Surviving Complex Geoeconomics

 A small state has many problems. Any Least Developed Country (LDC) has additional challenges. And, a landlocked country has further domestic and international issues like high production and transit costs. Unfortunately, Nepal is all of them. On top of that, it has two large neighbours that are also among the largest global economies with a combined 2.8 billion population, about 36 per cent of the world. This small Himalayan nation fits the adage coined by the late king Prithvi Narayan Shah – a yam between two boulders, which indicates its delicate nature since the growth of the yam is restricted by the boulders.

But it's time for Nepal and its giant neighbours to change the way of thinking and redefine the country's identity along with the changing the world and regional geopolitics. Touted as the Asian century, when China and India's rise in global economy and politics is rather rapid and contestations between the United States of America and China, as well as China and India, are on the rise, Nepal is under pressure to join either force against its long celebrated non-aligned policy or 'balanced neighbourhood' policy. 

Meanwhile, it is trying to shed off its image of a 'yam' and adopt a polity of a 'bridge' that would facilitate increased connections and exchanges between India and China through Nepal transit. At the time, it had also tried to use China as a counterweight against India or vice versa. 

The country's foreign policy and strategy are not coherent and it gets twisted according to preference and at the whim of the party in power, with the communist parties exerting affection to the northern and Nepali Congress to the southern neighbour. This is explicitly exhibited at the project execution level, for example, the Budhi Gandaki Hydroelectricity Project has been ping-ponged between the two countries. However, Nepal has long failed to tap the development potential and strike a deal that would benefit the country while people feel that India has deceived Nepal in bilateral project development in Koshi, Gandaki and Mahakali rivers. 

'Gaida's dance with tiger and dragon', a book published by Friedrich Ebert Stiftung (FES) and edited by Chandra D. Bhatta and Jonathan Menge, is the latest treatise that discusses the redefined relations of Nepal with its immediate neighbours. 

As the editors have summarised the write-ups included in the book, relations have new fields of contestation propelled by the trade war between China and the USA, border confrontations between India and China, Millennium Challenge Corporation (MCC)'s a grant to Nepal and the Indo-Pacific Policy (IPS) of the US, and complexities and conspiracy theories funnelled up during the COVID-19 pandemic. 

Being a Least Developed Country, Nepal needs foreign support for development financing as well as management of crises like the earthquake and pandemic. 

However, the US grant for infrastructure development was pushed into controversy as the interest groups try to define it in the light of IPS against the Belt and Road Initiative (BRI), a concept of Chinese President Xi Jinping. 

The book aptly warns that while the rise of China has forced the US to intensify its manoeuvres around South Asia and South-East Asia, Nepal must try to cater to its national and development interests without falling into the ambit of either force. According to the book, while Nepal cannot ignore its neighbours, ignoring the West would dampen its developmental activities. 

Therefore, it will be important to align the country's foreign policy with national interest and find ways to tame foreign interests in a way that supports the country's developmental ambitions. 

Given the newly sprouted challenges of the new geopolitics and economic dependence, Nepal should revisit its foreign policy. The book also suggests a balance between the two neighbours while redefining its relations with the West – as a development partner. 

The book has four sections where 11 experts have analysed the country's situation and prospects in historical, economic, developmental and diplomatic dynamics as well as the situation of central Asia's landlocked nations. Achyut Wagle, Madhu Raman Acharya and Jagadish C. Pokharel have analysed Nepal's relations with their immediate neighbours and other development partners where they have suggested various tools and policies that serve the national interest. 

Wagle's article helps to understand the political economy and intentions behind the aid, trade, transit, water cooperation, foreign direct investment and humanitarian support by China and India to Nepal. Likewise, the late Dhruba Kumar and Geja Sharma Wagle have contributed to the theme of national security. Dhruba Kumar's insights will surely amaze readers when he says: 'Incisive and timely moves in dealing with challenges are the prerequisites of hardheaded strategic diplomacy. Nonalignment as a holy grail of foreign policy will not be enough to secure Nepal's place in the new strategic calculus.' 

Nihar R. Nayak, Lila Nyaichyai and Indra Adhikari have analysed the complexity of Nepal's relations with India and China. Similarly, other must-reads are 'How small is a small state?' by Ananda Aditya and 'Navigating renewed geopolitical rivalries' by Mendee Jargalsaikhan. 

Stating that Nepal is one of the least conflict-prone states in one of the most violence-prone regions in the world, even if a substantial part of the country's population remains militarised, Aditya puts great efforts to convince the readers that Nepal is not a small country, and offers pragmatic solutions to fuel hopes for development and prosperity. Likewise, Jargalsaikhan's article can offer to learn about Nepal from the experiences of Mongolia, a landlocked country in Central Asia with a similar geopolitical situation with two large neighbours – Russia in the north and China in the south – and the US interests in it. Nepal can learn a lot from Mongolia's 'Third Neighbourhood Policy' framework. Nargiza Muratalieva tells the tale of a crumbling hegemonic order in central Asia.

The book is worth reading. It will certainly guide policymakers, diplomats and those who have interests in diplomacy, international aid, political economy, security and development.  

Published in The Rising Nepal daily, Friday Supplement, on 3 June 2022.