Nepal is Failing To Capitalize on its Location Between India and China


Credit: Sundar1/wikimedia

Last week, three of Nepal's former Prime Ministers called for trilateral cooperation among Nepal, China, and India. For Nepal, a small Himalayan country sandwiched between two giant economies, there are obvious benefits to increased cooperation. However, with Nepal's political history calls for reform come with some baggage.  

I asked Arpita Nepal, Co-founder and Research Adviser at the Nepal-based Samriddhi Foundation, about the calls for trilateral cooperation:

This is an interesting piece. But I'm on quite skeptical on what this means. Talks of tripartite cooperation are really old. All the leaders quoted in the article are either Maoists or belong to the Unified Marxist Leninist party. They are notorious for saying something while refuting their own statements the very next day. Maoists have always relied on posing India as the 'bad guy' in their populist agenda in Nepal. But the instant they resume government, it does not pay them to be that radical.

Another reason for my skepticism is the lack of value addition that Nepal can provide. I sincerely don't see any value addition for India and China to go via Nepal as a transit route unless we change our trade treaties condition with India. We have a lot of custom duties and quarantine regulations that is likely to negate any advantages that can be gained from using Nepal as a transit route. Of course, having tripartite cooperation would be beneficial for a country like Nepal but then in terms of negotiations as such, the question is 'What's in it for India and China?'

We really like to think that we are advantageous to both India and China but other than their own internal security concerns (given the fact that India has an open border with Nepal and a lot of Tibetan refugees either migrate to Nepal or travel via Nepal), their interest in us is a little too exaggerated by the media. Officially I don't know how much China would relent in terms of 'One China Policy'. India is officially opposed to this and supports the free Tibet movement.

It would be wonderful if Nepal can be forward looking enough to take advantage of its location in between giants but our policy direction suggests an entirely different scenario where we still live by the fear that either India or China will take us over. Therefore, our orientation is more towards protectionists policies.

Chinese State Councilor Yang Jiechi was supposed to visit Nepal recently, but his trip was postponed, a move that Nepalese writer Trailokya Raj Aryal believes is the latest illustration of how much Nepal means to China, and how unlikely trilateral cooperation may be:

While our seasoned China watchers never tire of discussing how important we have become to China's new set of leaders, as evidenced by the recent visit to China by Pushpa Kamal Dahal and his photo op with China's new President Xi Jinping, the Chinese side has unilaterally postponed the two-day visit of Yang Jiechi, state councillor in charge of foreign policy and former foreign minister, to Nepal, originally scheduled to start on May 18. There goes our importance to China's new set of leaders and some of our optimists' views that we are on our way to becoming a 'bridge' between India and China and that we are moving towards trilateral cooperation.

Nepal could benefit from its geographic location, but to do so reforms that will develop the economy and address the unemployment rate, which stands at over 45 percent, need to be implemented.

While Maoists and Leninists in Nepal may be hampering the sort of reforms the region needs there is some hope that incremental reforms can be made domestically in Nepal, with the Samriddhi  Foundation working towards empowering entrepreneurs through a crowdfunded project that hopes to reduce regulations faced by store owners.

China and India's attitude towards their smaller neighbor might well change if Nepal can makes necessary reforms. Because it is trying to work with two of the world's largest economies it is up to Nepal to implement the necessary reforms to make cooperation possible.