Is India’s influence still strong in Nepal?

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by HARI PRASAD SHRESTHA 28 April 2019

Being a poor, landlocked country, Nepal has been under an obligation of external forces on major affairs of its national importance. There is no doubt that India is the primary external player meddling in Nepal’s internal affairs. After that western countries, China and the USA are important players, who also have strong influences in Nepal.

Western-funded INGOs have influences in Nepal in selected sectors and issues related to religion, federalism, inequalities, minorities, and participatory government. According to media reports, making Nepal secular state by omitting Hindu as the state religion in the Constitution of Nepal 2015 and conversion of around a million Hindus to Christianity within a couple of decades are examples of their influence in Nepal. Moreover, they have been continually supporting the agenda to pressurize Nepal on granting Nepal citizenship certificates to large numbers of ineligible immigrants by making, this issue never-ending to ignite ethnic conflicts.

Since a couple of years, China has also been active in Nepal. Its primary concern is Tibetan refugees, residing in Nepal. As China is becoming world political and economic power, and it is carefully watching counter activities of its rival countries against it especially in Tibetan issues in Nepal.
At the same time, the interest of the United States of America in Nepal has increased significantly in recent days. Due to the strategic location of Nepal between India and China, it wants the active involvement of Nepal in its Indo-pacific Alliance to watch Tibet, an autonomous region of Chine through bordering country Nepal.

But these countries are not as much as influential compared to India. As a major player, since the British rule until now, it had been the policy of India to have Nepal under its sphere of influence through political and economic interference and having continued ascendancy over its strategically vital areas. Consequently, Nepal’s internal systems and potentialities have been severely undermined, and it is finding enormous hurdles to function appropriately to achieve the minimum level of national goals compared to other poorest countries.

In this point, some treaties and agreements with southern neighbor have severely hit the core of stability and prosperity of Nepal. Both pre and post-dependence regimes in India, influenced then Rana regime of Nepal to sign unequal treaties – Treaty of Sugauli 1816, Britain- India- Nepal Tripartite Agreement 1947 and India Nepal Treaty of Peace and Friendship 1950 were notable – afterward Nepal lost significant portions of its territory; Gurkha recruitment continued in foreign armies, restriction imposed on import of weapons from countries other than India and free movement of people started between two countries especially by the motive to interfere in the economy and politics of Nepal.

According to the 1950 treaty, there are no restrictions to buy arms ammunition from other countries than India; however, in practice Nepal suffered from coercive Indian restrictions in buying weapons from other countries. For example, India slapped a 16-month embargo on Nepal in 1989 when Nepal imported weapons from China, which were five times cheaper than Indian weapons.

In the circumstance, Nepal can never become self-sufficient in security matter at a minimal level, and it seems to be in an awkward position even to manufacture minor arms ammunition for security and blasting materials for infrastructure development.

Although time and again, Nepal has been effortful to come out of these disastrous grips, however, the outcomes have not been noticeable.
After continued efforts of Nepal, for the first time, India accepted to address some of the concerns and difficulties faced by Nepal in bilateral relations with India by forming Eminent Persons Group (EPG) of both the countries.

And after two years extensive consultations and exercises, it finalized its joint report to be presented to prime ministers of both the countries.
According to media reports, among others, EPG recommended to amend unequal provisions on procurement of arms and ammunition for Nepal and suggested the use of smart cards for the people crossing either side of the open border. Nevertheless, Indian intelligence agencies and bureaucracy pressurized on the Indian government citing this report in favor of Nepal, and Indian prime minister is delaying in receiving EPGs report.

Next area, where Nepal is facing tremendous difficulties are water and power sector, a potential gateway for Nepal’s development transformations. India signed many hydropower treaties with Nepal. However, even a single project has not been completed. Other than Indian investors are reluctant to construct hydropower projects in Nepal citing India’s unstable policy in buying Nepal’s electricity. Hydropower is the only item, which can boost the economy of Nepal by selling energy to other countries.

If we see the previous agreements with India whether it is Koshi, Gandak or Tanakpur dam, and others, Nepal has negligible benefit from these projects. Moreover, under the Mahakali water and power treaty of 1996, the DPR of this project was supposed to be completed within six months, has not been concluded even after more than three decades.

India is continuously indirectly pressurizing Nepal to follow, Bhutan model regarding the development of export-oriented hydropower projects, solely for the one-sided benefit of its own, which is not so easy in Nepal’s context.
Another sector, where Nepal is entirely dependent on India is the supply of petroleum products. There are ‘feudal’ monopolies of Indian Oil Corporation for sale of petroleum products and buyer Nepal Oil Corporation. Fuel is a sensitive commercial plus political item, and it is vital from national security points of view too; its scarcity could bring instability in the country. The fuel crisis during Indian border blockades were its scorching examples.

Next, a high reliant sector with India is trade and transit facilities. The trade treaty signed between Nepal and India has always been guided more by political influence than economic factors. The pact’s vague wording and provisions permit India to impose tariff and non-tariff barriers, additional taxes, quantitative restrictions, quarantine barriers, anti-dumping duty, and product disqualification.

Moreover, the dumping of cheap goods by India has killed off budding domestic production. Nepal’s balance of annual trade deficit with India has crossed US$ 8 billion. Moreover, Nepal suffered enormous problems in its trade and transit during three border blockades by India. In each blockade, it was estimated to have incurred economic loss of over US$ 5 billion.

To lessen the trade gap to some extent, Nepal has also initiated diversifying its trade with other countries through ports of Bangladesh and China. Nepal has already signed trade transit agreement with Bangladesh and China. Nepal is in the stage of finalizing a bill to impose non-tariff barriers, anti-dumping duties and restrictions on the import of some products, in which it is self-reliant.

Moreover, to break sole dependency with India and diversify import of fuel, in 2015 a memorandum of understanding (MOU) was signed between the Nepal Oil Corporation and China National United Oil Corporation (PetroChina) in Beijing to supply petroleum products to Nepal. Nepal could import 35-40 percent of its total fuel needs.

However, it is taking a more extended period to operationalize it. The road infrastructure in Nepal side is, and quality, quantity, price, loading capacity, loading method, fuel storage, and the route to bring fuel to Nepal has not been yet finalized.

To break sole dependency with India and diversify its power sector, Nepal is also inviting investors from other countries. China and Bangladesh have agreed to construct hydropower projects in Nepal and power transmission lines up to their countries.

After growing openness and connectivity of Nepal with China, western countries and the USA, India seems to be a little bit liberal, at least in some minor issues in dealing with Nepal.

India’s recently assured to buy Nepal’s electricity produced by other than Indian investors in Nepal. It also allowed Bangladesh to build transmission lines from Nepal to Bangladesh through India territories. Moreover, it provided access to two more seaports for Nepal’s international trade and transit. India also agreed on additional bi-directional air routes through Janakpur and Bhairahwa for flying aircraft from new international airports under construction in Nepal.

Nepal was suffering from the problem of inundation in border areas to India. To address this problem, India agreed to form a joint inspection team, which visited the bordering areas of Nepal prone to flooding by Indian embarkments and roads build near the border of Nepal.

As India agreed to provide inland river waterways from the sea up to Nepal border, it would certainly lower the transportation costs for international trade.

However, Nepal’s primary concern is the implementation of EPGs report. India’s reluctance in receiving EPGs report indicates that it is still rigid on significant issues with Nepal. In the changed regional and global context, it is natural and legitimate right of Nepal to have its control to function independently in crucial sectors of external dependency and inequality, if not Nepal’s desire of paradigm shifts to be prosperous and stable would be continually in transition.

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