Why does Nepal matter for the US?

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The Indo-Pacific Vs. the Belt and Road: Nepal's Great MCC Debate – The  Diplomat

by Hari Prasad Shrestha      8 November 2020

Finally, Joe Biden won the US Presidential race, and the Trump era of extreme nationalism came to a halt. This new change in leadership would certainly affect US relationships with the rest of the world.

Asia is under high priority under US external policy and the Himalayan region seems to be the center of it. India and China are dominant players in the Himalayan region. India is a strong ally of the US, while China and the US relationships are in the worst stage of a trade war.

Experts believe that under the new US administration, there would be no substantial changes in US policies with these nations, however, the strategy to deal with them would be certainly, in some way changed.

India would remain a strong ally of the US in Asia, however, Joe Biden’s policy paper opined some different vision on India related to Kashmir and the citizenship act. The paper says – India to take necessary steps to restore the rights of Kashmiris, and expresses discontent over the Citizenship (Amendment) Act and the implementation of the NRC in Assam.

And Biden’s policy towards China would contrast with Trump’s sometimes-hawkish approach, he would keep China in check by strengthening ties with U.S. allies.

As China’s growing economic and military power has been big challenges for both India and the US, India is playing a lead role under US Indo-Pacific Strategy in the South Asia region to encircle China.

Being a neighbor of India and China, the small landlocked Himalayan country, Nepal’s strategic importance is on the rise not only for the neighbors but also for the US. Nepal and the US have excellent relations despite some traditional divergences – especially on the Tibet matter.

In 2017, Nepal signed an MCC treaty under the US Indo-Pacific Strategy with a US$ 500 million grant amount for the construction of power transmission lines and roads in Nepal, which has yet to be ratified by the Nepal parliament.

This offer under the US Millennium Challenge Corporation (MCC) grant to Nepal has been under controversies and big debates in Nepal whether to accept or not this grant amount? There are suspicions and confusion in many Nepali elites that it would bring Nepal under the US Indo-Pacific Strategy security umbrella?

The MCC agreement between Nepal and the US indeed holds many unbalanced qualities. According to section 7.1, the MCC agreement “will prevail over the domestic laws of Nepal,” while section 5.1 (iii) mentions that MCC funding cannot be used to violate U.S. law “or United States Government policy.” But the real controversy is not about the agreement’s unequal nature, but the Nepali fear that the U.S. aid is part of the Indo-Pacific Strategy and may be used for military purposes.

The Millennium Challenge Corporation (MCC) grant agreed in 2017 has become the bone of contention between PM Oli and influential party members. Divisions are running high in Nepal over this deal that many see as anti-China.

The opponents of the MCC argue that the aid from the United States is to limit Chinese influence in the region. Nepal PM Oli has failed to get the agreement ratified twice since a related piece of legislation was put before parliament in July 2019.

At present, Nepal’s relationships with India are at the lowest level. India is trying hard to regain its lost status through the visit of the security chief to Nepal. Due to Nepal’s strategic location bordering Tibet of China, the US has a special interest to actively engage in Nepal through MCC.

Moreover, communities of both India and China are sensitive to the possibility of Nepalese territory be used by one to others as part of a larger encirclement plan.

With the strong interest of three world powers, Nepal seems to be in a critical position on how to balance them diplomatically as more security tensions are under rising in the Himalayan region.

After the Nepal border blockade by India in 2015, Nepal realized that heavily dependent only on a single neighbor might be risky for it. Thereafter, Nepal signed a trade and transit agreement with china allowing Nepal to use four seas and three land ports in China for movements of goods to and from Nepal to other countries.

Not only on border blockade by India, but Nepal is also unhappy with India in some other issues as India is consistently refusing to receive and accept Nepal India Eminent Persons Group (EPG) joint report for many years under the pressure of some politicians, bureaucrats, and intelligence. The encroachment of the Nepali territory of Limpiyadhura, Lipulekh, and Kalapani, where Nepal Indian forces entered and stationed during the 1962 war with China, worsened the relationships.

After many issues with India, Nepal does not want to distance itself from China. Nepal made a shift in foreign policy from being only dependent on one nation towards a new policy of equal distance with both the neighbors, India, and China.

Nepal accepted to be part of the Chinese BRI and signed an agreement with China in this regard. During the visit of Chinese President Xi Jinping to Nepal, China announced to provide Nepalese Rs 56 billion assistance over the next two years to help Nepal’s development programs and transform the landlocked nation into a land-linked country. This is equivalent to amounts to be provided to Nepal under the US MCC program.

“Amity to all and enmity to none” is the guiding principle of Nepal’s non-aligned and neutral foreign policy.  This strategy has helped Nepal to survive as an independent nation.” Nepal would never allow using its territory against any neighbor and country.

However, the concept of neutrality has also limitations. If one is weak and in a life-threatening situation, neutrality may not be a proper tool to survive. By that time, one must be aligned to a stronger one, who could save a life.  In this regard, the South African cleric Desmond Tutu once said, “If you are neutral in situations of injustice, you have chosen the side of the oppressor. If an elephant has its foot on the tail of a mouse and you say that you are neutral, the mouse will not appreciate your neutrality.’

There is an old Nepali saying: “An enemy close by is far more useful than a friend in the distance.” Therefore, if Nepal must choose between neighbors and third countries, it will always choose neighbors.

For a long time, there are competition and confrontation between the US and China.

Obama’s strategy of “returning to the Asia Pacific,” shifting a focus which had been on Europe for 200 years, to Asia, the strategy was later rephrased as a “strategic pivot” and finally a “rebalancing”.

Behind the US adjusting its global strategy to return to the Asia-Pacific is the rise of China. However, looking back, the “rebalance to Asia-Pacific” strategy cannot be called a success. It not only failed to contain the rise of China but also deepened China’s strategic mistrust of the US, which is against its interests.

At the end of 2015, China’s total manufacturing output represented 150% of the US or was equivalent to the combined total of the US and Japan—an unprecedented record in Chinese history. At the current growth pace, China’s factory output would be as much as the sum of the US, Japan, and Europe in 10 years.

The US still has a great sense of superiority, viewing the world from a US-focused perspective without appreciating the most important fact in this world.

The US remains focused on itself and its allies, unable to treat China as an equal. If it reverses its approach and considers China as an equal partner, both its Asia-Pacific and global strategies will gain a new life. If the two countries can become friendly partners, the cause of war in the Asia-Pacific region will be rooted out.

The US paid a high price for the wars fought whether it was Vietnam, Iraq, or Afghanistan. And instead of direct confrontation with China, it is pushing India and other powerful allies in the Asia Pacific region.

In Feb 2019, US Deputy Assistant Secretary of Defense for South and Southeast Asia, Joseph H Felter, during his Nepal visit in Kathmandu, told “From the defense perspective, Nepal is an important security partner. It has an important role to play in regional stability.” This clearly reflects the US desire to pull Nepal under its security umbrella, which is a major concern for Nepali people.

Nepal has a policy not to allow any country to use its land against any of its neighbors. There are valid reasons for Nepal to be scared as both India and the US had a history of using Nepalese soil against China.

Dalai Lama, after he flew away to India,  was strengthening his military, they were called Khampa by nature, quite fearless and competent warriors, hiding in the mountains of Nepal. They were terrorizing people in Nepal and trying to assault China from entering through Nepal borders.

A key strategic location of Nepal, the Mustang district, was used by the CIA to support the Khampa rebellion in Tibet.  Kathmandu-based American mission also provided weaponry and financial assistance to Khampas to foment terrorist activities against the Chinese army in Tibet.

Around that time, Indian troops were deployed in Nepal-China border areas as India had 18 security posts in the Nepal China border, later which were removed by Nepal except one in the Kalapani Lipulekh Limpiadhura area. These check posts provided military intelligence and other guidance to the Khampas.

After strong protest from China in 1974 and under a pact between Nepal and China, Nepal Army disarmed and killed many of the Khampa leaders in a conflict.

Recently, India and the United States signed a basic exchange and cooperation agreement for geospatial cooperation, a major defense pact for the exchange of classified geospatial intelligence between their armed forces amid India’s growing tensions with China.

It will permit the U.S. armed forces to provide advanced navigational aids and avionics and share geospatial intelligence to India that will help boost the accuracy of the Indian military’s automated hardware systems and weapons such as drones, cruise missiles, and ballistic missiles.

After this agreement between India and the US, it is expected to raise tensions in the Himalayan region as we are familiar that India and Chinese securities have been seen confronting many border points.

The surprise meeting of Chief of Indian Intelligence, Research and Analysis Wing (RAW) Mr. Samant Kumar Goel with Nepal PM Oli and the official visit of Indian Chief of Army Staff Mr. Manoj Mukund Narawane to receive Honorary General title of Nepal Army, must have some connections with Nepal’s trilateral relationships with India, China, and the US.

Both India and the US have given an indication that they feel more comfortable to deal with Nepal through military diplomacy instead of civilian authorities as the US Secretary of State visited South Asian countries India, Sri Lanka, and the Maldives, but Nepal excludes from his visit. It could be due to the immaturity of Nepalese politicians as there is no consensus between and within political parties in Nepal on certain issues while dealing with foreign countries.

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