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In the intricate geopolitical landscape of South Asia, the potential for smaller nations like Nepal to assert their influence and leverage their positions has never been greater, particularly under the Trump 2.0 administration. The political climate fostered by Trump has been characterized by a focus on bilateral relations, economic pragmatism and an “America First” approach, in addition to “Make America Great Again”, which has opened new avenues for smaller South Asian nations—countries such as Bangladesh, Bhutan, the Maldives, Nepal and Sri Lanka—to enhance their diplomatic and economic prospects. Trump’s intent has both domestic and international policy approaches. 

The administration is in the middle when South Asia is being re-imagined with cooperation, competition, crisis and conflict. Standing in times of change in the interconnected world, South Asians are confronting an exceptional array of new political-security-economic challenges.  

The second day for the new administration (Jan 21) commenced with a commitment from QUAD Foreign Ministers: “Our four nations maintain our conviction that international law, economic opportunity, peace, stability and security in all domains, including the maritime domain, underpin the development and prosperity of the peoples of the Indo-Pacific. We also strongly oppose any unilateral actions that seek to change the status quo by force or coercion.”

A day after Trump’s inauguration, Secretary of State Marco Rubio met with Indian External Affairs Minister Subrahmanyam Jaishankar, affirming a shared commitment to continuing to strengthen the partnership between India and the US. 

The US’ 2017 “South Asia Policy”, “Free and Open Indo-Pacific” strategy and the Indo-Pacific Strategy 2022 will continue to be the bedrock of the US South Asia policy with India playing the role of a vital partner in the Indo-Pacific. 

It will be a continuation of the policy of provoking China and embracing India as a major ‘defense partner’ (since 2016), establishment of India-US 2+2 ministerial dialogue in 2018 and a contest to smaller nations in South Asia like Nepal.

The context

The geopolitical dynamics in South Asia have been shaped by historical rivalries and alliances, with larger powers like India’s relations with Pakistan often dominating the narrative. From the 1950s to the 1970s, South Asia had a special significance in great power competition between the US and the Soviet Union. But the analogy in the region is returning to the geopolitical space of the 1970s, where China and the US both supported Pakistan during the ‘1971 third war’ between India and Pakistan that created the independent state of Bangladesh. China and India have had turbulent and sometimes friendly relationships. Through the 1954’s ‘Treaty of Coexistence’, the two sides emphasised the ‘Five Principles’ of mutual respect for sovereignty and territorial integrity, mutual non-aggression, non-interference in each other’s internal affairs, equality and mutual benefit and peaceful coexistence, only to engage in a war in 1962. 

US anxiety at the height of the East-West Cold War with the declared alliance between China and the Soviet Union and Henry Kissinger’s realpolitik led to two strategic approaches. One, it greeted the rise of a strong China. Second, Pakistan was driven by multifaceted US interests manifested, among others, through support to Pakistan in the 1971 war with India. 

India signed the ‘Treaty of Friendship’ with the Soviet Union in 1971 and annexed Sikkim as its “22nd” state four years later. 

The change of US policy with China in 1971 and the tilt to Pakistan as well as change of the Soviet Union’s policy with closer relations with India, disintegration of Pakistan and the announcement of Sikkim becoming part of India altered South Asia’s regional and international relations. Under China’s foreign policy radar, South Asia had a low profile, though the country established diplomatic relations with several South Asians. At that time, the South Asian geostrategic environment transformed the balance of power irreversibly in India’s favour. 

Anyway, the US engagement with India is paramount to achieve the intent of “Making America Great Again”. India has her own constraints to counter the challenges from China and Pakistan, who have maintained their cordial friendship to an ‘all-weather’ partnership. Meanwhile, China and India agreed on 18 Dec 2024 to continue taking measures to safeguard peace and tranquillity along the border and promote the healthy and stable development of bilateral relations and to continue seeking a package solution to the boundary question that is fair, reasonable and acceptable. 

However, under a future Trump administration, the approach to foreign policy could shift, encouraging greater engagement with smaller nations. This shift may stem from several factors, including the need to counterbalance China’s growing influence and India’s foreign policy approaches with strategic autonomy, foster economic partnerships and establish a stable regional environment that can contribute to US interests.

Countering China

One of the most pressing issues for South Asian nations is the increasing presence of China, especially through the global governance mechanism, the Global Common Shared Future. One segment of its Belt and Road Initiative is furthering inroads. Smaller nations like Nepal in the continental and Sri Lanka in the maritime have found themselves in precarious positions as they navigate their relationships with China and the Trump 2.0 administration could leverage this anxiety, providing alternatives to Chinese investments and increasing American influence in the region.

For example, smaller nations could benefit from increased American investment in infrastructure projects, thereby reducing dependency on Chinese funding and creating opportunities for sustainable economic development. The US could work collaboratively with South Asian nations to identify projects that align with their national development goals while promoting American technological and investment interests. This dual approach not only empowers smaller nations but also helps the US establish stronger ties in the region.

Economy and trade

There is a high likelihood of renewed discussions surrounding trade agreements that might favour smaller nations in South Asia. The focus on “fair trade” and economic sovereignty resonates with many countries looking to diversify their economic partnerships.

Countries like Bangladesh and Sri Lanka have historically benefited from trade preferences under programs such as the Generalized System of Preferences (GSP). Renewed American leadership could facilitate deeper trade relations through customized agreements that emphasize mutual benefit while ensuring that smaller nations are not sidelined in favour of larger economies. Enhanced trade relations could see smaller South Asian nations gain access to the American market while simultaneously attracting US investments.

Strengthening alliances

The prospects of a Trump 2.0 administration also bear significance in terms of international alliances. Strategically-placed smaller South Asian nations like Bangladesh could find themselves in favourable positions to strengthen regional alliances, particularly through platforms like the QUAD as well as potential new initiatives aiming to unite nations against common regional challenges.

By aligning with larger democracies and leveraging US strategic interests, smaller nations can increase their visibility on the global stage. For instance, Nepal, which maintains a delicate balance between India and China, could use its unique position to advocate for increased focus on climate change and sustainable development, receiving support from US initiatives that align with their national interests.

Défense-security collaborations

Security concerns are paramount in South Asia, with issues ranging from terrorism to territorial disputes impacting the region’s stability. A renewed commitment under Trump 2.0 to support smaller nations could manifest through enhanced military training exercises, defined equipment transfers and intelligence-sharing agreements.

The Maldives, for instance, has been a critical actor in the fight against piracy in the Indian Ocean. An American focus on collaborating with such nations to enhance maritime security operations can significantly bolster their defined capabilities while ensuring a more secure sea-lane for international trade—an issue of major strategic interest for the US.

Promoting democracy

Another area where smaller nations in South Asia can seize opportunities is in the promotion of democratic governance and human rights. The Trump administration has often balanced its foreign policy between realism and idealism, sometimes prioritizing strategic interests over democratic principles. However, under the influence of prominent policymakers focused on human rights issues, smaller nations could find an ally in the US.

For countries like Nepal and Bhutan, which have made significant strides in democratic governance, partnerships that emphasize political reform, civil society engagement and anti-corruption measures could have long-lasting effects. By aligning with US interests in promoting democracy, they can enhance their own legitimacy and international standing.

Conclusion

The implications of a hypothetical Trump 2.0 administration on smaller nations in South Asia present a landscape full of opportunities. While challenges remain—particularly regarding regional stability and external influences from China and Pakistan—the potential for economic growth, enhanced security collaborations and stronger democratic institutions could define a new era of engagement for these nations.

Small countries have historically been overshadowed by larger neighbours, but the dynamics driven by US foreign policy could empower these nations to carve out a significant role in regional affairs. As they navigate this complex landscape, it is crucial for smaller South Asian nations to seize the moment, engaging proactively with the US to ensure their voices are heard and their needs met in a rapidly changing global environment.

Ultimately, in an era where national narratives are being redefined, Nepal and other smaller nations can play critical roles by acting as bridges between larger powers, advocating for their interests while contributing to a more stable and prosperous South Asian region. As these countries position themselves strategically, the tenets of collaboration, mutual respect and shared objectives will be essential to building a coalition that can navigate the complexities of 21st-century geopolitics.

Under all potential geopolitical scenarios, the convincing intervention in outlining the relationship’s progression eventually dwells with New Delhi and Beijing, not Washington. But for Nepal and other smaller nations, Washington is and should be secured as the strategic potent partner. 

The implications of a potential ‘Trump 2.0’ for small nations encompass a complex interplay of political, security, economic factors with justified diplomacy. The situation would necessitate a careful balancing act, as it navigates its relationships with major powers while striving to maintain its sovereignty and ensure national interests are prioritized. The overall impact would depend greatly on the specifics of Trump’s policies and the regional dynamics at play during his second term. Then again, Nepal must be in existence with national interests in both competition and coexistence without falling into the strategic trap in the long game.

The author is a Strategic Analyst, Major General (Retd) of the Nepali Army, and is associated with Rangsit University, Thailand

As technology changes rapidly, we are faced with new questions about our values, our identities and how we care for our planet. These are questions that philosophy has been thinking about for centuries, but it's only recently that technology has made them more urgent. While technological advances have brought many benefits, they also raise important ethical questions. 

How can we ensure that technology serves humanity in a way that is responsible, fair and mindful of the environment? How can we use technology to improve lives without causing harm to the planet? These are the kinds of questions philosophy can help answer. From my experiences living in different countries—India, Nepal, Korea, and Norway—I’ve come to see how philosophy, technology and sustainability are all deeply connected. The more we bring these areas together, the better prepared we will be to tackle the challenges of the modern world. In India and Nepal, I learned how Eastern philosophy emphasizes the connection between all things. “Vasudhaiva Kutumbakam”, meaning the world is one family, is central to these cultures. This belief teaches us that everything in the world is linked, and that includes technology. Eastern ideas encourage us to think about how our actions, including our use of technology, affect the world around us. They make us ask: how can we use technology to benefit everyone, not just ourselves? How can we make sure technological progress doesn’t harm the environment or deepen inequality?

In these countries, nature is seen as something sacred, and people are encouraged to live in harmony with it. This idea pushes us to consider the impact of our actions on the planet and those who are less fortunate. In Norway, I was introduced to Western views on technology, which offer a different perspective. For example, German philosopher Martin Heidegger argued that modern technology tends to turn nature into something we can use up, without considering its long-term consequences. He argued that we treat the Earth as a resource to be consumed, rather than something to be respected. This idea makes us think about the true cost of technological development, not just in terms of money or convenience, but in terms of the environment. Another important philosopher, Hans Jonas, also spoke about the ethical responsibility we have to future generations. He argued that we need to think carefully about the long-term effects of our actions and the kind of world we are leaving behind. His work reminds us that while technology can bring progress, we must use it with caution to avoid damaging the planet and society.

Through my work with ICT4D (Information and Communication Technology for Development), I’ve seen how technology can improve lives in countries like India and Nepal. It has opened doors to education, healthcare and other opportunities that were once out of reach for many people. But there’s a challenge: technology must be used carefully. If we aren’t careful, it could deepen the divide between the privileged and the underprivileged. In many places, access to technology is still limited, and without addressing this gap, we risk leaving some people behind. In countries like Korea and Norway, technology has driven economic growth and innovation. However, even in these places, there are concerns about how technology affects the environment. From the waste created by old electronics to the energy used by digital systems, technology can harm the planet if we don’t take care. The question we need to ask is: how can we use technology to help society without causing harm to the planet?

Sustainability is not just about protecting nature; it’s also about ensuring that we meet the needs of future generations. How we understand sustainability is influenced by the cultures we come from, and that affects how we use technology. In Norway, sustainability is a key part of everyday life.

The country has embraced renewable energy, and people care deeply about reducing their environmental impact. This is not just a policy but a way of life. In India and Nepal, sustainability is often tied to moral and spiritual beliefs. The idea of respecting nature is deeply embedded in these cultures, and people see it as a responsibility to care for the environment. By combining these different views, we can create a more complete understanding of sustainability—one that includes both technological progress and respect for the Earth.

The solution to today’s challenges lies in bringing together Eastern and Western philosophies, where we can learn from both. We need to combine the wisdom of respecting nature with the need to think carefully about how technology affects society. By doing this, we can create a future where technology benefits humanity while also respecting the environment. To address the issues we face today, we need to bring together philosophy, technology and sustainability.

It’s not enough to focus only on technological innovation or philosophical reflection; we need an approach that considers all aspects of life—social, economic, environmental and technological. From my experiences in India, Nepal, Korea, and Norway, I’ve learned that no single philosophy can solve all our problems. We need to encourage a dialogue between different ideas, cultures and disciplines. Only by doing this can we find solutions to the challenges we face today. It’s time for both technology experts and philosophers to engage with each other more, sharing ideas on how to build a better future. If we listen to the lessons of philosophy and sustainability, we can create a world where technology helps everyone without harming the planet. We must ensure that technology is used in ways that are beneficial for all, not just for a few, and that it works to protect, rather than harm, the Earth.

Opposition parties have recently intensified their criticism of the government. They have raised issues such as the ruling coalition's attempts to amend the constitution and the government's reluctance to convene the winter session of parliament. Additionally, they have criticized the administration for bypassing standard legislative procedures by introducing ordinances.

The government’s move to introduce constitutional changes has sparked significant debate. When the two ruling parties—the CPN-UML and the Nepali Congress—formed an alliance, they signed a seven-point agreement that included revisions to various constitutional articles as a key component. The ruling parties argue that these amendments are necessary to ensure stability at both the central and provincial levels, which they view as a prerequisite for effective governance.

One major focus of these proposed reforms is the electoral system. The Congress and UML have proposed replacing the current Proportional Representation (PR) system, which they claim fosters instability. Under the current arrangement, 165 members of the Lower House are elected through the first-past-the-post (FPTP) method, while 110 are chosen through PR. The PR system allows smaller parties with fewer FPTP seats to wield significant influence in government formation. The proposed reforms include shifting the PR system to the National Assembly and electing all House of Representatives members via FPTP. They also suggest reducing the total number of PR seats from 110 to 60.

However, these proposals have faced strong opposition. The Maoist Centre and Madhesi parties have expressed concerns over the potential impact of such changes. The Maoist Centre, in particular, argues that eliminating the PR system from the House of Representatives—or relegating it to the National Assembly—undermines the foundational principles of Nepal's federal democratic republic, which aims to protect the rights of marginalized communities.

Madhesi parties have also opposed the proposed reforms, especially suggestions to raise the electoral threshold for national party eligibility from 3 percent to 5 or 6 percent. They argue that such changes would significantly disadvantage smaller and regional parties, potentially reducing their representation in parliament. Further, the ruling parties’ plan to streamline Nepal's governance structure—by reducing the total number of federal, provincial, and local representatives—has drawn criticism. Proposals to lower the number of local units from 753 to 500 and provincial lawmakers to save resources have left smaller parties feeling excluded and marginalized.

Despite their ambitions, the ruling parties face a significant hurdle: they lack the two-thirds majority in parliament required to pass these constitutional amendments. Meanwhile, the opposition has accused Prime Minister Oli’s administration of deliberately delaying the winter session of parliament, which is nearing its end. By avoiding parliament, the government has enacted major laws through ordinances, angering opposition parties such as the Maoist Centre and others.

These ordinances, which address issues related to investment, business, and land, have been welcomed by the corporate sector but criticized by opposition parties for undermining democratic norms. The opposition fears that the administration's reliance on ordinances over parliamentary debate sets a dangerous precedent for democracy.

One particularly contentious issue involves a potential ordinance that could split smaller parties facing internal discord. This legislation could result in parliamentarians returning to their original parties, weakening smaller factions like the Unified Socialist. For instance, four or five lawmakers might leave the Unified Socialist and rejoin the UML if this ordinance is implemented. Similarly, the Rastriya Swatantra Party (RSP) could face internal splits due to tensions between its leadership and estranged members.

The government’s delay in convening the winter session is also seen as an attempt to avoid parliamentary confrontation over sensitive issues, such as the legal troubles facing RSP Chair Rabi Lamichhane. By delaying the session, the administration hopes to resolve Lamichhane’s case and shield itself from opposition attacks.

These developments have widened the rift between the government and opposition parties. However, the opposition currently lacks the numbers to pose a significant threat to the administration. For now, the government remains secure, though political tensions continue to simmer.

The author is a freelance journalist

Anti-money laundering is an international network of laws, rules and procedures aimed at making money appear legitimate. For centuries, governments and law enforcement agencies have tried to fight crime by chasing money. 

The Financial Action Task Force (FATF), an international organization formed to combat money laundering, has given Nepal a year to avoid the ‘gray list’ in money laundering cases. 

Immediate assessment 

Nepal’s mutual evaluation group, the APG, is reviewing Nepal’s progress in January. 

Based on its report and Nepal’s response, the FATF will decide whether to keep Nepal on its ‘gray list’. As the deadline approaches, the government should not feel like it hastily amended the law. 

The FATF also identifies countries that lack adequate financial infrastructure to prevent corruption and other financial crimes. In the case of Nepal, it has recently become public that the government has proposed to amend the Cooperatives Act, 2074 and the Nepal Rastra Bank Act, 2058, less than a year after amendments. The recent Cabinet meeting passed an ordinance to amend some Nepal Acts related to cooperatives, indicating that the Cooperatives Act and the Nepal Rastra Bank Act may be amended. 

FATF blacklist 

The FATF blacklist is a list of countries that the financial watchdog has declared ‘non-cooperative’ in its efforts to address money laundering and terrorist financing concerns. The list helps identify financial weaknesses that hinder anti-money laundering compliance within an organization. 

Failure to meet the required action points in a timely manner places a country on the FATF blacklist as a ‘country under enhanced monitoring’. The blacklist is an official document based on findings related to financial crime and its prevention. Taking into account regulatory criteria, the FATF can remove a country from its blacklist based on the financial infrastructure of a particular sector. 

Due to the state of illegal activities related to terrorism and nuclear weapons, only a few countries are currently on the FATF blacklist. Looking back, the House of Representatives of Nepal unanimously passed the Money Laundering Bill paving the way for amendments to laws such as the Export-Import (Control) Act-2013, the Ship Registration Act-2027, the Revenue Act-2034, the Tourism Act-2035, the Building Construction Act-2013. Other relevant laws include the Securities Act-2063, Nepal Rastra Bank Act-2058, Human Trafficking and Transportation (Control) Act-2064, Criminal Assets and Equipment (Forfeiture, Control and Confiscation) Act-2070, Prevention of Money Laundering Act-2064, Prevention of Organized Crime Act-2070, 2079, Cooperatives Act-2074, Foreign Investment and Technology Transfer Act-2075 and the Electricity Regulatory Commission Act-2074. Looking back, the plenary session of the FATF held last June pledged to address the weaknesses pointed out by the APG by amending various laws. 

After the House of Representatives approved the Money Laundering Bill, Nepal took a major step to reduce the risk of being graylisted by the Financial Action Task Force (FATF). 

Institutional governance

In this context, the regional organization on money laundering—Asia Pacific Group (APG)—assessed that institutional governance in cooperatives was weak last year and the risk of money laundering was high. 

The government tried to amend the act to control the transactions of cooperatives. Last year, the government proposed to set a limit of personal savings in cooperatives at Rs 2.5m, but it was removed when it was passed by the parliament. Similarly, there is a provision for the regulation, monitoring and supervision of organizations with transactions up to Rs 250m by the local level, up to Rs 500m by the province, and more than Rs 500m by the federal department. 

The Nepal Rastra Bank Act was also amended to include the Nepal Rastra Bank in the financial governance and risk-based supervision of cooperatives with a share capital or annual turnover of more than Rs 500m, at the request of the department. 

Despite the increase in the number of cooperatives that are in trouble due to failure to return the savings of their members, the government has not been able to do anything for security. 

Advisory panel 

The advisory task force formed under a member of the National Planning Commission to solve the problems seen in cooperatives last year also suggested that the monitoring of large-scale cooperatives through Nepal Rastra Bank should be carried out immediately and a regulatory authority should be formed in the long term. The ‘Parliamentary Inquiry Committee on Misuse of Savings by Cooperatives’ formed under the Parliament had also suggested setting limits on savings and loan transactions by cooperatives and forming a regulatory authority. 

It should be recalled that the APG, in its mutual evaluation report, pointed out the need for Nepal to pass an amendment that would give the authority to investigate money laundering to the relevant criminal investigation agency. 

Once adopted, Nepal should accelerate implementation and significantly enhance the capacity of effective competent authorities to carry out new/modified functions.

Nepal and the gray list 

Nepal was on the Gray List from 2008 to 2014. A series of improvements in the anti-money laundering regime, including the Anti-Money Laundering Act, 2008, and other laws, finally removed Nepal from the list in 2014. 

Although FATF does not enforce regulations or impose penalties, its recommendations and guidelines play an important role in helping financial institutions combat money laundering and terrorist financing. 

FATF Gray List Jurisdictions under enhanced monitoring—also known as the FATF Gray List—include countries with “strategic weaknesses” in combating financial crime. Countries on the list represent a high risk of money laundering and terrorist financing; they are required to formally commit to improving the regulatory infrastructure to prevent financial crime. 

These efforts include creating an action plan to address the need for anti-money laundering measures across the country, developing a central regulatory unit that works with other financial institutions and businesses to combat illicit flows of money, and effectively implementing the “anti-money laundering” standards. 

In addition to efforts to effectively implement the “anti-money laundering” standards, graylisted countries are increasingly monitored by the FATF itself or other regional bodies designated by the FATF. 

These bodies report on the country’s progress in meeting anti-money laundering compliance. Although graylisted countries represent a lower risk than the jurisdictions on the blacklist, the World Bank and other financial institutions may impose certain restrictions. 

Like the blacklist of countries graylisted by the FATF, the FATF Gray List is updated regularly to take into account the state of financial crime in a particular country. 

In 2020, the FATF Gray List included around 18 countries. Laundering laws on the legalization of inherited wealth should be softened, and self-declaration of inherited wealth should be made more explicit. The lawmakers also raised the question of whether the accountability is to FATF or to the Nepali people. 

It is said that Nepal has failed in implementation—the system for investigation, prosecution, asset seizure and prevention of money laundering is not efficient. 

A country like ours cannot remain isolated from the international economy. Similarly, foreign donors can impose more stringent conditions on aid and grants after the country is blacklisted. 

If the ordinance is brought before the next FATF plenary meeting, it will be considered a major step forward. Enacting a law will be even better.  

Otherwise, Nepal will remain a country that has failed to fulfill its commitments. Nepal must continue to implement its action plan to address these shortcomings, namely: adequately criminalizing money laundering and terrorist financing; establishing and implementing adequate procedures to identify and freeze terrorist assets; implementing adequate procedures to confiscate money related to money laundering; implementing and enforcing appropriate mutual legal assistance laws; ensuring a fully operational and effectively functioning Financial Intelligence Unit. It seems that adequate suspicious transaction reporting obligations should be established to prevent money laundering. 

Overall, the responsibility of the concerned bodies to take the necessary initiatives to protect Nepal from the gray list lies with the concerned bodies. 

If strong policies and government lobbying are required for this, initiatives should be taken at the regional and bilateral levels for liberalization in Nepal. 

Corruption, tax evasion and human trafficking are the biggest ML threats in Nepal. 

They have the greatest potential to generate income and produce negative economic and social impacts. According to the opinion of some people, there should be no provision in the current provision to allow some unaccounted assets to be made white by paying taxes on illegally acquired assets. This is also related to VDIS and ancestral property. 

Recently, the government has decided to form a seven-member task force to make the work against money laundering and terrorist financing more effective. According to the decision taken by the meeting of the Money Laundering Control Committee, the coordinator of the National Coordination Committee will be the coordinator of the task force. The task force is also expected to coordinate among agencies involved in money laundering and terrorist financing control.