New Delhi needs to respond to Chinese designs in this emerging scenario.
Nepal Prime Minister K. P. Sharma Oli paid a five-day official visit to China from June 19. Before going into an analysis of that visit and its import and impact on Nepal, India and China relationship, it may be useful to take a brief look at an important development in the internal politics of Nepal in the immediate past.
The two communist parties engaged in working out the modalities of their merger into one communist party ever since the last parliamentary elections in December last year ultimately concluded their unification process on May 17 this year. Once at daggers drawn, the two parties decided to bury the hatchet after the parliamentary elections in December last year when they found that together they commanded a clear majority in Parliament.
The name of the united party is Nepal Communist Party, not the Communist Party of Nepal. A near-parity was maintained in forming the Central Committee and the Standing Committee of the NCP. Of the 441-member CC, 241 are from Oli's party, the CPN (United Marxist Leninist) and 200 from Pushpa Kumar Dahal's (better known as Prachanda) CPN (Maoist Centre). In the 43-member Standing Committee, 25 are from CPN(UML) and 18 from CPN(MC).
The united party has 174 seats in the 275-member Parliament. This has at last given Nepal the much needed political stability it lacked. The past few years had witnessed frequent changes in government because no party commanded a clear majority on its own and had to depend on the support of other parties.
Before the merger, Prachanda was perceived as being pro-India and Oli as pro-China. Keeping this in mind, one can turn to Oli's China visit within a month of the merger of the two CPs and see what transpired.
The burden of Oli's speeches in China was that Nepal was to follow an independent foreign policy. In an interview to the CPC organ Global Times, Oli said that from the very first, his government had "intensified engagements with both China and India." He went on to say: "We have made it clear that we will pursue an independent foreign policy and a balanced outlook in the conduct of international relations." He emphasised that "We are firmly committed to not allowing our territory to be used against the sovereign interests of our neighbours." This clear and categorical statement should allay fears and misgivings, if any, in the minds of policymakers in New Delhi.
As many as 14 agreements were signed between Nepal and China during Oli's visit in the fields of connectivity, transportation, energy, infrastructure development and tourism. The most important was, of course, the one on building a strategic railway link that will connect Kathmandu with the Tibet region of China across the difficult mountainous terrain of the high Himalayas. Oli himself described this agreement as an important one. However, no details of the project agreement, like the project cost, the expected date of completion, the likely amount of investment by the Chinese and the interest on the loan to be charged by the Chinese companies, have been disclosed.
Besides, China will undertake exploration of natural gas and petroleum products in Nepal. This is rather intriguing because there are no known reserves in Nepal either of natural gas or of crude petroleum.
Knowing that the loans given by China for building infrastructure projects in underdeveloped countries often create a debt trap for the debtor countries, the main opposition party, the Nepali Congress, has sounded a warning. Prakash Sharan Mahat, a Nepali Congress leader and former foreign minister, has said that Nepal can never pay back the loan taken for the railway project "as the cost of such projects would exceed the annual capital expenditure of Nepal" and that it may "take decades or even a century to get results from such mega projects." He suggested that India also build a railway line up to Kathmandu and both China and India bear the entire cost as 'grant assistance.'
China is very unlikely to respond to such a request even if Nepal makes one because it is following the traditional capitalist policy of lending as a tool to entrap the recipient countries in a debt trap and acquire proprietary rights on the projects they finance. According to a survey made by the Quartz online business magazine, eight countries are likely to find themselves in the Chinese debt trap. These are Djibouti, Tajikistan, Kyrgyzstan, Laos, Maldives, Mongolia, Pakistan and Montenegro. Sri Lanka, it may be borne in mind, has had to sell 70 per cent equity in the Hambantota port project to the Chinese company building it. Bangladesh also carries a huge Chinese debt burden of $8 billion.
As a seasoned political leader, Prime Minister Oli must be aware of the risks involved in taking huge loans from China for building 'mega projects'. As far as India is concerned, it should seriously consider the suggestion of Nepali Congress leader Mahat and offer to build a railway line to Kathmandu. Such a line is justified not only on purely economic and financial grounds but also for compelling strategic reasons. If China has a rail link with Kathmandu, there is no reason why India, being the closest neighbour and having a cultural and historical bond with Nepal for thousands of years, should allow China to steal a march.
(The views expressed are strictly personal)