During the just-concluded visit of Nepalese Prime Minister Pushpa Kamal Dahal to China, the two countries signed a number of agreements. But security deals and the Belt and Road Initiative (BRI) were conspicuously missing,

It is well-known that China has been pushing Nepal to join its Global Security Initiative (GSI). But Dahal has been resisting this despite being a Maoist. He is steering clear of any overt security tie with China.

Secondly, he is not too enthusiastic about Xi Jinping’s pet project and China’s flagship global venture, the BRI. In its current format, the BRI does not suit a poor country like Nepal, he feels.

Dahal told the Nepali paper ‘Kantipur’ in an exclusive interview in New York last week that he would not enter into any security-related agreements with China during his visit to Beijing.

He said that China had proposed a Global Security Initiative (GSI), a Global Civilizational Initiative (GCI) and a Global Development Initiative (GDI). Among these, Nepal is interested in joining the development initiative, he added.

“We cannot wade into security-related issues. It is our stated policy not to be under the umbrella of any side. Ours is a non-aligned foreign policy. We have said that the American Indo-Pacific Strategy (IPS) and the State Partnership Program (SPP) are security initiatives and that we are not taking part in them. Having said that, we cannot join others' security arrangements.,” Dahal explained.

The agreements Nepalese and Chinese officials signed in Beijing on Monday in the presence of Dahal and his Chinese counterpart Li Qiang covered, among others, the economic development of the northern region of Nepal bordering China; digital economy; green and low carbon energy and the translation and publication of ancient Buddhist texts.

A security cooperation agreement was missing as was any mention of the BRI.

There was speculation about a security pact after the Chinese Foreign Ministry issued a statement quoting Dahal saying that “Nepal supports a series of important concepts and initiatives put forward by President Xi Jinping, and is willing to work with China to promote the development of the international order in a more just and reasonable direction, safeguard the common interests of developing countries, and promote the building of a community with a shared future for mankind.”

China wanted to insert something related to the GSI and the GCI in the joint communique, but Nepalese officials stalled it, the ‘Kathmandu Post’ said.

In September 2022. The Nepalese Ministry of Foreign Affairs had advised former President Bidya Devi Bhandari not to take part in a GSI-related event, even virtually.

Interestingly, Dahal did not want to have any security alliance with India either. “We did not take part in a joint military exercise in India organised by BIMSTEC. We only took part in programmes related to development. We cannot be under the security umbrella of any country. Nepal’s geo-political sensitivity does not allow us to stay under anyone’s security umbrella,” he said in his interview to ‘Kantipur’.

In an interview to the ‘Global Times of China’ on Nepal’s relations with China and India, Dahal said: “Nepal's relations with both China and India are guided by principles of good neighbourliness, peaceful coexistence, and a non-aligned foreign policy. Nepal deals with China and India independently. Our relationship with one neighbour will not be influenced by our relationship with the other, nor will we seek to play one against the other.

“Both neighbours are close friends and important development partners. We will continue to develop our relationships with both the neighbours on a bilateral basis. If any differences arise with either of them, such issues will be resolved through friendly bilateral negotiations.

“Nepal respects the interests of both China and India. We emphasise the development of a win-win cooperative model that benefits all three countries”.

Xi Jiping’s flagship project the Belt and Road Initiative (BRI) is also missing in the agreements inked during Dahal’s visit, though he mentioned it in an interview to ‘Global Times’.

To the Chinese Communist party organ, he said: “A Memorandum of Understanding (MOU) has been signed between China and Nepal, solidifying mutual commitment to the BRI. We are fully prepared to take the maximum benefits from this cooperative framework.”

Perhaps he was referring to the 2017 MOU on the BRI. However, till date, not a single project under the BRI has taken off. Dahal told ‘Kantipur’ that Nepal did not want to take loans to finance projects and BRI projects are loan-based. “If we are offered grants under the BRI, we will accept them,” he said.

According to Nepalese economists, Nepal is game for low-interest loans, preferably below that offered by the World Bank, the Asian Development Bank and other global lenders.

Dahal has a domestic political compulsion to take a pro-India line on Chinese projects because the pro-India Nepali Congress is a coalition partner.

According to Pragya Ghimire, a member of the Board of Directors at the Institute of Foreign Affairs in Nepal, the BRI has lost steam across the world because it has burdened participating countries with debt. There are transparency and accountability issues regarding BRI loans, project contracts, and the environmental and social impact.

Following India’s economic blockade of Nepal in 2015, Nepal veered to the Chinese side, signing a transport-transit agreement to access seven ports in China. Nine BRI projects were selected, including the ambitious “Trans-Himalayan Multi-Dimensional Connectivity Network”.

But none of the projects was implemented, Ghimire says. She also points out that China tends to be more interested in its own interests rather than Nepal’s.

“When the northern border was closed for an extensive period, China only cared about its own interests, disregarding the problems the Nepalis were facing. China pressured Nepal to become part of its Global Security Initiative (GSI) and even started openly marketing Xi’s ideology to various Nepali political parties. Chinese Ambassador Chen Song even remarked about how India’s policy towards its neighbouring countries, including Nepal, is unfriendly and not beneficial,” Ghimire wrote in the ‘Kathmandu Post’ recently.

According to Prashanti Poudyal, a researcher at the Centre for Social Inclusion and Federalism, the Nepalese Ministry of Industry, Commerce and Supplies had recommended that Nepal not move on the FTA with China, because it would lead to an exponential increase in imports, while Nepali exports would be unable to compete in the Chinese market, despite the duty waiver.

Poudyal suggested a careful selection of infrastructure projects. Thought should be given to the loan burden as well as financial viability and return on investment, she stressed. “It is essential to ask whether Nepal requires a trans-Himalayan Rasuwagadhi-Keyrung railway, advertised as the flagship BRI project, and if so, whether Nepal has the resources to sustain it,” Poudyal said.