President Bidya Devi Bhandari and Prime Minister KP Oli may have been among the earliest of the world’s heads of state or government to congratulate Joe Biden, the president-elect of the United States. But that diplomatic ritual alone is unlikely to have any significant impact on Nepal-US relations in the long run. Nepal is among those few, out of over 200 countries, that despite holding long bilateral diplomatic relations with the US has limited economic engagement; it carries very little weight in global strategic balance to be noticed for such diplomatic gestures.

Also, the prognosis that the change of leadership in the White House may not change US foreign policy towards Nepal is certainly plausible if Nepal is viewed in isolation. But, several overarching ramifications of emergent geopolitics, particularly in South Asia and China, where the US continues to seek expanded strategic presence, are bound to be felt in Nepal—for better or worse. On the one hand, China and India, as the second and the third largest economies of the world respectively, naturally top US foreign policy priorities and, on the other, Biden has no alternative but to calibrate many policies forced by current President Donald Trump. Some of the aggressive policies of the current administration have led to a major trade war with China.

A focus on South Asia

The US has to keep account of India, the regional superpower, and has many stakes in the country. The US is the largest importer of Indian goods; India is the second-largest exporter, second to only China. Most of the key US policies towards India were initiated much before Trump became president in 2017. The Indo-US nuclear deal was signed in 2005. India, as a ‘democratic’ nation, is a significant part of the US security strategy of containing China’s growing influence in the Pacific and Indian Ocean rims. Since its inception in 2007, India has been a part of the four-country club called the Quadrilateral Security Dialogue, or Quad. This involves the US, Australia and Japan. India is also part of the ‘shared vision’ of the US-sponsored Indo-Pacific Strategy, the recent resurgence of which is seen as the strategic counter to China’s Belt and Road Initiative (BRI).

Apart from India that sits on the pivot of the US regional engagement, the latter already has extensive engagement in South Asia. The US security forces have been present in Afghanistan for the past two decades now. Although US-Pakistan relations have drastically altered after the increasing presence of China there, through the ambitious $60 billion China-Pakistan Economic Corridor, it was a credible US ally throughout the Cold War. The bilateral trade and investment with Bangladesh, and to some extent with Sri Lanka, have witnessed a significant rise over the years.

Biden’s planned review of several Trump-era policies will also have an impact on South Asia. For example, he has promised to return to the nuclear deal with Iran that Trump had pulled out from. This is expected to ease economic sanctions imposed by Trump against Iran which in turn had forced India to suspend an ambitious oil pipeline project and buy the American crude instead. The Biden administration may also revive the Trans-Pacific Partnership (TPP) on trade among the Pacific rim countries, launched towards the end of its tenure by the Barack Obama administration—in which Biden was vice president. But the TPP was nipped in the bud by Trump immediately after he assumed office in January 2017.

Only two weeks ago, the US and India held the third edition of 2+2 ministerial dialogue in which the two countries signed five agreements, including the strategic Basic Exchange and Cooperation Agreement (BECA) that expects to share high-end military technology, classified satellite data and critical information between the two countries. The Biden presidency is only likely to consolidate on these endeavours.

The only Indian apprehension is that, like any previous president elected from the Democratic Party, Biden is likely to have a relatively softer approach in dealing with China and Pakistan and, as the history has it, a tougher approach on human rights situations—like in Indian-occupied Kashmir. However, India also has buoyed expectations to have a very strong link with the Biden administration through vice-president-elect Kamala Harris who is second-generation American, born from an Indian migrant mother.

The China factor

The US engagement in South Asia, including with Nepal, is expected to be inversely proportional to the level of improvement in its relations with China. A thaw on the current level of repeated bouts of retributions in the form of trade barriers from both sides would provide a recess to the ‘surround China’ strategy of the US. This is exactly the current, short term expectation of the Chinese establishment from the new US president. The immediate priorities on the Chinese side are the normalisation of trade relations, cooperation on Covid-19 vaccines, a lift of the potential bans on Chinese apps like TikTok and WeChat in the US market, cooperation on climate change and a fair treatment to Chinese high-tech companies like Huawei.

Beyond the mercantilist aspirations of China, Beijing also fears that unlike Trump, who was largely taking decisions in isolation, Biden may lead an alliance of democratic countries to contain the growing Chinese influence beyond Asia, in Europe, Latin America and Africa. Biden too, despite working to reduce trade tensions, is likely to continue cautious diplomacy in view of increased Chinese connectivity in South Asia through BRI projects like Hambantota port in Sri Lanka and Chittagong port in Bangladesh, among others.

Nepal in the middle

Placed literally at the middle of all these happenings, Nepal cannot remain untouched by the machinations, trade-offs and tensions on either side. Besides, there is a widespread perception that for long the US has been dealing with Nepal through the Indian lens and this diplomatic kaleidoscope has only consolidated after Nepal elected communists (who are seen as being very close to China) to rule. Historically, too, right since the beginning of the Cold War, the United States had seen and treated Nepal ‘as an outpost and a portal into China’. Now, with the growing clout of China as a global superpower—to the extent of challenging US strategic interests—the outpost and portal narratives have only become stronger.

Here in Kathmandu, the parliamentary ratification of the US-sponsored $500 million Millennium Challenge Corporation (MCC) Compact is in limbo; the fate of which will largely determine future US policy towards Nepal. Therefore, to assume that Nepal, situated amidst such a complex geostrategic and geopolitical web, would not be impacted by Biden’s return to a predictable foreign policy would be preemptive.

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