Breaking Away from the Zero-sum Paradigm​

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Prof Dr Sambhu Ram Simkhada, Former Ambassador to Switzerland Former Permanent Representative of Nepal to United Nations in Geneva Convener, CNI Think TankProf Dr Sambhu Ram Simkhada
Former Ambassador to Switzerland
Former Permanent Representative of Nepal to United Nations in Geneva Convener, CNI Think Tank

The foreign policy of every country is guided by national interests and priorities. In the context of the growing Nepal-China relationship, it is essential for Nepal to maintain a sound relationship with both India and China in order to ensure success of its foreign policy. For ages, the mountain range of the Himalayas has defined Nepal’s relationship with China. To some extent, our relationship with the northern neighbour has been cultural and traditional. It has also been proximal as well as distant due to the geographical factors. 

The ‘death of distance’ has been cited as the most important characteristic of the 21st Century by prominent thinkers of the world. Due to the rapid advancements in science and technology, the physical distance of barriers no longer exists between the countries. Distance is not a separation, as people now can travel fast to any corner of the world. The increasing air and land connectivity coupled with the melting ice in the Himalayas have made interaction between Nepalis and Chinese easier. Meanwhile, China has started to see that its relationship with South Asia, and particularly with Nepal, is tied not only to its economic development but also to its strategic dimensions. Similarly, the Tibet Autonomous Region is the most important dimension in China’s relationship with Nepal. Because of the increasing accessibility to Tibet from Nepal, Chinese are wary that whatever happens here will affect their national interests and security in some way or another. This is why China has become so keen to further strengthen its relationship with Nepal. 

China seems to have considered Nepal as a potential route for transit and transport. For instance, any disturbance in the sea lanes in the South China Sea can distort its trade with South Asia and the rest of the world. As an export-oriented economy, the country has to ensure that all its lines of export and channels of transportation are always kept open. With its ambitious Belt and Road Initiative (BRI), China is on its way to develop land connectivity with the whole Eurasia region. The country has been building an extensive railway track to reach out to major European cities including London. 

Historically, China feels more comfortable in our good relationship with India.Chinese leaders and top government officials clearly express the importance of strong Nepal-India relations, whereas India is more sensitive to our closer cooperation with China. Nevertheless, the mindset of Indian leaders and bureaucracy is gradually changing. 

Zero Sum Game
The situation of Nepal-India-China trilateral relations cannot be exactly pointed out as a zero sum game. There is still room for clarity required in this regard. In India, there is a serious debate between two schools of thought. One school of thought says that the relationship between large countries is simultaneously cooperative and competitive. It acknowledges that tomorrow India and China can be competitors economically, politically or even to some extent strategically,and says that such contentions need to be "managed competitions." It says war and conflict do not necessarily define the competition between the countries in the 21st century and emphasizes cooperation. On the other hand, the traditional school of thought in India believes in the country’s traditional dominance in the South Asia region. It sees neighbours like Nepal maintaining a stronger relationship with China as a risk to the interests of India. Things are changing and the erstwhile school of thought is gradually gaining prominence.

The Proximity Factor
Proximity makes interstate relations vital. Due to this element, our relationship with India and China carries the utmost importance. On the other hand, proximity also adds complexity and sensitivity to interstate relations. Till now, complexity and sensitivity is bigger in Nepal-India relations. It is primarily due to our higher level of historical, cultural, social, political and economic interactions with India compared to other countries. Nepal-China relations, meanwhile, used to exist more at the state to state levels. The interactions at the citizen level between the two countries used to be much lower due to low level of bilateral trade, people and cultural exchanges, etc. Now, the situation is changing. There is increasing trade, people exchanges and rising Chinese investment in Nepal. Here, Nepal needs to be aware that the complexities and sensitivities in its relationship with China can be developed in the future. 

Foreign policy is all about managing relations with countries. If managed well, it is international assistance, and if mishandled becomes external interference. While Nepal runs its foreign policy, both India and China should be convinced in such a way that its relation with one is not affected by our relationship with the other. The problems in Nepal-India relations which arise from time to time is due to mishandling and mismanagement in foreign policy approaches. Tied by common history, culture, language and several other socio- political aspects, the bilateral relationship of the two neighbours is really magical and beautiful. It is such a relationship where if one side gets hurt, the other feels the pain. But, our political and diplomatic levels aren’t able to understand the depth of this relationship. 

Potentials to Realise
Located between the world’s two most dynamic economies with the biggest markets, there is a readymade access to the markets available for Nepal for all types of goods and services. Capitalising on the opportunities is challenging. Increasing economic productivity by boosting agricultural and industrial activities is a precondition. The current lethargic and manpower exporting activities won’t take Nepal anywhere near the benefits that can be derived from the available economic opportunities. The mostly underutilised duty-free-quota-free (DFQF) access for more than 8,000 Nepali products which China has been providing to Nepal since 2009 is an example in this regard. In the meantime, we also need to work with the view that our trade deficit with China does not sky rocket like with India in the future. Percentage wise, Nepal’s trade deficit with China is much higher than India. 

Similarly, our focus should also be on tourism sector development. In recent years, China has become the biggest tourist source country in the world. Currently, the European and American tourism markets rely on Chinese visitors. In August 2000, I went to China for a 10-day official visit when I was Nepal’s ambassador to Switzerland. During the welcome dinner organised on August 10, Yang Wenchang, the then vice minister for foreign affairs designated Nepal as the ‘9th country of Chinese Tourist Destination’. But we weren’t able to utilise such an opportunity. Now the government needs to focus on developing tourism infrastructure alongside making the cities clean and ensuring the availability of amenities, goods and services that the tourists seek. Whether it is tourism or investment, China has been leaving its large footprints the world over. The country has become the biggest investor in the African continent. Also, in developing intermediate and adaptive technologies like solar power, China is advancing rapidly.

It is quite difficult for a country like Nepal to source technology from developed nations. A separate policy is required to benefit from such transfers. First we need to determine the type of technology appropriate for us and whether China can transfer it or not. The approach for technology transfer should be treated with caution. Technology transfer has become factor of dispute between the countries in global trade. This is one of the biggest issues behind the current trade row between United States and China.

Safeguarding Our Interests
While India and China are ready to construct the infrastructure for railways in Nepal, the management of the railways and movement of the trains should be in our control on our side of the borders.Otherwise, misunderstandings over sensitive issues could arise between Nepal and its neighbours in the future. The proposed Kyirong-Kathmandu Railway is important to China as much as it is significant to us. The country has aimed to access a large part of the South Asian market through this connectivity. Also, the focus of China’s development orientation has been gradually shifting from its highly developed east to the southern and western parts. This drive has led to the start of massive development activities in the Tibet Autonomous Region bordering Nepal. After Tibet is fully developed, the optimum response for demand and supply of goods and services is likely from Nepal. If we can effectively manage our diplomacy, China can develop many of our much needed connectivity and other essential infrastructures in grants. Nepal’s debt servicing is already at 10 percent of the total national budget. It will be quite hard to sustain the debt if its size is substantially escalated as the country’s economic productivity is very weak. 

BRI is very appropriate and useful from our economic and developmental viewpoint. To realise the opportunities, we need to do our homework to find an outlet to the political and strategic dimensions of BRI. There is a need to start serious intellectual discourse to find ways to address the political and strategic fallouts BRI can bring to Nepal. Similarly, Nepal’s focus should also be on the selection of projects. Our priority should be on constructing the projects on grant assistance. If this cannot be achieved, projects with very high level of importance can also be built on loan assistance.The projects must be well managed to ensure that the loan amount is well spent. The issue of ‘debt trap’ particularly arises due to the mismanagement in project development and mobilisation of funds. It is up to us to decide how to productively ustilise the loan money so that there will be no problem in its repayment.  

The 21st Century March of China 
The Chinese system and the European Union (EU) are the world’s two most interesting political experiments in the 21st century. EU has redefined national sovereignty by forging a political and economic union. It has been formulating and practicing common policies for its 28 members, and 18 of them are even in a currency union as the Eurozone. To become a superpower, a country needs economic strength, military might, big geographical size and population. Besides, the country also needs an idea that it follows and others emulate. 

Many people used to think that China would gradually adopt the democratic political system. The idea of China adopting the western style system of governance is based on the misperception of westerners post-1990. Many in the west had thought they could bring China into their political fold like Russia by massively investing and opening up the country for trade and business. It has been proved to be a pipe dream.China has been moving ahead with economic liberalisation and political centralisation. The country’s miraculous economic development is a result of this approach. The 19th National Congress of the Communist Party of China has made it clear that China is no more ready to accept the communist ideology as an underdog doctrine. I think that China will assertively present this as a political and economic model to other countries. Nevertheless, whether or not the policy of economic liberalisation in a strictly controlled political landscape can be a viable option for other nations is a matter that has a big question mark over it. With entirely different political systems and international approaches of our two neighbours, Nepal is entering into a very difficult phase in terms of managing its domestic affairs and foreign relations. We now need very skillful politics and diplomacy to manage our internal challenges and capitalise on the opportunities that exist on both sides of our borders.

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