Enter the Dragon


China’s big-ticket push into a politically unstable Nepal should force an Indian rethink, says Avalok Langer

Chinese President Hu Jintao India,’ says a Maoist leader and Nepal Prime Minister Baburam Bhattarai
Ties that bind Chinese President Hu Jintao India,’ says a Maoist leader and Nepal Prime Minister Baburam Bhattarai
Photos: AFP

AS THE rickety bus weaved its way through the Nepalese mountainside, a music system blared: “Tenu main love karda, Bematlab karda… Tu mera Hero, O, O, O”, and a middle-aged man turned around and said, “Don’t get me wrong, I have many Indian friends. I love Bollywood. But India is not very popular here, China is. Nothing personal, ok.”

Open for business China and Nepal are connected with highways and a railway line is also on the anvil

Over the past month, everyone from taxi drivers to policymakers across the country have uttered something along similar lines, and in truth, the statement very aptly reflects the complex love-hate relationship between India and Nepal.

Unlike India, China has by and large steered clear of day-to-day politics in Nepal, focussing on trade and investment. Looking to expand its role after the 2008 Tibetan protests in Kathmandu got out of hand, Beijing has started a massive investment drive — building hydropower microgrids for free, investing $1.8 billion in a 750 MW hydro project and also building highways and airports. At the same time, they have flooded the Nepalese market with Chinese goods and restaurants.

Today, the Chinese control 20 percent of Nepal’s trade and are looking for a bigger slice of the pie. They have built many highways, linking Nepal to Tibet, through which hundreds of trucks carrying Chinese goods enter Nepal every day. Work is underway to extend the Lhasa railway to the Nepal border and in time to Kathmandu. An inland port near Khasa, in China, close to the Nepal border, to supplement the growing trade is also under construction.

“By providing a trade alternative to India, economic investment will automatically get them political leverage,” suggests an Indian intelligence official.

“China looks at an investment opportunity, makes a plan, sanctions money and acts on it. Their legal process is streamlined. They have no red-tapism and this gives them a 10-year headstart compared to India,” says a top Maoist leader on the condition of anonymity. “India will always be our largest trading partner, but we cannot be 100 percent dependent on them. By reaching out to others, we are looking to create a buffer.”

This mindset of “creating a buffer” and opening up to China is a direct result of Indo-Nepal friction, says a political analyst, who didn’t want to be named. “India is perceived to be constantly interfering in Nepal’s internal affairs and following a ‘use and throw’ policy: handpicking political elements, bringing them to power and then dumping them. Since 1950, Indian support has alternated between the monarchy, the Nepali Congress, the Maoists, the CPN(UML) (Communist Party of Nepal Unified Marxist Leninist) and the Madeshi Front, angering each group at one point or the other,” says the analyst.

A recent example was the statement by Indian consul SD Mehta, who allegedly said that his “heart was shattered” when he came to know that “One Madesh, One Province” would not be guaranteed by the new Constitution. The major political parties — the NC, the Maoists and the CPN(UML) — raised objections, terming the remark an external interference that could seriously affect ties between the nations.

‘China acts on investment opportunities promptly. This gives them a 10-year headstart compared to ETies that bind Chinese President Hu Jintao India,’ says a Maoist leader

Many feel that India has always looked to maintain ties with individuals and groups with influence, through whom it tries to pursue its interests. However, Madeshi People’s Rights Forum General Secretary Jeetendra Dev feels this political “flip-flop” boils down to policy driven by personalities. “In India, some have good relations with the monarch, some have ties with the democratic forces and others with the Left movement. So India’s policy depends on which lobby is in power,” he says.

While the Chinese Embassy is the single point of access, India’s open border with Nepal changes the dynamics drastically. Lakhs of Nepalese study and work in India and it is these interpersonal relationships that have created a system where personalities dictate policy, says a political analyst. Multiple channels of communication and influence have complicated the issue, making the job of the diplomats at the Indian Embassy much tougher.

The advent of the anti-India sentiment and the push towards embracing China has been pegged to the Maoists coming to power, but that is far from the truth. Anti-Indianism finds it roots in the definition of Nepali nationalism in the 1960s and ’70s when the Royalist forces as well as the fledgling Left Front injected the ideas of “Indian expansion” and the “Sikkimisation” of Nepal. A sentiment that was later picked up by the Maoists, who rallied the masses to fight against the “India threat”.

Political analysts blame New Delhi for the rise in anti-India sentiment, citing examples of political arm-twisting, the 18-month economic blockade of 1989 and more recently, the 2010 embargo on newsprint, for fuelling the discontent.

Annually, India pumps crores of rupees into Nepal. Since Nepalese law allows for direct investment below Rs 3 crore, India has set up many schools and colleges, donated hundreds of ambulances and set up hospitals, but these investments have failed in achieving the desired feelgood factor.

“I don’t know why India is investing in these miniscule projects. Why aren’t they looking at large-scale projects? Building schools is good, it is much appreciated. But you can’t provide schools for everyone, so you end up alienating the rest,” avers Rajan Bhattarai, adviser to former prime minister Madhav Kumar Nepal.

Indian largesse is aimed at politicians and provides investment to their constituencies in return for their support. A majority of the investment has been in the Terai region, which is ethnically and culturally more closer to India.

“India is investing to win over individuals to get political leverage but it doesn’t work that way,” says a Maoist leader. “If I take money from India to build a hospital in my constituency, my opponents will allege that I’m an Indian agent. India needs to rethink the investment policy — Invest big, create jobs and take your profit.”

Prominent economist Bishwambher Pyakuryal feels that India needs to look at bigger projects like highways and hydro projects. “India should try to build on the Dabur model (the company trained local people, encouraged them to conserve and grow medicinal herbs under a 100 percent buy back scheme) and exploit the massive potential in Nepal through joint ventures. This will create many jobs and mobilise Nepali entrepreneurs,” he says.

Of late, while Indian hydroelectric projects have met with red-tapism and protests, China’s investment in similar projects has grown substantially. Nepal has a proven hydroelectric potential of 43,000 MW and India has been looking to exploit it. However, water has been the most contentious issue between the neighbours, with all previous treaties ending in disaster.

Water experts argue that India’s proposed hydroelectric projects in Nepal — 400 MW Arun III and 900 MWG MR Karnali — aimed at easing the power deficit in Bihar and Uttar Pradesh, could have been better used to solve Nepal’s power woes. Some add that India is looking at Nepal’s water resources through colonial eyes.

IN FACT, according to former water resources minister Dipak Gyawali, “The MoU with GMR states that before the people of Jumla can use the water of the river, they have to take GMR’s permission. On the other hand, China has offered Nepal a $200 million grant to develop 110 MW for internal use.” When it comes to water, there is a growing feeling that India needs to look at joint ventures that deliver electricity to both Nepal and India.

Though China’s investment and influence is steadily increasing, it isn’t time to push the panic button just yet. The main reason why there is no anti-China feeling is because China is still an unknown entity in Nepal. Given that Nepal is going through a process of political churning, this is the ideal time for an Indian rethink. Once Nepal stabilises, India should build on the appreciation for its role in the peace process and look at investing in mega infrastructure projects, setting up industries and working to strengthen Nepal’s economy. An economically strong and politically stable Nepal will provide India the “strategic buffer” that it is looking for.

Avalok Langer is a Correspondent with Tehelka.


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