Last August, when CPN (Maoist Centre) Chairman Pushpa Kamal Dahal was elected as the prime minister for the second time in eight years, his major foreign policy challenge was to strike a balance between the two immediate neighbours India and China. The opposition parties had branded him a ‘pro-Indian prime minister’, and there were serious charges that the Dahal administration had been formed under Indian auspices and that he would neglect relations with China. At the same time, several Chinese media outlets including Global Times daily had expressed doubts about prospects for good relations between Nepal and China under Dahal’s leadership.

Maintaining a fine balance

In the beginning, Dahal seemed to be tilting towards India, but later he worked to maintain good relations with both neighbours. Within a month of being sworn in, he made his first foreign trip to India. He also sent Foreign Minister Prakash Sharan Mahat to New Delhi five times in five months. It was clear that there was political mistrust between Beijing and Kathmandu. Beijing did not invite Dahal for an official visit, but he met with Chinese leaders during the Boao conference, which helped to dispel the mistrust. Ten months later, things are totally different. Dahal resigned on May 24 as per a gentleman’s understanding reached with Nepali Congress President and Sher Bahadur Deuba. Deuba was elected prime minister on Tuesday.  

A close study of the decisions taken by the Dahal administration shows that he has been able to maintain a fine balance between the two countries. The government signed several deals with China. No new agreements were reached with India, and Dahal focused on implementing pending projects. There was speculation that Dahal would award the construction contracts for the Kathmandu-Nijgadh expressway and other big projects to Indian firms, but it was proven wrong. The expressway project was given to the Nepal Army.

The Dahal administration signed an accord on the framework Belt and Road Initiative (BRI), a mega project of Chinese President Xi Jinping. The BRI proposal had been gathering dust at the Foreign Ministry, and Dahal decided to sign it just before resigning. He achieved a foreign policy success by convincing India why Nepal could not stay out of BRI.

Another important decision taken by the Dahal-led government was to hold the first ever military drill between the Nepal Army and the Chinese People’s Liberation Army. Though there was no official objection from India, it was evident in many forms and manifestations that the southern neighbour was not happy with the military exercise. According to media reports, the duration and size of the drill were whittled down at India’s request.

Ending total dependence

Likewise, the Dahal administration signed a memorandum of understanding with China to construct a cross-border special economic zone (SEZ) with the purpose of facilitating trade and investment between the two countries. Nepali officials have said that the SEZ will play a significant role in uplifting the country’s industrial sector and exports. Nepal and China also signed a pact on the Rasuwagadhi-Syabrubesi road that leads to the Chinese border. Nepal has been asking China to reopen the Tatopani border point, the largest trading route between the two countries, which was closed after being severely damaged by the 2015 earthquake. The Dahal-led government completed all these tasks with little fanfare.

The Nepal government is working to finalise the protocol to the Transit Transport Agreement signed by the Oli administration. The pact was regarded as a milestone as it ended total dependence on India. China had repeatedly expressed displeasure at the lack of progress on the implementation of agreements reached with previous governments. Officials from both sides are working to finalise the protocol to the Transit Transport Agreement.

The Dahal administration has also submitted a proposal to China regarding the construction of railways in Nepal. A Foreign Ministry statement issued during Deputy Prime Minister and Finance Minister Krishna Bahadur Mahara’s visit to China says, “The Chinese side said it would look at the proposal from Nepal on constructing railways in Nepal, and had advised relevant agencies to start discussions on it.” News reports hint that Chinese companies are doing a feasibility study of railway projects in Nepal. China plans to extend its railway to Lumbini, the birthplace of Gautam Buddha. Dahal showed the utmost maturity while dealing with India and China, the two countries that are at the centre of Nepal’s foreign policy. Amid criticism and doubts, he has been able to keep relations on track.

It seems that there have been more important deals with China than with India during Dahal’s tenure.

In 2008, Dahal had failed in his efforts to maintain balanced relations with the two countries. He had resigned as prime minister accusing India of interfering in his decision to sack the then chief of army staff Rukmangud Katawal. However, during his second stint as prime minister, Dahal has been able to build good trust with the political leaders of India and China.

Bhattarai is the Delhi correspondent for The Kathmandu Post