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The whole of the first half  of October, was consumed by Chinese President Xi Jinping informal summit  to India and thereafter a formal  summit in Nepal,  hogging the media limelight. Just ahead of his visit India had undertaken a massive military exercise on Sino-India border in Arunachal Pradesh,  100 kms from the Line of Actual Control, in an operation called ‘Him Vijay’ 1 which is attributed  as a regular exercise.   Another (un)welcome gesture undertaken by India which had come a week earlier was to restrict Indian universities from tie-up with Chinese institutions 2 .  The Modi-Jinping hullabaloo, ended at Mahabalipuram, in anticipation of  a ‘100 year plan’ for cementing everything that embroils between India and China.

Jinping next halt was in Nepal where quite arguably he was given an ecstatic reception with PM Oli and President BD Bhandari all lined up to a grand red carpet welcome.  This was the first such visit in over two decades. Chinese President Jiang Zemin had last visited Kathmandu in 1996. No doubt India, had tried everything to avert the visit of Jinping to Nepal as India’s External Affairs agency RAW, unzipped its purses 3 to anyhow scuttle the visit but to no avail. Now as India watched in stoic-silence Jinping penned more than two-dozen agreements and memorandums before he left the Himalayan state. The 14-point joint statement from Kathmandu 4 is a telling example that Nepal and China are on their road of togetherness and it won’t be much of a surprise that Nepal would soon enter in CNEC.  However, right now India seem to have taken quite a lead as it has already laid down the 34 kms railway track which would connect Nepal and India as China’s promises are still a long ahead dream.

What can be construed as a ‘wreckage of a maverick ‘ decision of demonitisation (Nov 8, 2016) in India as our economy will take decades to recover from it, but its international dimension, much beyond the purview of our policy makers , in Nepal, is just untapped. The tremors it created in Nepal has left the country permanently skeptical of our moves. Its economy was far more worse hit than ours, as its economy is driven by tourism and remittances from millions of Nepali workers in India. There are about 2 million Nepali workers in New Delhi alone. About 50,000 Nepali students come to India for studies annually and a 100 patients/day enter India for medical treatment.   Countries like Nepal and Bhutan where Indian currency is widely used, were caught completely off-guard. There was an estimated $146 million worthless rupee bills in Nepal 5 with Bhutan claiming to have exchanged 1.2 billion ( USD 16.8) million worth of demonetised  rupees as late as May 2017 6 . It may be known that people in Nepal were rendered penniless as Indian currency is widely accepted in Nepal and where people even keep their savings in the same currency. Despite Modi visiting Nepal three times in last five times, yet there hasn’t been any assurance from Indian side to the Nepali counterpart Oli which has led to Nepal even shunning Indian products.  Oli visited India in May 2019.

The Nepal currency has taken to a massive brunt as it has fallen 22 percent in the past four years. Our failed demonetisation spelled a toll for Nepal. ‘Nepali economy is a 1.6 one. That is, for every impact on the Indian Rupee, Nepal gets hit 1.6 times. The Indian Rupee is informal legal tender in Bhutan and Nepal. There is a free flow of the Indian currency in these two countries. While a mechanism was developed for Bhutan to give back the demonetised Indian currency, for Nepal, there has been no such mechanism. Nepali institutions, including the Nepal Rastra Bank, who has a stock of Indian demonetised bills, are left to believe it is now just a piece of paper’ 7 Notwithstanding, apart from this are  the two border blockades (1989@ 2015) India had imposed on Nepal which have had far reaching impacts on Nepal foreign policy.

However, India’s deft diplomacy is boring its fruition as Imran Khan had to hop to China for twice, since August 5 when India abrogated Article 370 in Kashmir and instead Jinping, even if informally, making a visit to India. This is despite China making noises alongside Pakistan by placing the Kashmir issue on UNSC.  Pakistan is getting isolated by every passing day. Imran Khan has been given a false-pride to mediate between arch rivals Saudi Arabia and Iran by Donald Trump, and thus, Kashmir no longer is making to headlines. The grand show of Modi with Trump at Houston toppled the charts, but skeptics do ask as to how would the next incumbent President of US treat Modi if Trump looses the elections?  Meanwhile, China does not seem to wither out with its machinations in Bhutan, where it was locked in a 72-days stand-off with India at Doklam. India did help Bhutan defuse the crisis but it was only in 2013 when India had cut subsidies on cooking gas and kerosene oil as punishment to Bhutan for cosying-up to China 8 .  Despite India very often acting as a jealous brother ‘China has been reaching out to Bhutan through sports, religious and cultural visits as well as scholarships to Bhutanese students. Its foreign vice-minister Kong Xuanyou made a rare trip to Bhutan’ this year.  China therefore it making considerable inroads in India traditional bastions even in countries like Sri Lanka and Maldives.

What however matters is that India despite millions of its citizens under poverty line, millions going to sleep without food and cloth, millions of children under nourished and women anemic apart from poor infrastructure where every monsoon even large cities like Mumbai and Patna get submerged, yet, with its carrot and stick diplomacy has been able to carve a niche for itself in South Asia where it competes with Dragon whose stupendous rise is even a scourge to US. As of now the Elephant has very ably given a silent burial to its nearby Frankstein (Kashmir) and no doubt when Nepal Finance Minister Gyawali gave a smiling approval to US Pompeo, to become a part of Indo-Pacific-Strategy ( on Dec 18, 2018) 9  it led to Beijing get into a spree and landed Jinping in Kathmandu.

It be nobody’s guess that South Asia is likely to become quite a diplomatic battleground in near future, between the Dragon and Elephant, as meetings between China and Bhutan are already underway to resolve the Doklam border dispute. 10

The writer is a lawyer, journalist and former UP State Information Commissioner. 

  1. ( https://www.scmp.com/week-asia/opinion/article/3032337/india-diplomacy-china-flows-through-barrel-gun
  2. https://www.scmp.com/week-asia/politics/article/3031454/india-restricts-universities-tie-ups-chinese-institutions-just
  3. http://telegraphnepal.com/nepal-the-raw-republic/)
  4. https://mofa.gov.np/joint-statement-between-nepal-and-the-peoples-republic-of-china-2/)
  5. (https://www.reuters.com/article/nepal-india/nepal-pm-to-press-india-for-banned-currency-swap-idUSL4N1RH2CN)
  6. https://www.scmp.com/week-asia/geopolitics/article/2185468/how-indias-neglect-drives-nepal-chinas-outstretched-arms).
  7. https://kathmandupost.com/opinion/2018/10/09/falling-rupee
  8. (https://www.scmp.com/news/china/diplomacy/article/2168951/china-woos-bhutan-expense-rival-india
  9. http://telegraphnepal.com/india-grieves-as-nepal-greets-chinese-president-xi-jinping/)
  10. https://theprint.in/defence/china-bhutan-close-to-striking-doklam-deal-holding-line-could-become-working-boundary/302273/

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