Pearls and Irritations

Nepalese Prime Minister KP Sharma Oli’s visit to China last month was closely watched by both domestic and international observers.  

Oli’s visit was a continuation of his groundbreaking trip to China during his first tenure as prime minister in 2016, during which a transit transport agreement between the two countries was signed. Such an agreement should have been inked a long time ago, but the economic embargo imposed by India in 2015 forced Nepal to examine its options. It was regarded as a historic step as landlocked Nepal had such an arrangement only with India until then.

Apart from agreements related to road links, infrastructure and energy, the most significant progress made during Oli’s visit was a memorandum of understanding on establishing railway connectivity between the two countries. This has great significance both in terms of enhancing cross-border connectivity and the fact that the Himalayan frontier would no longer be impregnable.

The Qinghai-Lhasa railway network is set to be extended up to the Sino-Nepalese border point of Gyirong (Kerung) within a couple of years. Similarly, the feasibility study for extending it further up to Rasuwagadhi-Kathmandu has already commenced, although the modalities of investment are yet to be ascertained.

China-Nepal railway connectivity would be a part of the broader concept of a trans-Himalayan multi-dimensional connectivity network proposed by China which, in turn, would be under the framework of the China-led Belt and Road Initiative (BRI). Concrete details about trans-Himalayan connectivity need to emerge in order for the project to move ahead, although experts have previously talked about trans-Himalayan economic corridors. Nevertheless, it can be envisaged that the proposed network would be on a massive scale, encompassing Central Asia, China, South Asia and Southeast Asia.

The idea of trilateral cooperation between China, Nepal and India, despite being opaque in terms of the details, has been discussed on different occasions, although India has hardly shown any interest in it. Since India has not expressed any desire to be a part of the BRI, it remains to be seen what effort China is going to make in the coming days to convince India to participate.

It is logical to assume that one of China’s major goals in establishing China-Nepal railway connectivity is to extend it to the Indian border in the future. If it happens, such a network would set the stage for making the concept of trans-Himalayan connectivity a reality. In that scenario, Nepal could act as the gateway for China’s seamless entry into the South Asian market and vice-versa, as China and India are the two largest economies in the region.

Although there are a couple of existing trade routes between India and China, the state of connectivity is far from desirable. The routes also are not operational throughout the year due to unfavorable Himalayan weather conditions. Thus, the shortest all-weather trade and transit route from China to India would be through Nepal if the railway network currently being constructed up to the Sino-Nepalese border of Kyirong could be extended up to a suitable Indo-Nepalese border point.

The opportunities for trans-Himalayan multi-dimensional connectivity seem plentiful, but at the same time, the challenges are equally great.  The biggest advantage would be the easy movement of goods and people through the trans-Himalayan terrain, which has historically been considered difficult to navigate. However, gauging India’s current position on the BRI, it is difficult to imagine it becoming a part of either the trans-Himalayan multi-dimensional connectivity or the proposed China-Nepal-India trilateral cooperation framework anytime soon. Unless geoeconomics is separated from geopolitics in India-China relations, the prospects for such connectivity and cooperation look bleak. There can also be no denying that if China really wants its endeavor to be successful, it must address the genuine concerns of India within the broad framework of the BRI.

Since the present condition of connectivity and infrastructure in Nepal is extremely poor, it stands to benefit from any sort of cross-border railway connectivity, as it would facilitate the movement of goods and people, leading to a great increase in trade and tourism. While connectivity is important for Nepal, measures should also be taken to avoid debt traps. A majority government with a strong mandate has finally been formed in Nepal, which has raised hopes for political stability and prosperity. Such incentives need to be translated into tangible outcomes to achieve the desired goals.

Nepal and China have had an excellent bilateral relationship based on the principles of Panchsheel, both in theory and practice

Nepal and China have had an excellent bilateral relationship based on the principles of Panchsheel, both in theory and practice. Despite vast dissimilarities in terms of size, population, economy and military strength, Nepal is an important neighbor of China due to its crucial geostrategic location. Oli’s visit to China has definitely helped boost the bilateral relationship.

Unlike in the past, Nepal should undertake a more proactive role and be serious about implementing past agreements with China. It should also discard the tendency of seeking help from China only when in dire need. Only then can an environment of trust for a mutually beneficial partnership be developed.

The trans-Himalayan multi-dimensional connectivity network could emulate the historic silk route and become a game changer not only in the trans-Himalayan region but beyond. Nepal’s foreign policy attaches the highest priority to its neighborhood. India remains the largest investor in Nepal, but at the same time, Chinese investments are rising gradually. Nepal’s desire to move along the path of economic development by choosing suitable development partners should not be interpreted as a move directed against any party, but rather be considered as its means of promoting and protecting its own national interests.