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Nepal: Caught Between China and India

March 3, 2010

By Jyoti Thottam / New Delhi
Time Magazine
March 2, 2010

Nepal may be most famous for its majestic
Himalayan peaks, but much of the country is a
vast stretch of plains, the terai, which have
long been underdeveloped and largely ignored by
the two powers on either side. No longer. India
has just launched a plan to spend $361 million
over the next several years on roads and rail
links in the terai, announcing the grants just
before Nepali President Ram Baran Yadav made his
Feb. 15 official visit to New Delhi. China,
meanwhile, recently increased its annual aid to
Nepal by 50% to about $22 million.

The money is certainly welcome in Nepal, which
has the lowest per capita income in South Asia.
But the jockeying for influence between China and
India may be undermining Nepal's fragile
democracy, as the country's 24 political parties
trade charges of being pawns of one or the other.
Even a tiny royalist party, supporters of Nepal's
deposed King Gyanendra, have gotten into the act,
staging a rally in Kathmandu on Feb. 22 that shut
down the capital for a day. Meanwhile, the
parties are debating complex constitutional
issues, including a proposed federal system of 14
ethnicity-based states. Nepal's interim
constitution will expire on May 28, and if its
politicians cannot agree on a new one by then,
the constituent assembly will be dissolved, new
elections will be called and, many observers
fear, the country will enter a period of deep
uncertainty. Says Nihar Nayak, a researcher with
the New Delhi--based Institute for Defence
Studies and Analyses: "They are moving toward a political crisis."

India, for its part, maintains that it has always
had a "very deep and vast relationship" with
Nepal based on its shared cultural ties. Both
countries have a majority Hindu population, and
they share millions of cross-border migrant
workers. But the character of that relationship
has changed. India used to engage Nepal only at
the highest levels, in meetings between
bureaucrats, ministers and -- until Gyanendra
stepped down in 2008 — representatives of the
King. That has changed dramatically over the last
few years, since Nepal's Maoists came to power in
a 2006 peace agreement that ended the monarchy,
halted a decade-long insurgency and set the
country on the road to democracy. The Maoist
leader Pushpa Kamal Dahal, known as Prachanda,
has cultivated close diplomatic ties with China.
In the meantime, India's government changed too:
the ruling Congress Party severed its
parliamentary alliance with the leftist parties
in 2008, resulting in the closing of a key channel of communication to Nepal.

Recent security concerns, however, have given
India new reasons to reassert itself in Nepal by
investing in infrastructure as well as more
troops on the border. Security experts say that
that jihadist groups in the region exploit the
porous border between India and Nepal, and they
worry that India's Maoist insurgency may do the
same. "That is their biggest concern," says Nayak.

China's main interest in Nepal has always been
led by its concerns over Tibet, which has been
ruled by China since 1950. Beijing's involvement
with Nepal grew much more intense after the March
2008 ethnic Tibetan uprising against Chinese
rule, which deeply embarrassed the Beijing
government on the eve of its expensive Olympic
Games. There are an estimated 20,000 Tibetans
living in Nepal but, with China pushing Nepal to
tighten its border with Tibet, the number of new
refugees reaching Nepal has dropped to about 500
from an annual figure of around 2,500. But it too
has increased its focus on economic ties — trade
between China and Nepal has quadrupled since
2003. This week, China said it would restart the
tourist bus route between the Tibetan capital
Lhasa and Nepal's capital Kathmandu. It had suspended the service in 2006.

The apparent jostling for influence is making
Nepal's tricky politics even trickier. By far the
most difficult issue left unresolved since the
2006 peace talks is the integration of the former
Maoist guerrilla fighters into Nepal's army, a
conflict that led to Prachanda's resignation as
Prime Minister last year. India's military
academies have historically been the training
ground for Nepal's top officers -- the Nepali
army chief graduated from the Indian Military
Academy in Dehradun — so the Maoists have long
claimed, most famously in a fiery speech by
Prachanda in December, that India backs the Nepal
army and wants to restore the monarchy.
Ironically, the influence of India is the one
point on which the former King and the Maoist
former Prime Minister agree. When Gyanendra was
on the throne, he too chafed at any hint of
excessive Indian influence. It may be an
inevitable dilemma for a small country squeezed
between two giants -- and one that Nepal has less than three months to resolve.

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