The recent visit of Indian External Affairs Minister Sushma Swaraj to Kathmandu has opened up a number of opportunities that KP Sharma Oli can utilise to mend ties with the Indian establishment as well as Prime Minister Narendra Modi. These opportunities are much needed, given Oli’s ‘patchy relation’ with Nepal’s southern neighbour following the 2015 Indian blockade and India’s bid to scuttle his premiership in July, 2016.

The Swaraj visit also poses a serious foreign policy challenge to Oli, who is widely perceived to be Nepal’s next prime minister.

With India reaching out to Oli, it is now up to the CPN-UML Chairman to reciprocate appropriately. Symbolism and substance are the two key mantras in diplomacy. Symbolically, the recent gesture from the Indian side was positive. And we are yet to see the results of the recent Swaraj-Oli meet-up.

A change in India

The situation is not easy for the Modi administration either. A government formed by the left alliance in the centre as well as in six out of the seven provinces is not good news for India. It has had to dilute its memories of past incidents, when Oli was the prime minister of Nepal in 2015/16, and start afresh. Following Swaraj’s visit, both sides made public remarks about forgetting the past bitterness—albeit without doing any concrete homework.   

One positive piece of information is that the whole batch of senior officials who were supposedly behind the economic blockade against Nepal are no more in position in New Delhi and the Indian Embassy in Kathmandu. Officials are key in shaping foreign policy matters, so the new faces in the Indian foreign policy circle is another advantage for Oli. Whether or not this change in personnel will bring about any substantive changes in India’s Nepal policy, we will have to wait and see. At least we can say that the style and conduct has changed, and is moving in a positive direction given the recent statements made by both sides during the visit.

Oli’s challenges

As for Oli, he will surely face a huge foreign policy dilemma on how to balance relations with our two immediate neighbours—India and China. Given the geo-political and geo-strategic competition between the two Asian giants, and their spheres of influence in the region and beyond, maintaining a fine balance is crucial.

The second challenge is how Oli will manage relations between Kathmandu and Beijing given the backdrop of landmark agreements sealed with China. Some three dozen pacts, some of them having high strategic significance, were signed during Oli’s China visit in early 2016.

After Oli left government, Nepal became part of the Belt and Road Initiative (BRI), Nepal and China held a joint military exercise, and now government agencies are collecting projects under the BRI. However, none of the agreements reached with China are gaining any momentum—whether they be BRI projects or the pacts Oli signed. 

India considers South Asia to be its own backyard, and as such, Chinese muscle flexing is a matter of worry for India. So, the same “paranoia” applies in terms of China’s relations with Kathmandu too. India wants to either scuttle or derail the projects and agreements signed with China in the past. The Indians were reportedly unhappy with Oli’s visit to Rasuwagadhi at the Nepal-China border, which is widely seen as the doorway of the proposed Nepal-China rail link.

India is also overtly concerned about the growing anti-Indian sentiment in Nepal, which it feels is being propagated by some political sections—given the fragile atmosphere and open Nepal-India border.

Long standing security concerns are also in evidence. Given its ambition to become a military, economic and strategic super-power, China will not leave any stone unturned when it comes to making inroads into Nepal. Doklam is one example of the fact that China can go to any lengths to harbour strategic interests.

Oli’s inner circle has denied any kind of ‘template’ choreographed during Swaraj’s visit for future consideration. With aspirations to become a superpower, Modi wanted to reach out to Oli. Second, as a regional power, India has to work with any government that comes to power in Nepal. India has worked and engaged with even the Maoists—considered then as a hardcore and radical communist party compared to the UML—after the first Constituent Assembly elections.

Modi is facing some backlash and criticism within India because of repeated foreign policy failures in the immediate neighbourhood. As Modi completes a five year term in office and faces another big test in the 2019 Indian general elections, he definitely wants to showcase to his opponents that he has at least been able to mend ties with Nepal and other South Asian countries, although the issue of foreign policy hardly counts in Indian domestic politics—particularly during elections.

So, it is also good for Modi to reach out to Oli, and roll the red carpet out for him in New Delhi. This way, he can show his domestic constituencies that India’s ties with Nepal are back on track.

But Nepal and India have a lot of issues on their plate that have to be sorted out by demolishing mistrust at the highest political level. Each side has concerns and grievances when it comes to bilateral relations. Apart from several pending issues related to India funded projects, trade, transit, investment, cross border connectivity projects, people to people relations, open border, issues related to security, people to people contact among others, Oli and Modi should come up with a new frame work of bilateral ties in a changed domestic, regional and global context.

As the new PM, Oli will need lots of money to run the newly formed provinces and local bodies, especially in terms of budgetary support to run these new administrative and political blocks until they can be sustained through local resources. Oli is definitely eyeing India, China and other multilateral donor agencies for their support. It is going to be a big domestic challenge for Oli to manage funds, and he needs support from India and China, among others. It is imperative for Oli, without harming national interest, to lead the nation towards development and prosperity. But this road is not an easy one.

The message to the international community, donor community and the community that is ready to invest in Nepal, is that Nepal will have a stable government for the next five years. Besides other issues, Oli has to present this image of stability on international platforms to ensure investments.

Another big chunk of Nepal’s foreign policy is to manage relations in the South Asian Association Regional Cooperation (Saarc) region and play a balancing act among major powers like the United States, Europe and others. The transitional justice (TJ) system is going to be a pressing issue due to a lack of progress towards its resolution. Two bodies were formed to dig out the reasons behind the killings of over 13,000 people and the status of those disappeared. There is so much interest from the international community about Nepal’s prolonged TJ process. Without the completion of the TJ process and without justice given to victims, the international community will keep on pressing Nepal.

These five years are crucial for redefining Nepal’s foreign policy, for strengthening institutions to make the foreign policy apparatus more effective, and for spreading a sense of security among the public that Nepalis are no longer vulnerable. These will be the key tasks for Oli. Oli, who was touted as “pro-Indian” after signing the Mahakali Treaty is now described as “pro-Beijing.” Another big challenge would be for Oli to remove these labels and show people that he is a “pro-Nepal” leader.