A new page opens in Nepal-India relations

By Shyam Saran

Prime Minister Narendra Modi’s visit to Nepal on August 3 and 4 has certainly hit all the right notes. It has raised very high expectations, not unlike those in India itself, and on their fulfilment, within a reasonable period of time, rests the future of India-Nepal relations.
What were the high notes? In every pronouncement, Modi accorded respect and courtesy to his hosts. This was not an arrogant big brother talking down to a smaller neighbour. This set the right tone throughout the visit. In his speech to the Constituent Assembly, the Indian leader conveyed a categorical and public assurance that India had no desire to interfere in Nepal’s internal affairs, thus reinforcing a similar assurance conveyed earlier by Foreign Minister Sushma Swaraj. While expressing the hope that the Constituent Assembly would fulfill its mandate expeditiously, comments on the nature of the Constitution were avoided, except on one significant issue. By conveying his respect for Nepal’s ‘Federal, Democratic Republic, as per the wishes of the people of Nepal’, Modi put to rest apprehensions that India under the BJP would not be averse to a revival, in same form, of Nepal’s monarchy. The Indian leader reiterated what had also been conveyed earlier by his foreign minister, that India would be agreeable to ‘the review, adjustment and updating of the Treaty of Peace and Friendship of 1950, in order to reflect current realities’.
At the welcome banquet in his honour hosted by the Nepal prime minister, Modi said, “My doors are open, I invite you to bring any suggestions to review the 1950 Treaty, if you so want.” The foreign secretaries of the two countries are expected to meet soon in order to make necessary recommendations in this regard.
Modi’s reference to Nepal being the birthplace of Lord Buddha, lays to rest any lingering controversy on this emotive issue.
As was anticipated, India announced a US$ 1 billion credit to finance infrastructure and development projects in Nepal. This is generous, but the test would be in how quickly projects are drawn up and implemented. Generosity has never been lacking in the past but inordinate delays in execution have bedevilled Indian diplomacy both in the neighbourhood and elsewhere. The high notes were not matched by substantive agreements concluded during the visit. Three relatively modest documents were signed and these related to ongoing projects such as the supply of iodized salt, another for cooperation between Nepal TV and Doordarshan, and the third for reactivating the Pancheshwar Multipurpose Hydropower project, which has been in limbo for several years now. Controversies surrounding the proposed Project Development Agreement in the hydropower sector and the Power Trading Agreement for sale/purchase of power across the border, remain stalled due to familiar political controversies in Nepal. Therefore, one remains cautious about the prospects of Nepal emerging, in the next decade, as the energy bank for the region, earning significant revenue through the sale of power to India, even while relieving its own serious power shortage.
What are the prospects for India-Nepal relations in the wake of this important bilateral visit?
The restoration of high level political engagement between the two countries is arguably the most important development. This was the first prime ministerial visit from India in 17 years and thereby hangs a tale. A relationship as important as this should never have been devolved, by default if not by design, to bureaucrats and agencies, with increasingly limited political involvement. The revival of the Joint Commission at the foreign minister level, after an inexplicable gap of 23 years, and the promise made for continuing high level political exchanges, are indispensable for the management and nurturing of a critical relationship for both countries. One hopes that the momentum is maintained in the future.
One also hopes that the two sides will finally get down to a substantive discussion on reviewing and modifying the India-Nepal Peace and Friendship Treaty of 1950. This issue has been raised repeatedly by the Nepali side at least since 1995. The Indian side, to be fair, has all along expressed a readiness to consider any amendment or revisions which could “reflect the current realities”. In fact, one round of talks between foreign secretaries was held in June 2001, in New Delhi, on this subject. As far as one is aware, the Nepali side interpreted a more “equal” treaty to imply the retention of all the advantages which Nepali citizens enjoy in India on an entirely non-reciprocal basis while removing any security clauses. It is unlikely that the Indian side would accept such an interpretation of what constitutes an equal treaty based on mutual benefit and a shared concern on security challenges the two countries confront.
One remains somewhat pessimistic on the hydropower front. India is, of course, interested in purchasing at an economically viable price, power which Nepal considers surplus to its needs. India has also agreed that under sub-regional cooperation, Nepali power could be wheeled to Bangla-desh through the Indian grid, once the required transmission lines are laid between India and Nepal and India and Bangladesh. Nepal is free to develop its hydropower resources, with its own funds or through non-Indian foreign developers. However, Indian developers should not be excluded though they need not be given any preference. This has been the situation at least since 2002, when the first Power Purchase Agreement was signed with India’s Power Trading Cooperation in respect of the 700 MW West Seti project. That the project has still not been implemented has nothing to do with India.
There remain deep political and psychological barriers to promoting India-Nepal cooperation in the hydropower sector and the unseemly controversy over the proposed PDA and PTA bears witness to that. As a result, the one resource which could transform Nepal’s economic prospects remains grossly under-utilised. Instead, we have the strange spectacle of India selling power to Nepal.
The China factor was not acknowledged explicitly but it is obviously an important element in India-Nepal relations. What Prime Minister Modi appears to have done is to seek to enhance India’s presence in Nepal rather than try to limit China’s. India has major assets for promoting a closer partnership with Nepal, including age-old religious and cultural links, extensive people to people relations and a strong economic and trade relationship. India may not be averse to Nepal becoming, once again, a major transit country for trade between Tibet and India. After all, Nepal’s prosperity in history and its rich and varied culture owes a great deal to its location lying astride the major routes for Indo-Tibet trade. There need not, therefore, be only a competitive edge to India-China relations vis-à-vis Nepal.
Prithvi Narayan Shah is said to have described his kingdom as a “yam between two rocks”, conveying a sense of being besieged by India on one side and China on the other. In actual fact, Nepal is “India-open” not “India-locked”. Few countries can boast of having open borders with a dynamic and rapidly growing economy of 1.2 billion people and virtually free access to its vast market. Nepal must begin to think of India as an opportunity, not as a threat and if it does it will find itself soaring to the heights of prosperity, lifted by the tide of rising India. For India, it is necessary to never take Nepal-India relations for granted, be prepared to go as far as our Nepali partners are comfortable with and create a truly inter-dependent partnership in trade and economic relations. The high notes of the Modi visit must herald a new symphony of trust and friendship between the two countries.
(Shyam Saran is a former Indian Ambassador to Nepal and a former foreign secretary)

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