New government in Nepal: What does it mean for China?

New government in Nepal: What does it mean for China?

By Santosh Ghimire

Nepali Prime Minister Sher Bahadur Deuba was appointed to the post on July 13 as per the Supreme Court order. The development came a day after the apex court overturned then Prime Minister KP Sharma Oli's move of dissolving parliament and ordered Deuba's appointment to the post in accordance with the Article 76 (5) of the Nepali constitution. This is the fifth time Deuba is taking the helm as prime minister.

（From: The Radar）

Prime Minister Deuba, who is also the president of ruling Nepali Congress Party, has primarily two major tasks: handle the COVID-19 crisis effectively and calibrate Nepal's foreign policy—particularly vis-à-vis China and India.  Calibrating foreign policy remains a great challenge for every government in Nepal given its geo-strategic location.

In his recent address to parliament, Prime Minister Deuba said that his foreign policy priorities will begin with neighboring countries and go on to include the region, the major countries like the United States. “There are no permanent friends and enemies in foreign policy and international relations but there is always a permanent interest,” said Deuba, adding that securing vaccines against COVID-19 will be his first and foremost foreign policy.

Immediately after Deuba took the charge as the prime minister, Indian media described him as "India-friendly" Nepali leader while dubbing his predecessor KP Sharma Oli as "anti-Indian". The Deuba-led government is likely to steer Nepal's foreign policy toward a favorable direction for India, according to political observers in Kathmandu.

Given geographical and cultural affinities between the two countries, India will try to keep Nepal into its fold as earlier. India is currently Nepal's biggest trading partner. Majority of Nepal's third country trade is taking place through Indian sea ports even as the country is looking for alternatives and eyeing for conducting trade with third countries via China. By using its economic and political leverage, New Delhi will try to micromanage Nepal's domestic affairs and counter the influence of other countries, particularly China.

Nepal has been cautiously observing the border tensions between China and India particularly after the Ladakh incident in May 2020. As of today, Nepal has maintained a neutral relationship during tensions between the two neighboring countries—be it in 1962 war or recent Ladakh incident. However, New Delhi might force the Deuba-led government to take its side if tensions escalate between India and China in the coming days. If any such untoward development happens, Nepal's ruling and opposition parties must develop a common consensus so that their territory would not be misused.

India might not immediately be seen as intervening into Nepal's internal politics. Rather, it will try to broker alliances between political parties in the upcoming parliament elections. New Delhi might provide tacit support to political parties which have a soft corner for it, like the ruling Nepali Congress and Madhesis.

(From: Hindustan Times)

For China, Deuba's comeback as the prime minister should not be something of a big surprise. Because, China has also its own historic ties with the Nepali Congress party since the early 1960s as towering leader BP Koirala established the party-to-party friendly relationship with the Chinese Communist Party.  As China has seen Nepal as its strategic partner in the South Asia region, it must deal with whoever comes to power here and maintain sound and friendly relationships. It is said that a friend in need is a friend indeed and China has proved it during Nepal's difficult times.  For example, China provided at least 3.4 million COVID-19 vaccines to Nepal under grant assistance.

China should develop its ties with all Nepali political parties and continue its friendship as before. While refraining from intervening into internal political affairs of Nepal as earlier, China can also pursue its strategic interests in Nepal.  

The most important thing is that China should press Nepal for expediting the execution of the connectivity and infrastructure projects under the Belt and Road Initiative (BRI) which were agreed at the top political level on several occasions including Chinese President Xi Jinping's visit to Nepal in October 2019. The Oli-led government did not work sincerely to implement mega projects under the BRI on the pretext of COVID-19 pandemic. However, the hidden reason behind Nepal's failure of implementing BRI projects was Indian and western pressure, apart from the infighting in the then Nepal Communist Party and the COVID-19 pandemic.

The growing American footprint in Nepal should be another matter of concern for China. Amid hostile relations between China and the United States, the Deuba-led government may not be sincere enough toward respecting the matters pertaining to China's core interests such as Tibet, Taiwan and Hong Kong. Therefore, China needs to carefully watch the attitude and behavior of western powers including the United States and European Union who often try to take undue advantage of Nepal's sensitive geo-political location. Even as Nepal has maintained One China policy for long, the western support (United States, European countries) for the 'Tibetan separatists' has huge implications for both Nepal and China.

At the same time, the United States is trying to bring Nepal into its fold through the Indo-Pacific Strategy. It is obviously a huge concern for China, the northern neighbor. The US government has been seeking Nepal's central role in the Indo-Pacific Strategy since the time of the Oli-led government. It might keep exerting pressure on Deuba to ensure Nepal's participation in the Indo-Pacific Strategy.

The US-initiated Millennium Challenge Corporation (MCC), which is awaiting parliamentary ratification in Nepal, is hugely debated here. But the Deuba-led government seems to be eager to pass it through parliament, ignoring calls for its amendments beforehand. In his recent visit to India, US Secretary of State Antony Blinken telephoned Prime Minister Deuba from New Delhi to exert pressure on the passage of MCC through parliament. It means that the US is expecting to further deepen its bonhomie with Deuba and serve its strategic interests in the coming days.

It was the Deuba-led government which signed MCC with the United States in 2017. The MCC, which is an integral part of the US Indo-Pacific Strategy, has courted huge controversy in Nepal and public sentiment is against ratifying it from parliament. In the past, the Nepali Congress party strongly advocated for passing the MCC through parliament. It is likely that the party will reiterate its commitment toward the MCC, apparently to please the United States.

Western countries including the US are likely to ask Nepal to execute projects under the Build Back Better World (B3W) initiative pushed by the G7 countries in near future.  The US is likely to seek at least political support from the Nepal government for the same for now.  As per the announcement made by the G7 countries, the B3W aims to counter the China-proposed Belt and Road initiative. Obviously, it will be very difficult for Nepal to accept such a proposal which directly threatens Nepal's friendly ties with China. However, the Nepal government has not shared its official position yet on this new western concept. For Deuba, it's difficult to undermine Nepal's friendly ties with China and growing cooperation and partnership under the framework of the BRI because Nepal will certainly reap benefits from the peaceful rise of China. Under the framework of the BRI, Nepal can realize its long-cherished developmental objectives.

Now, the big question is: Will the current coalition government led by Deuba be able to avoid such China-containment strategies and resist the pressure from the United States? Can Nepal pursue its long-standing non-alignment policy?  

Non-resident research fellow at Chengdu Institute of World Affairs, a Kathmandu-based freelance correspondent. He often writes on foreign affairs, geopolitics and governance.