February 19, 2016 Sujeev Shakya

India-Nepal Relationship Mishap

The India-Nepal relationship has always had a bumpy ride ever since the two countries signed a treaty in 1950 that assisted the puppet Shah Kings to assume power; thereby disposing off a 104-year regime of the Rana Prime Ministers. While the border towns share a special social and cultural relationship with nearly seamless integration of trade and business, the relationship between Delhi and Kathmandu has always been overshadowed by suspicion. It remains hard for Nepalis to believe that India has a hands-off policy in regard to Nepali politics when India continues to intervene in different ways, despite failing to understand the pulse of things on the ground. The reliance on intelligence services above diplomatic and track two efforts has always brought about a policy prescription that does not suit the reality. In Nepal, every while every politician has whipped the anti-India sentiment in public, at the same time they are seeking personal favors with India. This hypocrisy has impacted the credibility of Nepali leaders as they are seen to be supported by India in private, despite their anti-India stance in public. The fact that the Maoist leaders who raged a ten-year insurgency in Nepal, were living in India at that time perhaps also demonstrates the complexities in understanding the bilateral relationship.

Modification Of Relationship

In August 2014, Prime Minister Narendra Modi visited Nepal as part of his neighborhood first policy. An Indian PM was on Nepali ground after 17 years on an official visit, wherein he received great hospitality from the people of Nepal. He reciprocated with sense of confidence on how India viewed Nepali sovereignty with key popular references of Buddha being born in Nepal and Mount Everest being in Nepal. He was also clear that Nepal’s water belonged to Nepal and India was only willing to work together. Transport treaties were signed that saw a surge of Indian tourists traveling by road, and Project Agreements were signed for two hydroelectric power projects. The Indian PM also pledged a $ 1 billion credit line. When PM Modi returned in November to attend the SAARC Summit, Nepalis again saw him as a global leader who was willing to help his neighbors. The quick Indian response post Nepal earthquake for relief and commitment of $ 1 billion for reconstruction further solidified this view. June 2015 was perhaps the high of Nepal-India relationship.

Blockade Begins

Nepal promulgated its constitution on 20 September 2015 therefore ending one of the most expensive processes both in terms of time and resources. While the constitution was promulgated with overwhelming majority of the Constituent Assembly, issues on rights of women, representation and demarcation of federal provinces were controversial. India disapproved of this constitution and since 22 September 2015 restrictions have been imposed on movement of petroleum products and other essential goods from India. As per international norms, India is supposed to provide uninterrupted movement of goods destined for Nepal for it being a landlocked country. It is not sure what prompted India to make such a move but two months after the imposition of the blockade (that officially is not accepted as one) Nepal is reeling under an economic crisis. The economic impact of the blockade has far outweighed that of the earthquake with economic growth being projected to grow negatively at 0.8% for 2015-16 compared to the 4.5% growth; revised downwards to 3% post-earthquake. In the last five months, Nepal-India relationship has plummeted to new lows, something that can be compared with the mid-1970s when Sikkim was annexed and the then Prime Minister of India was very upset with the then Nepali King Birendra and his idea of Zone of Peace.

Going Ahead

The unfortunate plummeting of the bilateral relationship to new lows blankets the opportunities that were being explored in rekindling the Nepal-India relationship and taking trade through the free movement of goods, services and people to another level. The new economic bloc of Bangladesh, Bhutan, India and Nepal (BBIN) and BIMSTEC provided the larger framework for the bilateral relationship to be redefined that needs to be continuously pursued, even at the cost of India accepting in private that it did mess up this time as it has done so many times in the past.

Since the capitals – Delhi and Kathmandu largely define bilateral relationships, they are often far removed from the issues of the people in the border towns. Relationship between the Indian states and Nepali institutions also need to be strengthened. The key is therefore to ensure that border economics is boosted and benefits the people and the government through more tax revenues. Currently, the blockade has heavily impacted businesses on both sides of the border.

Institutional arrangements are also essential in terms of institutions at both ends working together to guide both governments. It is also important that business organizations and institutions work together; like they have been able to do successfully in the past, to help the two governments improve their relationship. Nepali Ambassadors to Delhi have always been political appointees; and save a few, most of them have limited understanding of what encompasses this bilateral relationship. Similarly, the Indian Ambassadors to Nepal are seen as Viceroys and even their best gesture can be interpreted otherwise. It is therefore important to build a strong track-two mechanisms to help both governments not only do better for its citizens but also avoid mishaps for their respective governments.

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