The Assam Chronicle

News and Views from Northeast India

Modi’s Nepal Visit: Will Restore India’s Clout?

Guwahati, 25th August 2014 (Dr Rupak Bhattacharjee) - In his effort to boost India-Nepal ties, Prime Minister Narendra Modi visited Kathmandu on August 3-4 at the invitation of the Nepalese premier. The Indian prime minister was accompanied by a team of 101-member delegation, including seven ministers, captains of industry, National Security Advisor Ajit Doval and Foreign Secretary Sujatha Singh. Nepal is the second South Asian neighbour Modi visited after Bhutan in June. His visit was part of the new government’s initiative to forge closer ties with the neighbouring nations and aimed at strengthening economic cooperation and rebuild trust between the two countries. A day before the visit, Modi said he looked forward to working with Nepalese leadership to build a “new relationship” by identifying steps to enhance bilateral cooperation in key sectors, including trade and investment, hydropower, agriculture and agro-processing, environment, tourism, education, culture and sports. He said, “I hope my visit will open a new chapter in India-Nepal relations, characterised by more frequent political engagement and closer cooperation across the full spectrum of our extraordinarily broad-based relations, which will serve as a model and catalyst for South Asian partnership for prosperity”. Referring to Nepal as a close friend and neighbour, Modi said, “We have had the privilege of being a leading partner in Nepal’s socio-economic development. We are committed to continue our support to Nepal in its development efforts”.

In the last week of July, India’s External Affairs Minister Sushma Swaraj paid a three-day visit to Nepal to prepare the ground for prime minister’s visit. Swaraj held extensive talks with her Nepalese counterpart and participated in the Third India-Nepal Joint Commission (JC) meeting held on July 26-27 in Kathmandu. The commission is a bilateral institutional device set up in 1987 to oversee the entire gamut of India-Nepal relations and provide input to further strengthen the relations. During her talks with Nepal’s Foreign Affairs Minister Mahendra Bahadur Pandey, Swaraj pledged to harness the hydropower potentials of Nepal and upgrade the relations at the political level. India and Nepal share a unique relationship of friendship and cooperation characterised by open borders and centuries-old people-to-people relations. There are about six million Nepali workers in India. Nepal share a 1,850 km long border with five Indian states—Uttar Pradesh, Bihar, Bengal Sikkim and Uttarakhand. The bilateral relations are governed by the India-Nepal Treaty of Friendship and Cooperation. According to the provisions of the treaty inked in 1950, Nepalese citizens enjoy special advantages in India. The treaty is designed to help Nepal overcome the disadvantages of being a landlocked country. Nepal relies heavily on India for financial and institutional supports and supplies of essential commodities including fuel.     

But for a host of reasons, Indian political leadership did not try to engage Nepal in a meaningful way during the last ten-fifteen years. Observers of India-Nepal relations have pointed out that the Ministry of External Affairs (MEA) left the management of Indo-Nepal relations to a few diplomats. No significant effort was made to inject life into the relations. The recent JC meeting was held after a gap of long twenty three years and Modi’s visit was first by an Indian prime minister after seventeen years. New Delhi had been confronting difficulties to maintain its traditional influence in the neighbouring country following the fall of monarchy in 2008. India’s ruling elites did not pay adequate attention to the changing realities in Nepal for nearly two decades allowing China to spread its tentacles all over the small South Asian country. For the three successive Indian governments—Atal Behari Vajpayee-led NDA (1998-2004) and Manmohan Singh-led UPA (2004-14), Nepal did not figure prominently in New Delhi’s foreign policy priorities. Vajpayee visited Kathmandu in 2002 to attend SAARC Summit while Singh serving two terms as prime minister did not undertake a bilateral visit to Nepal at all. Under such circumstances, there was an urgency felt by the Modi government to arrest Nepal’s further tilt towards China. Modi noted that despite close geographical proximity, it took an Indian premier seventeen years to pay a bilateral visit to Kathmandu. He promised that such mistakes would never happen again.  

Many in Nepal looked at Modi’s visit as a golden opportunity and turning point to reinvigorate India-Nepal relations, expecting “equal and just treatment on matters concerning both nations”. Modi’s visit generated unprecedented enthusiasm among the Nepalese with the media covering the visit extensively. The Indian premier tried to assuage the people’s sentiments in Nepal which is steadily moving towards Beijing despite geographical contiguity, cultural affinity, and economic inter-dependence and shared political values. The visit was keenly watched by Nepali intelligentsia. Sridhar K Khatri, former executive director of South Asia Centre for Policy Studies in Kathmandu remarked, “This is a once-in-a generation opportunity to begin fresh and build a level of trust that needs to be developed to define relations for the next 50 years”. Another factor that added attention to the visit was Modi’s landslide victory in the 2014 Lok Sabha polls. Observers of Indo-Nepal relations maintain that his campaign messages of economic development and good governance worked effectively in the Himalayan nation which has been facing serious economic challenges and crisis of governance for several years.     

The visit also created unusual interest among the wrangling Nepali political elites who accepted the Indian offers to help the country develop hydropower and tourism potentials to their fullest extent. It is interesting that even known India basher like Pushpa Kamal Dahal alias Prachanda—radical leftist leader currently playing the role of opposition in the parliament, has welcomed Modi government’s overtures. Scores of Nepali political parties representing diverse interests have acknowledged the fact that they neither have funds nor technology to tap abundant resources of the country. It may be noted that on July 31, Nepalese Prime Minister Sushil Koirala urged all political parties to take Modi’s visit as the last opportunity to save the country from disaster. Reports indicate that the Indian premier’s visit had a profound impact on the political parties of Nepal. They temporarily sidelined their differences, tried to reach a consensus and discussed the agenda with Modi. Koirala told the Indian media that Indian prime minister’s visit would offer an opportunity to “rebuild trust” between the two neighbours. Referring to New Delhi’s perceived indifference towards Kathmandu, he said, “The fact that there has been no prime ministerial visit for seventeen years to Nepal contributed to the perception of neglect”. The added that the Modi government’s focus on the neighbourhood and realisation that better ties with SAARC countries is essential for India’s own rise is welcome. He further noted, “We hope that Modi will be able to convince Nepalese that India is committed to peace, stability and democracy in the region”.

During his visit, Modi pledged to assist Nepal in various sectors, including hydropower, infrastructure, space technology and agriculture. He announced a $ 1 billion Line of Credit for Nepal’s infrastructure development. The MEA in a statement said that the focus of the prime minister’s visit was 4Cs—Cooperation, Connectivity, Culture and Constitution. During the visit, Nepal and India signed three Memoranda of Understanding. Nepal has sought increased assistance from India in the development of hydropower projects, Kathmandu-Terrai Fast Track Road, Postal Highway, Mahakali Bridge and a cricket Academy. Modi assured Koirala to revive stalled power projects, including building hydropower plants using Nepal’s vast natural resources and Indian investment. Nepal’s Finance Minister Ram Sharan Mahat said the two leaders agreed to push the currently-stalled 900-mw hydropower project on Karnali River. The joint venture project signed between Nepal and Indian Infrastructure Company GMR in 2008 would be approved and signed within 45 days.

Indian companies are ready to sign agreements with Nepal to generate hydropower. Companies like GMR Consortium and Sutlej Jalavidyut Nigam are keen to move ahead once the agreement is signed. At present, GMR is engaged in the building of 900-mw Upper Karnali Hydropower Project and 600-mw Upper Marsyangdi 2 Project and Sutlej is developing 900-mw Arun Third. Modi added new momentum to the pending 5600-mw Pancheswar Multi-purpose Project on the Mahakali River by agreeing to amend the terms of reference of the mega project signed between the two countries in 1996. Reports suggest that a Pancheswar Development Authority would be set up and a detailed project report would be finalised within a year. Modi assured Nepali leaders that the work on this project would begin soon. After several years of negotiations, work on this joint venture project has not started. He added that Nepal could earn huge revenue by selling power to India. Both the premiers also directed the concerned authorities to conclude negotiations on the Project Development Agreement between the Investment Board of Nepal and GMR of India for the development of Upper Karnali Hydropower Project and a Power Trade Agreement within 45 days.   

Slow progress of the joint venture projects has led to lot of resentments in Nepal with some political parties started questioning India’s credibility as a development partner. Reports suggest that India-Nepal joint venture projects such as road construction in Terrai, building of check post at Birgaunj and Raxaul and Biratnagar and Jogbani, rail link projects from Jogbani to Biratnagar and Jaynagar to Barbidas, and trauma centre in Kathmandu—all these schemes crossed several deadlines for completion. This has resulted in the creation of a negative perception among ordinary Nepalese about India. Nepali political parties left no opportunity to derive political mileage out of India’s perceived neglect. India’s foreign policy experts and former diplomats have pointed out that chronic political instability in Nepal has been India’s primary concern. The country had five prime ministers in the last five years. They maintain that several joint ventures could not be completed in the stipulated time-frame due to political uncertainty that had been looming large over the impoverished nation. A former Indian diplomat observes, “Implementation of large-scale projects remained stalled in Nepal mainly due to the political instability there. From 2001 onwards, a political uncertainty had been continuing in Nepal”.    

However, at the same time, lack of political will and lethargy on the part of successive Indian governments has also contributed to India’s loss of leverage in the neighbouring nation. A former Indian ambassador to Nepal remarks, “We have been tardy in implementing the projects in Nepal, as we are even domestically. We have to follow different models of project implementation for different countries. The best way to go forward will be to get on the run on the river projects”. According to a report, Modi pledged to assist Nepal in the construction of a multi-lane motorable bridge over Mahakali river at Mahendranagar, which will allow traffic along the East West Highway to cross over the Mahakali River and establish a crucial trade and transit linkage between the far western region of Nepal with Uttarakhand, Uttar Pradesh and Delhi. The Modi government also assured the Nepali side that it would consider construction of motorable bridges in the border points at Jhulaghat and Darchula.

One of the most significant aspects of India-Nepal relations is bilateral trade. India is Nepal’s single largest supplier of fuel and its largest trading partner. New Delhi accounts for 47% of FDI in the country. Bilateral trade between the two nations stood at $ 4.7 billion in 2013-14. During the recent bilateral talks, Nepal asked India to increase FDI, relax non-tariff measures and allow greater market access for its products to bridge widening trade gap. In 2013-14, India exported to Nepal worth $ 3.58 billion whereas the imports were only $ 526 million resulting in a trade deficit of approximately $ 3 billion. The Nepali officials requested India to ease duties on its products including ready made garments, copper, brass utensils and other products. The Indian government assured Nepal to consider its requests and reiterated that the problem of trade deficit could be resolved to a large extent by development of hydropower in Nepal and export of surplus power to India.

There is also an important security dimension of India-Nepal relations. During the visit, New Delhi sought assurance from Kathmandu that its soil would not be used for anti-Indian activities. The porous Indo-Nepal borders have emerged as a hub for terrorist acts, trafficking in women and children, smuggling of small arms, narcotics and electronic items and different transnational crimes. Pakistan’s notorious intelligence agency ISI takes advantage of the open-borders to foment trouble in the restive North Eastern region. Its nefarious designs to destabilise the economy by pumping fake currency notes into India generally takes place through the Indo-Nepal borders. Nepal has long been considered as a safe heaven for terrorists and international criminals. Besides, it is no more a secret that Indian Maoists maintain close relations with their Nepalese counterparts and often use the porous borders for transhipment of arms and ammunition.

The highlight of the Indian prime minister’s visit was his speech in the constituent assembly of Nepal. Modi was the first foreign leader to address the joint sessions of constituent assembly-cum-parliament. In his 50-minute speech, Modi shared his thoughts with the Nepali parliamentarians on a number of bilateral issues and domestic challenges facing the neighbouring country. Modi reiterated India’s commitment to help Nepal in its development endeavours and vowed to take the bilateral relations to a new height. He said, “… I am eager to take the relations between India and Nepal to a new height during my tenure as prime minister”. He described the Indo-Nepal relations as “older than the Himalayas and Ganga”. In his bid to boost economic ties between the two nations, Modi said, “Nepal can free India of its darkness with its electricity….We do not want free electricity, we want to buy it. Just by selling electricity to India, Nepal can find a place in the developed countries of the world”. While emphasising the importance his government attaches to Indo-Nepal relations, Modi coined a term—HIT which means Highways, Infoways and Transways for accelerating the pace of Nepal’s economic growth, improving transport infrastructure and connectivity and expanding people-to-people relations.

Modi also assured the Nepali leaders that India do not want to interfere in the internal affairs of their country. He made it categorically clear that India has no intent to “dictate” anything to Nepal which should choose its own course in the endeavours to build a stable and prosperous republic. During his meeting with Koirala, Modi reinstated that the ongoing peace process in Nepal is purely an internal matter and should be concluded according to the requirements of the country. It is a sensitive issue in Nepal and most of the political parties perceive that India has interfered too frequently in the domestic politics of Nepal. Modi reiterated the point while addressing the joint session of the assembly. He noted, “Nepal is a truly sovereign nation. We have always believed that it is not our job to interfere in what you do but to support you in the path you decide to take”.

During his speech, Modi urged the Nepali leaders to work together to break the deadlock over drafting a new constitution. Nepal has been struggling for more than five years to draft a new constitution. Nepal’s premier Koirala sought India’s “moral and political support” for the constitution writing process. But Modi refrained from offering suggestion to the Nepali law makers on this question. The political leaders of Nepal are yet to resolve some key issues like nature of the federal framework of the government, future political system of the country—parliamentary or presidential and status of religion in the polity. He said, “My work is neither to give directive nor to interfere with your work in Nepal….because Nepal itself is a sovereign nation”. While stressing on the importance of a constitution in the nation’s political life, he told the parliamentarians, “A constitution always unites, it never divides…. A constitution is not merely a book….it integrates the past, present and future”. Reports indicate that he did impress more than 600 parliamentarians through his speech. A Nepali daily noted that his speech had won millions hearts too. The daily wrote, “The speech which could be described as level-headed and delivered with compassion seemed very mindful of Nepali sensitivities, which was visible not only at the cultural front but also at the political level”.   

Despite all such efforts, anti-Indian sentiments still persist among a sizeable segment of the society, particularly the radical leftists who try to derive ideological comfort by advocating closer ties with China—the strategic competitor of India. A section of Nepali analysts believe that Modi’s attempt to woo Nepal is primarily driven by “economic pragmatism” rather than old solidarity. A major irritant in Indo-Nepal relations has been the Treaty of Peace and Friendship signed in 1950. The treaty is seen as unequal by a section of the population in Nepal. Some political parties, including the Maoists, have been demanding its abrogation for quite some time. Many Nepali commentators and political leaders have pointed out that the treaty had been violated several times in the recent past. It may be noted that the treaty was revised in 2007. During her talks with Nepal’s Foreign Affairs Minister Pandey, Swaraj was reported to have agreed to review, adjust and update the treaty. 

It is true that prior to the August bilateral summit, New Delhi’s engagement with Kathmandu remained low key for more than a decade due to the ongoing political turmoil stemming from ruling elites’ inability to reach consensus on major national issues. Taking advantage of this, China has made rapid inroads into the impoverished landlocked nation by playing the role of a key development partner. While India more or less failed to deliver, China has been consistently engaged with Nepal offering valuable financial and technical assistance. Beijing provided soft loans for building a 750-mw hydropower project, airport in Pokhra, telecommunication facilities and civilian aircrafts, upgradation of roads and construction of dry ports. In 2007-08, China started building a 770-km long railway lire connecting Lasha, capital of Tibet with the Nepalese border town Khasa. This railway project is expected to be completed by 2017. By doing all these, Beijing is all set to gain huge strategic advantage over India. The Asian giant has already succeeded in drawing Nepal into its arc of influence by re-orienting the foreign policy of this country in the post-monarchy period. India’s foreign policy makers believe that Nepal has always played the China card to counter India’s influence on its soil.

Modi, who is reported to be not comfortable with China’s growing presence in India’s neighbourhood, has made concerted efforts to win back the confidence of the Nepalese leaders. He stressed on symbols of Nepali pride and ancient cultural heritage and clarified that by assisting Nepal, India was not extending charity to this country but only fulfilling the responsibility of a bigger regional neighbour. The foreign policy analysts have welcomed the new government’s outreach to the smaller South Asian neighbours by expanding cooperation with them. They maintain that New Delhi must step up its efforts to regain the strategic depth it once enjoyed in the region without antagonising China. The Indian leadership should drive home the point to the immediate neighbourhood that New Delhi accords top priority to South Asia in its foreign policy and intends to build partnership based on mutual trust, respect and benefit. According to a joint statement issued at the end of the visit, “The two prime ministers expressed satisfaction over the excellent state of      Nepal-India relations that encompass a broad spectrum of political, economic and social and cultural ties that are deep-rooted at both government and people’s levels”. Indian premier’s visit has created a positive image of India among the Nepalese. Such optimism was also witnessed before but eventually died down either for Indian indifference or Nepali mistrust. But now there is a real hope that things will be different under Modi. The Indian premier is scheduled to visit Nepal in November this year for the SAARC Summit. It remains to be seen how the governments of both the countries sustain this momentum in the next four months.