Memorandum of understanding (MoU) was signed by the NCP (Nepal communist party) with the Communist Party of China. President Xi Jinping is visiting Nepal in October 2019

About Nepal-

• Nepal is a landlocked country in South Asia.
• It borders China in the north and India in the south, east
• Hinduism is the predominant religion of the country
• The Constitution of Nepal, adopted in 2015, affirms Nepal as a secular federal parliamentary republic divided into seven provinces.
• Friendship treaties were signed with India in 1950 and the People’s Republic of China in 1960.
• Member of South Asian Association for Regional Cooperation (SAARC), Non Aligned Movement(NAM) and the Bay of Bengal Initiative.

India – Nepal relations-

The 1950 Indo-Nepal Treaty of Peace and Friendship

• Treaty provides Nepalese, the same economic and educational opportunities as Indian citizens in India, while accounting for preferential treatment to Indian citizens and businesses compared to other nationalities in Nepal
• The Indo-Nepal border is open; Nepalese and Indian nationals may move freely across the border without passports or visas and may live and work in either country
• Since late 2015, political issues and border disputes have strained relations between the two countries with anti-Indian sentiment growing amongst the government and people of Nepal
• No border agreement between two countries

Recent developments in India – Nepal relations-

• In August 2014, when the Indian Prime Minister Narendra Modi had visited and number of sops were announced
• When a big earthquake struck Nepal, India was quick to respond with help and relief materials.
• India’s failure to complete past projects on time has created frustrations.
• In 2015 India objected to Nepal’s constitution and exerted pressure for Nepal to accommodate the voices of Madhesi people led to blockade this infringed the relations

China- Nepal relations-

• The Sino-Nepal Treaty of Peace and Friendship signed in 1960.
• From 1975 onward, Nepal has maintained a policy of balancing the competing influence of China and India
• China has been making an effort to gain entry into SAARC, and, Nepal has continuously backed and supported the proposal to include China as a member in the regional grouping
• China being the largest source of FDI, (while India still remains one of the major source of remittance to Nepal)
• The Nepal and China ratified the border agreement treaty 1960.

Recent development in China – Nepal relations-

• Nepali leaders played the nationalism card to reach out to China (after blocked).
• With the announcement of the Belt and Road Initiative (BRI), exchanges and interactions between the two countries grew.
• Nepal signed agreements with China to ensure it was not “India locked”, in turn opening transit and trade opportunities through its northern border.

Problems with the Nepal-

• Nepal’s engagements with the outside world have been more of theatrics, speeches and little action.
• Nepal has never been about seeking investments and get into a partnership model such as what Bangladesh has been able to do successfully with both China and India.
• With a strong patriarchal and feudal culture embedded in Hinduism, rituals dominate Nepali life, there is much emphasis on rituals rather than an understanding of the deeper issues.

Communism in Nepal Vs China-

• The recent rise of the Nepali communist has been due to the empathy of and support from the Communist parties of India that were part of the United Progressive Alliance(UPA). The Maoists, while underground, received tacit support. With the communist parties in India in disarray now, the Nepali communist leaders are looking for options.
• Communism to Nepal came through Calcutta and not straight from China. Therefore, what we see in Nepal is the West Bengal version of communism rather than a Chinese one.
• The communist movement in both India and Nepal has been about rent-seeking on positions and selling rhetoric and hypocrisy. In contrast to the Chinese societal model of hard work and encouraging entrepreneurial pursuits.
• Nepali communists, especially the former insurgents, still talk about Mao and the Maoist ideology. In China, Mao is a word best avoided and is jarring for the current key leadership.
• In China, over the years, when a majority group within the party decides on an issue, people with opposing views accept the decision and do not challenge them in the future. Nepali communism has been about continuous infighting and creating fiefdoms rather than accepting an individual’s leadership.

China- India-Nepal Trilateral-

• China wants to invest in big connectivity projects in Nepal but prefers to bring India, on board. But India has not shown much interest.
• Chinese engagement in Nepal is sharply increasing, making India uncomfortable. India views Nepal as its traditional sphere of influence, and wants to contain Chinese influence. Thus India  is rejecting the proposal for trilateral cooperation
• Nepal wants to change the old pattern of a heavy economic dependence on India by expanding large-scale ties with China.
• China, meanwhile, is keen to increase its economic, military, and strategic influence in Nepal without direct confrontation with India.
• Ongoing Trade and transit agreement of Chinese and Nepal governments. Once it is finalized, Nepal, a land-locked country, could use Chinese ports and seas for the export and imports of goods .Currently, Nepal uses Indian ports and cities for exports and imports. (The border blockade of 2015 taught Nepal the lesson)
• China is perceived as a trusted neighbor, agreements, treaties, and conventions. India is greeted with suspicion.
• China’s noninterference policy seems to have played a vital role in creating positive public opinion toward China.
• By contrast, there are widespread perceptions that India interferes in Nepal’s politics.
• Example- In 2015, India objected to Nepal’s constitution and exerted pressure for Nepal to accommodate the voices of Madhesi people, China welcomed the promulgation of the constitution in Nepal, lauding it as a historic progress.

How far is the progress of China – Nepal relation?

• China-funded projects such as constructing Pokhara International Airport and the Kathmandu Ring Road expansion are underway.
• Chinese investment in various sectors is increasing.
• Chinese tourists have also noticeably increased in fact surpassed Indian tourists in 2018
• Nepal Army and People’s Liberation Army of China is on the rise, after their first joint military exercise last year
• Nepal and China signed a framework agreement on the BRI and now the onus lies on Nepal to select the projects under the BRI framework (2017)
• Nepal is asking China to open more border crossings. Though both countries are talking about broader connectivity, China has opened very few border points.
• China and Nepal are also exploring the possibility of a free trade agreement (FTA).

Way forward-

• Longstanding people-to-people ties and cultural connect.
• India should focus on fructifying the potential of hydropower cooperation, which has remained untapped largely due to differing perceptions.
• Timely completion of projects 
• India should maintain the policy of keeping away from internal affairs of Nepal

Conclusion-

• President Xi’s visit will be once again be one made by a “friendly neighbour or cousin”, who brings some gifts, exchanges pleasantries and then moves on.
• With its immense strategic relevance in the Indian context as Indian security concern, stable and secure Nepal is one requisite which India can’t afford to overlook.