Nepal’s geopolitical importance continues to grow as China, India, and the United States deepen their engagement.

This heightened interest brings opportunities for economic development and international cooperation but also entangles Nepal in the complex web of competing global interests.

The challenge for Nepal lies in crafting a foreign policy that balances opportunities with the realities of geopolitics.

Whether Nepal has made notable achievements since foreign policy transitioned to elected governments is worth examining.

Before 2008, the monarchy primarily made key decisions on foreign policy, international relations, and diplomacy, with elected governments playing a limited role. The removal of the monarchy in 2008 marked a turning point, transferring control of foreign policy to elected governments. This shift, however, coincided with a prolonged political and constitutional transition from 2006 to 2015.

During this period, nearly all aspects of governance—political, social, economic, developmental, and foreign policy—were in flux.

The promulgation of the new constitution in 2015 was expected to bring political stability and enable the country to move forward, but even the 2017 elections, political stability has remained elusive and has left Nepal struggling to navigate foreign relations effectively.

Nepal’s strategic location between India and China necessitates a nuanced foreign policy.

Mrigendra Karki, executive director of the Center for Nepal and Asian Studies, stresses that Nepal’s foreign policy must be anchored in sovereignty, independence, and non-alignment. “Nepal must balance relations with India and China while fostering diversified global partnerships, including with the United States, Europe, Japan, and Russia.”

This strategic approach is vital for safeguarding territorial integrity and advancing national interests in an increasingly competitive global landscape.

Nepali political leaders face numerous challenges in conducting foreign policy.

From addressing historical baggage to navigating evolving geopolitical dynamics, diplomats and officials often operate with limited room to manoeuvre, especially when engaging major powers like India, China, and the US.

“Building trust and mutual respect with neighbours is crucial, but successive governments have struggled to achieve this,” says Karki.

Experts suggest that Nepal should move beyond ‘emotional’ ties with India and China and adopt pragmatic and transactional diplomacy instead.

Chandra D Bhatta, a political scientist, argues that the era of emotional relationships between states is over and has been replaced by pragmatism centred on national interests and diplomatic professionalism.

“Nepal must embrace this pragmatic approach to defend its interests effectively.”

Maintaining stable and productive ties with India remains a significant challenge.

Trust-building efforts are essential for unlocking the economic benefits from strong bilateral relations.

Simultaneously, Nepal’s engagement with China has expanded through initiatives like the Belt and Road Initiative (BRI), which focuses on infrastructure projects like airports, roads, hydropower plants, and a proposed a trans-Himalayan railway.

China aims to connect Nepal more deeply to its markets while reducing Nepal's dependence on India.

Politically, China has shown keen interest in preserving Nepal's political stability to safeguard its interests, particularly concerning Tibetan issues. It has actively engaged with Nepal to curb anti-China activities, especially by Tibetan refugees. Beijing’s strategic investments and non-interference policy appeal to many in Nepal, giving it a strong foothold.

India's influence also extends into Nepal's political sphere. New Delhi has often played a key role in mediating political transitions and providing economic assistance during crises. However, Nepal-India relations have occasionally been strained, such as during the 2015 economic blockade, which spurred anti-India sentiments and pushed Nepal closer to China.

The United States, while not as historically entrenched as India or geographically close as China, has strategically increased its involvement in Nepal. This includes significant investments in development aid, such as through the Millennium Challenge Corporation (MCC), to improve Nepal's energy and transport infrastructure.

Washington's interest in Nepal is primarily driven by its broader Indo-Pacific strategy, which seeks to counter China's growing regional influence. The US emphasises democracy, human rights, and the rule of law, offering an alternative to China's more transactional approach.

However, its initiatives, such as the MCC agreement, have sparked controversy, with critics alleging they may undermine Nepal's sovereignty.

Experts say these relationships must be managed carefully to ensure mutually beneficial outcomes.

While Nepal has supported China's core interests, including the One-China policy and China’s ownership of Tibet, Taiwan, Hong Kong and Macau, it must also assert its priorities to ensure a balanced partnership.

Prime Minister KP Sharma Oli's recent visit to Beijing has opened several vistas for cooperation with the northern neighbour if political leadership successfully navigates and negotiates projects under the BRI.

But in September, Oli’s meeting with Indian Prime Minister Narendra Modi on the sidelines of the 79th session of the United Nations General Assembly did not go well. Later, Oli decided to visit China after India showed him the cold shoulder over differences with Kathmandu regarding Kalapani, Lipulek, and Limpiadhura, following India’s issuance of a new map in 2019 and Nepal’s counter in 2020.

Critics, however, say there is no other option for New Delhi and Kathmandu but to mend fences sooner or later.

“Kathmandu and New Delhi should move forward to erase the past irritants, bury the misunderstandings, and remove the mistrust to inject momentum into their bilateral ties. Yet, despite all these ups and downs, it has been a typical year for Nepal, except on the domestic political front, which has always remained not so encouraging,” said Bhatta.

In 2024, elections in over 60 countries, including major democracies like India and the US, have shaped the global geopolitical landscape.

“However, global geopolitics is not moving in the right direction. Much fear is still lurking. No one knows how the situation will unfold in 2025. Now, globally, not only are new geopolitical flashpoints emerging, but geopolitics is also intertwined with geo-economics,” said Bhatta.

“The government must work cautiously to protect Nepali citizens abroad, particularly in conflict zones like Ukraine and the Middle East. Economic diplomacy should be central to Nepal’s foreign policy,” says Bhatta.

The growing Nepali diaspora has long been a pillar of the country's economy through remittances, yet successive governments have failed to leverage this potential effectively.

Proactive engagement in multilateral platforms, such as the United Nations and regional organisations, can amplify Nepal’s voice on global issues like climate change and equitable development.

Nepal must overcome its "small country syndrome" and engage meaningfully with regional and global powers. Traditional equidistance policies with India and China should evolve into a dynamic geostrategic balancing strategy.

This approach should emphasise mutual respect, shared economic interests, and sustainable cooperation. Additionally, Nepal’s inclusive governance model, rooted in its diverse socio-cultural spectrum, must inform its foreign engagements, projecting the nation as a democratic and progressive state.

As both India and China continue to grow economically, Nepal has the opportunity to benefit from their progress.

This necessitates a foreign policy that turns challenges into opportunities. By adopting a pragmatic and visionary approach, Nepal can effectively manoeuvre through its intricate geopolitical landscape and promote its national interests.