The Foreign Ministry wrapped up an eventful diplomatic year with a ‘cherry on the cake’ Washington visit in December 2018. The issues discussed principally opened the doors for the Himalayan nation to envision its place in a new year of world politics. Given the accentuation built within Nepal’s foreign affairs circle, two principal issues need close attention for Nepal to keep in stride withworld politics in 2019. First, US-China on Tibet and Nepal’s geo-politics; and second, international funding and Nepal’s geo-economics.

The underlining principle of contemporary alliance in geopolitics is to avoid war at all costs. International cooperation for collective security, therefore, is incontestable in ethical alliance. In order to live by these principles, a country must be resourceful in pragmatic predictions of geopolitical trends in the future supported byempirical data, evidence and analysis.

As keen foreign policy experts and international studies pundits may claim, Nepal clearly lacks in-house research, data and evidence, and mostly relies on external sources, conspiracy, and hyper-analytic speculations to predict the future of the region and the world.

Indo-Pacific strategy

It seems that the foreign delegation was caught in an unprecedented politics-of-alliance limboupon return from Washington in December. Headlines that Nepal had agreed to be part of the free and open Indo-Pacific strategy, which is widely thought to be anti-Chinese, were quickly brushed off for readers and thinkers to be made aquatinted to new headlines claiming that Nepal was not part of the US-led strategy.

Furthermore, two days after the historic Nepal-US engagement, and days after a stern diplomatic protest from Beijing, US President Trump signed a bipartisan bill on Tibet. The Reciprocal Access to Tibet Act of 2018 imposes a visa ban on Chinese officials who deny American citizens, government officials and journalists access to the remote regions of Tibet.

As quoted in the Economic Times, Chinese Foreign Ministry spokesperson Hua Chunying said in response, ‘We urge the US side to fully realise the highly sensitive nature of Tibet-related issues, stop using them to interfere in China’s internal affairs and refrain from putting the act into effect, otherwise the US itself has to bear all the consequences that may cause.’ On these premises, Nepal must evaluate tangible, fact-based shifts in the regional powers’ Indo-Pacific policy approach, and analyse the regionally driven nature of the Indo-Pacific with focus on China plus Quad (Australia, India, Japan, US) nations throughout 2019.

International order through geo-economics is now the preferred pursuit of soft power. Discreetly distinct from mercantilism, geo-economics exerts conclusive political influence while maximising national wealth; therefore, the risks and challenges of geo-economics must be well studied. Following the 2008 financial crisis, when multilateral development banks like the World Bank and Asian Development Bank shortened their financing for the developing countries, China expanded funding in the Asia-Pacific region through various projects in infrastructure and energy.

 According to the Diplomat, sources covering news from across Asia and the Pacific, two Chinese state banks that provide development assistance, the Export-Import Bank of China and the China Development Bank, now hold assets greater than the combined assets of all Western-backed multilateral banks (although only about 30 percent of those assets are international). China also helps fund a variety of regional multilateral institutions that it created, like the Asian Infrastructure Investment Bank (AIIB). On the other hand, in Nepal and the China-EU lending race, Peter Gill claims that Western lending institutions seem to be responding to the Chinese with plans to increase funding in infrastructure by over $100 billion by 2027 in Asia.

 China began increasing its investment since 2008 in Nepal as well. Major investment has mainly been channeled towards industry, transportation and telecommunication. In 2010, China increased its annual aid to Nepal by 50 percent. More recently, Xinhua reports claim that China accounted for around 87 percent of the foreign direct investment (FDI) commitments received by Nepal as of May 2018. According to theDepartment of Industry, China topped the chart in committing FDI in the last three consecutive fiscal years.

Grants and loans

Furthermore, in geo-economic alliance, to say that aid associations continue to be active will not be to deny that alliance politics is more effective. On an average, more than 25 percent of Nepal’s annual budget comes in the form of grants and loans. Millennium Challenge Corporation’ sagreement for a $500 million grant assistance, which sources say Nepal will be able to access by September following ratification by Nepal’s Parliament, is an example of how a bilateral foreign aid agency and the Nepal government continue to build aid alliances. Millennium Challenge Corporation’s grant is equal to the total foreign grants Nepal received in 2017, reflecting a rise in foreign funding through various media. The Ministry of Finance is yet to unveil the development cooperation report for 2018, but a 30 percent hike in foreign aid was recorded in 2017.

It is very important to understand that the economic decisions and actions undertaken in Nepal not only affect relations between Nepal and the immediate neighbors per se, they affect broader relations between multiple nations, their interests, diplomatic ambitions and a wave of global trends and the new world order.

Foreign issues under the spotlight in 2018 mainly laidemphasis on the need for Nepal to be more resourceful in predicting the trends of global politics on the Tibet matter.

Economic decisions and actions, within widening geo-economic mechanisms, too should account for a holistic geo-political alliance rather than only focus on funding for development. Finally, military diplomacy and international coordination for collective security should be the spine of Nepal’s global contribution in 2019.

 Basnyat holds a master’s degree in diplomacy and international studies.