Why India and China Are Watching Nepal’s Elections

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Why India and China Are Watching Nepal’s Elections

Beijing is hoping for the left alliance to emerge victorious; India is rooting for the Nepali Congress.

Why India and China Are Watching Nepal’s Elections

A Nepali man casts vote during the legislative elections in Balefi, Sindupalchowk, 80 kilometers (50 miles) east of Kathmandu, Nepal (Nov. 26, 2017).

Credit: AP Photo/Niranjan Shrestha

As Nepal draws closer to electing a new parliament, all eyes are on who will form the next government — the left alliance of the Communist Party of Nepal-Unified Marxist-Leninist (CPN-UML) and CPN (Maoist Center), or the democratic block led by the centrist Nepali Congress (NC) party. New Delhi and Beijing are especially concerned about the election result and Nepal’s future government as both Asian giants are competing to increase their influence in the Himalayan nation.

New Delhi and Beijing have deeper concerns this time because the new government will probably sustains for the next five years, something that has not happened in Nepal since its first elections. Both India and China have complained that the lack of stable government in Kathmandu is affecting their development projects and assistance; both believe that the new government, if friendly, could be instrumental to advancing their influence and interests in Nepal. That is why both countries are closely watching the overall election results, with final tallies expected within the second week of December.

In the 275-member House of Representatives (HoR), 138 seats are required to form a government. Based on the results of Nepal’s recently concluded local level polls, there is a better chance that the left alliance of CPN-UML and CPN (Maoist Center) will gain a majority and form the government; those parties won the first and third most seats, respectively, in the local elections. At the same time, election results are always unpredictable — as proven by recent polls in the United States and the United Kingdom’s Brexit vote — and the NC could also win.

It seems that Nepal will be dominated by two political forces — left forces and democratic forces led by NC — soon after the election. There are perceptions that the left alliance will tilt toward China and democratic alliance toward India, based on both side’s previous behavior while in government. There is also the same understanding in Delhi and Beijing.

In a time when nationalism is sweeping across the globe, many believe the left alliance, which has used nationalism as a major election plank, will win the elections. CPN-UML leader K.P. Oli has used symbolic attacks on India throughout the campaign. The election manifesto of the left alliance states that, under the coalition’s government, the India-Nepal Peace and Friendship Treaty 1950 will be terminated and new treaty put in place. Oli’s colleague, CPN (Maoist Center) Chairman Pushpa Kamal Dahal, however, has been almost silent about India. If the left alliance wins the elections, however, it’s likely Oli would become prime minister again.

Oli built a good image among ordinary people for his firm stance against the Indian “blockade” in 2015, when he was prime minister. Even the leaders of rival parties supported his stance. At the same time, he faces charges of promoting a “narrow nationalism” and taking a rigid stance in addressing the demands of Madhesi people, an ethnic group in southern Nepal bordering India. Despite his current anti-Indian rhetoric, many believe that Oli will seek to maintain a balanced relationship with both India and China, but his approach would be watched closely.

Beijing will be happy if the left alliance wins the election. As there is little progress to date on the Belt and Road Initiative (BRI) in Nepal, Beijing hopes that a left alliance government in Kathmandu will speed up related projects. Beijing is already putting pressure on Kathmandu to act swiftly on BRI projects.

When he was in power in 2015, Oli signed several agreements with China, including trade and transit deals that aim to end India’s monopoly over the Nepali market. During the election campaign, Oli has frequently mentioned constructing a railway line linking the two countries, something agreed to during his brief stint as prime minister. China believes that an Oli-led government could be favorable to advance its interests in Nepal; Beijing is expecting the same spirit and pace after the elections. India, on the other hand, fears losing its influence in Nepal if the left alliance is in power.

Though they have not said so publicly, many NC leaders believe that the left alliance of CPN-UML and CPN (Maoist Center) was engineered by China. Soon after the left alliance was announced, Chinese Ambassador Yu Hong met Prime Minister and Nepali Congress President Sher Bahadur Deuba and reaffirmed China’s age-old policy of non-interference in the internal political affairs of the other country. This was clearly meant to convey to the ruling party that China’s hand was not behind the left alliance. Many Chinese scholars in their writing also highlight that the left alliance was an internal development based on internal requirements.

This time, India has not been vocal about political developments in Nepal. However, it is clear that if the left alliance wins the elections and forms government, New Delhi will feel uncomfortable.

Some recent developments have clearly demonstrated the increasing India-China rivalry in Nepal, and the stakes for both sides in Nepal’s election. The previous Nepali government, led by CPN (Maoist Center) Chairman Pushpa Kamal Dahal, signed agreement with China’s Gezhouba Group Corp for the development of the 1200 MW Budhi Gandaki Hydropower project, a projected located in the central-western development region on the Budhi Gandaki River of Nepal. The agreement was signed in the presence of then-Prime Minister Dahal and Chinese Ambassador to Nepal Yu Hong. In September, China decided to list this project under the Belt and Road Initiative framework, following a request from the Nepali government. The deal, however, was protested by some political parties and others for not following due process. Similarly, India was not happy with the deal.

Just before first phase of elections on November 26, the current NC government decided to scrap the agreement on the Budhi Gandaki hydropower project, despite the fact that the NC was also a part of the Dahal-led government that oversaw the deal. On the other hand, Nepal extended the deadline for the developers of Arun-3 and Upper Karnali Hydropower Project to achieve financial closure. Indian companies are developing these two hydropower projects and those companies had failed to meet earlier deadlines for finalizing financial agreements.

Left alliance leaders are saying that they will revoke decisions made by the NC-led government if their government is formed after elections.

China has openly expressed its displeasure over the decision made by Prime Minister Sher Bahadur Deuba’s government. The Chinese company Gezhouba, on November 28, asked the government to revisit its decision to terminate the $2.5 billion contract, stating that the process of its removal was invalid. The NC-led government has defended its decision and stated that the state-owned Nepal Electricity Authority will build this hydropower project mobilizing national resources.

China’s Global Times criticized Nepal’s government for scrapping the deal. In his article on November 30, Zhang Shubin, a research fellow with Charhar Institute and Director of the Nepal Study Center at Hebei University of Economics and Business, said, “The capricious backtracking on the agreement by the current NC government not only does harm to the legitimate rights of Chinese corporations and shows an unfriendly attitude toward China, but also demonstrates its tendency to form a more intimate relationship with India.”

“To ensure the legitimate rights of Chinese companies remain intact, the Chinese government has the right to ask that Nepalese government guarantees signed agreements between it and Chinese entities,” he further added.

If the left alliance wins, China will have certain expectations regarding its interests in Nepal. If the NC wins, India will have similar thoughts. In this context, it will be a big challenge for either the left alliance or the NC to handle foreign policy after the election.

Kamal Dev Bhattarai is Kathmandu-based writer and journalist. He writes on geopolitical issues mainly focusing on South Asian region. He is closely following Nepal’s peace process, constitution drafting, and constitution implementation process.