Caught between India, China and the U.S., Nepal PM Prachanda struggles to strike a balance in foreign policy

Beijing, through its BRI projects, is trying to expand its sphere of influence in Nepal, where New Delhi traditionally enjoyed its clout, just as Washington appears to have renewed its interest in the Himalayan country

April 18, 2023 05:28 pm | Updated April 19, 2023 08:20 am IST - Kathmandu

The struggles of Nepal’s Prime Minister Pushpa Kamal Dahal, aka Prachanda, at home turf are immense, but he is also faced with myriad challenges when it comes to foreign policy.

The struggles of Nepal’s Prime Minister Pushpa Kamal Dahal, aka Prachanda, at home turf are immense, but he is also faced with myriad challenges when it comes to foreign policy. | Photo Credit: Reuters

Nepal Prime Minister Pushpa Kamal Dahal ‘Prachanda’ appointed Narayan Prakash Saud, a Nepali Congress leader, as Foreign Minister on Sunday, after holding the portfolio for seven weeks himself. Domestic politics is so fractured that he was struggling to keep a stable Cabinet — Sunday’s was the eighth expansion since his appointment as the Prime Minister on December 25.

The current government of Prachanda, chairman of the Communist Party of Nepal (Maoist Centre), which is the third largest party in Parliament, is supported by a motley of seven parties — from the Nepali Congress, the largest, to small ones with one to four seats. Prachanda has already gone for floor tests twice in his four months in power. By his own admission, it won’t be a surprise if he has to seek a vote of confidence again, as withdrawal of support by any of those parties would necessitate so as per the Constitution.

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Nepali politics continues to be in a constant flux. While Prachanda’s struggles at home turf are immense, he is faced with myriad challenges when it comes to foreign policy.

Three-way challenges

Prachanda has taken the helm at a time when there have been overt bids by Beijing to expand its sphere of influence in Nepal, where New Delhi traditionally enjoyed its clout, just as the Americans appear to have renewed their interest. Particularly after the passage of the Millennium Challenge Corporation-Nepal Compact (MCC), there has been a flurry of visits by U.S. officials to Kathmandu. Under MCC, the U.S. will provide $500 million in grants to build electricity transmission lines and improve roads in the Himalayan country.

File picture of Prime Minister Narendra Modi with his Napalese counterpart Pushpa Kamal Dahal ‘Prachanda’ in New Delhi in 2016

File picture of Prime Minister Narendra Modi with his Napalese counterpart Pushpa Kamal Dahal ‘Prachanda’ in New Delhi in 2016 | Photo Credit: Sudershan V.

As Nepali politicians and intelligentsia debated the MCC last year, Beijing minced no words to warn Washington not to impose anything against Nepal’s will. Meanwhile, ties with India are not in their best days.

“The biggest bane of Prachanda is that he is leading one of the weakest governments ever in terms of legitimacy,” said K.C. Khadga, a professor of international relations and diplomacy at Tribhuvan University, Kathmandu. “And there is a lack of trust from… say, neighboring countries and the U.S., given his track record, his own worldview and his party’s ideological and philosophical perspectives.”

Prachanda’s duplicity over the MCC was exposed after a letter he co-wrote with Nepali Congress president and then Prime Minister Sher Bahadur Deuba to U.S. officials in September 2021 made it to the public domain. His party eventually voted to pass the compact, but Mr. Khadga believes Prachanda is yet to win Washington’s confidence fully.

“His decision to skip the Boao Forum for Asia Summit also does not seem to have gone down well with Beijing,” Mr. Khadga added. Chinese Ambassador to Nepal Chen Song, in the third week of February, had met with Prachanda and extended an invitation for the summit. “I don’t think his elevation to power has been much to the liking of India either,” said Mr. Khadga.

A tightrope walk

As the U.S. and China jostle for influence, Prachanda faces a tightrope walk with India. He is avidly awaiting an invitation from New Delhi, with reports suggesting that an April-end or May date is being considered.

Even though Prachanda’s party fought the November elections under an alliance with the Nepali Congress, his ascension to power materialised with the backing of the Communist Party of Nepal (Unified Marxisit-Leninist), or CPN-UML, the second largest party.

Observers believed the Left-dominated government was not much to Delhi’s delight. Nevertheless, India sent Foreign Secretary Vinay Mohan Kwatra to Kathmandu in the second week of February, signalling its willingness to work with the new government in Nepal. But weeks after Mr. Kwatra’s visit, the political landscape changed. Prachanda ditched the CPN-UML as his party decided to back the Nepali Congress candidate for presidential polls.

Prachanda’s keenness to fly to India has been evident from his public statements that New Delhi would be his first port of call and that he would visit Delhi “soon”, even as a formal invitation was due.

That Nepal can serve as a bridge between two big economies—India and China— for its own economic development has been a common refrain for long, but it has failed to materialise due largely to unstable Nepali politics. But with mounting economic problems at home and heating competition between India and China, Nepal cannot afford to overlook its foreign policy challenges any more, say experts.

The government’s revenue collection is not enough to sustain the regular expenditure, the market demand has seen a massive contraction, and industries and businesses are tottering. In the first six months of the current fiscal year, foreign direct investment commitments have declined by 44%. The International Monetary Fund has revised Nepal’s economic growth to 4.4% for this fiscal from an earlier 5% estimate in view of sluggish trade and low investment. The country is in dire need of investments.

It is also wishing to export energy, seeking to have a say in the international stage, making its voice heard on issues like climate crisis and looking for partners in the areas of shared interests like security, cybersecurity, development and combating terrorism. To meet these challenges, Nepal has to build stronger ties with its more powerful neighbours as well as the U.S., without getting caught in their competition. A tall ask indeed.

BRI projects

The Chinese are keen to pour money into Nepal under the Belt and Road Initiative (BRI), to which Nepal signed up in 2017, while New Delhi clearly appears reluctant to be engaged with any project that is part of the BRI. Though nine projects were shortlisted under the BRI, not even one has moved forward. India has agreed to buy electricity from Nepal, but it has made it clear that it will buy power only from those projects where there is no Chinese involvement. A reluctant India, in the past, however, has shown an increased interest in investing in hydropower plants in Nepal. A flurry of visits from the U.S. is viewed in Kathmandu as Washington’s bid to bring Nepal under its security umbrella.

Observers say Prachanda will do well if he can bring domestic actors together for a consistent and coherent foreign policy while employing his government to negotiate projects under the BRI, maximise the benefits for Nepal by implementing the MCC and strengthening cooperation with India in the areas of energy, trade and transit.

“But given the fluid political landscape, for Prachanda, bringing all the parties to consensus on foreign policy is not easy,” said Chandra Dev Bhatta, a political scientist who writes on geopolitical matters. “For years, Nepali politicians have failed to prioritise foreign policy in national interest, and Prachanda is no exception. Since his appointment as the Prime Minister, he has been using all his might to save his government, just as foreign policy remains completely ignored.”

Trust deficit with India

Prachanda has also his task cut out restoring the trust with India. The K.P. Sharma Oli government’s decision in May 2020 to publish a new map showing the Kalapani area, which India claims as its own, within Nepali territory created a big chasm between the two neighbours. “That led to a trust deficit which still continues,” said Mr. Bhatta. “I doubt this will even be an agenda when the Prime Minister visits Delhi.”

Experts say amid the fast-changing world order, Prachanda’s major focus should be on taking India and China, the two immediate neighbours, into confidence, while maintaining robust ties with the U.S.

“There is such a lack of clarity in Nepal’s foreign policy that friendly nations have been engaging with it based on their imagination,” said Mr. Bhatta. “Prachanda’s foremost challenge is to bridge the trust deficit and build confidence with our neighbours.”

Mr. Saud, the newly appointed Foreign Minister, says his government would continue to maintain cordial ties with both India and China. “We have always had cordial and peaceful relations with our neighbours,” he told reporters in Kathmandu on Sunday, after assuming office. “In the coming days too, we will further deepen our ties with all our friendly nations.”

Sanjeev Satgainya is a journalist based in Kathmandu.

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