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The House of Representatives on Tuesday witnessed a heated debate as cross-party lawmakers raised multiple pressing issues that need immediate government attention. Foreign Minister Narayan Kaji Shrestha was absent, so Prime Minister Pushpa Kamal Dahal responded to the questions. 

One key topic was China’s Belt and Road Initiative (BRI). PM Dahal reminded lawmakers that the BRI Memorandum of Understanding (MoU) was signed in 2017 during his second term as prime minister.

In Sept 2023, during Dahal’s visit to China, the two sides held discussions on finalizing the BRI implementation plan. Nine months later, Dahal informed Parliament that the implementation plan is in its final stages and will be signed soon, although he did not specify the dates. Lawmakers expressed concerns about the potential debt burden on Nepal if loans are taken to finance infrastructure projects under the BRI.

PM Dahal reassured lawmakers that Nepal prefers grants over loans and, if loans are taken, they would be concessional to avoid a ‘debt trap’. He stated, “I have clearly told the Chinese side that Nepal cannot afford high-interest rates and prefers the same interest rates as the World Bank and Asian Development Bank.” 

Nepali Congress lawmaker Ram Hari Khatiwada requested that grants be prioritized over soft loans, emphasizing that any loan interest rates should not exceed 1 to 1.5 percent. Transparency regarding the interest rates of BRI loans is often lacking, with rates reportedly at two percent or higher.

Lawmaker Shishir Khanal from the Rastriya Swatantra Party argued that there should be parliamentary deliberations about the BRI agreements with China. Due to the lack of debate in Parliament, negative perceptions of the BRI have arisen outside of it, Khanal said.  While the two countries are negotiating the implementation plan, the government has yet to publicize it.

Lawmakers also questioned the PM about issues relating to India. Despite the report of the Eminent Persons Group (EPG) being almost inactive, PM Dahal assured lawmakers that efforts are underway to submit the EPG report to both sides. He acknowledged that he did not bring up the issue during his visit to India last year to avoid straining bilateral relations. Lawmakers also inquired about the ongoing map dispute with India and the progress made in diplomatic negotiations. PM Dahal stated, “Efforts are underway to resolve this issue through bilateral mechanisms formed to address boundary disputes.”

The issue of Nepalis trapped in the Russia-Ukraine war was prominently raised, but PM Dahal did not provide a clear answer about the government’s efforts. Unofficial figures indicate that around three dozen Nepalis who joined the Russian army have died, and hundreds are trapped in the war zone. The PM mentioned that both sides are in constant talks to resolve the problem and that a committee has been formed to provide recommendations on managing the movement of people between Nepal and Russia.

Recently, the government has faced criticism for recalling ambassadors before completion of their terms and violation of its own recruitment standards for new ambassadors. PM Dahal admitted these shortcomings and pledged that future appointments would be merit-based and better managed.

PM Dahal also faced questions about efforts to convene the SAARC summit, stalled since 2014. He attributed the delay to souring relations between India and Pakistan but did not mention the impact of recent developments in Afghanistan. He stated, “I have clearly talked with Indian Minister for External Affairs S. Jaishankar about the need to organize the SAARC summit, but India has indicated there are complexities involved.” With Indian Prime Minister Narendra Modi taking office for a third consecutive term, fresh debates about the possibility of organizing the SAARC summit have emerged.

The PM also addressed questions related to Gorkha recruitment and the 1947 tripartite agreement among Nepal, India, and the UK. He emphasized the need to update the agreement in the changing context, based on national consensus. A section of Nepali politicians has long demanded the scrapping of the treaty.

China’s Belt and Road Initiative (BRI) has seen mixed progress in Nepal since the two countries signed the agreement in 2017. A common narrative suggests that no significant projects have been completed under the BRI framework, leading many foreign policy observers to conclude that China has not succeeded in expanding its influence in Kathmandu, largely due to implicit pressure from the West and India. 

Nevertheless, the implementation of BRI remains a top agenda item in interactions between representatives of the Communist Party of China and Nepal’s political parties, especially the communist ones, which have expressed dissatisfaction over the perceived slow progress.

From the Chinese perspective, several soft and hard projects launched in Nepal fall under the broader BRI framework. However, China is pushing for the implementation of more infrastructure projects, as globally, the BRI is perceived mainly as an infrastructure initiative. 

Beyond BRI, China’s reach and influence in Nepal have significantly expanded across various sectors—from education to security, from village to national levels, and from electric vehicles to airline companies. Recent interactions even include the judiciary and parliament, with notable exchanges of visits between officials from both countries.

In November last year, Nepal’s Chief Justice Bishowambhar Prasad Shrestha visited China, followed by a reciprocal visit this week by Liu Guixian, a senior justice of the Supreme People’s Court of China. Senior leaders from Nepal’s National Assembly and the Speaker of the House of Representatives have also visited China in recent years.

Recent examples of China-Nepal cooperation include Chinese Ambassador to Nepal Chen Song’s participation in multiple events. These events illustrate China’s diverse offerings to Nepal, such as organizing the first intra-party school Chinese pop dance competition involving students from 13 primary and secondary schools, and a cardiovascular screening program by specialists from Fuwai Yunnan Hospital, which provided screenings for 4,682 Nepali children diagnosed with congenital cardiovascular disease, offering them free treatment in China.

Additionally, China has resumed the China Higher Level Education Fair, halted for two decades, and Nepal’s colleges and universities are increasingly offering Chinese language courses. The number of scholarships for Nepali students to study in China has also increased, as has the participation of Nepali bureaucrats going to China for education. Beyond education and health, China is also interested in importing Nepali tea, and the two countries are working on petroleum product collaborations. These are just some instances where there is a long list of new areas of collaboration between the two countries. 

For a long time, Western and European countries have been expanding their influence in Nepal through non-governmental organizations. Now Chinese non-governmental organizations (NGOs) are also becoming more active in Nepal. The China Foundation for Rural Development (CFRD), for instance, has been working in the areas of health, education, and other social issues, particularly in the Tarai region. Recently, CFRD provided aid to fire-affected people in the Mahottari district but this is not the first time. CFRD has been providing support in Madhes region since 2015 and it continues to expand. 

China has developed networks and projects to engage with all segments of Nepali society, and Ambassador Song has been instrumental in enhancing bilateral engagement through active social media presence and interactions with media personnel.

Deputy Prime Minister and Minister for Foreign Affairs Narayan Kaji Shrestha has been a strong supporter of bilateral projects, frequently attending events organized by the Chinese Embassy and other Chinese-funded local organizations. Shrestha is notably the only minister in the Pushpa Kamal Dahal-led government, who has been consistently pushing for the signing of the BRI implementation plan, which remains pending.

As China aspires to engage more with Nepal, bilateral visits are expanding, with politicians from various levels visiting China. But it is noteworthy that visits by leaders from the Nepali Congress (NC) are fewer compared to those from communist parties. This could be due to fewer invitations from China or a lack of interest from senior NC leaders. Despite this, both Chinese and NC leaders acknowledge the historical role of bilateral relations, often referencing BP Koirala’s contributions from the 1960s.In summary, while progress on the BRI in Nepal may have been slow, overall Chinese engagement in the country has picked up speed, balancing hard and soft power. The Nepal-China border, which had been largely closed since 2015 and further impacted by Covid-19, has recently reopened, facilitating increased movement of people and goods. This week, the two countries are holding their 16th Secretary-level meeting to review the entire bilateral relationship. To measure China's influence in Nepal solely through the BRI lens is to overlook the broader picture. 

Indian Prime Minister Narendra Modi has hailed the export of electricity from Nepal to Bangladesh via the Indian grid as a landmark in sub-regional energy cooperation. 

Speaking at a joint press conference with Bangladesh Prime Minister Sheikh Hasina in New Delhi on Saturday, Modi emphasized that the swift implementation of such large-scale initiatives in multiple areas within just one year reflects the dynamic pace and scope of bilateral relations.

Last year, Nepal and India signed a long-term power trade agreement, which included India's consent to facilitate the sale of Nepali electricity to Bangladesh. Officials from Nepal and Bangladesh are currently finalizing the modalities of this agreement.

The joint statement underscored the commitment to expanding power and energy collaboration and developing intra-regional electricity trade. This includes competitively-priced power generated from clean energy projects in India, Nepal, and Bhutan, transmitted through the Indian electricity grid. To support this initiative, India will expedite the construction of a 765 kV high-capacity Katihar-Parbatipur-Bornagar interconnection, with suitable Indian financial assistance, to serve as a key anchor for grid connectivity.

Modi and Hasina also discussed regional issues, highlighting the potential of the India-Bangladesh relationship as a major anchor for regional and sub-regional integration under the BIMSTEC, SAARC, and IORA frameworks. They committed to working together on global platforms to advance their common interests, particularly those of the Global South.

As part of sub-regional connectivity initiatives, India will provide transit facilities for the movement of Bangladeshi goods to Nepal and Bhutan via the railway network. The two leaders also reiterated their commitment to the early operationalization of the BBIN Motor Vehicle Agreement to enhance sub-regional connectivity.

Recognizing the significant contribution of their partnership to regional peace, security, and stability, India and Bangladesh reaffirmed their commitment to a free, open, inclusive, secure, and rules-based Indo-Pacific region. With converging visions for the Indo-Pacific and awareness of the region's vulnerability to climate change, India and Bangladesh will co-lead the ‘Disaster Risk Reduction and Management’ pillar of the Indo-Pacific Oceans Initiative (IPOI). They will cooperate to mitigate disaster risks, build disaster-resilient infrastructure, and contribute to the sustainability of their shared maritime region.

Narendra Modi was sworn in for his third consecutive term as India’s prime minister on Sunday. The ceremony, held at Rashtrapati Bhavan in New Delhi, was  attended by leaders from neighboring countries, highlighting strong regional ties. 

Nepal’s Prime Minister Pushpa Kamal Dahal, Bangladesh’s Prime Minister Sheikh Hasina, Sri Lanka’s President Ranil Wickremesinghe, Maldives’ President Mohammad Muizu, Bhutan’s King Jigme Khesar Namgyel Wangchuk, Seychelles’ Vice-President Amhed Afif, and Mauritius’ President Prithvirajsing Roopun were among the attendees.

Modi, who began inviting his neighboring counterparts when he was elected the prime minister for the time in 2014, has continued with the tradition for his third-term as well, apparently signaling that he will stick to ‘Neighborhood First’ policy. Under Modi’s stewardship, this policy continues to evolve, focusing on mature, nuanced, and practical responses to regional issues. 

A prime example is India's measured approach to anti-India rhetoric from Maldives President Mohammad Muizu, who attended Modi’s swearing-in ceremony. Enhanced development and economic partnerships with neighboring countries have also marked this period, achieving greater regional connectivity, infrastructure improvements, and stronger development cooperation. Now, all South Asian countries are seeking an enhanced economic and development partnership with India avoiding geopolitical and other issues. 

Except with Bhutan, India's relationship with neighboring countries witnessed many highs and lows during Modi’s first two terms as India’s prime minister. With Nepal, significant progress has been made in cultural, economic, and development spheres despite past disputes like the economic blockade and the map row, which still cast a shadow over the relationship. Trust between India and Nepal is yet to return to the high levels seen in 2014.

India’s relations with Pakistan remain strained, affecting regional cooperation and the functionality of the South Asian Association for Regional Cooperation (SAARC). Ties with the Maldives are also fraught, with little signs of improvement. As a regional leader aiming for global influence, India is expected to play a proactive role in mending ties with its smaller neighbors and addressing their concerns. 

Over the past few years, India has projected itself as a leader and voice of the Global South or more importantly South Asia. As a strong prime minister, Modi and his government could have played a vital role to resolve the issues with the South Asian countries. In his third tenure, Modi leads a coalition government. It might not be easy for him to take decisions without the consent of ruling partners.

Nitish Kumar, chief minister of Bihar and his Janata Dal (United), the second-biggest ally, will also have a greater say when it comes to Modi government’s Nepal policy. Though India’s external policy is under the control of the Union government, of late, states are having greater influence on those countries which share borders with them. 

A significant concern for India is the growing Chinese influence in the region. While India seeks to reduce this influence, its neighbors are increasingly looking to China for assistance and investments. As Modi looks ahead to lead India for the historic third consecutive term, smaller neighbors like Nepal will be keenly watching India’s ties with China, because they believe improved India-China relationship will make it easier for them to deal with both countries. 

But foreign affairs experts say the India-China relationship, strained by border disputes, is unlikely to improve soon, impacting India’s relations with its smaller neighbors. Modi’s third term presents a long list of tasks to strengthen ties with neighboring countries, essential for regional connectivity, collaboration, and stability. The Nepal-India relationship, in particular, is expected to sail smoothly without major hurdles.

India’s 18th Lok Sabha (lower house of parliament) election results are out, with the National Democratic Alliance (NDA) led by the Bharatiya Janata Party (BJP) securing the majority needed to form a new government. Although the BJP did not achieve a single-party majority as it did in 2014 and 2019, coalition support ensures that Narendra Modi will enter a historic third consecutive term, a first since 1962. 

The election results indicate a weakening of the BJP’s dominance, a resurgence of the Indian National Congress, and a growing influence of regional parties. This also marks the return of coalition governance in India after a decade. Since Nepal and India are close neighbors, a pertinent question arises: What will India’s Nepal policy look like under Modi’s third term? Over the past decade, Nepal-India relations under Modi's leadership have seen many fluctuations. 

Modi’s emphasis on the ‘neighborhood first policy’ in 2014 placed Nepal at the forefront. However, Nepal-India relationship hit its lowest point right after Nepal promulgated its new constitution in 2015. Seemingly to show its disapproval of Nepal’s new charter, India imposed an undeclared border blockade for about six months, causing an economic and humanitarian crisis in Nepal that was still reeling from the devastating earthquake of 2015.

Relations began to improve from mid-2016 but hit another rocky patch during the 2019 map dispute. Despite these highs and lows, Modi visited Nepal five times during his first two terms. Under his leadership, bilateral mechanisms were revived, several long-standing issues were resolved, and numerous connectivity projects—such as the cross-border pipeline, Integrated Check Post, railways, roads, and digital connectivity— were advanced. In the final months of this second term, two countries signed a power agreement to export Nepali electricity in India and Bangladesh. 

Recently, bilateral relations have stabilized, and with Modi’s third term, major changes to India's Nepal policy are unlikely. Over the past decade, the BJP has strengthened its ties with Nepal's political parties. In several instances, Nepali leaders are employing BJP channels to reach out to the highest level of government to resolve outstanding issues.

This elevation of bilateral relations to a political level has opened more communication channels. Prior to 2014, interactions were largely limited to bureaucratic and security agencies, with minimal high-level exchanges. Recently, the relationship has evolved into a robust development partnership, though some contentious issues remain unresolved. 

While the BJP has faced criticism for allegedly fueling Hindu radicalism, these claims lack independent verification. Before the elections, political analysts speculated that the BJP might push to turn both India and Nepal into Hindu states in Modi’s third term. However, the return of a hung parliament may hinder such plans. The Modi government should reassure Nepali leaders that there is no such agenda in Nepal. 

Continuation of Modi as prime minister presents an opportunity for Nepal to address pending issues and explore future avenues. Compared to the BJP, the Indian National Congress and other parties have fewer communication channels with Nepal's political leaders. Key contentious issues, such as the Peace and Friendship Treaty and border disputes, require intense diplomatic and political dialogue. Both sides must avoid politicizing these issues to maintain healthy bilateral relations. India’s Nepal policy is expected to remain stable for India’s political parties are not much divided on foreign policy issues. 

Nepal government and political parties need a clear strategy for engagement with India. All political parties in Nepal should unify on major issues with India, ensuring that changes in government do not disrupt bilateral relations. Consistent positions from major political leaders, regardless of their power status, will facilitate smoother negotiations with India on contentious issues. It would have been better if those issues were settled when there was a powerful government led by Narendra Modi for 10 years. 

Enhanced coordination between political leadership and bureaucracy is essential. Rather than focusing solely on India’s Nepal policy, Nepal must prepare its own strategy for dealing with India, which is poised to become the world’s third-largest economy. The key question is how Nepal will manage this relationship, with economic and development partnerships forming the foundation of bilateral ties over the past decade. 

The current coalition government led by Pushpa Kamal Dahal may not collapse in the near future, though Prime Minister Dahal himself seems less certain. Political analysts and leaders agree that as long as the Nepali Congress and CPN-UML, the first and second largest parties respectively, do not join forces to form a new government, Dahal will continue to exploit the situation. However, the complexity of Nepal’s political parties makes it challenging for analysts to make definitive predictions. Few anticipated that Dahal would expel the Nepali Congress from the government on March 4 and ally with his rival, KP Sharma Oli of UML. 

For over a year, Dahal has remained in power somehow, securing the vote of confidence three times, highlighting his government’s fragility. Since the beginning, even Dahal has appeared uncertain about the government’s longevity. He often tells his colleagues that despite predictions he wouldn't last a couple of months, he has managed to stay in power for over a year. His remarks in public also indicate his doubts about the government's survival. There are several factors that are feeding Dahal’s doubt, including the possibility that coalition partners, mainly CPN (Unified Socialist), could withdraw support anytime. 

This uncertainty has also made Dahal desperate to cling on to power. To bolster his position, Dahal facilitated a split in the Janata Samajbadi Party led by Upendra Yadav, creating a new party of seven lawmakers who now support his government. Dahal was worried after reports that Yadav was planning to pull out its support from the coalition and join forces with Congress, the main opposition, in a bid to form a new government.    

Dahal’s CPN (Maoist Center) has just 32 seats in the House of Representatives, which makes it a distant third largest party after the UML and NC. Yet, Dahal managed to become prime minister after the 2022 general elections, which took much negotiations, political maneuverings, and making and breaking of alliances.    

Dahal’s guile and cunning has kept him at the helm so far, but he has yet to (and he may never) shake off the specter of one of the coalition partners turning against him, reducing his government into a minority status.  

With Yadav’s Janata Samajbadi Party out of the picture, Prime Minister Dahal is now concerned that CPN (Unified Socialist) Chairman Madhav Kumar Nepal might withdraw support to the coalition due to his growing closeness with Nepali Congress President Sher Bahadur Deuba. While this might not immediately topple the government, it would definitely force Dahal to reaffirm his majority, further weakening his political standing. Additionally, Rastriya Swatantra Party Chair Rabi Lamichhane, also the minister for home affairs, faces the allegation of embezzling cooperative funds, and Dahal fears a court order might force Lamichhane to resign, prompting RSP to leave the government.

Political parties have finally agreed to form a parliamentary committee to probe the misuse of funds by multiple cooperatives across the country. Had Lamichhane’s name been included in the probe committee’s terms of reference, he might have resigned. But to prevent this, Prime Minister Dahal successfully convinced NC President Deuba to adopt a more flexible stance. It was NC that first raised the demand for a parliamentary panel to probe the financial scandals in various cooperatives, including the one linked with Home Minister Lamichhane.  

Dahal’s visit to Deuba’s residence before the budget session suggests a possible agreement between the two leaders. After forming a new  ruling coalition in March by breaking the alliance with the Congress, Dahal feels external forces might attempt to remove him from power. This explains his attempt at appeasing India’s ruling Bharatiya Janata Party, which is likely to get a historic third term as several exit polls indicate.

After parting ways with the NC, Dahal has faced increasing difficulties. Relegated to the opposition bench, the NC has been creating obstacles in the Parliament and has even initiated street protests, aiming to topple the government. There are also reports about the NC holding back-channel negotiations with the UML to form a new coalition, the one that is stable and strong.   

Within the UML, opinions are divided: some leaders believe a coalition with NC would ensure stability, while others argue that as key electoral competitors, the two parties should not ally. Nonetheless, it won’t be surprising if they come together. Some NC leaders want to join the government, fearing that the current home administration under Lamichhane might target them in corruption scandals.

At this juncture, it is difficult to gauge Oli's intentions. The UML leader has been saying that the internal and external environment is not conducive for him to become prime minister, which is why he is currently supporting Dahal and focusing on strengthening his party. 

Oli aims to make UML the largest party by inducting lawmakers from fringe parties. But at the same time he has not completely ruled out the possibility of forming an alliance with the Congress. Some leaders say Oli’s preferred option is to ally with the Maoists and ultimately seek to merge the two parties, with UML leaders in dominant positions. Oli might even try to secure the position of president after the 2027 elections, while his current targets remain NC and RSP, seeing the former as a key electoral competitor and the latter as a formidable threat to all major parties. 

With both ruling and opposition parties expending significant energy either to maintain or disrupt the coalition, governance, economy, and development are taking a hit.

The US Indo-Pacific Strategy (IPS) was a hotly debated topic in political and diplomatic circles from 2019 to 2022, though discussions have subsided somewhat since then. In Nepal, discourse on the IPS has been dominated by its security and strategic components, with support for this initiative often viewed as joining the US-led military alliance.

In a veiled reference to IPS, Nepali leaders often say that Nepal cannot and should not join any military alliances as it goes against the country’s long-standing commitment to the non-alignment policy. Bolstering Indo-Pacific security is a key part of the IPS which faced stiff opposition in Nepal after the country was mentioned in the 2019 Indo-Pacific Strategy Report by the US Department of Defense.

Additionally, some US documents claimed that Nepal had joined the State Partnership Program (SPP), prompting Nepal to reportedly request for removal from the SPP. Some SPP documents, however, still include Nepal. Nepali leaders also briefly put off the Millennium Challenge Corporation (MCC) project, stating that it was part of the IPS. Discussions on the IPS in Nepal are framed around these two issues, but the strategy encompasses much more.

For the US and international strategic community, the 2022 Indo-Pacific Strategy unveiled by the Biden administration serves as the guiding document on IPS and its execution. The Trump administration had placed the military component as the central pillar of the strategy which landed it in controversy. So, the Biden administration introduced a new Indo-Pacific Strategy (IPS), which has now entered its third year of implementation. US officials are currently occupied with compiling progress reports on a country-by-country basis. Contrary to the Trump administration’s confrontational approach toward China, the Biden administration’s IPS adopts a different stance. It consists of five pillars: promoting a free and open Indo-Pacific, fostering connections within and beyond the region, driving Indo-Pacific prosperity, enhancing Indo-Pacific security, and building regional resilience to 21st-century transnational threats.  Biden’s IPS focuses more on economic cooperation, capacity building of regional partners, and the view that US resources alone are insufficient. 

A frequently asked question in Nepal is whether the country is already a part of the IPS. This is a tricky question and the answer can be both yes and no. Those who view the IPS solely through the prism of security and military cooperation say Nepal is not involved. However, considering all components of the strategy and its implementation, Nepal can be seen as a part of the IPS. US officials and experts have often clarified that the IPS is an overarching framework outlining how the US, as a superpower, envisions the Indo-Pacific region. Nepal, being the landlocked country situated between India and China, is a high priority in the region. US officials have stated in documents that ‘Nepal can play a vital role in the Indo-Pacific region’ and that Nepal is ‘a valued partner in the Indo-Pacific’.

The broader context suggests Nepal is indeed a high priority for the US within its overarching Indo-Pacific policy. In recent years, the US has stepped up diplomatic engagements with Nepal through high-level visits. These visits have focused on increasing US development assistance to Nepal, attracting private investment, promoting democracy and human rights, curbing corruption, and boosting collaboration across sectors. At the same time, the IMF, World Bank and other financial institutions have also intensified their engagements with Nepal. The MCC compact is a case in point.

Looking at how the IPS is being implemented in Nepal through various US agencies like USAID, there are investments “to strengthen democratic institutions for good governance and human rights; foster sustainable, inclusive, transparent economic growth; and improve resilience to health and climate threats” which is the thrust of IPS.

Let’s consider some specific cases now. The first pillar of the IPS is a free and open Indo-Pacific. Targeting the first pillar, the US has been supporting Nepal across domains like governance, democratic values, security and stability. This includes working with Nepal’s media, civil society and key institutions to build capacity, as well as security cooperation with Nepali forces on disaster preparedness, humanitarian assistance, border security, and more.

US agencies are actively engaged in Nepal across other pillars of the IPS. The US closely coordinates with allies and partners, recognizing its resources alone are insufficient for the region's challenges. Hence, allies like Japan, South Korea, India, Australia, and the UK are also expanding their presence and investments aligned with their own Indo-Pacific outlooks.

While the IPS has many facets, discussions and understanding in Nepal have been narrow. Obviously, there are challenges in dealing with the strategic initiatives, but time has come to make an understanding and position about what IPS means to Nepal. In the lack of an official government position, politicians and bureaucrats face difficulties addressing IPS-related issues and projects, particularly with the US.

As Nepal desperately seeks investment across sectors, the US and its partners are exploring opportunities, alongside emerging economies eyeing Nepal. Rather than shying away or viewing the IPS solely as a military strategy, there is a need for open dialogue to build an accurate understanding. The IPS involves US engagement with Nepal on clean energy, climate change, disaster preparedness and facilitating regional power trading agreements. On energy cooperation, the US is working closely with south Asian countries including India, Bangladesh, Bhutan and Nepal. The US also played a vital role in facilitating a regional power trading agreement in South Asia. Regarding climate change, the US partners with various organizations in Nepal, particularly targeting youth engagement—an area where Nepal can greatly benefit as it already faces impacts from climate-induced disasters. Another associated issue is preparedness for disaster response and relief operations. 

There is a need to build an understanding of the IPS to provide clear thoughts and ideas on how to address these challenges. Better comprehension of the multifaceted IPS can offer Nepal significant benefits. However, there are inherent risks if Nepal fails to develop a uniform and consensus-based position on it.

In the Lowy Institute's Asia Power Index 2023, 15 countries, including Japan, Russia, Australia and South Korea, are classified as middle powers, while Nepal along with nine other countries are categorized as 'minor powers.' The foreign policy discourse in Kathmandu is dominated by the three major powers—India, China, and the United States. There is a lack of deliberation about Nepal's engagement with these middle powers which have been our long-standing development partners. 

Unlike the major powers, middle powers seemingly have fewer strategic interests in Nepal, making it easier to attract more investment and development assistance from them. Of late, these countries have shown a greater interest in engaging with Nepal across multiple areas. It is, therefore, time to explore how Nepal can maximize benefits from them. 

Many middle powers are increasing their partnership with Nepal, and they do not want to be seen as aligning with major powers, at least publicly. However, there is a convergence between the US and other middle powers on issues like democracy, human rights, and, more importantly, containing China's influence in the Indo-Pacific region. These middle powers often work through loose networks on several issues, and the US is working to empower their capacity while seeking their support to counter China.

In Nepal, these middle powers are trying to distance themselves from geopolitical ambitions but they are also concerned about Nepal’s position on key regional and international issues. 

For instance, during Japanese Foreign Minister Kamikawa Yoko's recent visit to South Asia, including Nepal and Sri Lanka, discussions focused on global and regional issues like the situation in the Middle East, the Russia-Ukraine war, and other South Asian regional matters.

Over the past few years, Japan has been investing in infrastructure development in South Asia in close collaboration with India. Its main priority is enhancing connectivity between South Asia and Southeast Asia, and for this purpose, Japan is investing in infrastructure in Northeast India. In this context, Japan considers Nepal an important position and is already investing in Nepal's infrastructure development. Japan is also concerned about the growing Chinese loans in South Asian countries, which could be a reason for the Japanese foreign minister’s visit to Nepal and Sri Lanka. Kamikawa conveyed the message that Japan is ready to step up its cooperation with Nepal, and to work closely with South Asian countries on regional and global issues.

The United Kingdom is also one of Nepal's oldest friends. The two countries established diplomatic ties in 1816. The Treaty of Friendship that the two countries signed in 1923 further formalized bilateral relations and helped Nepal claim UN membership, and reiterate its independence, sovereignty and territorial integrity. The UK has consistently been one of Nepal's top development partners. Still, there is a perception in Nepal that the UK has maintained a low profile or has been quieter about its diplomatic engagement over the past decade.

Recently, the UK has shown a greater interest in Nepal, with increased grants and a keenness to bring foreign direct investment (FDI) to the country. In February 2023, UK Minister of State (Development and Africa) Andrew Mitchell launched a new £400m UK-Nepal development portfolio, aimed at mobilizing vital private sector funding for development and creating 13,500 jobs in Nepal.

Let’s talk about South Korea now. Seoul is gradually enhancing its cooperation and engagement with Nepal. Last year, South Korea sent President Yoon Suk-Yeol's special envoy Jang Sung Min to Nepal for discussions on bilateral and other issues. The two countries are currently discussing a wide range of bilateral issues, and high-level visits are on the agenda. Prime Minister Pushpa Kamal Dahal is preparing for an official visit to South Korea soon.

The trade volume between South Korea and Nepal has significantly increased from $100,000 in 1970 to $37m in 2023. Between 1987 and 2022, South Korea provided Nepal with $282.4m in Official Development Assistance (ODA) in areas like health, water, sanitation, education, rural development and energy. The private sector of South Korea has also shown interest in investing in various sectors in Nepal. This week, South Korea’s Ambassador to Nepal Park Tae-Young said they are willing to step up cooperation with Nepal. 

All these three countries—Japan, the UK and South Korea—have strong ties with the US and are often taken as junior partners of the superpower. The Indo-Pacific outlook unveiled by these countries are very similar in content to the US’ Indo-Pacific Strategy. All of these countries have stepped up strategic partnerships with India, which has a huge influence in Nepal. Along with these, other countries like Australia and France are also increasing their engagement with Nepal. Europe’s major power Germany is also keen to invest more in Nepal. 

While Nepal is preoccupied with dealing with the three major powers, the time has come to comprehensively engage with these middle powers to bridge the investment gap that the country is currently facing. These countries have clearly shown their interest in investing in Nepal if a conducive investment climate is created. It is easier to deal with these powers because they are publicly stating that their support for Nepal is guided by deep people-to-people relations and geopolitical factors do not prominently figure into their engagement. In a recent interaction, a diplomat said: Our support in Nepal is guided by a long history of people-to-people connections and we do not have much geopolitical interests in Nepal, although there is a lot of geopolitics in Nepal.

One immediate opportunity is the high chance of attracting foreign direct investment (FDI). After the 2024 Nepal Investment Summit, these middle powers are encouraged by the government's amendments to laws as demanded by international investors and the all-party consensus on these issues. If some of their remaining issues are resolved, Nepal can attract more investment. For instance, during the investment summit, the UK conveyed that many UK investors are ready to invest in Nepal if issues related to tax and the safe repatriation of profits are eased.

Therefore, the government, think tanks and civil society should pay greater attention to stepping up engagement with these middle powers, along with the major powers vying for influence in Kathmandu. It is time for Nepal to seize this opportunity and tap into the potential of these middle powers for its development.