Prime Minister Pushpa Kamal Dahal’s visit to China comes as the season here in Beijing begins to shift from the summer to autumn.&nbsp;
As the Prime Minister alights from his aircraft at the Beijing Capital International Airport being greeted by still balmy conditions, he may very well wonder why his flight could not have touched down at the other (newer) colossal international airport in Beijing, Daxing International, designed by the award winning British architectural firm Zaha Hadid Architects.
That facility is not just a piece of art but is the world’s largest single-building airport occupying more than 7.5 million sq feet of ground space. Although by land-area, Daxing International is still significantly smaller than King Fahd International or even Denver International or Washington Dulles, the way in which the airport evokes, in combination, a sense of power, networks and a futuristic vision is inescapable.&nbsp;
Read also: <a href="https://nepalitimes.com/banner/fixing-the-broken-parts-in-nepal-china-ties">Fixing the broken parts in Nepal-China ties</a>, Kanak Mani Dixit
This is not surprising at all because the People’s Republic of China is probably at this juncture of history the example par excellence of a Eurasian power vigorously straddling the super continent in almost every sense of the word: political, economic, cultural and certainly in respect to hard infrastructure systems.&nbsp;
It is also no surprise that it is exactly due to this position China currently occupies as a preeminent Eurasian power that it is bumping up with such great and increasing friction against not just the United States but <a href="https://nepalitimes.com/latest/political-geography-of-india-nepal-china-ties">other leading powers in the system such as India</a> and so on.&nbsp;
The state of progressively intense upheavals that is consequently being generated within the international system is something that smaller powers such as Nepal will find almost impossible to circumvent let alone easily maneuver around.&nbsp;
Read also: <a href="https://nepalitimes.com/here-now/nepal-now-has-to-balance-not-just-india-and-china-but-also-the-west">Nepal now has to balance not just India nad China, but also the West</a>, Bhairaja Panday
It is within this broad lay of the land that Dahal's September sojourn to China must be viewed and analysed. Sino-Nepal relations do not exist in a vacuum, they are part of larger (and ever shifting) structural, geopolitical forces at play that can potentially pull Nepal against gravitational force into spaces not easily comprehensible, much less simple to navigate.&nbsp;
This comes back to the question as to what is the natural direction of Nepal’s foreign policy, where does the gravity of Nepal’s foreign policy lie, because it is against this question too that better inferences and assessments of the prime minister’s China visit can be brought to bear.&nbsp;
At any given point in history, the state of Sino-Nepal relations will be dictated as well by the overall <a href="https://nepalitimes.com/here-now/40-years-after-the-sino-us-thaw">nature and tenor of Sino-US</a>, Sino-Indian as well as Sino-Russian relations and different combinations of those bilateral relationships.&nbsp;
Nepal’s relationship with India and then the United States exerts a profound impact on its foreign policy towards China, and this is exponentially the case in contemporary times as larger and larger diaspora communities in those countries become more entrenched and organised, giving rise to push and pull factors that reverberate back into the corridors of power in Kathmandu.&nbsp;
It must not be forgotten as well that the Maoist party Prime Minister Dahal's visit to China takes place at a time in Nepal's history when its governmental and administrative apparatus is perhaps the most fragile and fungible they have ever been, and therefore prone to being malleable in general or definitely within certain distinct pockets.&nbsp;
Read also: <a href="https://nepalitimes.com/editorial/geopolitical-tectonics">Geopolitical tectonics</a>, Editorial
There are certain strong domestic lobbies in favour of China within Nepal’s political ecosystem, but it is hard to establish the extent to which these have the ability to triumph in forging real diplomatic success in <a href="https://nepalitimes.com/opinion/sino-nepal-ties-in-the-post-afghan-era">Sino-Nepal relations</a>.&nbsp;
Surely in terms of big-ticket items in the bilateral relationship such as expansion of BRI and an elevated position for China in harvesting the green energy market in Nepal, it appears that Nepal’s position is currently circumscribed to a large extent by structural factors and that Kathmandu would need to approach cooperation with China with greater creativity encompassing an international approach.&nbsp;
For example, harnessing <a href="https://nepalitimes.com/here-now/geopolitics-of-nepal-s-rivers">Nepal’s substantial hydropower potential</a> is a key objective of policy makers in the country but due to the divergent and fragmented geopolitical environment Nepal faces externally, it becomes challenging for any one of the great powers alone to plan and actually execute large scale infrastructure projects without inciting adverse pushback.&nbsp;
So would it be feasible for Kathmandu to think along the lines of gradually proposing and nurturing international consortia (by including within a single basket China, India and the United States, for instance) to address the <a href="https://nepalitimes.com/news/balance-of-power">development of hydropower in Nepal</a> or other large scale infrastructure initiatives?&nbsp;
It is unlikely that such an approach can be made to happen, but it is certainly worth the effort by the prime minister to explore during his high-level engagements with leaders in China. Sticking to a strictly bilateral approach on this visit to China will be a safe bet for the Prime Minister Dahal and will not ruffle any feathers.
But if one can think out of the box as a means to inject more momentum from Nepal towards much needed regional economic growth, then why not at least try?
Bhaskar Koirala is an independent analyst with Peking University. Views here are the author's own.

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Nepal's Maoist leader visits China

In 1960, during his second official visit to Nepal, Chinese Premier Zhou Enlai sat on a boat on Pokhara’s Phewa Lake with Prime Minister B P Koirala for one and a half hours and was spellbound by the reflection of Mt Machapuchre on the water.&nbsp; King Mahendra’s chief adviser Gunja Man Singh and Chinese ambassador Yuan Zhongxian had signed the agreement to establish diplomatic relations between Nepal and China on 1 August 1955, only a year after Zhou became Premier.&nbsp; In the nearly 70 years since, China has financed and supported infrastructure projects across Nepal — but especially those with links to Pokhara, like the Prithvi Highway that first linked Kathmandu to Pokhara by road. Anand Raj Mulmi, former president of the Federation of Nepal Chamber of Commerce and Industries (FNCCI), notes that China initially wanted Pokhara to be its focal point in Nepal.&nbsp; “The Prithvi Highway was built to project China’s soft power, and advance its geopolitical interest to link Nepal to China through Korola in Mustang,” Multi explains.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/2023091313094_0e0bd60f12dc8ce1ea07bb38116ae1d8da359d06808774e980ae840766d435f6.jpg" data-media-id="editor_0" data-image-id="2023091313094_0e0bd60f12dc8ce1ea07bb38116ae1d8da359d06808774e980ae840766d435f6" data-rendition-name="original" width="4608" height="3072" loading="lazy" alt="Pokhara China connection"> </figure>  Indeed, China worked on road, irrigation, highway and hydropower projects in Pokhara. After the Prithvi Highway, it financed the construction of the Pokhara-Baglung road in 1988. The strategy was connectivity, long before the Belt and Road Initiative was even thought of. By 1980, China was also helping Pokhara’s irrigation sector, providing financial and technical assistance for a hydropower and irrigation project on the Seti River. All this&nbsp; Chinese activity made India suspicious, and Mulmi says things did not turn out like Beijing wanted.&nbsp; Even so, China’s love affair with Pokhara did not wane. The popular Chinese tv serial Deng Feng Lai (Up in the Wind) was filmed on location in Pokhara in which the two protagonists took <a href="http://archive.nepalitimes.com/news.php?id=19255#.XgmF09Iza70" target="_blank">a paragliding flight</a>. Since then, many young Chinese have started booking holidays in Pokhara.&nbsp; This dovetailed well with Rs 22 billion Chinese ExIm Bank loan for Pokhara International Airport which was inaugurated on 1 January 2023. The international flight to land there was a Sichuan Airlines Airbus 319 from Chengdu last month.&nbsp; The chartered flight on 23 June brought 130 Chinese passengers to Pokhara for the first Nepal-China Dragon Boat Race Festival organised by the Nepal Tourism Board, Pokhara Metropolitan City.&nbsp; “Events like the Dragon Boat Race Festival will bolster Pokhara’s economy, and enhance the socio-cultural relations between our two countries and its people,” said Chinese Ambassador Chen Song during the opening ceremony of the event.&nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/2023091313094_3e8d98945946e3368b5b5a360f9dad23253f680eee3d5e63049a47dd1d8a2861.jpg" data-media-id="editor_2" data-image-id="2023091313094_3e8d98945946e3368b5b5a360f9dad23253f680eee3d5e63049a47dd1d8a2861" data-rendition-name="original" width="1800" height="896" loading="lazy" alt="Pokhara China connection"> <figcaption>A Chinese team participating in Nepal-China Dragon Boat race earlier this year.</figcaption> </figure>  Although the pandemic killed tourism prospects in Pokhara, Chinese tourists are flocking back. Lakeside restaurants in Pokhara once more have Mandarin menus and the city is still hoping that Chinese airlines will start direct flights to the new airport. Pom Narayan Shrestha, chairman of the Pokhara Tourism Council, says that Pokhara’s local as well as Gandaki Province government should push promotional activities.&nbsp; Pokhara first established sister-city relations with the city of Linzhi in the Tibet Autonomous Region in 2008. Since then, similar sister-city links have been established between Nepali cities and Kunming, Guangzhou, Yibin, Chiuchow, Haikou, Nanning and Yanji to promote bilateral cooperation in various sectors, including business.&nbsp; However, entrepreneurs in the region say that there have been no benefits to their business from such agreements.&nbsp; Experts also note that Pokhara has not been able to take advantage of the agreements, and the bilateral relationship has been limited to mayors and deputy mayors of Pokhara and the Chinese cities attending events in each other’s countries.&nbsp; “Pokhara’s sister-city agreements with various Chinese cities will only be relevant if Pokhara is promoted as a tourist destination there, and entrepreneurs from Pokhara can participate in and benefit from trade fairs in those cities,” says Mulmi. “Similarly, people from China also need to be invited to events in Pokhara, that is how all of the cities involved will benefit economically. Events like the Dragon Boat festival, and other Chinese cultural affairs represent a new beginning.”&nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20230913130920_a2059268ee3f3ff7fbb916cb47806e0710fbfb02e25595771c49a5f1ac26640b.jpg" data-media-id="editor_3" data-image-id="20230913130920_a2059268ee3f3ff7fbb916cb47806e0710fbfb02e25595771c49a5f1ac26640b" data-rendition-name="original" width="1080" height="720" loading="lazy" alt="Pokhara China connection"> <figcaption>Pokhara Mayor Dhanraj Acharya with Chinese Ambassador to Nepal Chan Song.</figcaption> </figure>  Kiran Prasad Koirala of Pokhara Metropolitan City, admits that the town has not been very aggressive in promoting &nbsp;sister-city relationships, but adds that Chinese cities have supported Pokhara, having provided financial, ambulance, and other aid during the pandemic. &nbsp; Bishwa Shankar Palikhe, president of the Nepal-China Friendship Association, has been actively involved in expanding exchanges between Pokhara and its sister cities in Kunming, Guangzhou and Linzhi. However, he admits a lot more needs to be done.&nbsp; Palikhe adds: “We must study the development and experiences of our sister cities and incorporate them into Pokhara’s development plans. Additionally, the entire world at present is trying to draw tourists from China, we must take advantage of our proximity.”&nbsp;

Pokhara’s China connection

At the annual Nepal Power Summit in Kathmandu on 18-19 April, officials called on India to allow Nepal to export power at real-time prices, not just in the day-ahead market. Also discussed was a need for more flexible guidelines on market access for Nepal’s electricity to India which currently buys power on a project-to-project basis, pointedly boycotting those built by Chinese investment or contractors. India’s interest in regulating Nepal’s rivers is not new, but with the Himalaya becoming a geopolitical and climate hotspot, its strategic interest in regulating river flow has grown.&nbsp; Climate models show that the hydrology of Himalayan rivers will change dramatically in the coming decades, with peak water in the 2030s, and low flow levels in the dry season thereafter. With 70% of the annual discharge on the Ganga flowing down from rivers in Nepal, 75% of it in the four monsoon months, storage projects in the mountains will be ever more important. Because of this, New Delhi would like pliant politicians in place in Kathmandu that will not obstruct its plans to ensure future water supply, and given current geopolitical tensions, this also means keeping the Chinese out.&nbsp; Ever since Sher Bahadur Deuba became prime minister for the fifth time in 2021, he has fast-tracked a slew of projects in which Indian companies are involved, including the West Seti reservoir project that has languished for 20 years mainly because of Indian objections to Australian and Chinese investment. Most recently, Indian National Hydroelectricity Power Corporation (NHPC) Limited is in talks to be awarded the 480MW Phukot Karnali Hydroelectric Project in Kalikot jointly with Nepal’s state-owned Vidyut Utpadan Company Limited with a share ratio of 51% to 49%. The project will likely be launched during Prime Minister Pushpa Kamal Dahal’s state visit to India in May. India’s NHPC has already been granted licenses for West Seti and Seti River-6 projects, and is also eyeing another 1,902MW megaproject on the Karnali.&nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/2023050603050_10fc6c82b0d995c39b388d8d8628365ea5e2299a1f4d474e2c2d5b7f01d37d83.jpg" data-media-id="editor_0" data-image-id="2023050603050_10fc6c82b0d995c39b388d8d8628365ea5e2299a1f4d474e2c2d5b7f01d37d83" data-rendition-name="original" width="3776" height="2424" loading="lazy" alt="West Seti"> <figcaption>Sushil Bhatta of Investment Board Nepal and Abhay Kumar Singh of India's NHPC, after signing an agreement to develop the 760MW West Seti and 460MW Seti River 6 projects in 2022.</figcaption> </figure>  In fact, across Nepal, Indian companies are building hydropower projects which will add a combined total of 4,000MW to the grid, three of which were rushed through only in the past year. Three more Indian projects are in the pipeline.&nbsp; Why the sudden renewed Indian interest in Nepal’s rivers? And what is the hurry? The answer lies in the need to plan for the decades ahead when water is going to be an even scarcer commodity in the Indo-Gangetic plains than it is now because of climate change, increased industrial, agricultural and household consumption. Energy analysts say that although India’s interest seems to be in renewable energy from hydropower to fulfil its decarbonisation commitments, exports of power from Nepal is only projected at $800 million in the next three years, which will only be a tiny percentage of the 1,600 billion kWh that India generated in the last fiscal year.&nbsp; And although power demand is expected to rise with rising incomes, industrialisation and increasingly intense summer heat waves in the plains, India’s long-term interest is in reservoir projects to store monsoon water in Nepal’s rivers to reduce monsoon flood risk and keep rivers flowing in the dry season. And New Delhi has not tried to hide its distaste for any Chinese involvement in these projects.&nbsp; Hydropower Investment and Development Company Nepal (HIDCL) in which the government is a majority shareholder informed the Investment Board Nepal in February that it was withdrawing from the export-oriented 762MW Tamor Hydropower project.&nbsp; CEO Arjun Kumar Gautam is upfront about why: “We cannot sell electricity generated with Chinese involvement in the Indian market.” Tamor was one of the two projects agreed upon during Chinese President Xi Jinping’s visit to Nepal in October 2019. Soon after, Investment Board Nepal (IBN) signed up China Construction to build the project after completing a feasibility study. The HIDCL now wants to null the agreement with the Chinese contractor and bring in a new contractor more amenable to the Indians. Meanwhile, India’s state-owned <a href="https://sjvn.nic.in/">Satluj Jal Vidyut Nigam</a>, which is involved in a cascade of projects on the adjoining Arun River to generate a total of 2,000MW, is said to be aggressively lobbying top Nepali officials to also build Tamor. Besides the 900MW Arun 3, Satluj was awarded the Lower Arun by the K P Oli-led government in 2021 without competitive bidding. Then in May 2022, the Sher Bahadur Deuba-led government suddenly awarded Arun 4 to Satluj (with a 51% share) during Indian Prime Minister Narendra Modi’s visit to Lumbini.&nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20230506020556_4f38ffb96de37f17c662684914f0b65ab41adaaf98183a073273e88621de480b.jpg" data-media-id="editor_2" data-image-id="20230506020556_4f38ffb96de37f17c662684914f0b65ab41adaaf98183a073273e88621de480b" data-rendition-name="original" width="1000" height="666" loading="lazy" alt="Arun 4 agreement"> <figcaption>Indian Prime Minister Narendra Modi and then Prime Minister Sher Bahadur Deuba look on as Satluj Jal Vidyut Nigam's Nanda Lal Sharma and the NEA's Kulman Ghising exchange MoUs in May 2022 in Lumbini to build the 409MW Arun 4. Photo: RATNA SHRESTHA/RSS</figcaption> </figure>  But even though Satluj is said to be also interested in the 1,061MW Upper Arun, Kulman Ghising of the Nepal Electricity Authority (NEA) says it is building the project. "Upper Arun is our first priority, we are planning to start the construction of the access road," Ghising told us. Arun and Tamor are both in eastern Nepal (see map), but India is also interested in rivers in western Nepal because of the proximity of its main load centres as well as to augment the dry season flow of Nepal’s rivers that flow into the Ganga.&nbsp; There was some hue and cry last year after the Deuba-led government abruptly handed over the 750MW West Seti Dam and Seti River-6 projects to two Indian state-owned companies without competition or transparency. Experts pointed out that Nepal’s Public-Private Partnership and Investment Act 2075 states that there should be competitive bidding.&nbsp; The Seti saga is three decades long. After successive partnerships with Australian, Chinese and private Indian companies fell through, India’s state-owned NHPC finally took the lead. Since the terms of the deal are opaque, many experts question how beneficial the $1.6 billion project that involves building a high dam in the Doti district will be for Nepal.&nbsp; Indian state-owned companies appear to move faster than private Indian companies interested in river projects in Nepal. The GMR Group (Gandhi Mallikarjun Rao) obtained a permit to build the 900 MW Upper Karnali and a Project Development Agreement (PDA) was signed with the IBN in 2014 with plans to start construction in two years after securing funding. The government's latest decision to extend the deadline for the GMR by two years is being challenged in Nepal’s Supreme Court.&nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/2023050603054_0b5cc52ed5ece09ac54bf7fd42d663e156bd8a721203fecad4470d449722bfd9.jpg" data-media-id="editor_3" data-image-id="2023050603054_0b5cc52ed5ece09ac54bf7fd42d663e156bd8a721203fecad4470d449722bfd9" data-rendition-name="original" width="1083" height="834" loading="lazy" alt="Indian investment in hydropower in Nepal"> </figure>  Geopolitical games The export-oriented 456MW Upper Tamakosi project finally started production in June 2021 after much delay. But because a part of the Upper Tamkosi was built by the Sino Hydro of China, India refused to buy power from the project during the monsoon surplus last year – even though it was built with NEA investment.&nbsp; One international lender told Nepali Times: “Obtaining an Indian nod before building any big hydropower project in Nepal has now become a must.” Indian pressure manifests itself in its refusal to buy only 364MW of electricity which was recently increased to 452MW. This is the sum total of generation capacity with no direct Chinese involvement. Nepal also cannot sell its power to China as there are no trans-Himalayan transmission lines, and exporting to Bangladesh would need an Indian approval system without giving a free and open market to Nepali electricity, while also rejecting any Chinese involvement. India’s international electricity trade procedure issued in February 2021 prohibits the import of electricity from projects invested in third countries that do not have a bilateral agreement for cooperation in the energy sector. The fact that India does not have an energy cooperation agreement with China has therefore become an excuse, not just to blacklist projects in Nepal with Chinese investment, but even Chinese contractors. India has even stopped the supply of explosives for projects like the Tanahu and Upper Trisuli-1 Schemes being built by Chinese contractors.&nbsp; "Even though there is nothing in writing, India does not want any involvement of the Chinese in any capacity in Nepal's hydropower projects, they even have details of which country is the contractor and where are the machines being used from," explains Ganesh Karki of the Independent Power Producers Association Nepal (IPPAN). India first allowed imports of electricity only from the 24 MW Trisuli and 15 MW Devighat projects, both built by the Indian in the 1960s. But after Deuba signed an agreement on energy cooperation between the two countries in 2022, NEA was allowed to 364MW.&nbsp; Even so, Nepal must renew this export provision every year, which is a bureaucratic hassle. What this essentially means is that if Indian companies do not get licenses for new plants in Nepal, they may not renew the power-selling contract either. Nepali officials have been trying to convince the Indian side that it is in their own best interest if Nepal has a surplus in the coming years. Based on projections of generation capacity, NEA has sent a proposal to New Delhi to export an additional 600MW.&nbsp; The installed capacity of hydropower projects in Nepal has reached 2,400MW and is expected to cross 3,000MW after the completion of more projects this monsoon. Projects with a combined capacity of 3,200MW are under construction and will be completed in the next three years. On the demand side, the average domestic consumption at present is about 1,600MW and is expected to increase only to 2,000MW next year.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/2023050603054_1ba6d252b58558d3d1263b0f76e3abbfc1c9dd3c019f8d9d47bd8aa415651e3f.jpg" data-media-id="editor_4" data-image-id="2023050603054_1ba6d252b58558d3d1263b0f76e3abbfc1c9dd3c019f8d9d47bd8aa415651e3f" data-rendition-name="original" width="1171" height="834" loading="lazy" alt="Hydropower generation in Nepal"> </figure>  &nbsp; <div class="embed-block"><div class="flourish-embed flourish-chart" data-src="visualisation/13536204"><script src="https://public.flourish.studio/resources/embed.js"></script></div></div> &nbsp; <div class="embed-block"><div class="flourish-embed flourish-chart" data-src="visualisation/13535503"><script src="https://public.flourish.studio/resources/embed.js"></script></div></div> There are critics who say Nepal should not be exporting power to India at all since it will not make a big dent in the trade deficit, and the $85.8 million it earned last year is negligible compared to the $8.33 billion Nepal earned in remittances.&nbsp; They say the priority should be on increasing electricity consumption in cooking, transportation and industry. At present, 70% of Nepal’s energy is from biomass and only 5% is from electricity.&nbsp; Since most of the electricity in Nepal is from run-of-river schemes in which generation depends on the flow of water in rivers, Nepal will have to continue to import power from India during the peak winter months for the next three years. In the monsoon, though, generation is double of demand, but the Indian quota, inadequate transmission and low domestic demand mean much of this clean electricity is wasted.&nbsp; Dinesh Kumar Ghimire at the Energy Ministry says Nepal is looking to sign a 25-year export agreement with India. "We are preparing a draft for the agreement. If both sides are on board with it, there may be an agreement during the Prime Minister's visit to India.” Edging out China While India is awarded one hydropower project after another in Nepal, China is being edged out. Both Phukot Karnali and Tamor hydropower projects were supposed to be implemented under Beijing’s Belt Road Initiative (BRI) scheme.&nbsp; Last month, Sichuan Wangping Energy Science and Technology gave up its license to build the 235MW Humla Karnali-1 and 335MW Humla Karnali-2 in partnership with a Nepali company. The survey permit for these projects has now been granted to Ruru Hydropower, a Nepali company. The 1,200MW Budi Gandaki reservoir project has been caught in a geopolitical tangle between India and Nepal for the past six years. In May 2017, the Pushpa Kamal Dahal government handed over the project to China’s Gezhouba Group without competition. A few months later in October, the Deuba-led government reversed the decision and said Nepal would build it. Fast forward a year later and the Oli-led government gave Budi Gandaki back to Gezhouba, only for the Deuba-led coalition government in March 2022 to reverse the decision again. Exasperated, the then-Chinese ambassador Hou Yanqi said abandoned diplomatic niceties and said publicly that it was wrong for Nepal to change its decision every time a government changed. Says Ganesh Karki of IPPAN: “We have to conclude that because of India’s stance, it is difficult to get Chinese investment in Nepal’s hydropower. The top political leadership should lobby with India to remove this obstacle.” The hydro of hydropower&nbsp; Nepal’s former energy secretary Dwarika Nath Dhungel is convinced India considers water a strategic commodity, and its emphasis on electricity export hides its real intention to secure water supply in the coming decades.&nbsp; “We in Nepal, on the other hand, have no idea about this, and there is no clarity about our own water and energy policy. In fact, our policymakers are not working in the national interest at all,” he adds. Studies have shown that water scarcity in the Indo-Gangetic plains will increase as Himalayan glaciers dry up, and the groundwater level falls due to over-extraction. And in the monsoon, there is too much water, so the world’s most densely populated region is hit by destructive floods. &nbsp; Building storage dams in Nepal is a win-win-win for India, reducing flood risk, augmenting dry season flow of Nepali rivers that flow across the border, and generating electricity. Nepal will get some export income, but will not benefit much from irrigation since it only has a narrow strip of land in the Tarai, and large tracts of its fertile mountain valleys will be inundated by future reservoirs. “Nepal’s export of a few thousand megawatts will not mean much for India's huge power system with a capacity of around 400,000MW,” adds Dhungel. “What India is fixated on is our water. And that is why it does not want any third parties involved, especially not China.” Former secretary at the Ministry of Energy Anup Kumar Upadhyay on the other hand is all for more Indian investment in Nepal’s hydropower, and does not think there is any ulterior motive. He argues that the model in which Nepal is allowing Indian companies to build projects is beneficial to Nepal in the long term. At present, Indian companies that have received permission to build hydropower plants have agreed to provide about 22% of electricity to the Nepal government for free. And after 25 years, these projects will be fully owned by Nepal. Says Upadhyay: "Whatever projects we are giving to India now, India does not even have the benefit of regular water flow from them, so there is no reason to be suspicious that India has a grand design to control our rivers." Indeed, there are many in Nepal, even those critical of Indian behaviour, who say Nepal cannot choose its neighbours and it might as well keep India happy by ensuring that the river agreements are fair to Nepal as well.

Geopolitics of Nepal’s rivers

<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221114111124/637217bd9c7e80680e0baa03jpeg.jpg" alt="" width="1802" height="1160"/><figcaption>On 25 June 2021, China inaugurated a 435km section of the Lhasa-Nyingchi Electrified High-speed Rail. The ‘bullet train’ will have a top speed of 160 km/h and bring Chengdu closer to the Nepal border when completed in 2025. Photo: Xinhuanet</figcaption></figure>Nearly a decade since China adopted the Belt and Road Initiative (BRI) and five years after Nepal signed it, the connectivity project is trying to rebrand itself.The $1 trillion program focused on trade, development and connectivity is financed largely by Chinese banks and SOEs.The Green Finance and Development Center of Fudan University says a total of <a href="https://www.sciencedirect.com/science/article/pii/S004016252100740X#bib0154">$755 billion has been spent</a> on BRI projects of which more than 65% has gone into energy and transportation.In 2013, President Xi envisioned the BRI as<a href="https://press-files.anu.edu.au/downloads/press/n9514/pdf/book.pdf"> an aspirational world</a> of peaceful connectivity and friendship — one that is free from conflict. Yet, over the years, its success has also drawn widespread criticism questioning its sustainability.Chinese infrastructure projects in BRI include energy, transportation and real estate require construction inputs — like steel, cement and glass that remain oversupplied in China.For example, the utilisation capacity of the total production of steel and oil refining in China had gone down by <a href="https://onlinelibrary.wiley.com/doi/10.1111/1758-5899.12439">10% from 80 to 70</a>% between 2008 to 2015, signaling bad loans for the banks due to overproduction and negative effects on its overall economy.BRI projects allowed the Chinese government to take steps to ensure that the vast majority of the <a href="http://www.axel-dreher.de/Dreher%20et%20al._Aid_China_Growth.pdf">construction inputs will be sourced</a> from China to offset its industrial overproduction. This allows a large volume of trade to be in China’s favour while creating a huge trade imbalance between China and recipient countries.In 2021, China’s <a href="http://country.eiu.com/article.aspx?articleid=250850808">trade surplus with BRI countries</a> had reached $199.2 billion. For some countries like Italy which saw a rise of exports by 63% in 2021, others like Nepal <a href="https://kathmandupost.com/money/2022/02/05/nepal-s-trade-with-china-going-through-rough-patch">had a trade deficit of Rs232.9 billion</a>, when total exports was only Rs1 billion.One thing has remained clear: while Chinese exports will continue to grow until the BRI projects are completed, countries at the receiving end must bet on export competitive projects that can reduce the trade deficit and ensure sustainability.Secondly, the Chinese <a href="https://madeinchinajournal.com/2021/12/01/builders-from-china-from-third-world-solidarity-to-globalised-state-capitalism/">consider themselves</a> ‘builders’ rather than ‘financers’ projecting their capacity to build projects under the BRI. It is no surprise that China dominates international project contracting. By 2018, <a href="https://www.enr.com/toplists/2019-Top-250-International-Contractors-1">75</a> of the world’s top 250 international contracting firms were Chinese.Most BRI projects have been funded by large state-owned banks of China and implemented by Chinese international contractors and SOEs, at times they have been subject to reproach due to poor labour relations including a lack of awareness of local rules and regulations, and especially on the hiring of Chinese labourers in large numbers instead of locals.Maria Carrai, Professor of China Studies at NYU Shanghai argues in favour of  <a href="https://d1wqtxts1xzle7.cloudfront.net/65743046/WD_1_s2.0_S0305750X20305167_main-with-cover-page-v2.pdf?Expires=1651327708&amp;Signature=OG1O4XNvHSblwIsYUfrb5blQwbiy0b~SuXiq9aKfw-STjlYGahGVTKHwgN7DXOm3WDAerWqfKY0iHspunM2n9IAGOfzYkuZCryKq8eq0PPgvLwdQG6Ufl3HoizzJTEQAHgj3x627V3359aWAyCxLSa-H6SYYTD2VxbkPQpV2vpOrNQ2YzX886Y0NK0t-s9WCt6Lf7ZlMy2evz54aewwDQJvS3Ki-P2ybBibKxQ5mNtJBd1xZYEe19UvN15ZLL3rmNXTCus2QW6mO6BflTSeGGcPbMsOiD-e-977Qh7KUg46GKxIvGJ8houVVqpvyq7-OoDY3nVJVjAgi3NPhOU0yVQ__&amp;Key-Pair-Id=APKAJLOHF5GGSLRBV4ZA">local adaptive governance</a> because the success of BRI projects relies on effective communication of its social responsibilities to recipient countries with their local governments and making sure that working with the contractors or SOEs can enhance good governance.The Addis - Djibouti SGR railway operation and maintenance <a href="https://qz.com/africa/1634659/ethiopia-kenya-struggle-with-chinese-debt-over-sgr-railways/">were awarded to construction contractors with no actual railway operation experience</a> resulting in a lack of adequate technical capabilities to complete the project.Yet, the major challenge is still that Chinese BRI projects are heavily invested in countries that have historically demonstrated poor and weak governance, lack of transparency and are vulnerable to political shocks and instabilities.Since the start of the BRI in 2013, more than 80% of total Chinese foreign assistance <a href="https://www.cgdev.org/blog/three-key-shifts-development-cooperation-chinas-2021-white-paper">has gone to low-income countries</a>, and for some like Angola, and Montenegro the BRI loans continue to risk having an <a href="https://www.cgdev.org/sites/default/files/examining-debt-implications-belt-and-road-initiative-policy-perspective.pdf">unfavorable degree of dependency</a> on China as its prime creditor.Despite this, BRI in itself has gradually undergone reform over the years. From its lofty and vague ambition in early 2016 that did not indicate its focus, we now know its priority areas.President Xi during the 2nd Belt and Road Forum in 2019 <a href="https://www.business-humanrights.org/de/blog/chinas-white-paper-and-the-bri-can-we-expect-china-to-deliver-on-the-sdgs/">called for cleaner, greener, high-quality infrastructure projects</a> that are “sustainable, affordable, inclusive and accessible”.Chinese-backed projects have previously been under heavy scrutiny due to a lack of transparency and growing debt burden. A 2021 white paper on Belt and Road highlights the need for high-quality sustainable projects and the 2022 MOFCOM’s ‘Guidelines for ecological environment protection of foreign investment cooperation’ stresses the need for Chinese investments to meet international standards of environmentally sustainable projects.In 2021 China declared to <a href="https://greenfdc.org/wp-content/uploads/2021/07/21_07_22_BRI-Investment-Report-H1-2021.pdf">not to invest in coal-power plants</a> and also to cut funding for loss-making projects. Regulatory scrutiny has forced Chinese contractors under BRI to significantly up their game, which means we will see it focusing on smaller and fewer projects of higher quality, particularly in areas of the green and sustainable energy sector.It has been five years since Nepal signed the MoU but has so far seen little in terms of the impact. The BRI projects use the <a href="http://www.edcnepal.org/wp-content/uploads/2018/11/DAY-4-LECTURE-5-NHDP_Hydropower-Financing-Traditional-Project-Finance-EPC-and-EPC-F_2018-11-29_FINAL.pdf">Engineering, Procurement, Construction and Financing (EPC-F)</a> used in infrastructure projects and are particularly preferred in developing countries where debt markets are less mature and there may be wide variations in the availability and cost of debt financing.The EPC contractor will be responsible to finance a large portion of the project and the government has to provide a sovereign guarantee to safeguard lenders’ interests and provide payment security guarantees on behalf of off-taker, usually government-owned entities.This has generated controversy for the huge risk involved to the host country. The selection process tends to be restrictive to a particular country or set of manufacturers, in this case only to Chinese contractors.For example, only a few weeks back the government of Nepal <a href="https://myrepublica.nagariknetwork.com/news/china-miffed-with-deuba-govt-s-decision-to-deny-chinese-company-to-develop-budhi-gandaki-hydro-project/">revoked the license</a> issued to the Chinese state-owned China Gezhouba Group Corporation (CGGC) for the development of the Budi Gandaki Hydropower Project under the EPCF modality with a total cost of around <a href="https://www.hindustantimes.com/world-news/nepal-refuses-china-s-offer-to-fund-multi-billion-dollar-power-project/story-cfRJPHSKJkn2gqyon7anUL.html">$2.73 billion.</a>After the 2017 BRI agreement, for the first time, Nepal developed a project under the EPC financing modality of $88 million financed by China and with MoU between Nepal’s People’s Energy and China’s Chongqing Water Turbine Works Co. Ltd.The agreement was to develop a 48.8 MW Khimti-2 hydropower project on the border of the Ramechhap and Dolakha districts in Province 3. However, the project suffered a major setback: 500 Chinese workers were prevented from coming back to Nepal due to the Covid-19 outbreak. Similarly, the EPCF model requires the contractors to be present in the project while the main construction takes place.The high-interest rates associated with BRI loans with a relatively short payback period is another drawback for Nepal which prefers grants. Furthermore, in BRI projects there is a right to bid reserved exclusively for Chinese firms, but the Nepali side demands to be open to all.Back then the BRI used to run projects on an ad-hoc basis but by 2022 it has undertaken various reforms to properly guide sustainable infrastructure development.Because the BRI is enshrined into the CCP’s constitution, there is no question regarding its sustainability, but as BRI puts its focus on environmentally friendly infrastructures, countries like Nepal should prioritise projects that can yield better results and help strengthen Sino-Nepal relations.Abiral Khatri is with the NIFRA bank and is a research scholar based previously at Erasmus University Rotterdam, IIM Bangalore and Renmin University of China. Raunab Singh Khatri is the co-founder of The Araniko Project and is a Yenching Scholar in Chinese studies at Peking University.

BRI enters the tenth year

<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221114111148/63721d6b9c7e80680e0bd4e9jpeg.jpg" alt="" width="1400" height="1011"/><figcaption>Illustration: DIWAKAR CHETTRI</figcaption></figure>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 <a href="https://www.cfr.org/article/what-happened-supply-chains-2021">shipping cost</a> 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 <a href="https://www.whitehouse.gov/briefing-room/speeches-remarks/2022/03/01/remarks-of-president-joe-biden-state-of-the-union-address-as-delivered/">said</a>: “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 “<a href="https://www.theatlantic.com/international/archive/2017/05/what-china-wants/528561/">the great rejuvenation of the Chinese nation”</a> and Prime Minister Narendra Modi’s <a href="https://www.thehindu.com/opinion/op-ed/are-we-turning-into-a-nation-of-hyper-nationalists/article18701484.ece">increasingly intolerant</a> 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.<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221114111148/63721d6e9c7e80680e0bd4eajpeg.jpg" alt="" width="1500" height="1000"><figcaption> </figcaption></figure>Extreme climate change events will further destabilise the 21st century global world order. According to a <a href="https://report.ipcc.ch/ar6wg2/pdf/IPCC_AR6_WGII_FinalDraft_FullReport.pdf">report</a> 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 <a href="https://www.nepalitimes.com/latest/post-monsoon-rain-ruins-nepals-crops/">"freak" rain in October</a> 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 <a href="https://www.orfonline.org/expert-speak/rising-far-right-declining-centre-left-future-refugees-europe/">forces</a> 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 <a href="https://openknowledge.worldbank.org/bitstream/handle/10986/33891/Main-Report.pdf?sequence=5&amp;isAllowed=y">report</a>, 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 <a href="https://thediplomat.com/2021/07/on-chinas-doorstep-laos-plays-a-careful-game-of-balancing/">economic ties</a> 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 <a href="https://www.eastasiaforum.org/2022/02/10/china-and-russia-position-themselves-for-laos-fast-approaching-post-ldc-era/">tie</a>s with Russia.Bangladesh also has met its own interests amidst the new order and recently surpassed <a href="https://thewire.in/south-asia/bangladesh-economy-pandemic-gdp">India's per capita income</a> despite its inherent vulnerabilities to climate change. Its <a href="https://foreignpolicy.com/2020/11/28/bangladesh-is-everyones-economic-darling-it-might-not-last/">economic prosperity</a> combines strong remittance, a vibrant garment industry, and prudent economic governance.Most impressively, through ‘<a href="https://thewire.in/south-asia/bangladesh-economy-pandemic-gdp">balanced’ diplomacy</a>, it advances its economic interests while maintaining the two clashing mighty powers: Western liberal and authoritarian forces.In June 2021, the World Bank <a href="https://jamestown.org/program/the-belt-and-road-initiative-still-afloat-in-south-asia/">canceled</a> 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 <a href="https://www.nepalitimes.com/here-now/mcc-gets-green-light-in-nepal/">Nepal ratifying the US’s $500 million MCC aid</a> is strategically a positive step. Beijing’s <a href="https://www.fmprc.gov.cn/mfa_eng/xwfw_665399/s2510_665401/2511_665403/202202/t20220218_10643446.html">objection</a> should not surprise anyone or the US’s pressure.Chinese Foreign Minister <a href="https://www.nepalitimes.com/banner/fixing-the-broken-parts-in-nepal-china-ties/">Wang Yi’s visit</a> despite the MCC ratification <a href="https://www.nepalitimes.com/here-now/reaction-to-wang-yis-nepal-visit-in-chinese-media/">indicates that Beijing</a> 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 “<a href="https://ec.europa.eu/commission/presscorner/detail/en/ip_21_6433">Global Gateway</a>”, 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 <a href="https://theopen.institute/">the Open Instiute</a> in Kathmandu.

Nepal in the new world order

<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221114111144/63721c669c7e80680e0bd48djpeg.jpg" alt="" width="1765" height="903"/><figcaption>A caravan of yaks carrying salt heads south. SOURCE: JAG BAHADUR BUDHA</figcaption></figure>While it is unclear when and how salt was first introduced to Nepal’s culture and cuisine, what is clear is that Tibetan salt was once the foundation of our Himalayan economy and livelihood.From the Walung, Lhomi, Bhote, Sherpa, Byasi Souka, Mugali, Nyinba, Dolpo, and Nisyangba, the ethnicities on Nepal’s Himalayan rimland from Taplejung in the east to Humla and Darchula in the far west have historically shared socio-cultural and religious ties with Tibet.The relationship between the southern flanks of the Himalaya with the Tibetan plateau extended to trade at a time when agriculture and livestock were the main means of livelihood on both sides of the mountains. Before 1850, Nepal imported rock salt, wool, powdered gold, horses and yaks from Tibet, and exported grain, spices, knives, fabric, handicrafts and more.In 1774, Prithivi Narayan Shah’s Gorkha expansion had led to the annexation of regions controlled by Darjeeling as well as the town of Bijaypur in the Limbuwan region which was then ruled by Sikkim.This angered the Tibetans, effectively souring relations and bringing trade to a standstill. This caused a shortage of salt in Nepal, which traders would try to remedy by smuggling it through high Himalayan passes.Nepal and Tibet fought wars in subsequent years over minting coins to trade disputes. But this did not affect the secret crossborder trade since the Nepal-Tibet border was so rugged and remote it could not be fully policed.Nepal and Tibet finally signed a treaty in 1856 to officially resume cross-border trade, allowing free travel and trade to resume.Historian Baburam Acharya in his journal China, Tibet and Nepal notes that Nepali merchants bartered rock salt bought down from Tibet for grain from Nepal’s south. In the absence of common currency, bartering these goods was the main form of trade. This barter system remained in place until 1959, writes Wim van Spengen in his book Tibetan Border Worlds: A Geohistorical Analysis of Trade and Traders.The people of Tibet’s Changthang Plateau were largely nomadic, while Nepal’s ethnicities were more settled into farming and pastoralism in the upper reaches of the Tamor, Arun, Dudhkosi in the east, to Budi Gandaki, Marsyangdi, Kali Gandaki in central Nepal, and Bheri, Karnali and Mahakali in the west.Low agricultural yield in these semi-arid trans-Himalayan valleys meant that the communities traditionally depended on cross-border trade with Tibet.Because merchants would have to be away to engage in trade for long periods of time, they divided roles, particularly among brothers, with some of the family members tasked with transporting and trading salt, and others staying behind to manage their homesteads.For this reason, polyandry was convenient and accepted in Himalayan cultures. One woman married to all brothers meant the family remained together with centralised resources, and the women did not become widows if one brother died during the perilous Himalayan traverses.Austrian anthropologist Christoph von Fürer-Haimendorf spent much of his life in Nepal, studying Nepal’s cross-border trade with Tibet, publishing his book Himalayan Traders in 1988. He explores how the market for Tibetan salt extended from Nepal’s high mountains to the foothills and the southern plains.Read also: <a href="https://www.nepalitimes.com/banner/was-tenzing-a-tibetan-nepali-or-indian-it-does-not-matter/">Was Tenzing a Tibetan, Nepali, or Indian? It does not matter.</a>, Lhakpa Norbu Sherpa<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221114111144/63721c699c7e80680e0bd48ejpeg.jpg" alt="" width="960" height="640"><figcaption> </figcaption></figure>The Salt Economy From 1850 to 1959, the indigenous peoples living in the highlands from Taplejung in the eastern Nepal to Humla in the northwest and Mahakali in the far west engaged in the ‘salt economy’ — trading Tibetan salt with the Nepalis across the central hills and the plains.The Walung ethnic group settled on the banks of the Tamor in Taplejung’s Olangchungola, Yangma and Ghunsa regions. Their job was to transport the salt from Tibet down to Maiwakhola, and exchange the goods with the Limbu indigenous groups in the central mountains. The Limbus would then take the salt down to Dharan to barter for grain and cloth.Meanwhile, Nepal’s Bhote and Sherpa put down roots where the Arun river originates in   Sankhuwasabha’s Thudam, Ritak and Topkegola regions. A little further downstream lived farmers from the Lhomi community. The Bhotes and Sherpas would barter salt for the potatoes and grains grown by the Lhomis. Similarly, the Sherpa of the Khumbu region bought and transported rock salt from Tingri in Tibet across the Nangpa La and traded it with the Rai people from down valley of the Dudh Kosi.In western Nepal, <a href="https://nepalitimes.atavist.com/high-and-dry-upper-mustang" target="_blank" rel="noopener noreferrer">Mustang’s</a> Lowa tribe settled along the Kali Gandaki and carried Tibetan salt to  Thak Khola, where they bartered it with the Thakalis who took it down to Pokhara and Kathmandu.Meanwhile, the Nisyangbas of Upper Manang used to trek even lower to trade salt in Pokhara and Baglung, eventually expanding to Calcutta and the British East India Company, and later to even Burma via Darjeeling, Kalimpong and Gangtok.In fact, so impressed was King Mahendra with the Nisyangba traders that he issued special passports to Nisyangba  merchants in 1960, allowing them to expand their transnational trading bases as far as Malaysia, Thailand and Singapore.Read also: <a href="https://www.nepalitimes.com/latest/north-of-the-border/">North of the border</a>, Nabaraj MahataraAfter Prithivi Narayan Shah’s conquest of Kathmandu Valley in the 1770s, Sankhu became also a major trading post, and would remain one until 1967. Tibetan salt from Sankhu Customs was  traded in the markets of Kathmandu from where it would reach the Tarai.The Mughals and Karins settled near the Karnali River and indigenous to Upper Mugu used to travel to Tibet twice a year to import salt and wool. The salt was then exchanged for grain in the lower Mugu and Jumla to the Matwali Chhetris, who would go on to sell the goods in Jajarkot and the Tarai. Communities in northern Humla also traded salt for grain with the Thakuri  in Bajhang and Bajura to the south.The Dolpopa of the Upper Dolpo transported salt and wool on sheep, mountain goats and yaks to exchange for grain in the Tarali Magar village  as well as to the Hurikot and Kaigaun villages in the Tichhurong region. Some of the last of these yak caravans were depicted in Éric Valli's Oscar-nominated film, Himalaya.In the far-west, the Khas Thakuris of the Byasi Sauka, Hikila and Sunsera communities brought salt from Taklakot in Tibet, trading it across Baitadi, Doti and Bajura.The salt economy strengthened ties not only between the people of Tibet and the Nepal Himalaya, but also fostered personal relationships between individual Nepalis and Tibetans, so much so that the exchange of कोसेली presents between Nepalis and Tibetans was as commonplace as the buying and selling of salt.The salt trade also cemented lasting bonds between communities of the high Himalaya and the mid-mountains. The Nyinba tribe of Upper Humla were closely linked to the Khas of Limal, while the people of Upper Mugu had ties with the Khas of Lower Mugu.  The Tarali Magars and Matwali Khas people of Dolpo, as well as the Lowa and Thakali of Upper Mustang had strong family bonds. The Sherpa of Khumbu similarly built relationships with the Sunwar and Rai communities to the south, as did Taplejung’s Walung with the Limbu community.Read also: <a href="https://www.nepalitimes.com/banner/there-are-muslims-in-tibet-too/">There are Muslims in Tibet, too</a>, Duksangh Sherpa<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221114111144/63721c6c9c7e80680e0bd48fjpeg.jpg" alt="" width="1500" height="1069"><figcaption> </figcaption></figure>Rubbing Salt By 1959, with China’s annexation of Tibet and later with the Panchayat system in Nepal, there were stricter border controls and the salt trade started declining. In addition, the activities of Khampa guerrillas based in Nepal who launched cross-border raids on the Chinese military led to tighter controls at the border.There was also an imposition of high taxes and quotas on the production of salt making it an expensive commodity. The popularity of Tibetan salt also waned when awareness spread that the lack of iodine in it led to goitre and cretinism among Nepalis.The Salt Trading Corporation was established in 1963 which coincided with the spread of new roads and airports. Gradually, salt imported from India replaced Tibetan rock salt in Nepal. Indeed, sea salt from India reached Nepal’s mountains faster and was cheaper than rock salt, and its transport by road and even aircraft was subsidised by the state.The loss of the salt trade dealt a heavy blow to the economy, and ultimately changed the socio-economic status of the trans-Himalayan regions. Traders and their families were forced to migrate or  take up alternative occupations. In Olangchunggola in northeastern Nepal, the decline of the salt trade destroyed the local economy, impoverishing families.Read also: <a href="https://www.nepalitimes.com/banner/gift-a-goat/">Gift a goat to Tibet nomads in Nepal</a>, Nepali TimesThe salt trade disruption caused a mass exodus of Nepal’s Himalayan communities to Taplejung, Dhankuta, Kathmandu and even Darjeeling. The Thakalis of Mustang  moved to Kathmandu and engaged in international trade.  The Sherpas of the Khumbu region found alternative employment in mountaineering and tourism, while some communities in Dolpo and Mugu clung to the declining salt trade.The end of the Nepal-Tibet salt trade also stopped cross-border community and family links. The cessation of the trade also led to a loss of skills, art forms, livelihoods and traditions like the salt-carrying yak and sheep caravans. Now, there are motorable roads in most places where the caravans used to traverse.<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221114111144/63721c6f9c7e80680e0bd490jpeg.jpg" alt="" width="1162" height="1438"><figcaption> </figcaption></figure>Some former salt traders now rear livestock, but the closure of pastures in Nepal and Tibet have affected herders on both sides of the border.  This in turn has resulted in the decline of wool production and traditional apparel like bakkhu and docha, leading to a loss of knowledge, skills, craft, art forms and festivals, particularly among younger Nepalis.The Nepal government could have introduced alternative livelihood programs to offset the effects of the termination of the salt trade, made worse by the Himalayan barter economy being affected by monetised trade. Communities have not had time to adapt, since many of these changes came within a generation.The Himalayan region, which used to export grain to Tibet in the past, has now been reduced to importing rice and other food items from Tibet. Himalayan self-reliance has been replaced by dependency and hyper-consumerism. Gone are vestiges of the salt-economy and the socio-cultural ties it fostered.Read also: <a href="https://www.nepalitimes.com/banner/fixing-the-broken-parts-in-nepal-china-ties/">Fixing the broken parts in Nepal-China ties</a>, Kanak Mani Dixit(Jag Bahadur Buda is a student of anthropology. Adapted from the <a href="https://www.himalkhabar.com/news/128848">original</a> in the March issue of Himal magazine by Shristi Karki.)

The salt of the earth

<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221114101148/63720f249c7e80680e0b795ajpeg.jpg" alt="" width="3600" height="2400"/><figcaption>Chinese Ambassador Hou Yanqi and diplomats after seeing off Chinese foreign minister Wang Yi's plane in Kathmandu airport on 27 March.</figcaption></figure>A day after Chinese State Councilor and Foreign minister Wang Yi’s visit to Nepal was announced, my Chinese professor cited a Nepali news source which he received from a foreign colleague to inform the class about the three-day visit to Kathmandu.Without timely reporting, Chinese netizens who are dependent on the official press and social media for news had been largely unaware about Wang Yi’s ‘Journey To the West’ until he was already in Nepal on 25 March.‘Journey to the West’ is a proper noun in Mandarin and derived from an extended account of the Tang dynasty Buddhist monk Xuanzang, who travelled to the ‘Western regions’ of Central Asia and the Subcontinent in the 7th century to obtain sacred texts.Compared to delay in reporting Wang Yi’s Pakistan, Afghanistan and India visits, news on Weibo that he was in Kathmandu on the second day was relatively more timely. The late media reports and posts of his ‘Journey To the West’ could have been deliberate so as to make the news stale, and not create a big fuss.Although Global Times, Xinhua and other state media published articles on the visit, it was not shared on their Weibo pages because it could have likely created undesired discussions. Moreover, the visit coincided with the tragic crash on 21 March of a China Eastern Boeing 737-800 that diverted the attention of netizens.Similar low-key reporting was observed when Global Times and other state-owned media took more than a day to react to the <a href="https://www.nepalitimes.com/here-now/mcc-gets-green-light-in-nepal/">ratification of the American MCC grant</a> by Nepal’s Parliament on 27 February.At that time, Chinese cybersphere was rife with reference of other international websites and expressing curiosity about why the MCC news was not trending on Weibo yet. Whether this was intentional or not, it successfully suppressed the hashtag ‘Nepal approved US aid deal’ (尼泊尔通过美援助协议) which reached the Top 11 on Weibo as soon as the state media reported about it.  (Screenshot below)It is most likely that in the case of Nepal, the <a href="https://www.nepalitimes.com/here-now/china-lobbying-against-mcc/">uproar over the MCC ratification</a> on Weibo was toned down to welcome Wang Yi’s visit to Nepal. Besides the nine agreements signed between Nepal and China during his visit this week, a bigger takeaway was <a href="https://www.fmprc.gov.cn/mfa_eng/wjb_663304/wjbz_663308/activities_663312/202203/t20220327_10656328.html">Wang Yi’s talks about China’s ‘Three Supports’ for Nepal</a>:1) Supporting Nepal in pursuing a development path suited to its national condition2) Supporting Nepal in pursuing independent domestic and foreign policies3) Supporting Nepal in participating in the Belt and Road cooperation to a greater extentOne article in the Chinese media noted that the second and third ‘supports’ in particular were a clear reminder to Nepal that it should remain independent in its relations with China, and take the long-term bilateral relations into consideration.<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221114101148/63720f279c7e80680e0b795bjpeg.jpg" alt="" width="528" height="1012"><figcaption>The hashtag尼泊尔通过美援助协议 (Nepal approved US aid deal) trends at Top 11 on Weibo on 1 March, 2022</figcaption></figure>Moreover, Nepal ‘should not be easily deceived by the US investment’ and ‘$500 million is not worth the sacrifice of Nepal's sovereignty’.In a recent <a href="https://weibo.com/ttarticle/x/m/show/id/2309404752126701339032?_wb_client_=1">interview with the China’s state-media</a>, Wang Yi admitted that his visit to South Asia came at a time of the spreading spillover effect of the Ukraine crisis and threats to world peace. He confirmed that China’s neighborhood holds a top position in Beijing’s overall diplomacy, saying it was “better to be a close neighbour than a distant relative” to South Asian countries.While Nepal’s own mainstream press focussed on the nine agreements inked during Wang Yi’s visit and photo-ops with Nepal’s leaders, Chinese media and cybersphere were fixated on Nepal’s reiteration of the One China Policy and commitment towards ‘<a href="https://www.globaltimes.cn/page/202203/1256876.shtml">never allowing any forces to use the Nepali territory to engage in any anti-China activities</a>’.Prof Xue Xiaorong of the School of Marxism at Fudan University, who has over 170k followers on Weibo, posted that the ‘explanatory notes’ on MCC ratification was Nepal’s way of expressing goodwill to China, and the reason behind Nepal’s firm commitment to Minister Wang was to reassure China that it has not sold out its sovereignty to the Americans.This was met with sarcastic comments by some Chinese social media users who urged China not to trust a ‘sold country’. A <a href="https://mp.weixin.qq.com/s/0YcotBZyChOXSThRyIy6UQ">WeChat page reporting on Nepal, Xin Niboer (新尼泊尔),</a> dug out a relatively obscure news item of a small protest on Sunday in Janakpur against the 9-point agreement between Nepal and China.<img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221114101148/63720f299c7e80680e0b795cjpeg.jpg" alt="" width="640" height="585">Besides the expected meetings with President Bidya Devi Bhandari, Prime Minister Deuba, Foreign Minister Narayan Khadka , Wang Yi also met two Communist leaders Pushpa Kamal Dahal of the Maoist Centre and K P Oli of the UML .While Wang Yi’s talk with Dahal were reported with predictable remarks from both sides thanking each other for their effort and support, the meeting with Oli was cited in the Chinese media with greater sentiment.“<a href="https://www.guancha.cn/internation/2022_03_28_632119_s.shtml">You are an old friend to the Chinese people</a>,” Wang Yi is reported to have told Oli, reminding him that it was when he was prime minister in 2019 that <a href="https://www.nepalitimes.com/banner/president-xi-in-kathmandu/">Chinese President Xi Jinping paid a historic visit to Nepal</a> which ‘achieved important outcomes and brought bilateral relations to a new level’.This reporting could signal that the tables may have turned on <a href="https://www.nepalitimes.com/opinion/comment/what-the-chinese-think-about-nepals-maoists/">Dahal’s positive impression in China as a ‘Maoist’ leader</a>. Some comments on Chinese social media remarked that ‘this was not the same Prachanda’ as the one in 2006. Others joked that <a href="https://news.ifeng.com/history/4/200703/0319_338_89975.shtml">Prachanda</a> was the rabbit in the race with the turtle and had underestimated the ‘intensity of the struggle’ back then.Another comment called Wang Yi’s meetings with Nepal’s two top Communist leaders as sending a message to the Americans that ‘if they can interfere in Nepal’s internal affairs then so will China’.Regardless, as much as Nepal has stressed on supporting One China Policy, China has equally stressed on non-interference in the internal affairs of other countries.It was not lost on many that Wang Yi’s visit to Nepal came just over a month after Nepal’s Parliament approved the MCC. This undoubtedly is a factor that has made Beijing rethink its Nepal policy, which is an extension to the whole region.In his interview in state media, Wang Yi stressed that his South Asia tour was to stress the importance to work with neighbours, and ‘<a href="https://weibo.com/ttarticle/x/m/show/id/2309404752126701339032?_wb_client_=1">to build an Asian community with a shared future</a>’.Aneka Rebecca Rajbhandari is a Masters student of Chinese Politics at Renmin University of China.

Reaction to Wang Yi’s Nepal visit in Chinese media

<figure><img width="640" height="359" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221114101144/63720eb29c7e80680e0b7933jpeg.jpg" alt=""/><figcaption></figcaption></figure>In 1991, as the editor of Deshantar weekly, I was part of a visiting team of journalists accompanying Prime Minister Girija Prasad Koirala on his state visit to China. Nepal had just become a constitutional monarchy after the Peoples’ Movement, there was no Google yet, and we did not have too many China watchers in Nepal.To prepare for my Beijing trip, I was directed to the Center for Nepal and Asian Studies (CNAS) where I first met Dhurba Kumar. He gave me monographs and papers to read, and the professor knew so much that he overwhelmed me with information.Dhruba Kumar took great interest in geopolitics vis-a-vis Nepal, and was a self-taught expert on China. Over the years, as Nepal transitioned into multiparty democracy, the Maoist conflict and finally became a republic, I came to rely on Dhurba Kumar for guidance and contributions for Himal Khabarpatrika, the magazine I edited.He did not miss any details, and could present them in fluent, easy-to-grasp language, translating concepts from academese into Nepali or English with equal ease.In 1986-87, when the Indian Peace-keeping Force (IPKF) landed in northern Sri Lanka, there was fear that like Sikkim, Nepal could be the next place for Indian intervention.The theory was that the Indian Army could foment internal conflict in Nepal as well, and use the same pretext of ‘peace-keeping’. The IPKF soon got embroiled in a war with the Tamil Tigers and had to retreat.Through this period, I relied on Dhruba Kumar for sage advice and analysis. Under his tutelage and with Director Khadga Bikram Shah, CNAS produced quality research on the Nepal dimension of the Indian Army’s presence in Sri Lanka.When India and Pakistan conducted nuclear tests in 1997, there was consternation in Nepal that we would be downwind for any radiation fallout. I interviewed Kumar about the implications for Nepal of antagonistic nuclear-armed neighbours with both of which Nepal had cordial relations. No one else at the time had the expertise and insight to analyse this from a Nepali perspective. I sought Dhurba Kumar’s inputs on many other security matters for Himal. Having not written in Nepali previously, he was initially reluctant. I persuaded him that writing in Nepali would not be as difficult for someone with his educational background. Dhruba Kumar was not one of those arm-chair analysts, he did painstaking research, looked at issues objectively and his conclusions would be evidence-based. When the Maoist conflict was at its peak, his analysis of the geopolitical dimensions of the insurgency would be a cover story in Himal. Two years ago, we approached Dhurba Kumar to write for us once again after Shikshak began to co-publish the magazine Niti-Bimarshsa. We had been constantly in touch with him up until the time he was admitted to hospital. He was not meeting people during the pandemic, but I visited him with a copy of Niti-Bimarshsa.Nepal has signed the ambitious Belt and Road Initiative (BRI) project with China, and the US Millennium Challenge Corporation (MCC) grant has been ratified by Parliament. Chinese Foreign Minister Wang Yi is in Nepal, Prime Minister Sher Bahadur Deuba is going to New Delhi soon, and a US delegation arrives next month.To make sense of this new geopolitical Great Game churning in our neighbourhood, we would have relied on Dhruba Kumar to explain what the real implications for Nepal would be. Nepal has now edged closer to the United States, the other global power that China is suspicious of. We must win China’s trust, while keeping a balance with India. The Russian invasion of Ukraine is a lesson of what can happen if we lose that balance. What is Nepal's relationship with China? How do we maintain cordial relations with both neighbours, while keeping both at arms length? And what should the basis of Nepal’s foreign policy be in the context of the Ukraine-Russia war?As journalists, those are questions we would have posed to Dhurba Kumar if we were trying to make sense of the region today. In fact, we did send him an email recently asking for an interview, but there was no answer. We then went to his house, and found out that he was not well. I cannot see anyone else in Nepal’s academia today that can make the kind of sharp dissection of current affairs and security matters like Dhruba Kumar did. That is not to say that there are no other analysts, but none come close to doing justice to the issues like he did.The demise of Nepal's foremost analyst of political and security issues  leaves a big void not just for us journalists, but also as a researcher and adviser to Nepal’s foreign policy establishment. There is a vacancy for the post Dhruba Kumar has left.Translated by Shristi Karki from the Nepali original in <a href="http://himalkhabar.com/" target="_blank" rel="noopener noreferrer" data-saferedirecturl="https://www.google.com/url?q=http://himalkhabar.com/&amp;source=gmail&amp;ust=1648281701876000&amp;usg=AOvVaw0POzKUeeR0wZ4JHUWmuVAV">himalkhabar.com</a>

Nepal loses its foremost security analyst

<img width="2048" height="1282" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221114101144/63720e1d9c7e80680e0b78fcjpeg.jpg" alt=""/>While many countries <a href="https://www.nepalitimes.com/latest/nepal-reopening-for-tourists/">lift mask mandates and coronavirus restrictions</a>, Hong Kong and China are reeling from an Omicrons surge. Britain, the US and some parts of Europe are seeing a new spike in cases. In Nepal, the <a href="https://www.nepalitimes.com/here-now/omnipresent-omicron-starts-to-lose-its-edge/">public is determined to believe</a> that the worst is over. But there is a danger that China's Omicron surge will bring out a new variant. Hong Kong's Centre for Health Protection, Department of Health has urged all residents to avoid non-essential travel. The territory may soon impose a lockdown, just as China has isolated entire provinces. The surge in China and Hong Kong has been attributed to low natural immunity because of the zero-Covid strategy, the relative inefficacy of Chinese vaccines to Omicron, and the emergence of the Omicron BA.2 sub-variant.Meanwhile cases of a new hybrid strain that is as transmissible as Omicron and as serious as Delta, dubbed the 'Deltacron', has broken out in the United States and Europe.The WHO warned this week that the world is “only half-way” through the pandemic, and although news of <a href="https://www.nepalitimes.com/here-now/ukraine-crisis-hits-nepal-economy-hard/">Russia’s invasion of Ukraine</a> has overshadowed Covid-19, the virus is still spreading in unpredictable ways.Given all this, it may be prudent for Nepal not to lift all vaccine restrictions just yet. Masks and avoiding crowds must still be enforced to spread a future surge. Even though, as we have seen in the last two years, new variants can easily come in <a href="https://www.nepalitimes.com/latest/nepal-on-high-alert-for-omicron/">from travelers and spread in the community</a>.Read also: <a href="https://www.nepalitimes.com/latest/the-story-of-nepals-first-covid-19-fatality/">The story of Nepal’s first COVID-19 fatality</a>, Laxmi BasnetA number of European countries have relaxed restrictions and several states of the US have moved to eliminate mask mandates after a new guideline by the Centers for Disease Control and Prevention (CDC). The hope is that the pandemic is giving way to an endemic. An endemic has been described by the CDC as a ‘constant presence and/or usual prevalence of a disease or infectious agent in a population within a geographic area’. "We're almost there, it is now the beginning of the end, at least in the UK," Prof Julian Hiscox at the University of Liverpool told the BBC recently. "I think life in 2022 will be almost back to before the pandemic.” CDC director Rochelle Walensky echoed this, saying earlier this year that the pandemic is likely to become endemic in the US and around the world. Virologist Ian Jones of the University of Reading in the UK also said recently: “There is now no doubt that Omicron is attenuated and taking as a step toward endemicity”. Medical historians argue that most pandemics last between two and a half to three and a half years. Without a clear explanation and vaccination, the <a href="https://www.nepalitimes.com/opinion/remembering-a-pandemic-100-years-ago/">1918 Spanish pandemic</a> that infected one-third of the world’s population and claimed over 50 million lives fizzled out in 1919. An analysis suggests that the Omicron variant has now changed the shape of the global pandemic and this is likely to lead to the 'endemic world'. Chris Murray of the University of Washington takes the fact that despite the surge in infections, hospitalisation and fatality rates are still low as indication that we are now entering an endemic phase.Stephen Kissler at the Harvard T H Chan School of Public Health has been quoted as predicting: “Omicron will soon become endemic much like flu." Read also: <a href="https://www.nepalitimes.com/editorial/survive-revive-thrive/">Survive, revive, thrive</a>, EditorialWhat is puzzling scientists is why Hong Kong’s fatality rate is so high, while Omicron has not killed people at the same rate elsewhere. The risk of reinfection from Omicron is estimated to be 5–fold higher and this poses a danger to the high risk groups, elderly and to those not yet infected.Epidemiologists warn that the worst may yet to come of new variants emerge from the spread in China. Spreading to other parts of the world not yet infected to Omicron, this could have a devastating effect. Nevertheless, turning back the pages of the history of pandemics, we have seen that viruses naturally mutate and slowly evolve into an endemic phase that circulates at more manageable levels. The 1918 <a href="https://www.nepalitimes.com/editorial/preparing-for-a-no-normal/">influenza strain may never have disappeared, and continued to mutate and circulate</a> to this day. What we need to develop and adopt is <a href="https://www.nepalitimes.com/banner/why-is-there-vaccine-hesitancy-in-nepal/">sustainable coping strategies, including vaccinations</a>. What are critically missing and paying least attention to is social interventions such as behavioural change, communication for mask wearing and avoiding crowds for the near future.Medical historians also agree that the pandemic ends socially before it ends medically. And proof of that is Nepal, where mot people seem to think that they no long have to worry about the pandemic. What if the virus has decided not to enter an endemic phase just yet?Mohita Upreti is Journalism student at St. Xavier's College, she regularly contributes to the College’s monthly newsletter - The Xavierian Chronicles.Read more: <a href="https://www.nepalitimes.com/banner/why-is-there-vaccine-hesitancy-in-nepal/">Why is there vaccine hesitancy in Nepal?</a> Sonia Awale

From pandemic to epidemic to endemic

<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221114101124/63720a149c7e80680e0b557fjpeg.jpg" alt="" width="1500" height="1000"/><figcaption>Photo: AMIT MACHAMASI</figcaption></figure>There is intense international diplomatic pressure for and against a <a href="https://www.nepalitimes.com/latest/missing-links-in-nepals-mcc-debate/" target="_blank" rel="noopener noreferrer">$500 million American project</a>, as Nepal’s main political players try to<a href="https://www.nepalitimes.com/here-now/maoists-backpedal-on-mcc-letter/" target="_blank" rel="noopener noreferrer"> strike backroom deals</a> ahead of the 28 February deadline for ratification of the compact by Parliament.This being Nepal, lawmakers will be expected to go late into the night to vote. And if they still need more time at the stroke of the midnight hour on Monday, 28 February, they might argue that there is another 12 hours before it is midnight in Washington DC.Whatever happens in the coming days, by playing political ping-pong with the MCC Nepal’s leaders have damaged <a href="https://www.nepalitimes.com/latest/nepal-in-political-and-geopolitical-jam/" target="_blank" rel="noopener noreferrer">Nepal’s international reputation</a> and have come across to both the Americans and the Chinese as being untrustworthy, prone to playing petty party politics to undermine the country’s own national interest.The MCC is a bilateral United States foreign aid agency established by Congress in 2004 to help improve the economies of under-developed countries that have democratic safeguards. Nepal was the only other South Asian country besides Sri Lanka to be offered the grant to ‘maintain road quality, increase the availability and reliability of electricity, and facilitate cross-border electricity trade between Nepal and India’.All agree that those things are needed. The problem has been that rivals of former prime minister K P Oli used his support for the MCC to bring him down, accusing him of selling out the country. It is no secret that <a href="https://www.nepalitimes.com/here-now/china-lobbying-against-mcc/" target="_blank" rel="noopener noreferrer">Beijing overtly opposed the American project </a>in Nepal, and has used the two Communist parties in the coalition government to reject it.The history of US aid to Nepal begins in the 1950s, and since then it has poured hundreds of millions of dollars into development projects, infrastructure and training. The MCC grant is a continuation of this involvement, and the reason it has become a <a href="https://www.nepalitimes.com/latest/the-deal-breaker/" target="_blank" rel="noopener noreferrer">political hot potato</a> now is because the compact needs Parliament ratification. Ironically, that clause was added because of chronic political instability in Nepal.With growing Sino-US polarity on the global stage, the MCC grant has brought Washington and Beijing on a collision course in Nepal. China is a geopolitical influencer in Kathmandu, and has always been wary of Western support for Tibetan nationalism. The Communist Party of China (CPC) has maintained fraternal relations with Nepal’s Communist parties, and wants them united to reject the MCC.Read also: <a href="https://www.nepalitimes.com/banner/high-tension-in-nepal/" target="_blank" rel="noopener noreferrer">High tension in Nepal</a>, Rabin GiriA fierce power struggle since the 2017 election resulted in a three-way split last year in the once-powerful Nepal Communist Party. Oli’s UML is now in the opposition, while the Maoist Centre led by Pushpa Kamal Dahal and Madhav Kumar Nepal’s Unified Socialists are members of a five-party governing coalition led by Prime Minister Sher Bahadur Deuba of the centre-right Nepali Congress (NC).Deuba has been a vocal supporter of the MCC. So was his predecessor Oli who now sees the project as a wedge to <a href="https://www.nepalitimes.com/latest/mcc-risks-split-in-nepals-ruling-coalition/" target="_blank" rel="noopener noreferrer">split the coalition</a> ahead of polls. It is an indication of just how high the stakes are that American Ambassador to Nepal Randy Berry met Oli on Tuesday, just weeks after the Chinese Ambassador Hou Yanqi also met him. The UML’s stance will be key to having the MCC passed, although the NC and smaller parties will have enough members for a simple majority if the Communist parties stay away.Democratic disarray in the US since 2016 and the rise of China have made Beijing more assertive in Nepal. China has been the largest source of foreign investment in Nepal for six consecutive years, it has provided large loans for Pokhara airport, and is negotiating another one for the Budi Gandaki dam. The Tibet Railway will arrive at Nepal’s northern border in Kerung by 2025, offering easier overland connectivity to the mainland.The MCC is seen by the Chinese as a direct challenge to its own <a href="https://www.nepalitimes.com/latest/china-builds-digital-and-medical-silk-roads/" target="_blank" rel="noopener noreferrer">Belt and Road Initiative</a> of which Nepal is a signatory. But many have warned that Nepal might fall into a ‘Chinese debt trap’ similar to the one that has now bankrupted Sri Lanka after it rejected the MCC in 2019.Nepal’s two Communist parties in the coalition contend that the compact is anti-national, allows American law to prevail over Nepal’s law, and lawmakers will have insufficient oversight over the MCC board. They have successfully mobilised the social web to spread fear among Nepalis of American imperialist ambitions to counter China. Following the chaotic withdrawal from Afghanistan and past American misadventures in the Gulf, many on Nepal’s cybersphere say the country could face similar instability with greater American engagement.If Parliament fails to ratify the MCC by the deadline, it could impact not just US-Nepal relations, but also undermine the country’s international credibility, dependence on multilateral agencies, and even Nepal’s peacekeeping operations for which the Americans pick up the tabs.US Assistant Secretary Donald Lu is said to have pointedly warned Nepali politicians in a call this month that Washington would "review its ties with Nepal" if an agreement is not reached, although the US Embassy later clarified that it was up to Nepal to take the grant or not.Read also: <a href="https://www.nepalitimes.com/opinion/to-be-or-not-to-be-on-the-mcc/" target="_blank" rel="noopener noreferrer">To be or not to be on the MCC</a>, Anil ShahThe most direct consequence of the project being cancelled will be in building a crucial 400kVa transmission line along the Kathmandu-Butwal corridor to evacuate the estimated 3,500MW of electricity that the country will be generating by 2025. Nepal will have to build the transmission line possibly with Chinese loans, which will mean greater cost and further delays.The elephant in the room in all this is India, which has kept out of the debate so far. But it is watching warily since New Delhi and Washington are allies, and yet Nepal's prevarication is a signal of bending towards Beijing. India is Nepal’s biggest trading partner by far, and it will be watching out for Chinese inroads into Nepal’s infrastructure if the MCC is rejected.On the other hand, if the MCC goes ahead it risks China's ire. On 23 February, Chinese Foreign Ministry spokesperson Hua Chunying said Beijing opposes "coercive diplomacy" by the United States in Nepal.Hua added: "How can a gift be sent by an ultimatum? Is it a gift or a Pandora's Box?"In MCC-related posts on the Sina Weibo platform's comments call the MCC a ‘US trap’ and ‘a form of occupation’. Some comments go even further, calling the US a ‘colonist power’. Another post said: ‘Nepal is close to China, that's why the US wants to come here."With geopolitics heating up, Nepal now finds itself caught between two powers like Vietnam vis-à-vis the East China Sea, or the Ukraine crisis. However, Mongolia is an example of a country that has successfully negotiated the MCC despite being squeezed between Washington, Beijing and Moscow. Mongolia is using its $350 million MCC grant for a water supply project in Ulaanbaatar.Whichever way it goes, the MCC will be a tipping point in Nepal’s domestic politics and will have a direct impact on three levels of elections this year.Read also: <a href="https://www.nepalitimes.com/editorial/the-message-is-the-medium-2/" target="_blank" rel="noopener noreferrer">The message is the medium</a>, EditorialHoang Chu is a student at Pitzer in Nepal in Claremont, the United States.

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