepal-Pakistan Relations, n. 7.
28. M. D. Dharamdasani, “India as a Factor in Pakistan-Nepal Relations”, n. 2, p.248.
29. India was critical of King Mahendra’s taking over of government by dissolving
democratically elected government in December 1960 and introduction of Panchayat
system. Government of India softened its policy towards him with the onset of War
with China in October 1962. A series of diplomatic exchanges between both the countries
took place at India’s initiatives. During these visits India tried to appease the king by
recognising the Panchayat system, giving an assurance that it would not allow Indian
territory for anti-king activities and also offered aid for economic and infrastructure
development in Nepal. For details see S.D. Muni, Foreign Policy of Nepal, National
Publishing House, Delhi, 1973, pp.124-128.
30. M. D. Dharamdasani, “India as a Factor in Pakistan-Nepal Relations”, n. 2.
31. Hiranya Lal Shrestha, Golden Jubilee-Nepal-Pakistan Relations, n. 7.
32. Ibid.
33. Anirban Roy, Prachanda: The Unknown Revolutionary, Mandala Book Point, Kathmandu,
2008, p. 96.
34. “Musharraf gives tacit backing to Nepal King’s power grab”, Outlook India, New Delhi,
21 May 2005, at http://news.outlookindia.com/items.aspx?artid=299582 (accessed on
20 January 2014).
35. Hiranya Lal Shrestha, Golden Jubilee-Nepal-Pakistan Relations, n. 7.
36. “Preconditions for IMF loan fulfilled, says Dar,” The Nation, Islamabad, 21 August
2013, at http://www.nation.com.pk/pakistan-news-newspaper-daily-english-online/
editors-picks/21-Aug-2013/preconditions-for-imf-loan-fulfilled-says-dar (accessed on 25
August 2013).
37. “Nepal for trade concessions”, Dawn, Karachi, 20 August 2013, at http://dawn.com/
news/1036979/nepal-for-trade-concessions (accessed on 25 August 2013).
38. “Pakistan rightly looks towards East,” Pakistan Observer, Islamabad, 21 August 2013, at
http://pakobserver.net/detailnews.asp?id=215914 (accessed on 25 August 2013).
39. “Pakistan seeks Indian cooperation on transit trade with Nepal,” Global Post, 20 August
2013, at http://www.globalpost.com/dispatch/news/kyodo-news-international/130820/
pakistan-seeks-indian-cooperation-transit-trade-nepal (accessed on 25August 2013).
40. Bidanda M. Chengappa, Pakistan, Islamisation, Army and Foreign Policy, APH Publishing
Corporation, New Delhi, 2004, pp. 115-32. For more information, see B. Raman, “A
Terrorist State as a Frontline Ally (Lancer Paper 7)”, Indian Defence Review, New Delhi,
2002.
174 Strategic Himalayas: Republican Nepal and External Powers
41. S.D. Muni, India and Nepal: A Changing Relationship, Konark Publishers, Delhi, 1992,
pp. 24-25.
42. Tunda alias Abdul Quddooss has allegedly been a member of the banned Pakistan-based
Lashkar-e-Taiba (LeT) militant outfit. He was involved in the 1993 Mumbai blasts and
over 40 other deadly bomb blasts across India. He is a well known LeT explosive expert/
terrorist. For more information see “LeT terrorist Abdul Karim Tunda held by Delhi
Police,” The Hindu, 17 August 2013.
43. “Arrest in Kashmir in India IC-814 hijack case”, BBC News (India), 13 September 2012,
at http://www.bbc.co.uk/news/world-asia-india-19582592 (accessed on 13 February
2014). For more information, see “Kashmir militants give up fight and head home,”
BBC News (Asia), 31 May 2012.
44. “Diplomat involved in 1999 hijack: Terrorist”, The Times of India, 14 September 2012,
at http://timesofindia.indiatimes.com/india/Diplomat-involved-in-1999-hijack-Terrorist/
articleshow/16389121.cms (accessed on 13 January 2014).
45. “ISI even has a ‘Nepal set-up’: Headley”, The Times of India, 27 October 2010, at http:/
/timesofindia.indiatimes.com/india/ISI-even-has-a-Nepal-set-up-Headley/articleshow/
6817126.cms#ixzz13eDihsLN (accessed on 13 January 2014).
46. Yuba Nath Lamsal, “Steady Growth of Nepal-Pakistan Ties”, The Rising Nepal,
Kathmandu, 21 May 2008.
47. Siddharth Srivastava, “Delhi knocked out over China” Asia Times, 16 November 2005,
at http://www.atimes.com/atimes/South_Asia/GK16Df03.html (accessed on 9 January
2014).
48. For more information see Amit Baruah, “Has Nepal been put up by Pakistan?,” The
Hindu, 13 November 2005, at http://www.hindu.com/2005/11/13/stories/
2005111312930800.htm (accessed on 25 August 2013).
49. The statement was made by Charge’d Affaires of Pakistan Embassy in Kathmandu, Ahmar
Ismail, in a gathering of Nepalese journalists, intellectuals and scholars on 5 February
2012. For details of the speech see “Pakistan will strive for regional peace and prosperity,”
The Weekly Mirror, Kathmandu, Date of publication is not available. Available at http:/
/www.weeklymirror.com.np/index.php?action=news&id=1926 (accessed on 28 April
2014).
50. Yubaraj Ghimire, “Nepal’s agony”, Seminar, 3 September 2002, at http://www.india-
seminar.com/2002/517/517%20yubaraj%20ghimire.htm (accessed on 13 January 2014).
51. Peter Burleigh, “Nepal: Western Views of the Maoist Insurgency and the Royal Takeover”,
Working Paper, 9 July 2005, Institute of Governmental Studies, University of California,
Berkeley, p. 8.
52. “Indo-Nepal border the new den of militants”, The Hindu, 9 March 2005, at http://
www.hindu.com/2005/03/09/stories/2005030906550300.htm (accessed on 13 January
2014).
53. Yubaraj Ghimire, “Nepal’s agony”, n.50.
54. Following are the joint ventures established under the Nepal-Pakistan JEC: Silver Fibre
Textile Mill at Nawalparasi, Vivid Textile Mill at Chitwan, Peacock Textile at Parsa,
Himalayan Bank and Hotel Peaceful Palace, Kathmandu. The Nepal government has
also approved six more Pakistan-based companies located in Kathmandu.
55. M.R. Josse, Nepal and the World, Vol. 1, Published by the author, Kathmandu, 1984,
pp. 124-30.
Pakistan’s Engagement with Nepal 175
Conclusion
The presence of external powers in the Himalayan region has posed a critical
challenge for Nepal’s security and political stability. While Nepal has benefited
from the flow of aid and economic assistance from these countries, due to
their divergent strategic interests, they have acted at cross-purposes. This has
had a deleterious impact on the internal political dynamics and hampered
the twin processes of reconciliation and democratisation in Nepal. In certain
cases, external intervention/involvement has intensified the inherent
contradictions within Nepalese society and complicated the process of political
transition.
For example, the US support to King Gyanendra against the Maoists had
undeniably played its role in intensifying the conflict and affected the process
of dialogue and reconciliation during 2001-2005. The US had reportedly
discouraged the king from entering into any direct peace talks with the Maoists
clearly misjudging the popular opinion in Nepal in favour of cessation of
hostilities. Similarly, the role played by Western countries in exacerbating inter-
ethnic discord can hardly be overlooked.
In recent years, China has also sought to deepen its relationship with
Nepal with a view to countering the influence of India and various Western
countries. In the process, it has tried to micro-manage internal politics of
Nepal and ensure that the political transition in the post-monarchy period
does not hamper its interests. Since 2008, China is seen to be proactively
engaged with Nepal and sending several delegations at frequent intervals to
understand the evolving political dynamic in Nepal. It is trying its best to
strengthen its contacts with the state apparatus to manage its security concerns.
With the abolition of the institution of monarchy, with whom China was
quite effectively engaged, it has realised the need to build contacts with various
political groups who are vying for influence in a democratic setting in Nepal.
Conclusion 177
As a small landlocked country, for a long time, Nepal spent much of its
resources and diplomatic efforts to secure its territorial integrity and
maintaining its identity as a sovereign country. Until 1955, Nepal was
distinctly uneasy about the Chinese claims of suzerainty over various
Himalayan countries. However, after King Mahendra took over, the threat
perception to Nepal’s security shifted from the north to the south more for
political reasons. The king took advantage of the impact of the Cold War in
South Asia and the border disputes between India and China. King Birendra,
who succeeded Mahendra, followed the same policy with some modifications
after taking global and regional developments into account. Despite the
introduction of multiparty democracy in 1990, the monarchy continued to
play a dominant role in Nepalese politics and foreign policy.
In the post-monarchy period, despite the Chinese worries about the
political transformation in Nepal, the first democratically elected Maoist
government largely continued the king’s policy of maintaining ‘equidistance’
from India and China. The then Maoist government led by Prachanda sought
to set a new trend in Nepal’s foreign policy by visiting China before embarking
on any other foreign trip in order to seek the support of the Chinese
government on ideological grounds. It has been a trend in Nepal that the
head of any new government makes his first foreign visit to India given the
close relationship between the two countries. The Maoist-led government
came to an end with the resignation of Prachanda in May 2009. Until the
second Maoist-led government was formed under Baburam Bhattarai in
August 2011, the radical elements of the Maoist party undertook several trips
to Beijing and other cities of China to garner support for a Maoist-led
government in an effort to neutralise India’s influence.
As an influencial neighbour, India has been an important factor in
Nepalese political dynamics. Some analysts even hold the view that India has
been able to determine the course of Nepalese domestic politics for the longest
time. They perceive that the fall of the Maoist government led by Prachanda
as well as the delay in the Maoists’ return to power was occasioned by India’s
intervention in Nepal’s internal politics. This perception regarding India’s role
has, to some extent, made China to have a relook at its policy towards Nepal.
China has, especially since 2008, sought to limit India’s influence in Nepal
by expanding its influence through developmental activities and cultural
exchanges. There are indications that China’s engagement with Nepal is not
exclusively driven by its obsession with Tibet, but it may be part of its new
strategic policy for South Asia, in keeping with its global aspirations. The
178 Strategic Himalayas: Republican Nepal and External Powers
energy crisis and double-digit inflation. The banking and financial sectors
were in the throes of a liquidity crisis. FDI inflows into the country have
declined; and new joint ventures have been delayed in the absence of a coherent
economic policy. Investors felt insecure in Nepal due to the unstable political
situation and the absence of a Constitution. The economic survey of Nepal,
2010/11 reported that Nepal’s economic growth rate was limited to 3.5 per
cent in comparison to 4.5 per cent GDP [Gross Domestic Product] growth
achieved in 2009/10.2 This has forced Nepal to depend on donor countries
for funds to manage the development programmes. A depressed economy
badly affected by chronic political instability makes Nepal even further
vulnerable to political manipulation by external powers.
In the prevailing scenario, both India and China are now competing to
invest in Nepal; this could turn out to be positive for Nepal if it is managed
properly. China is already pressurising Nepal to give more concessions to its
companies and take action against the Tibetan refugees. It may be recalled
here that the Chinese Premier initially cancelled his trip to Nepal in December
2011 on the grounds that Nepal was not able to control anti-China activities
of Tibetan refugees. Further, despite some improvement in the relations
between India and China, the latter’s unease over the possible coming together
of the US and India against it, could also prompt Chinese proactive
engagement in Nepal. Since China feels vulnerable due to the presence of
Tibetan refugees in Nepal and India, and Western countries are perceived to
be sympathetic to their cause, Beijing has sought repeated assurances from
Nepal regarding its adherence to the ‘one China policy’ and commitment to
take strong action against Tibetan rebels. Therefore, the former Chinese
Ambassador to Nepal, Zheng Xianglin, declared: “Any foreign intervention
in Nepal will not be tolerable for China.”3
Chinese concern regarding the Tibetan unrest in Nepal was also
emphasised when China reportedly discussed possible closure of the joint-
military training facilities in Mustang district during the visits of political
and military delegations to each other’s country in 2013. China has also been
suspecting, although baseless, that the Indian Army pension camps in Pokhara
are being used to extend support to the anti-China elements (read Tibetan
refugees). Therefore, China has been repeatedly demanding opening of a
Consulate in Pokhara for monitoring purposes. China had considered India’s
presence near the Arnnapurna Conservation area as India’s forward camp close
to the southern Tibetan border. Therefore, China has been trying to counter-
balance this by making its presence felt in Pokhara and Lumbini.
Conclusion 181
Nepal’s Options
The diversification of Nepal’s foreign policy in the early 1960s was an attempt
to ensure regime security and its territorial integrity against perceived threat
from its neighbours and also to reduce its dependence on India. The external
powers took advantage of it and were motivated partly because of their own
interests to have a foothold in this part of the world. While geography has
remained a constant and a major determinant of Nepal’s foreign policy, there
have been occasions when some Nepali leaders misread the developments in
the region and beyond, and tried to use external powers against regional actors.
Nepal has used its relationship with the Western countries to meet its
developmental needs. In the past, this had also enabled to counter-balance
India’s influence. Until the early 1970s, the US was the top foreign aid donor
to Nepal. In the post-Cold War period, the US influence in Nepal’s domestic
politics diminished as it shifted its focus to other regions of the world. Nepal
again caught US attention due to the rise of India and China and the onset
of the Maoist insurgency. The US tried to help the king in his anti-Maoist
counter insurgency operations. While the political situation changed in 2005
and favoured the democratic forces, the US gradually came to recognise
(reluctantly until 2009) India’s efforts towards peace initiatives and political
stability in Nepal. Interestingly, the US considered India to be a reliable partner
in South Asia in the post-2012 period, when it enunciated its rebalance policy
towards Asia. Since the third Indo-US strategic dialogue in 2011 it has more
pronouncedly sought to partner with India to address common challenges in
the region.
For China, Nepal will remain strategically relevant as long as the Tibet
issue remains alive and the Tibetans continue to use Nepal as a transit point
between India and Tibet. China has been undertaking large-scale development
work in Tibet apart from its rapid ‘Hanaisation’ efforts to ensure a violence-
free Tibet. However, with the changing geopolitical situation—with US and
India synchronizing their policies, and with China and India choosing dialogue
over confrontation to settle their dispute— Nepal’s option of playing the ‘US
card’ against India and its second option of using the ‘China card’ against
India and vice-versa may not prove to be as effective as it was earlier. This is
not to deny that Nepal will retain its strategic importance for all these countries.
For India, Nepal is too important to be ignored. For China, Nepal is unlikely
to lose its relevance. As part of the ‘go global’ policy, Chinese economic
engagements with Nepal are also likely to grow in coming days followed by
political engagement to ensure security for Chinese investors and to ward off
182 Strategic Himalayas: Republican Nepal and External Powers
any kind of threats from external forces by using Tibetan refugees living in
Nepal.
Nepal, which was not earlier part of China’s list of countries labeled as
‘gateways to South Asia’, is being reconsidered by China as a vibrant bridge
after a proposal from former Nepalese Prime Minister Baburam Bhattarai to
this effect. The US policy of rebalance to Asia and growing Indo-US ties are
also likely to deepen Chinese interest in Nepal. So far, while strengthening its
presence in Nepal, China has been careful about not antagonising India due
to its larger geo-economic interests. However, given the existing trust deficit
in India-China relations, largely due to unresolved border disputes and the
effect of US rebalancing strategy in the region, situation may change rapidly.
In such changed circumstances, growing Chinese influence in Nepal may
reverse the strategic advantages that India has had in Nepal over the years. So
far, various Nepalese rulers were using the ‘China card’ to extract benefits
from India. However, if China increases its clout in Nepal, very soon India
may have to contend with an even more unpleasant reality of China playing
the ‘Nepal card’ against India. This could pose a strategic challenge for India.
Since the abolition of monarchy and re-introduction of multi-party
democracy in 2008, common people in Nepal talk about the relevance of
‘China card’ against India. After the dissolution of the first CA, the younger
generation and ultra-leftists and ultra-rightist groups are enthusiastic about
strengthening their relationship with China, given its economic rise, and the
perceived unsuccessful attempts by India since 2008 to bring about political
stability in Nepal. There has also been a feeling that Western powers would
have limited role in the political transition. The perception in Nepal is that
India would have less leverage in Nepal with the improved connectivity between
China and Nepal in the next 20 years or so. Industrialisation in Tibet and
improvement in border infrastructure will create an alternative market for
Nepal. In this context, given the negative public perception of India in Nepal,
the new political forces/actors there may attempt to play the China card to
balance India.
The changing geopolitical dynamics, both at the regional and international
level, demands that instead of adopting a policy of pitting one against the
other, Nepal should engage both India and China by taking into account their
genuine security concerns. Moreover, it is in Nepal’s interest to take advantage
of the economic rise of its neighbours rather than depending on countries
from other regions.
*
Conclusion 183
NOTES
1. Deepak Adhikari, “With an Eye to India and Tibet, China Courts Nepal,” Time, 29
March 2011, at http://www.time.com/time/world/article/0,8599,2061794,00.html#
ixzz1rXLzW7 AHACCESSE (accessed on 25 October 2013).
2. Economic Survey (fiscal year 2010/11), Vol. I, July 2011, Ministry of Finance, Government
of Nepal.
3. “Interview with Zheng Xianglin”, ekantipur, 12 June 2007. Sudheer Sharma interviewed
Zheng Xianglin, Chinese Ambassador to Nepal, at http://www.ekantipur.com/2007/
06/12/oped/interview-with-zheng-xianglin/112467.html (accessed on 25 October 2013).
APPENDICES
APPENDIX-I
Road Network of Nepal, Proposed Dry Ports by China, Transit Points at India–Nepal Border
Appendices
Lumbini
(proposed)
187
Source: Compiled by author from English media published from Nepal, India and China.
188
APPENDIX-II
Chinese Engagements in Hydro Projects in Nepal
Project/ River Location/District Estimated Cost JV/Direct Capacity Project status
Upper Marshyangdi Hydro Electricity Bhulbhule VDC, $138 million Sino Hydro Sagarmatha Power 50 MW To be Completed by
Project ‘A’ (UMHEP) Lamjung Company-JV 2015
Kulekhani III Hydroelectricity Bhaise-6 of NPR 1.08-billion Sino Hydro got 14 MW To be completed
Project (KTHEP)-Reservoir type Makawanpur contract in 2008 contract from NEA December 2011
Sunkoshi grant assistance 10MW
Trishuli-3A soft loan 61MW
Nalsyaugad Chinese aid 400MW
Trishuli 2 Hydrochina Corporation on 102MW
contract for construction
UpperTamakoshi Chinese contractors are involved 456MW
Chamelia Chinese contractors are involved 30MW
Lower Indrawati Chinese contractors are involved 4.5MW
Madi Chinese contractors are involved 20MW
West Seti River Seti/South US$ 1.6b Joint venture between Three 750 MW Yet get Parliament
Reservoir type Western region Gorges International approval
Strategic Himalayas: Republican Nepal and External Powers
THE Chairman of the People’s Republic of China and His Majesty the king
of Nepal, desiring to maintain and further develop peace and friendship
between the People’s Republic of China and the Kingdom of Nepal.
CONVINCED that the strengthening of good-neighborly relations and
friendly co-operation between the People’s Republic of China and the
Kingdom of Nepal is in accordance with the fundamental interests of the
peoples of the two countries and conducive to the consolidation of peace in
Asia and the world,
HAVE decided for this purpose to conclude the present Treaty in accordance
with the Five Principles of peaceful co-existence jointly affirmed by the two
countries, and have appointed as their respective Plenipotentiaries:
The Chairman of the People’s Republic of China:
Premier Chou En-lai of the State Council,
His Majesty the king of Nepal:
Prime Minister Bishweshwar Prasad Koirala.
THE above-mentioned Plenipotentiaries,
HAVING examined each other’s credentials and found them in good and
due form,
HAVE agreed upon the following:
Article I
The Contracting Parties recognize and respect the independence, sovereignty
and territorial integrity of each other.
Article II
The Contracting Parties will maintain and develop peaceful and friendly
relations between the People’s Republic of China and the Kingdom of Nepal.
They undertake to settle all disputes between them by mean of peaceful
negotiation.
190 Strategic Himalayas: Republican Nepal and External Powers
Article III
The Contracting Parties agree to develop and further strengthen the economic
and cultural ties between the two countries in a spirit of friendship and co-
operation, in accordance with the principles of equality and mutual benefit
and of non-interference in each other’s internal affairs.
Article IV
Any difference or dispute arising out of the interpretation or application of
the present Treaty shall be settled by negotiation through normal diplomatic
channel.
Article V
This present Treaty is subject to ratification and the instruments of ratification
will be exchanged in Peking as soon as possible.
The present Treaty will come into force immediately on the exchange of
the instruments of ratification1 and will remain in force for a period of ten
years.
Unless either of the Contracting Parties gives to the other notice in writing
to terminate the Treaty at least one year before the expiration of this period,
it will remain in force without any specified time limit, subject to the right
of either of the Contracting Parties to terminate it by giving to the other in
writing a year’s notice of its intention to do so.
DONE in duplicate in Kathmandu on the twenty-eighth day of April
1960, in the Chinese, Nepali and English languages, all texts being equally
authentic.
Sd/-
B.P.KOIRALA
APPENDIX-IV
Treaty of Peace and Friendship Between the Government of India
and the Government of Nepal
Kathmandu, 31 JULY 1950
Article 1
There shall be everlasting peace and friendship between the Government of
India and the Government of Nepal. The two Governments agree mutually
to acknowledge and respect the complete sovereignty, territorial integrity and
independence of each other.
Article 2
The two Governments hereby undertake to inform each other of any serious
friction or misunderstanding with any neighbouring State likely to cause any
breach in the friendly relations subsisting between the two Governments.
192 Strategic Himalayas: Republican Nepal and External Powers
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 with such staff as is necessary for the due performance
of their functions. The representatives and such of their staff as may be agreed
upon shall enjoy such diplomatic privileges and immunities as are customarily
granted by international law on a reciprocal basis: Provided that in no case
shall these be less than those granted to persons of a similar status of any
other State having diplomatic relations with either Government.
Article 4
The two Governments agree to appoint Consuls-General, Consuls, Vice-
Consuls and other consular agents, who shall reside in towns, ports and other
places in each other’s territory as may be agreed to. Consuls-General, Consuls,
Vice-Consuls and consular agents shall be provided with exequaturs or other
valid authorization of their appointment. Such exequatur or authorization is
liable to be withdrawn by the country which issued it, if considered necessary.
The reasons for the withdrawal shall be indicated wherever possible. The
persons mentioned above shall enjoy on a reciprocal basis all the rights,
privileges, exemptions and immunities that are accorded to persons of
corresponding status of any other State.
Article 5
The Government of Nepal shall be free to import, from or through the
territory of India, arms, ammunition or warlike material and equipment
necessary for the security of Nepal. The procedure for giving effect to this
arrangement shall be worked out by the two Governments acting in
consultation.
Article 6
Each Government undertakes, in token of the neighbourly friendship between
India and Nepal, to give to the nationals of the other, in its territory, 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.
Article 7
The Governments of India and Nepal agree to grant, on reciprocal basis, to
the nationals of one country in the territories of the other the same privileges
Appendices 193
Article 8
So far as matters dealt with herein are concerned, this Treat: cancels all previous
Treaties, agreements, and engagements entered into on behalf of India between
the British Government and the Government of Nepal.
Article 9
This Treaty shall come into force from the date of signature by both
Governments.
Article 10
This Treaty shall remain in force until it is terminated by either party by
giving one year’s notice.
DONE in duplicate at Kathmandu this 31st day of July 1950.
11. Our equipment, supplies and facilities are not used for purposes other
than those stated in our programme objectives. Our vehicles are not used
to transport persons or goods that have no direct connection with the
development programme. Our vehicles do not carry armed or uniformed
personnel.
12. We do not tolerate the theft, diversion or misuse of development or
humanitarian supplies. Unhindered access of such supplies is essential.
13. We urge all those concerned to allow full access by development and
humanitarian personnel to all people in need of assistance, and to make
available, as far as possible, all necessary facilities for their operations,
and to promote the safety, security and freedom of movement of such
personnel.
14. We expect and encourage all actors concerned to comply strictly with
international humanitarian principles and human rights law.
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*
Index
Nepal Muslim Seva Samiti, 62 Nepal, Madhav Kumar, former Prime Minister
Nepal Peace Trust Fund (NPTF), 139-40 of Nepal, 33, 53, 91
Nepal Police, 92, 95 Nepal-China
Nepal South Asia Centre, 90 context, 5
Nepal World Islamic Council, 168 Media Forum, 98
Nepal, 1-12, 15-20, 24, 27, 43, 50, 57, 65-66, Nepal-China Non-governmental Cooperation
75, 78, 80, 85, 97, 100, 102, 127, 132, 162, Forum, 96
177, 181 Nepalese Army (NA), 4, 29, 49, 82, 91, 121,
and SAARC, 25 125, 136, 140
and United Nations, 26 Nepali Congress (NC), 20, 22, 28, 29, 49, 53,
anti-China activities in, 5, 36, 92, 125 118
anti-China movement, 134 Nepali Congress-led interim government, 5
anti-India elements in, 50, 126 Nepal-India
anti-India operation, 157 affairs, 51
anti-Indianism in, 55 Border Management Coordination
Army, 124 border, 81
balance-of-trade deficit, 137 illegal trade, 65
card, 12 Joint Commission on Water Resources
Chinese Engagement in Post-Monarchy (JCWR), 51
Period, 87 Meeting, 52
Christians in, 147 Nepal-India Consultative Group, 52
conflict in, 137 Nepal-India Transit Treaty renewed, 52
Relations in Post-2006, 10, 43, 48
diplomatic relations with the US, 17
Nepal-India-China, 35
economy, 58
Nepal-Pakistan Trade, 170
engagement with Western countries, 133
Nepal-Tibet border, 81, 84
fall of royal regime, 137
Nepal-US
FDI from the EU, 137
bilateral relationship, 127
Foreign Direct Investment (FDI), 57
cooperation, 122
foreign policy, 9, 17, 19, 21, 22, 32, 36, 181
relations, 22
growing presence of China, 34 Trade and Investment Framework
Human Development Index, 138 Agreement (TIFA), 123
human development-related funds, 138 New Nepal, 89
internal politics, 18, 50 New Silk Road, 127
Maoist Violence in, 114 New York Times, 101
Maoists, 63 New York, 16
Nepalese Police, 158 NGOs, 179
political transitions in, 7 US funded, 136
post-conflict political transition in, 5 Western funded, 79
post-monarchy period, 10, 12, 25-6, 37, 44, Non-Aligned Movement (NAM), 24, 155
126, 154, 168, 176-77, 179 first summit in Belgrade, 24
Road Network of, 187 second summit in Cairo, 24
security, 19 16th summit in Tehran, 25
stability, 19 Nepal and, 24
status, 19 Norway, 8, 132, 133, 136, 143, 145, 146, 147
strategic location, 11, 110
Trade with China, 58, 95 Obama administration, 2, 77
Trade with India, 58 Office of the High Commissioner for Human
Trade with US, 58, 122 Rights (OHCHR), 29, 134, 145
trafficking, 64 Ofstad, Ingrid Ronnaug, Norwegian
under Interim Constitution (IC) Ambassador, 143
Article 26 (15, 16), 30 Olangchung Gola-Riwu, 97
Article 156(2), 31 Olangchung, 97
210 Strategic Himalayas: Republican Nepal and External Powers
Shamima alias Shazia alias Bitti, 159 Swiss Development Cooperation (SDC), 144
Shanghai Expo 2010, 35 Switzerland, 8, 132, 136, 138, 143, 145, 147
Sherman, Wendy R., Under Secretary of State for NGOs, 144
Political Affairs, 122 Syabrubesi-Rasuwagadhi road, 44, 97
Shrestha, Durga Lal, president of the Nepal
Trans-Himalayan Traders Association, 97 Taiwan, 17, 76, 83
Shrestha, Marich M.S., PM, 161 Tatopani, 97
Shrestha, Narayan Kaji, Deputy Prime Minister Terai Madhes Loktantrik Party (TMLP), 55
and Minister for Foreign Affairs, 25-26, 28, Terai politics, 90
119, 127 Terai region, 57, 60, 62, 157, 166
Sibal, Kanwal, 139 Terrorist Exclusion List (TEL), 123
Sikkim, 20 Thapa, Kamal, Nepalese Foreign Minister, 46,
Singapore, 16 146
Singh, Dr. Manmohan, PM of India, 77 Thapa, Ram Bahadur, Defence Minister, 32, 91
Singh, Surendra Pal, Deputy External Affairs Thapa, Surya B., PM, 161
Minister of India, 55 The Kathmandu Post, 83
Sino-Indian relationship, 44 The Telegraph, 46
Sino-US relationship, 76 The Times of India, 30
Sino-Nepalese Treaty of Peace and Friendship, Tibet Autonomous Region (TAR), 4, 5, 44, 81,
Kathmandu, 189 83, 97, 100-01, 134, 171
Sir David Julian Richards, British Army Chief Tibet, 2, 4, 11, 19, 26, 34, 44, 79, 80, 83, 86,
General, 142 98, 102, 125
Six-point agreement, 29 future of, 76
Small States, definitions of, 16 independence, 76, 85
Solhem, Erik, Norwegian Minister for issue, 3, 10, 81
Development Cooperation, 143 policy, 10
South America, 101 Tibetan
South Asia, 5, 8, 11, 15, 17, 44, 78-79, 81, 85, movement, 148
111, 127, 156, 162 plateau, 44
influence in, 11 refugees, 5, 15, 78, 80, 85, 88, 93, 100, 103,
peace and stability in, 92 121, 122, 125, 134, 147
South Asian Association for Regional Transition Support Strategy, 145
Cooperation (SAARC), 4, 8, 24, 25, 26, Treaty of Peace and Friendship Between the
101, 154, 162, 167 Government of India and the Government
summit in Thimpu, 164 of Nepal, 191
13th summit in Dhaka, 4, 99, 167 Truth and Reconciliation Commission (TRC),
17th summit in Maldives, 168 136, 139, 142, 147
South Asian countries, 125 Tunda, Abdul Karim, 167
South Asian region, 78, 127 Twelve-point agreement, 8, 19, 28, 116, 125
South Asian states, 121 Two pillar theory, 7
Southern Himalayas, 17
Specially Designated Global Terrorist Entity, 123 UCPN (Maoist), 31-32, 34-35, 52-53, 59, 63,
Sri Lanka, 127, 162 90-91, 123
Stebbins, Henry E., US Ambassador to Nepal, UN General Assembly, 26
112 UN peace-building fund, 146
Strategic airports, 98 UN principles, 19, 45
Strategic Co-operative Partnership, 79 UN Resident and Humanitarian Coordinator,
Strategic Interests of EU Member Countries, 147
134 UN Resolution 1740 (2007), 29
Sub-Himalayan region, 7, 9, 86, 124, 125, 127 UN Security Council, 16
Sweden, 132, 136 UNCTAD II, 28
Swiss Agency for Development and Cooperation, UNCTAD, 27
144 Unequivocally resist, 25
212 Strategic Himalayas: Republican Nepal and External Powers
United Kingdom (UK), 8, 80, 102, 110, 116, US-led Western donors, 7
118, 132-33, 135-36, 138, 140-42, 145-46, US-Maoist relations
148 improvement in, 124
policy on Nepal, 142 US-South Asia Relations: A Vision for the
United Nations (UN), 2, 16-17, 20-21, 25, 27, Future, 126
36-37, 132, 167 Uttar Pradesh (UP), 56
bodies in Nepal, 135
United Nations Charter, 30 Village Defence Volunteers, 116
United Nations Mission in Nepal (UNMIN), 6,
7, 28, 29, 143, 144 Wang Jiarui, 84
in Nepal, 179 Wen Jiabao, Chinese Prime Minister, 34, 82, 91,
United Nations Peace Fund for Nepal 93, 98
(UNPFN), 133, 145 West Bengal, 66
donors, 146 West European countries, 113
United Progressive Alliance, 51 West Seti hydropower project, 3, 31, 34, 98
UPA-I Western ‘containment strategy’, 77
UPA-II, 51 Western aid assistance to Nepal, 135
United States (US), 1-4, 6, 8-9, 11, 15, 17, 19, Western countries, 6, 15, 21, 85, 117, 133, 181
22, 67, 76-77, 80, 84-85, 96, 102, 110, 115, in Nepal, 99
125, 133, 135, 138, 141, 148, 156, 162 Western donors, 135
aid to Nepal, 22, 111, 113, 119 Western Nepal, 57
Assistance to Nepal, 120 Western peace negotiators, 137
bilateral relations, 127 Western powers, 21, 86
camp, 86 Wheeler Islands, 79
card, 12, 181 Whitehall’s official, 141
development in Nepal, 123 WikiLeaks, 159
foreign policy towards South Asia, 11 World Bank, 16, 36, 142
foreign policy, 102 WTO, 36
health mission in Nepal, 125 Wu Bangguo, 33
influence in the southern Himalayan region, Wu Chuntai, Chinese Ambassador, 92
4 Wu Dawei, Chinese Vice-Minister for Foreign
interests, 11 Affairs, 89
look at political transition in Nepal, 9
Pacific Air Forces, 125 Xi Jinping, 77
peace in Nepal, 123 Xinhua, 88
policy goals in Nepal, 126 Xinjiang, 76, 79, 102
policy of rebalance to Asia, 182
policy towards Nepal, 11, 111 Yadav, Matrika Prasad, CPN (Maoist) leader,
policy towards Tibet, 121 visited China, 90
presence in Nepal, 15 Yadav, Ram Baran, President, 148
relationship with Nepal, 117 Yadav, Upendra, 56
Upadhyaya, Umesh, 58 Yang Jiechi, Chinese Foreign Minister, 32, 88-
Upper Trishuli 3A, 94, 95 89, 91, 103
Upper Trishuli 3B, 94 Yari-Pulam, 97
US State Department, 124 Yubaraj Ghimire, 147
US views Nepal through the Indian prism, 125
US’s global campaign against terror, 15 Zheng Xianglin, former Chinese Ambassador,
US-China 180
equation, 113 Zhou Yongkang, 92
relations, 116 Zhu Rongji, Chinese premier, 82
US-India civil nuclear deal, 4 Zone of Peace (ZoP), 8, 22, 156