The challenges posed by China’s rise have led powerful countries to construct an overarching approach to ensure a rules-based order in the Pacific to the Indian Ocean known broadly as the Indo-Pacific strategy.  The nations that are in growing discomfort due to China’s extensive global outreach, such as Japan, US, India and Australia have shown strong interest in joining the efforts to build a trans-oceanic architecture to counter-balance Chinese influence in this new geo-strategic space and reality. While the term “Indo-Pacific” literally refers to the confluence of the two oceans, this geopolitical construct equally envisages the confluence of land that connects the rim of the two oceans.  The long-standing security guarantor of several nations in East and South East Asia, the United States naturally takes the lead in operationalising this strategy.

The Indo-pacific strategy has come as a reaction to China’s Belt and Road initiative (BRI), which is a massive plan to create a cross-continental geo-economic and geo-strategic space, both on land and sea, through infrastructure investments and connectivity.   Nepal is one of the eighty or so countries who are members of the Chinese initiative, and has already seen growing Chinese investment and diplomatic engagement. As a buffer zone that provides a protective circle for its Tibet sensitivity and that offers a viable corridor to connect to the Indian peninsula, Nepal has a special value in China’s foreign policy and neighborhood diplomacy. Likewise in India’s neighborhood policy. One reason China’s BRI is resisted by world powers is the fact that China has followed a different investment model than the traditional one espoused by the financial institutions under the post-WWII American leadership. Chinese banks have been investing massively, now streamlined under the BRI umbrella, in large infrastructure connectivity projects in Asia, Africa and Latin America as well as Europe, which is feared to wipe out other actors from host countries. Therefore, as a strategy to counter China’s active economic diplomacy, America is responding by providing an alternative model of investment.

The American camp sees its competitive advantage in framing the Chinese model as an unsustainable debt burden for host countries, a non-transparent government to government deal which encourages corruption and arrangements that see disproportionate advantages for China. Some expert even call this ‘debt trap diplomacy’ where China builds mega projects in developing world in concessional loans and subsequently handsovers the project to the country. But, due to low managerial capacity of the developing country, the opposite happens. The country to which China was supposed to hand over the project to ends up getting handed over by that country to China instead.  In this manner, China converts its debt to equity. Examples include Sri Lanka and Djibouti, who had to handover their ports owing to their to inability to pay the Chinese debt. By contrast,  Americans emphasise that their investment catalyses local private sector investments and growth. And by building upon the synergy of its partner countries and institutions such as India, Japan, Australia, Japan Development Bank, Asian Development Bank, World Bank, OPEC, the US wants differentiate itself vis-à-vis the massive Chinese investment.

Such global geostrategic events are routine in International Affairs. Talking about Nepal, it should develop its own organic way of thinking. China-India or the US-Indiaare both part of the geostrategic game. Then quite naturally, they would want to advance their national interest first and then think about their allies later. Yet, Nepal will be facing an increased  competition in the economic and diplomatic domains at various levels; mainly between the two camps—America (with India) and China. The citizens and the state instruments should be aware of this and try to turn it into an opportunity. There is no reason why the country should favor one particular country over the other as long as its own interests are met and a red line is set. Nepal has to continue the will it has been showing off late to establish itself as an a sovereign equal among all countries, and pursue a steadfast diplomacy to maximise its benefits in these changing times.

Sigdel is the director of a US based Think Tank & Pant is an IR speacialist.