With PM Oli in Beijing, Is Nepal Slipping Away Into China’s Arms?

Video Editor: Prashant Chauhan
Camera: Shiv Kumar Maurya

Nepal has traditionally been close to India, sharing strong cultural and geographical ties and open borders. But since about 2015, that goodwill has been eroding – 2015 is when Nepal really began looking in Beijing's direction.

Madhesis are a Nepali people with Indian ancestry who live near the Indian border. They alleged that the Nepali hill elites were discriminating against them in framing the Constitution, and widespread protests erupted, in which over 40 Madheshis were killed.

But India's intervention had been clumsy – it came too late and sent mixed messages. The situation turned nasty when the Madheshis imposed an economic blockade, halting crucial supplies to Nepal just months after the earthquake that crippled the economy.

Nepal accused India of unofficially backing the move in retribution for the Constitution, something India still denies.

Now PM KP Oli, Nepal's pro-Beijing leader, is looking to China to fill the space vacated by India... and China is only too happy to oblige. Here's how:

Hydropower

Nepal's previous India-friendly government had scrapped the $2.5 billion contract for the 1,200 MW Budhi Gandaki hydropower project, citing financial concerns and saying it had been signed "recklessly" and "shadily" with the Chinese company – reportedly to ease New Delhi's concerns. But in his first interview since coming to power, Oli promised to revive it. While an Indian company still has the contract for Nepal's largest capacity project, Budhi Gandaki's revival means that after the blockade, Nepal, at least under Oli, is less willing to put all its eggs in the India basket.

Foreign Aid

In 2015, in addition to the perceived economic blockade, Nepal was reeling from an earthquake. China took the opportunity to make its move. Though India sent massive amounts of aid in the immediate aftermath, China made up the rear with enormous investments in infrastructure. As of 2016, New Delhi had slipped out of Nepal's top 5 donor countries, and China overtook.

One Belt-One Road (OBOR)

In May 2017, Nepal signed a Memorandum of Understanding on the framework agreement for One Belt-One Road (OBOR), a Chinese effort to create trade and security linkages across the region. India refuses to join it, saying OBOR impinges on its sovereignty by passing through territory India considers its own. Nepal had held out of OBOR all this time... until it decided it was time to join up, just days after its very first bilateral military exercises with China.

Nepal has historically aligned with India, not China – but India is proving woefully unprepared for the Chinese diplomatic push, both in Nepal and in the rest of its neighbourhood.