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India needs to cement its recent gains in Nepal to firewall Chinese comeback

PM Modi with his Nepalese counterpart Sher Bahadur Deuba

Nepal’s upcoming general elections later this year and the outcome will be crucial not only for South Asian geopolitics in the aftermath of Covid 19 pandemic and the ongoing Russia-Ukraine war, but the ramifications will be felt across the globe. Sources told India Narrative that China will play its cards and try to regain its hold over Kathmandu.

But this time Beijing may face resistance, especially after its refusal to back bankrupt Sri Lanka, once its reliable economic partner. “The image of China as a dependable ally has been dented. Before the pandemic it enjoyed an image of being the ultimate economic saviour for many countries through the Belt and Road Initiative (BRI) financing and other infrastructure projects but since then its reluctance to provide any financial support to its partners have become a global talk point,” an analyst based in Kathmandu told India Narrative.

That apart China is currently battling several challenges at home and this includes a sharp economic slowdown.

“The rising problems at home for China may not leave much room for Beijing to increase its thrust and focus on Nepal at this point,” he added.

The Chinese Communist Party had worked hard at unifying and successfully bringing the Nepal Communist Party to power in 2018, Carnegie India noted in its report.

Nepali former Prime Minister KP Sharma Oli was considered “Beijing’s man.”

Nepal swayed away from India and leaned more on China. “Nepalis believed that Chinese promises of new connectivity and financial largesse would end their traditional dependence on India,” the report said.

But in the last one year, Nepal’s domestic politics has taken a sharp turn with the exit of Oli. With Prime Minister Sher Bahadur Deuba taking over, Kathmandu’s foreign policy has become more pragmatic.

The results of the local elections, in which Nepali Congress emerged as the biggest gainer, will also influence trends for the general elections.

Nepal’s growing ties with India

Meanwhile, foreign policy watchers said Prime Minister Narendra Modi's recent visit to Lumbini on the occasion of Buddha Purnima was a “sentiment booster,” and despite Deuba invoking the contentious issue of Limpiyadhura, Lipulekh, and Kalapani, India-Nepal ties are on the mend.

“The Nepal government is ready to defend its territories. The areas of Limpiyadhura and Lipulekh and Kalapani are Nepali and the government has a firm understanding of them. Issue of the border is sensitive and we understand that this can be resolved through dialogues and talks through diplomatic channels,” Deuba said last week during his address to the parliament.

Analysts however said that both countries are now working towards resolving the border issues.

“The most important aspect of this relationship must centre on people to people relations and the galvanising effect this has on state to state relations,” Bhaskar Koirala  Director of the Nepal Institute of International and Strategic Studies told India Narrative earlier. “A modus operandi must be defined and then it is important to adhere to it,” he said.

Koirala pointed out that by Modi’s presence in Lumbini on the occasion of Buddha Purnima reflected a larger picture.

“By being present in Lumbini on the occasion of Buddha Purnima , PM Modi has acknowledged to not just a Nepalese audience but globally as well, that the birthplace of the Buddha was indeed Nepal. This is very important for Nepalese sentiment and should have positive spin off for the larger bilateral relationship,” he said.

Navita Srikant, foriegn policy expert said that India-Nepal relations today are aligned in commitments and spirit. "It has emerged clearly that India will be guided by the interest of the people and mutual prosperity," she said.

Nepal gets US led MCC grant

In February, the Deuba government approved a $500 million loan from the US led Millennium Challenge Corporation (MCC), a sign that the Americans were staging a comeback in Nepal. In April, a 25-member strong bipartisan Congressional delegation from the US also visited Nepal.

Chinese foreign minister Wang Yi’s visit to Nepal in March was aimed at balancing power equations amid Kathmandu’s not-so subtle shift in policy towards Washington but it failed to create any buzz.

A host of agreements between Nepal and China have been signed but those were more customary in nature.

Beijing’s nudge to Nepal over acceptance of the US aid has further irked Kathmandu.

"The recent developments of growing US influence in Nepal is an area of concern for China. Where Nepal stands today, her economic growth necessitates her Neutrality and the need to grow with the basket of multiple choices. Therefore China may not succeed with much political influence but will seek a share in economic investments into the country," Srikant said.

However, a word of caution: Though China's influence may be waning in Nepal, India needs to remain vigilant, consolidate its gains and share the fruits of prosperity with its civilizational neighbour.   

Also read: China sees red after Nepal PM Deuba woos the United States

25-member US Congressional delegation in Nepal– has a Washington-Beijing shadow war in Kathmandu begun?