Nepal in the new world order

How to leverage our geostrategic location amidst hypernationalism and the clash between liberal democracy and authoritarianism


The war in Ukraine, which began with Russian aggression, has now turned into a battle between two powerful global forces: liberal democracy and authoritarianism. A new world order is emerging.

Unlike the 20th century’s ideological clash between communism and capitalism, recent global events show complexity, volatility, unpredictability and elusive multipolarism.

In this new world order, too, strategically located countries like Nepal will face intense pressure from the two mighty political forces: liberal democracy countries led by the US and allies, and alternative forces or authoritarianism led by China, Russia and the co.

In such hyper-polarisation, a win-win situation can be hard to come by, particularly for less powerful countries like Nepal. Nevertheless, the new 21st century world order also offers an opportunity for countries with important geostrategic positioning to advance their interests and gain leverage among the giants.

Financial integration, technological connectivity and human mobility today have turned the world into a global village, albeit with constant threats and instability.

Over the last 30 years, China has become a global factory, it enjoys economic growth at home while fulfilling material demands globally. The rise and fall of demand for goods inevitably influences its stability.

Around the world, many countries also face instability from dependence on global markets. The Covid-induced supply chain disruptions, particularly due to Beijing’s ‘zero-covid’ policy, have created high inflation around the world. In January 2021, the shipping cost for a 40-foot container was $1,400. By September 2021, it jumped to over $20,000.

Our chronic dependency on fossil fuels is the same story: from households in the foothills of the Himalaya to the suburbs of Houston, the fluctuation of oil and gas prices hits us hard, sparking protests and instability.

But there is an additional factor in play: hypernationalism. Donald Trump is no longer in the White House but the supposedly liberal statesman and champion of democracy President Joe Biden continues to advance Trumpian hypernationalism.

During January’s State of the Union address, Biden said: “When we use taxpayer dollars to rebuild America – we are going to Buy American: buy American products to support American jobs.” Such insular and self-serving American nationalism resembles President Xi Jinping’s desire for “the great rejuvenation of the Chinese nation” and Prime Minister Narendra Modi’s increasingly intolerant India.

Put simply, Russia under President Vladimir Putin and its ongoing onslaught in Ukraine to assert itself in a new global power equilibrium is the kind of hypernationalistic aggression we are likely to see more of.

Extreme climate change events will further destabilise the 21st century global world order. According to a report from the International Panel for Climate Change (IPCC), competition over water and food, made scarce because of climate change, will increasingly turn violent.

Nepal’s "freak" rain in October 2021 shows how a climate event can trigger civil strife. The downpour not only destroyed nearly $60 million of rice and killed dozens of people but also pushed peasants further into poverty and hunger, turning them desperate to seek ways to make ends meet.

One such way for them has been to farm wheat. But a shortage of wheat seeds pushed frustrated peasants to launch a protest, which prompted a violent response from the police.

To disperse protesters along the East-West highway, police fired teargas and rubber bullets and the protesters retaliated by hurling rocks and sticks. Both protesters and police sustained injuries.

This incident demonstrates the non-linear but complex interplay between extreme climate change events and social, political and economic dimensions, and how quickly it can escalate to violence.

Migration adds further complexity. An anti-refugee sentiment has given rise to anti-democratic forces across Europe and North America, upending democracy. Such forces are getting traction amidst the clash between liberal democracy and authoritarianism.

Migration, whether due to climate change, war, poverty, or labour, helps harden state boundaries. This, in turn, promotes intolerance and bolsters ultranationalism and xenophobia – some of the key features of the new world order.

But Nepal and strategically positioned countries can take advantage of this multipolar volatile and unpredictable world order. With shrewd diplomacy and strategic planning, the countries can use their location to not only spur economic development but also strengthen cooperation promoting stability and peace. Take Laos and Bangladesh as examples.

Laos, a Southeast Asian landlocked country like Nepal, is ruled by an authoritarian government and is under strong Chinese influence. As part of China’s Belt and Road Initiative, it implemented a $6 billion high-speed railway project. But Laos has only a 30% stake in this joint venture. Still, the country gets a lot of benefit from it.

Inaugurated in December 2021, the project advances the country’s fundamental economic interests: it not only directly connects Laos with Thailand (and eventually with all Southeast Asia) and China but also connects its internal territory, making goods transportation more efficient.

According to a World Bank report, swift goods transportation will help increase Laos’ GDP up to 21%. In other words, the project’s economic benefits outweigh the risk of a Chinese ‘debt trap’.

More importantly, mindful of a ‘debt trap’, Laos maintains strong economic ties with traditional donors like Japan, Thailand, South Korea and Vietnam, including the Asian Development Bank. To avoid over-reliance on military aid from China, Laos has established military ties with Russia.

Bangladesh also has met its own interests amidst the new order and recently surpassed India's per capita income despite its inherent vulnerabilities to climate change. Its economic prosperity combines strong remittance, a vibrant garment industry, and prudent economic governance.

Most impressively, through ‘balanced’ diplomacy, it advances its economic interests while maintaining the two clashing mighty powers: Western liberal and authoritarian forces.

In June 2021, the World Bank canceled a $1.2 billion investment to build the Padma Multipurpose Bridge project, citing corruption. But Dhaka secured the funding to build a bridge from China as part of the BRI. Yet, when Beijing proposed the Sonadia deep-sea port project, Dhaka rejected it, instead preferring Japan’s proposed similar project at Matarbari.

Most importantly, Bangladesh actively avoids Chinese projects that pose concerns, particularly to India. Like Laos, Bangladesh shrewdly focuses on economic interests while maintaining power asymmetries stemming from a new volatile multipolar global order.

Laos and Bangladesh’s experiences suggest that Nepal ratifying the US’s $500 million MCC aid is strategically a positive step. Beijing’s objection should not surprise anyone or the US’s pressure.

Chinese Foreign Minister Wang Yi’s visit despite the MCC ratification indicates that Beijing wants to build closer ties with Kathmandu. Above all, Nepal should expect intense pressure from liberal democracy and authoritarian forces and prepare itself.

Be it a US-led Indo-Pacific Strategy driven fund or China’s Belt and Road Initiative or the EU’s “Global Gateway”, strategically located countries do have leverage that they can use to push their financial interests while carefully handling the competing political powers.

In doing so, Nepal can achieve economic prosperity and contribute to stability and peace not just at home but also regionally and globally.

Dhirendra Nalbo has Ph.D. in Conflict Analysis and Resolution from George Mason University and is the co-founder of the Open Instiute in Kathmandu.