At this particular juncture, when Indo-Nepal relations are faced with unprecedented realities, it is important to factor in certain determinants in our analysis of the bilateral relations. These analysis-determinants can set the course of action that steer the future of our political and people-to-people links.

Nepal emerged through major alterations to its political, social and cultural past, and became a republic and a federal and secular state. India’s crucial posture in orchestrating a 12-point agreement between the Communist Party of Nepal (Maoist) and the Seven-Party Alliance was one of the key features of the political settlement that ended a 10-year conflict. Nepal and India may have endorsed policies, agreements and treaties without really visualising the future impacts to their relations. In the future, policy consequences and exit strategies must be considered when determining the course of Indo-Nepal bilateralism.

Rivalry and competition

The China-United States power rivalry and China-India competition has and will continue to invite major political events in the Himalayan region. This rivalry and competition will also continue to invite strategic compulsions for nations in the region like Nepal that is at the centre of the Himalayan arc. Freshwater reservoirs, one of the largest in the world, will also be a factor for continued global interest in the region. Political actions and border disputes that appear will only lead to a trust deficit and reluctance and suspicion for cooperation between nations in the region including Indo-Nepal cooperation.

US Secretary of State Mike Pompeo remarked that the free world must change China or China will change the free world, indicating an open call for alignment against China’s expansionism. Speaking at a meeting of the US-India Business Council, Pompeo also reiterated the importance of India in the region.

With this discourse in one corner, China’s growing interest in Nepal, the Belt and Road Initiative and other engagements appear equally appealing to the general eye, and more so to competitive national politics in Nepal. With 20 deals and over $500 million pledged in aid during President Xi’s visit to Nepal in 2019, China is fulfilling the right political needs in Nepal. The website of Nepal’s Ministry of Foreign Affairs shows that China is the largest source of foreign direct investment in Nepal. Chinese investors committed to spend over $8.3 billion in Nepal during the Nepal Investment Summit concluded in Kathmandu in March 2017. China’s economic potent has and will continue to sway policy deliberation in countries including Nepal. The ongoing parliamentary discussion on the Millennium Challenge Corporation projects is an example of many geostrategic compulsions Nepal’s political powers may adhere to.

Indo-Nepal agreements will likely be referenced to the necessity of peace and stability in Nepal and shared equity of trans-boundary resources. A handful of treaties and agreements guide and shape the Indo-Nepal special political relationship. The 1816 Sugauli Treaty between Nepal and the East India Company recognised the degree of sovereignty and integrity of Nepal. Prime Minister Jung Bahadur Rana’s goodwill to the East India Company during the 1857 Sepoy Mutiny was gesticulated by returning today’s Banke, Bardia, Kailali and Kanchanpur districts in the far western Tarai to Nepal.

The 1923 Nepal-Britain Treaty is also believed to be crucial in the history of Nepal for acknowledgement of Nepal’s independence and the right to conduct foreign policy. The 1947 British-India-Nepal Tripartite Agreement involving the three governments is a defence treaty allowing rights and continuation of Nepali citizens in both the British and Indian armies. This continues till today though equal benefits continue to be a contested argument.

India’s independence and the fear of the spread of communism south of the Himalaya after China’s annexation of Tibet and the threat to the Rana regime created an environment for the signing of the 1950 Treaty of Peace and Friendship. The 1950 treaty was the initiation of a new era and backbone of Indo-Nepal relations. After the promulgation of Nepal’s new constitution in 2015, the Eminent Persons’ Group on Nepal-India relations was formed in January 2016 with a mandate to review various aspects of bilateral relations including the 1950 Nepal-India Friendship Treaty in light of the changing regional and global context.

In the middle of 2020, members of the Eminent Persons’ Group stated that the group had completed its report in 2018, but still, it couldn’t be submitted to Indian Prime Minister Narendra Modi as no time has been given as yet. It is reported widely that observers find it surprising that the group hasn’t been given time to submit its report even though the current prime ministers of Nepal and India—KP Oli and Narendra Modi respectively—had agreed to form it.

Geo-strategic significance

Moving forward, two principles will most likely be the guideline reference in Indo-Nepal relations. First, given the buffer zone characteristic of Nepal, the importance of peace and stability in Nepal for the reduced threat to neighbours cannot be ignored. Instability in Nepal may trigger a threat to peace and stability in the region and for Nepal’s neighbours. And second, trans-boundary resource benefits and costs should be equally shared between our two nations.

At this juncture, it is important to acknowledge cooperation, coexistence, and competition as guidelines to determine Indo-Nepal relations, and their geostrategic significance in the global order. A possible foreign policy and international relations catastrophe, which will continue to loom, must be met with proper analysis-determinants in order to achieve the right outcomes.

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