Navigating Nepal's Indo, China and US relations

Nepal, strategically located in South Asia, often finds itself under the scrutiny of global powers, with a shifting geopolitical landscape presenting significant challenges in managing its diverse partnerships.

Given the fluid nature of these international relations, it is vital to identify and understand the challenges Nepal faces in managing its partnerships with India, China, and the US. 

These challenges stem from ideological, governance-related, geopolitical, and public sentiment-based factors.

Ideological, governance, geopolitical and public sentiments driven challenges—

First, India. Nepal has a multi-layered relationship with India, shaped by ideological orientations of political leaders and public sentiments. For instance, left-leaning politicians in Nepal often criticise partnerships with India, whereas democratic leaders tend to be more 'liberal' in their approach to such partnerships. How the public views the relations is equally important, where political leaders and media play a crucial role.

When it comes to governance, Nepal struggles with inefficiencies resulting in ineffective negotiation and absorption on matters related to trade deals, foreign aids and investment. This problem however is not just limited to India, but China and the US as well. Additionally, disharmony among the three tiers of government (Federal, Provincial, and Local) exacerbates these challenges.

Geopolitically, Nepal is considered ‘India’s soft belly’ due to its open, unfenced border with India, posing security challenges for the country. In the past, there have been multiple attempts from Nepali soil to destabilise India, prompting India to exert influence in Nepal. Balancing India’s legitimate concerns while navigating Nepal’s own internal political dynamics, shaped by diverse political players, is a difficult task.

When it comes to public sentiment, some segments of Nepali society view India as 'expansionist' and believe it will never fully recognise Nepal’s sovereignty. 

The ideological challenges associated with China stem from Nepal’s leftist political parties who are ‘naturally’ closer to China due to ideological proximity, while democratic leaders tend to take a more ‘middle-ground’ approach.

In governance, as is the case with India, Nepal’s three-tiered governance system struggles to implement and sustain agreed-upon projects with China.

On the geopolitical front, the Free Tibet Movement is a concern for China, which aims to prevent its escalation from Nepali territory. To address this, China has covertly initiated projects in Tibetan-dominated areas of Nepal, closely monitoring Tibetan refugee communities. The opposing positions of China and the US on Tibetan issues in Nepal have forced Nepali authorities to maintain a delicate balance in their partnerships with China. But in the current Trump administration, it is unclear how the US approach toward Tibetan issues will develop.

Additionally, Nepal has shifted its stance from the ‘One-China Policy’ to the ‘One-China Principle.’ While policy can be altered based on circumstances, a principle, by definition, is rigid and difficult to change. Nepal’s new position against Taiwanese independence is also problematic. For Nepal, taking an anti stance on the Taiwan independence campaign does not contribute to achieving its national interest. Nepal, both constitutionally and in practice, follows a foreign policy of non-alignment. Secondly, lacks any significant business or commercial relationships that would be affected by its stance on the Taiwan issue.

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Public sentiment towards China is divided. Some segments of Nepali society believe that China should not be trusted due to its lack of support for Nepal during crises, both past and present. But interestingly, a section of Kathmandu, including its urban elites, show deeper support for China.

With regard to the US, certain traditional radical left-leaning politicians in Nepal criticise partnerships with the US. However, due to the US's unavoidable global influence, they often hesitate to make direct public statements against it. Conversely, younger left-leaning politicians do not oppose partnerships with the US. Democratic leaders in Nepal are generally more ‘liberal’ in their approach to US partnerships.

In governance, the pre-Trump era saw substantial US engagement in Nepal’s social and political empowerment through USAID, operating under the assumption that Nepal’s government lacked the capacity to be economically competitive and socially progressive. However, in Trump’s second term, the future of development assistance to Nepal remains uncertain.

From a geopolitical perspective, in the pre-Trump era, the US sought for Nepali authorities to recognise Tibetan refugees in Nepal. However, Nepal has been unable to do so due to its relationship with China and the policies it has adopted. Experts suggest that, in the broader geopolitical context, the US is present in Nepal to balance the India-China dynamic and establish a sphere of influence in the Himalayas. However, the current US administration’s approach appears to be driven more by personal priorities rather than rooted in traditional US policies.

Regarding public sentiment, some segments of Nepali society, particularly those with leftist leanings, believe that the US—known for its extensive military involvement worldwide—aims to counterbalance the influence of both India and China in Nepal and potentially establish a military base. Others view the US and the west through their development aid, which some consider less of development effort and more of social engineering that undermines the traditional foundation of the society. 

Further commentary—

Due to the multi-layered relationship between Nepal and India, fluctuations in their bilateral relations are often perceived 'natural’.

In the case of China, Nepal’s transition from the traditional ‘One-China Policy’ to the ‘One-China Principle’ represents a radical shift in Nepal-China relations.

Although the world is moving toward a multipolar world, the US still holds significant power in global affairs. This means few in Nepal dares to openly challenge the US, and those who do often end up changing their position. This was evident during the controversy surrounding the US's Millennium Challenge Corporation (MCC) grant program.

Maoist parties, closely aligned with Chinese political ideology, initially opposed the MCC project but dramatically changed their position as pressure intensified from the US. However, the current US administration has unilaterally suspended the MCC project for a review extending to three-months. It is uncertain whether the US will decide to continue the program, potentially placing an additional financial burden on the Nepal government.

Strategy-building areas to manage relationships—

In advancing Nepal’s relationships, strategic collaboration is essential. Here are some key focus areas for managing Nepal’s relationships with India, China, and the United States:

India: Nepal’s strategy with India must center on economic cooperation (with serious consideration of dumping issues — influx of goods at a lower rate into Nepali market challenges its competitiveness, as Nepal is unable to produce at comparable quantity and cost), geographic proximity and deepening people-to-people exchanges, and cultural, societal, and religious ties.

China: Nepal’s approach to China should take into account regional dynamics, the interplay between the three powerhouses — the US-China, US-India, and India-China dynamics, and the evolving economic landscape. Here also, the issue of dumping like India remains a critical consideration.

US: Nepal’s relationship with the US differs from its ties with India and China. Here, collaboration should focus on advancing Nepal’s IT sector, fostering innovation, and leveraging US influence to elevate Nepal’s global standing.

Additionally, Nepal should actively advocate for its interests in international forums like the UN, with support from US think tanks and business sectors. However, navigating the US-China and US-India rivalries will require careful diplomacy to maintain balance and protect Nepal's national interests.

Two crucial questions remains on US foreign policy—

Can any fixed strategy be effective in dealing with the US when its policies and approaches are unpredictable under the current US administration?

And will the US revert to its pre-Trump stance once the Trump era is over? 

The present and future of US policy is uncertain, especially with a social media-driven population, widespread misinformation, rising populism, and the spread of far-right ideologies. Today, people are more reactive than empowered, with biased information consumption making global politics more unpredictable.

Yet and precisely why, it is critical to re-engage with policies and renewed efforts towards the US. 

A step in this direction is to build a comprehensive database and engage with undocumented Nepali migrants in the US.

Additionally, Nepal should initiate talks with the US administration over the alleged involvement of the Nepali government in the fake Bhutanese refugee scam. This would demonstrate Nepal's commitment to managing its diaspora and give it a chance to clear its name, and help improve relations with the Trump administration, safeguarding other crucial aspects of Nepal-US ties.

For Nepal, recognising challenges and crafting strategies to address them is crucial in managing relationships with India, China, and the US. But right now, there’s an urgent need for a focused strategy to navigate its relationship with the US.