Strategic Himalayas Republican Nepal and External Powers Strategic Himalayas Republican Nepal and External Powers NIHAR R. NAYAK INSTITUTE FOR DEFENCE STUDIES & ANALYSES NEW DELHI PENTAGON PRESS Strategic Himalayas: Republican Nepal and External Powers / Nihar R. Nayak First Published in 2014 Copyright © Institute for Defence Studies and Analyses, New Delhi ISBN 978-81-8274-761-6 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without first obtaining written permission of the copyright owner. Disclaimer: The views expressed in this book are those of the authors and do not necessarily reflect those of the Institute for Defence Studies and Analyses, or the Government of India. Published by PENTAGON PRESS 206, Peacock Lane, Shahpur Jat, New Delhi-110049 Phones: 011-64706243, 26491568 Telefax: 011-26490600 email: [email protected] website: www.pentagonpress.in Branch: Prime Arcade Office #11 1154 Saifee Street Opp. M.G.Road, Camp Pune-411001 Email: [email protected] In association with Institute for Defence Studies and Analyses No. 1, Development Enclave, New Delhi-110010 Phone: +91-11-26717983 Website: www.idsa.in The cover shows Machapuchare (Fish Tail in Nepali) in the Annapurna range of the Himalayas located in north-central Nepal. The photograph was taken from Dhulikhel by Dr Ashok K. Behuria in November 2013. Printed at Avantika Printers Private Limited. Dedicated To my loving wife, Swetalina Contents Foreword xi Acknowledgements xiii List of Tables and Figures xv List of Abbreviations xvii 1. Introduction 1 Significance of the Study 8 2. Foreign Policy Challenges of the Republic of Nepal 15 Theoretical Debate on the Foreign Policy (FP) of Small States 16 Evolution of Nepal’s Foreign Policy 19 Nepal and Multilateralism 23 Foreign Policy Under the Interim Constitution 30 Conclusion 36 3. Protecting the Sphere of Influence: India’s Relationship with Nepal 43 Strategic Relevance of Nepal for India 43 Conflicts Over the Peace Treaty 45 India and Nepalese Nationalism 47 Nepal-India Relations in Post-2006 48 Madhesi Movement and India 54 Trade and Economic Assistance 57 Infrastructure 59 Education and Health 60 Training of Nepalese Officials in India 61 Common Challenges and India’s Concerns 61 India’s Perception of External Involvements in Nepal 67 Conclusion 67 viii Strategic Himalayas: Republican Nepal and External Powers 4. China in Nepal: From Political to Strategic Engagement 75 China’s Broad Foreign Policy Objectives 75 China’s Approach to South Asia 77 Where does Nepal Figure in China’s Foreign Policy? 79 Chinese Concern over External Powers in Nepal 84 Chinese Engagement in the Post-Monarchy Period 87 People-to-People Contact 98 Elements of China’s Nepal Policy 99 Can China Play a Decisive Role in Nepal? 100 Implications for India 101 Conclusion 102 5. Return of the Super Power: The US in Nepal 110 Strategic Relevance of Nepal for US 111 Nepal and US Containment Policy 112 Nepal and the US War Against Terror 113 Post-2006: Looking at Nepal through an Independent Prism? 118 Trade and Business 122 Maoists and the US Rebalance to Asia 123 Nepal’s Perception of the US 125 Conclusion 126 6. Institutionalise Peace and Democracy: Role of the EU and Major European Countries in Nepal 132 As Key Development Partners 132 Strategic Interests of EU Member Countries 134 Role in Negotiations 136 As Trading Partners 137 Dilemma of Conflict Prevention 138 Post-Conflict Approach 139 Approach of Major Countries to the Peace Process 140 Major European Countries and UNPFN 145 European Aid and Federalism 146 Conclusion 148 7. Pakistan’s Engagement with Nepal 153 Pakistan’s Strategic Perspective on Nepal 155 Bilateral Relations (1950 to 1990) 160 Relations During Democratic Regimes 162 Contents ix Nepal-Pakistan Relations in Post-Conflict Period 164 Anti-India Campaigning on Regional Issues 167 Cross Border Terrorism: Implication for India-Nepal Relations 168 Aid and Trade 169 Conclusion 171 8. Conclusion 176 Nepal’s Options 181 APPENDICES I Road Network of Nepal, Proposed Dry Ports by China, Transit Points at India-Nepal Border 187 II Chinese Engagements in Hydro Projects in Nepal 188 III Sino-Nepalese Treaty of Peace and Friendship, Kathmandu, April 1960 189 IV Treaty of Peace and Friendship Between the Government of India and the Government of Nepal 191 V Basic Operating Guidelines agreed to by Undersigned Agencies in Nepal 194 Select Bibliography 197 Index 204 Foreword Articulating India’s strategic interests in Nepal, Jawaharlal Nehru had stated in the Indian Parliament in December 1950: “From time immemorial, the Himalayas have provided us with a magnificent frontier....We cannot allow that barrier to be penetrated because it is also the principal barrier to India.” Historically, India and Nepal have recognised their mutual security interests and acted closely with each other. The agreements that Nepal has had with British Indian authorities and also with independent India attest to this fact. Nepal is well-known for its strategic location in the Himalayas. It is situated at the meeting point of East Asia and South Asia, and between two big and powerful countries—India and China—who have gone to war with each other in the past. During the cold war years, because of its proximity to both these countries, Nepal also attracted the attention of world powers. It borders the restive Tibetan region of China and has a significant number of refugees from Tibet. Because of its open borders with India, Nepal has been used as an easy access point for subversive forces working against Indian interests. In spite of having a comprehensive agreement with India, Nepal has its own sense of insecurity vis-à-vis India. In the classic realist tradition, it has often used external powers to balance India to minimise its sense of insecurity. This has often led to mutual misunderstanding between India and Nepal. It is natural for external powers—both because of its strategic relevance, and its susceptibilities—to develop an abiding interest in Nepal. Over the years, through developmental interventions as well as diplomatic engagements, extra-regional powers have assumed importance in Nepal’s foreign policy. They have had influence on domestic politics as well. Since 2006, internal political dynamics have changed significantly. Nepal has become a republic and is in the process of drafting its Constitution. However, internal power struggles and political differences have made it difficult for the country to finalise its Constitution and stabilise as a normal state. It is visited by chronic political instability which has made it further xii Strategic Himalayas: Republican Nepal and External Powers vulnerable to external manipulations. In this context, the present book by Dr Nihar R Nayak seeks to examine the role external powers play in Nepal’s domestic and external policies, and assess its impact on India-Nepal relations. The present study is based on information collected both from primary and secondary sources. Government documents, foreign policy reports, statements of senior leaders and interviews have been used as primary sources. Secondary research inputs involve constant monitoring of day-to-day developments and events from open sources, viz. books, research articles, commentaries in the print and electronic media and reports of private research institutes. Dr Nayak’s views are also informed by close interactions with a wide cross section of people during his fieldtrips to Nepal. So far, limited work has been done to analyse and understand the role of external powers, as well as their influence on Nepalese politics and foreign policy, especially in post-monarchy period. Therefore, the attempt made in the book to understand the strategic interests of China, the US, India, the EU & major European countries and Pakistan is certainly welcome. I hope, this comprehensive study by Dr Nayak will add to overall understanding of the internal and external political dynamics of Nepal. New Delhi Dr Arvind Gupta Director General, IDSA Introduction xiii Acknowledgements This book would not have been completed without constant support and encouragement of well wishers. I am deeply indebted to many people, who supported me during the various stages of the writing of this book. First and foremost, I am deeply grateful to Dr Arvind Gupta, Director General, Institute for Defence Studies and Analyses (IDSA), for his constant encouragement and support in bringing out this volume. He very generously extended the deadlines whenever I approached him. Without his personal interest and support, this book could not have been completed. I would also like to express my sincere thanks to Brigadier (Retd) Rumel Dahiya, Deputy Director General, IDSA, for his help in bringing this volume in time. I thank Prof. S.D. Muni, Visiting Research Professor at the Institute of South Asian Studies, National University of Singapore, for his selfless guidance in the formative stages. The book would not have seen the light of day without the constant supervision and support of Dr Ashok K. Behuria, Coordinator, South Asia Centre, IDSA, and Dr Smruti S. Pattanaik, both of whom painstakingly edited the initial draft and offered valuable suggestions on it. Mr Post Bahadur Basnet, Visiting Fellow at IDSA (March-November 2013) also offered valuable suggestions during various stages of the writing of the book. My colleagues in the South Asia Centre and Vivek Kaushik, Associate Editor, IDSA, deserve thanks for their timely and valuable support. I would like to express my special gratitude to all the scholars, policymakers and journalists, who shared valuable insights with me during my interactions with them, and helped me in formulating my thoughts and ideas. My deepest appreciation to Prof. Lok Raj Baral, Prof. Bishwambher Pyakuryal, Ambassador Dinesh Bhattarai, Trailokyaa Aryal, Josy Joseph, Dr Nishchalnath Pandey, Prashant Jha, Dr Uddhab Pyakurel, Akanshya Shah, Mahesh Acharya, Pramod Jaiswal and the anonymous referees for their valuable xiv Strategic Himalayas: Republican Nepal and External Powers comments and suggestions.