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Back in 2017, the Pushpa Kamal Dahal government was under incredible pressure from the ‘democratic world’ to keep Nepal from joining the Belt and Road Initiative (BRI). The Westerners, keen to minimize communist China’s growing footprint in South Asia, argued how Nepal would be foolhardy to willingly walk into this ‘dark, bottomless pit’. The Indians feared Nepal joining the BRI would spell an end to its monopoly over the landlocked country. Only after Kathmandu repeatedly assured New Delhi of its ‘limited’ BRI membership—one dealing solely with ‘connectivity’ projects—did India reluctantly give its nod.

Many Nepali intellectuals were (and still are) skeptical about the BRI. Yet they still credit China for at least trying to explain the concept to them. Over the past five or six years, no month has perhaps passed without at least one China-sponsored conference in Kathmandu on the BRI. Visiting Chinese scholars have been grilled on the initiative. They have not always come up with satisfactory answers. Yet just the fact that Nepali intellectuals and journalists have been able to question them on the BRI, often with no restraint, has helped blunt its hard edges.

In sharp contrast, when the US State Department announced at the end of 2018 that Nepal would play a ‘pivotal’ role in the American Indo-Pacific Strategy (IPS), the intellectual community in Nepal felt cheated: How could such a monumental shift in Nepal’s international outlook—whereby Nepal was being pulled into a supposedly military alliance aimed against its close neighbor—have been handled so nonchalantly? Why were there no prior
consultations in Nepal?

Again, at the time Nepal joined the BRI, there were already extensive discussions here on its costs and benefits. The Chinese wanted to convince Nepalis of all the ways Nepal would benefit from the initiative, and hammer in the point that it was not aimed at saddling Nepal with debt it cannot repay. In some ways the underlying motive behind the BRI was less important than the Chinese messaging.

The IPS has been a more hush-hush affair. The American Embassy in Kathmandu has sponsored no seminar or conference where the architects of this strategy were invited to explain it to willing listeners. Its closed-door briefings on the IPS to handpicked journalists adds more to the suspicion than they help clarify things.

If you want the IPS to work in Nepal, at least give it a good shot at success. Or is the IPS so obviously a military alliance that the Americans in Nepal are hard-pressed to shed light on its non-military aspects? Concurrently, could it be that the much-withered Department of State that handles the US diplomatic engagements is helpless when the constantly bloating Department of Defense is calling the shots?

But even with limited resources the American Embassy could do a better job at highlighting the good aspects of the IPS, if any. Otherwise the perception that it is the American military that is driving the IPS, and that it is a purely strategic alliance to contain China’s rise, will stick. It is hard to see how such a perception will help long-term US interests in Nepal. Task number one for the American mission in Nepal: Convene an IPS conference in Kathmandu—pronto.

Over the past few weeks, Prime Minister KP Sharma Oli and his fellow co-chairman of the ruling Nepal Communist Party (NCP) Pushpa Kamal Dahal have reportedly been drifting apart after Dahal publicized the power-sharing deal with Oli. Dahal maintains that the agreement, whereby the two co-chairs becoming PM for two and half years each, should be implemented in its letter and spirit. But those close to Oli see this as a plot to change the government and push the country into another bout of instability. Kamal Dev Bhattarai talked to senior NCP leader Devendra Poudel, a close confidante of Dahal, for some insights.

There is a lot of public dissatisfaction over the performance of the federal government. How you react to this as a senior leader of the main ruling party?

First, with the formation of the two-third government, people’s expectations were sky-high. But there has not been the expected level of delivery. Second, opposition parties have consistently blown up government weaknesses, which has given the impression that the government is not performing well. Third, the party has failed to complete its unification process on time and there were thus lapses in government performance. Yet it does not mean the government has done nothing at all.

Are you suggesting that there has not been the desired level of coordination between the party and the government?

In some areas, the government has made substantial progress. All three levels of governments have come up with their budgets, which are now being of implemented. The tasks of building roads, highways, and other infrastructures are moving apace. But people had expected a lot in the terms of governance. You do not need huge budgetary support or FDI to change governance. There have been some lapses and we have to correct them immediately. 

There is much talk about the power-sharing agreement between PM Oli and Pushpa Kamal Dahal after two and half years. What is the reality?

Let me give you an example first. In 2006 the Maoists joined the peace process, and we agreed to invite the United Nations to assist our peace process. We had some differences with Nepal Congress-led government of the time. But we signed some agreements with then Girija Prasad Koirala government and we fully implemented them.

The Maoists had some ideological differences with then CPN-UML. Yet we could agree on party unification. All this could happen because there was a level of trust between the two sides. It is impossible to move ahead in politics if there is no trust on political agreements signed between two sides. 

Most of the Maoist and UML leaders were not there when the power-sharing agreement was signed. There were several issues and the two chairmen settled those through mutual consultations. The two then signed a power-sharing agreement. This is a real document whose implementation is based on trust and honesty. In fact, the very basis of unity was the power-sharing deal. Party unity could be achieved only after this agreement. Until there is new agreement, the agreement signed during party unification stands. Politics will move ahead smoothly only if this agreement is honestly implemented.

Is the agreement about the handover of either PM or party president to Dahal? Or does it deal solely with a change of PM?

We should not sow confusions about the agreement as two parties are now united. We should not provoke top leaders. We should not blow up the issue to the extent of party split; instead we have to work together to keep the party united and effective. We want to unite not just the party. We also want to take the main opposition Nepali Congress into confidence.

For party unification we skipped some core ideological differences, with a view of settling them in the general convention. But the power-sharing agreement clearly mentions that government leadership will be shared on rotational basis. There is no mention of specific date of change of prime minister, but it is again a matter of honesty. Now, KP Oli is the prime minister and no one wants to remove him right now. Even Chairman Dahal has made it clear that there would be no immediate change in government leadership. But we should also remember that the power-sharing deal has a time frame.

The party unification agreement stated that the General Convention would be held within a year of the deal. But is it possible to hold the convention right now?

It is agreed that all things would be settled through mutual understanding until the general convention. The first GC after unification will be held on the basis of understanding between two sides, keeping the spirit of party unification intact. It is not possible to hold general convention within a year so it will be postponed. But all things will move ahead as per the understanding reached during party unification.

In response to the power-sharing deal, some leaders and advisors of PM Oli have publicly spoken of ‘plots’ to derail the Oli government.

I have met friends who are making such remarks. They have one logic and it is justified too .They say talk of power sharing at a time when some forces are trying to weaken the government, including international forces, opposition and bureaucracy, would affect government functioning. But some friends are also publicly saying that there has been no power-sharing agreement and even if there is one, they would not own it. Some leaders say the party would not recognize the agreement between PM Oli and Prachanda. They cannot take such a position and make public speeches. Such irresponsible statements will only lead to a split. We should avoid them to keep the party intact.

What about the ideological differences between the former UML and Maoist cadres?

I think it is clear enough now. There was a lack of clarity over the party’s future course. Two ideological positions have been brought together under the same rubric of ‘Janatako Janabad’.

Oli is concentrating power and his ambition is piling up. What if Oli refuses to hand over government leadership to Dahal?

It is an important question. At the same time, it is very difficult question for us to speak about. KP Oli is the prime minister as well as our chairman. He was elected by the parliament. Even in the party PM Oli is elected. The PM’s success is our success and success of the whole country. So, it is our responsibility to protect him, to support him and help him pursue his projects. I am committed to it.

But I would suggest that he expands his advisory team. Many friends from the party are keen to support him and they should get the opportunity. The leaders who want to support the PM should have an access to him. Even former prime ministers have not been able to properly consult with the PM, and I feel the same. Also, I think the PM is trying to consolidate power in order to smoothen government functioning. But if you concentrate power and yet fail to deliver results, there comes a time when you have to justify such power-concentration. 

How do you evaluate the recent frequency of meetings between your co-chairman Dahal and Nepali Congress President Sher Bahadur Deuba?

The meetings between Dahal and Deuba are not related to government. Dahal would not engage in such childish games. NC, which is in the opposition, is a signatory to the peace process. A big component of this peace process is transitional justice, which is yet to be settled. To settle it, there is a need for national consensus, which is impossible with Congress support. The two have been meeting to settle this issue.

Similarly, there is a need of collaboration with opposition on the issues of development, peace and prosperity. It is natural that the government is reaching out to opposition parties on common national issues. There is no chance of an immediate government change, unlike what Deuba may have been saying following his meeting with Dahal.

The BRI is a multilateral and multi-dimensional economic proj­ect. At its core is seamless and multi-model connectivity. Nepal and Bangladesh should adopt a similar multi-dimensional, mul­tilateral approach. In South Asia, bilateralism is prevailing over mul­tilateralism. Nepal, Bangladesh and the rest of South Asia need to emerge from this bilateral syn­drome and open up to multilat­eral cooperation. The SAARC is a regional cooperation forum but it should now opt for open region­alism and economic cooperation.

SAARC should be connected with ASEAN, BIMSTEC and BCIM. Preferably, SAARC should also be connected with BRI. Bangla­desh wants this. I request Nepal to also advocate open regionalism because it can effectively bring the whole of South Asia closer.

BRI should not be seen only as a project to utilize Chinese capital to construct infrastructures across the world. The concept emerged from China, but it has now become a global initiative to build a new international order based on enhanced development. It can be a means to end poverty—all under a more equitable world order.

Bangladesh takes the pro­posal positively and expects an increasing inflow of Chinese FDI, increased access to the colossal Chinese market and continuous Chinese support in infrastructure development. Bangladeshi exports to China have increased by 40 percent in five years. We South Asians need to develop a consen­sus on China’s role in South Asia and China needs to appreciate our contextual realities. But China will need to avoid the prospect of BRI beneficiaries falling into debt and transfer of capital from the west.

China should structure the terms for the financing of BRI projects so that recipients can sustain the debt. It would be better if China considers restructuring its BRI projects in partnership with host countries rather than push for exclusive loan investments.

The policy of a debt trap will make China an economic loser. If there is partnership, there is no question of a debt trap. In the case of Bangladesh, we have payback capacity and there is no burden on our economy. There is no issue of a debt trap. China is engaged with all South Asian countries. The challenge for China is to ensure equal benefits for other countries, and not just look after its own ben­efits. Conversely, the challenge for South Asian countries is to prevent China from excessively exploiting them. To that end, they need to develop their own countries and to diversify their relations.

We need to develop South Asia into an economically united region. To achieve this, countries should move beyond old para­digms, build trust and engage in meaningful and mutually bene­ficial ways. There is a tendency among countries here to seek and maintain extra-regional allianc­es to balance and contain each other. But I expect this tendency to diminish.

(Last week, experts from South Asia and Southeast Asia were in Kathmandu for the ‘Fourth international Conference on Belt and Road for the Development and Prosperity of South Asia’. This article is based on Kamal Dev Bhattarai’s discussions with senior Bangladeshi politician and former Minister of Information Hasanul Haq Inu.)

Records with the Ministry of Foreign Affairs (MoFA) show that between 1960 and 1990 (i.e. during the Panchayat era), Nepal used to exchange frequent high-level visits with countries other than India and China. But such exchanges started petering out after the 1990 political change.

Data from the past two decades clearly show that Nepal’s high-level engagements have been confined to its two immediate neighbors, and that they have mostly been one way. In this period, there have been frequent high-level visits from Nepal to India and China, but fewer reciprocal visits to Nepal. High-level visits from India to Nepal have increased in the past couple of years, but such visits to Nepal from China have become rarer.

During the Panchayat regime, the kings tried to visit as many countries as possible. Such trips were aimed at garnering more development aid. The monarchy made efforts to reduce Nepal’s dependence on India and China for development needs.

Political parties agree that Nepal needs to diversify its bilateral relations beyond India and China, and that a stable government with a five-year mandate has opened a window of opportunity. The KP Oli-led government too has been trying to develop a narrative that it is diversifying its foreign relations. But there is little substance to back it up.

To meet the aspiration of graduating to a middle-income countries by 2030, Nepal has to maintain seven to eight percent annual growth. This calls for massive investment. Nepal needs an estimated $8 billion annual FDI inflow to graduate to a middle-income country in the next 10 years or so.

Money matters
One of the major factors that prompted the Oli government to diversify external relations is to bring in more foreign aid, much like what King Mahendra did in the 1960s and 70s. After the government was formed last year, Oli had expected a high volume of investment from India and China for infrastructure development. But except regular bilateral support, such investment did not materialize. During Oli’s state visits to India and China, no big economic package was announced; the focus was on completing pending projects. There was a time when its two big neighbors competed to provide more development aid to Nepal—but no more.

This led the Oli government to look beyond the immediate neighbors to the meet the country’s development needs. “We require massive investments in infrastructure development and advanced and innovative technology, for which our domestic resources are insufficient. We need the international community’s support and cooperation to fill the resource gap,” Foreign Minister Pradeep Kumar Gyawali is quoted as saying in his ministry’s website.

Foreign policy experts, however, say that while diversification is important, Nepal cannot overlook the roles of its neighbors for its economic development and prosperity. “Obviously we should broaden our foreign policy, but India and China are still the key to our economic development. Unfortunately, we haven’t been able to identify our priorities and define key national interests,” says Sundar Nath Bhattarai, Founder President of the Association of Former Career Ambassadors of Nepal.

Other foreign policy observers also think the new government has tried to diversify foreign relations, but without serious homework and without identifying priority areas. Visiting a plethora of countries without a substantial agenda, they stress, does not serve the country’s interest.

After taking charge of office, Oli has gone on eight foreign visits (see box). Attracting foreign investment is always a top priority of these visits. But the prime minister has not been able to draw investment from the countries he has visited in this period. “We should assess success on the basis of outcomes, not the number of visits,” says Bhattarai.

PM Oli’s foreign visits
- Europe: June 8-16, 2019
- India: May 30-31, 2019
- Cambodia and Vietnam: May 9-15, 2019
- Switzerland (Davos): 20-26 Jan, 2019
- Costa Rica: 27 September, 2018
- UNGA (New York): 22 Sept-3 Oct, 2018
- China: June 19-25, 2018
- India: April 6-8, 2018

Eggs in many baskets
Besides PM Oli, Foreign Minister Gyawali has also visited a number of countries and attended several bilateral and multilateral forums. In December last year, he visited the United States and held bilateral talks with US Secretary of State Michael R. Pompeo. Earlier, in November, Gyawali had visited Japan. In a gesture of reciprocity, Japanese Foreign Minister Taro Kono visited Nepal the following month. These visits carried some weight as such visits had not taken place for a long time.

Europe was a good choice in terms of economic diplomacy, but PM Oli’s visits to the continent have come under scrutiny for a number of reasons. First, every visit of a head of government or state is either a ‘state’ or an ‘official’ visit. But PM Oli’s visits to the UK and France were designated as ‘formal’, in violation of established diplomatic practice.

Second, no bilateral agreements were signed during Oli’s visits to the UK and France. After India, the European Union is Nepal’s second largest trade partner, and Nepal has old ties with Britain and France. But Oli’s visits were marred by a lack of preparation. He could not meet the British monarch and no formal ceremony was organized for him. (Oli did meet Theresa May, but she had already resigned as prime minister.) In France also, Oli could not get an audience with President Emmanuel Macron. Nor was any substantial agreement signed to bring in investments. “In terms of investment and economic cooperation, European countries matter a lot for us, but merely visiting them would not yield the desired benefits,”
says Bhattarai.

That a Nepali prime minister visited Britain after 17 years was possibly the only positive feature of Oli’s trip. Prime Minister Sher Bahadur Deuba had officially visited the UK in 1996 and 2002, while Prime Minister Girija Prasad Koirala had visited France in 2001. In 1994, King Birendra had paid a state visit to France while he undertook an unofficial visit to the same country in 1989.

Earlier, PM Oli had visited Vietnam and Cambodia, which also drew flak on the grounds that Nepal does not have strong economic and diplomatic ties with them. “Foreign policy is not an area for adventures... In fact, diversification is a wrong word in international relations. Foreign policy is not an arena where you look to ‘diversify’, but to promote your national interests,” said former Foreign Minister Ramesh Nath Pandey in a recent interview with APEX.

Constantino Xavier, a fellow at Brookings India, a think tank in Delhi, is more sympathetic to the Oli government’s attempts at diversification. “Post-Wuhan, with China and India cooperating again, Nepal’s scope to play off its two neighbors has reduced,” he told APEX. “Diversification of relations under PM Oli in recent months is giving Nepal more options, especially beyond the great power competition between China, India and even the US
and Japan.
Xavier thinks that with political stability at home, and new ambassadors finally in place, the Oli government has greater incentives to expand relations with more countries, especially in Europe, Central and Southeast Asia. “The EU and multilateral organizations like the Asian Development Bank can play an important role in diversifying Nepal’s development options,” he says.