Caravan of Dzo yak in the Nepal Himalaya. The yak a long-haired bovid found throughout the Himalaya region of south Central Asia, Tibetan Plateau and Mongolia. Photo: iStock

The recently concluded second Belt and Road Forum for International Cooperation (BRF) aimed to project China’s image as the champion of the new globalization. Delivering his keynote address at the opening ceremony of the BRF, Chinese President Xi Jinping called for cooperation and contributions from all stakeholders to obtain shared benefits from the Belt and Road Initiative (BRI). The BRF summit was an ideal opportunity for China to pitch the benefits of the BRI at a time when accusations against it from certain countries are on the rise. Covering a wide range of issues from connectivity, trade and economics to multilateralism, sustainable development, green development and Chinese reforms, Xi tried to convince the world that the BRI was not aimed at serving China’s interests but rather creating a win-win situation for all stakeholders that are part of the venture.

President Bidya Devi Bhandari represented Nepal at the BRF. Speaking at the forum, Bhandari elaborated on the shared benefits of BRI and how crucial it could be for the socio-economic development of a landlocked country like Nepal. The inclusion of the Nepal-China Trans-Himalayan Multi-dimensional Connectivity Network, including Nepal-China cross-border railway link, in the annex of the joint communique issued at the end of the summit signaled the desire of both the sides to realize that connectivity was the single most important factor in the Nepal-China BRI equation. Commencing her state visit after the completion of the summit, Bhandari held bilateral discussions with Xi which saw the signing of the protocol to the agreement on transit-transport between the two governments. The signing of this protocol, albeit after much delay, is a milestone in Nepal’s history as it has paved the way for landlocked Nepal to use four Chinese seaports and three dry ports.

Due to geographical considerations, Nepal has been dependent on India for its trade and transit activities. The Indian economic blockade of 2015 was a lesson to the political leadership that the diversification of trade and transit was in the national interest of Nepal. The signing of the protocol and the desire to establish a cross-border railway link is definitely a welcome step but there are several challenges that Nepal needs to navigate in order to realize the goals.

Connectivity is by far the most important aspect of trade and transit. A railway link up to the border town of Kyirong in Tibet is expected to be completed by China in a few years’ time. A feasibility study on extending the link up to Kathmandu has estimated the construction cost to be close to $3 billion dollars and the completion time to be eight years. Detractors of the BRI are trying to fend off potential BRI partners by claiming that it will ultimately lead to a “debt trap.” Xi has stressed time and again that the BRI does not intend to establish Chinese hegemony around the world but it is rather an initiative to establish a world order based on shared prosperity.

Nepal cannot afford to construct the railway link on its own. It is highly unlikely that China will build it on a grant for Nepal. Unless the modality of financing the project is finalized, it will be futile to talk about its benefits. Nepal will really have to be at its diplomatic best during negotiations with the Chinese side to extract a favorable outcome in this regard. Nevertheless, the most positive aspect of the signing of the protocol is that it has opened the door to new possibilities and given Nepal room to maneuver in terms of trade and transit. It has also instilled a belief in the minds of the Nepali people that Nepal will not be “India-locked” anymore if the project sees the light of day.

Nepal’s sensitive geopolitical neighborhood dictates that it has to tread a very careful path in its BRI journey. India has shown no sign of wanting to join the BRI anytime soon. China’s gradually increasing influence in South Asia has made India all the more suspicious of its intentions. Therefore, in spite of the improving economic relations between the two countries, their differences at the strategic level are unmistakable. Conspicuously absent from the list of economic corridors under the BRI published at the BRF was the Bangladesh-China-India-Myanmar (BCIM) corridor, which otherwise had been part of the initiative until recently.

The US has been trying to persuade Nepal to renounce the BRI and become a part of its Indo-Pacific strategy

The US has been trying to persuade Nepal to renounce the BRI and become a part of its Indo-Pacific strategy. Nepal seeks to maintain cordial relations with all its major friends and development partners around the world. However, it would be immature to expect Nepal to not be sensitive to Chinese concerns and wholly embrace the US. There seems to be a feeling among Indian policymakers and scholars that due to its sheer geographical and economic magnitude, the construction of the Nepal-China railway link is a long way off. While China has envisioned Nepal as the “gateway to South Asia,” India would ideally want the door to remain shut as it has still not gotten over its late prime minister Jawahar Lal Nehru’s Himalayan frontier theory.

It is likely that China will take a measured approach to dealing with Nepal with regards to financing projects under the BRI. Nepal should clearly understand that the functioning of the BRI is not based on Chinese grants. Therefore, Nepal needs to be cognizant of the fundamental bearings of the BRI and act accordingly. Chinese goodwill toward Nepal was highlighted when Xi mentioned to Bhandari that China was ready to help her government achieve its “Prosperous Nepal, Happy Nepalis” development goal. There is no doubt that Nepal should carefully examine the pitfalls of the BRI, but there is also no denying that it has the potential to accelerate economic development if the Nepali government properly considers how to prioritize, finance and implement projects.

Gaurab Shumsher Thapa

Gaurab Shumsher Thapa is an analyst and writer on topics related to international relations. He is the president and managing director of the Nepal Forum of International Relations Studies (NEPAL FIRST).

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