After Nepal joined the China-sponsored Belt and Road Initiative (BRI) by signing in May 2017 the framework agreement on what is known as One Belt One Road (OBOR), analysts of different shades and colour have started offering their respective opinions on the potential benefits and problems from this development for Nepal. In a nutshell, those views indicate that while Nepal stands to gain a lot from this association, the problems associated this are likely to be very serious if Nepal fails to play its role correctly. It also seems that Nepal has already blundered by hastening to sign the agreement without conducting sufficient debate on the issue within the country.
The largest gainer of this Chinese initiative is no doubt China itself. Otherwise it would not have taken this initiative in the first place. And gains are not only economic for China. It will make China more dominant international power than it is now. But the gains to the other, mostly developing or underdeveloped, countries that join the Chinese initiative are mainly economic, though to some extent they will make diplomatic gains as well because as China become stronger international power, good relations with China will make these countries less dependent on the existing western powers whom these countries view as colonialists.
However, for this gain these countries have to bear a cost. Remember, there can be no free lunches!
Then what about Nepal? Of course it will gain in the sense that the BRI promises Nepal better connectivity (rail and road) with other parts of China and to the Chinese sea ports as well as to the North-Central Asian countries like Kirgizstan, Kazakhstan, Uzbekistan, which so far remain so remote. This will expand the market for products made in Nepal, provided that Nepal actually produces exportable surplus of the products that can have demand in those countries.
Second, with such better connectivity on the north, there are better chances of industrial development in the Northern Nepal, which is so far largely under-developed due to lack of connectivity.
Third, there will be more Chinese investment in Nepal.
Now let’s turn to the costs?
First point is related with Nepal-India relations. India is not joining OBOR because of Karakoram Highway that runs through the Pakistan occupied Kashmir. The highway is an important part of OBOR project linking China to Gwadar Port which is near Karachi of Pakistan. India is perhaps interpreting that by joining OBOR, Nepal has recognised Pakistani sovereignty over that area.
Second point is related to present costs and future benefits. It is good to think that by joining OBOR, we will have better connectivity on the north in the future so that we need not depend so much on India for almost everything. But that benefit will come in future, if it really comes at all. However, the present reality is that if India is unhappy with Nepal it need not go to the extreme of imposing trade blockade to make Nepal stoop to it. Creating some technical hitches for some days at Kolkata or anywhere on the way upto Nepal border for some days will be enough. So, it is worth pondering whether the two birds in the bush are more valuable than the one in the hands.
Third point is related with potential immediate gains that are now lost. Nepal should have negotiated the terms of joining OBOR more intensively. For example, it could have insisted on annulling the India-China agreement that recognises the Lipu Lek as part of India. And it could have asked for some annual regular assistance starting from this year till the infrastructure for connectivity in the north is actually created. Such annual regular assistance could have served as an insurance against possible Indian backlash. And the Chinese could possibly not dare reject such request if Nepal also had brought to their attention the savings the China is making in its border security in Tibet due to Nepal. Moreover, to have Nepal in OBOR was more important for China from the international diplomatic considerations than having Laos or Bangladesh.
So, should Nepali people be happy or unhappy from this news of Nepal joining OBOR?