Nepal-India Relations Krishna V. Rajan

It is a truism that India and Nepal, despite their proximity and cultural affinities, have not been able to build up a relationship of mutual trust and confidence, or even partially succeeded in utilising their complementary economic potential for the benefit of their citizens. Since 1947, when India gained its independence, regimes have changed many times in Kathmandu, as have governments in New Delhi, little has changed in fundamental terms as far as the relationship is concerned. Plus ca change, plus c'est la meme chose (the more things change, the more they remain the same) is a fair description of the story of bilateral relations so far.

Nepal is currently experiencing a major, multifaceted crisis. The constitutional monarchy-multiparty democracy combine is beset with institutional difficulties, and there has been a dramatic erosion of central authority in the face of the eight-year long Maoist insurgency. The failure of governance and absence of leadership are painfully obvious, as is the breakdown in law and order and virtual collapse of the economy. There are serious questions about the capacity of its fragile Westminster-style democracy to survive not only challenges from the left and right, but popular disillusionment with the democratic experience of twelve years (1990-2002). The institution of monarchy has also been gravely damaged, first by the royal massacre of June 2001 and, since October, 2002, by the ill-advised and misjudged initiatives of King Gyanendra to assume full powers and sideline political parties as well as the Constitution. The Maoist insurgency is able to demonstrate at will through its tactics of terror and extortion, the impotence of government machinery and its own capacity to shut down factories and empty the roads, but it does not enjoy any real credibility as a democratic alternative to the present arrangement even if the latter is malfunctioning and discredited. The prospect of Nepal as a 'failing State' is a matter of deepest concern not only for the Himalayan kingdom but also for India and, indeed, for many other countries. In this grim crisis, India and Nepal need to introspect and see how their relationship could measure up to the existing challenges, rather than being held hostage to them.

Political and security considerations have usually been the driving force in bilateral ties. Over nearly six decades, India has dealt with every kind of regime in Nepal, tried different tactics and strategies, gone the extra mile in winning friends and influencing leaders -- basically guided by its own security perceptions. Nepalese sensitivities whether at the personal, political level or relating to the Nepalese psyche have not always been fully anticipated or well-managed. Nepalese political elites, for their part, have often exaggerated India's interest or ability to manipulate internal competitions for power in Nepal, and tended to expect political quid pro quos for cooperation even on India's legitimate security concerns. An inevitable result of such approaches has been the corrosion and devaluation of a relationship whose natural assets and complementarities could well have led it in a very different direction.

In the early 1950s, Nehru sought an understanding with the autocratic Rana regime a la British India, while encouraging an end to Nepal's international isolation and modification of its undemocratic polity. The 1950 Treaty of Peace and Friendship, was a robust imitation of the 1923 Treaty between British India and the Ranas -- it could not and did not go down too well with many Nepalese, who felt that the Treaty was unequal, non-credible and un-democratic, and who bristled openly at the suggestion that India's security perimeter legitimately extended up to the Himalayas. India, however, persisted with its efforts with the friendly constitutional monarch (King Tribhuvan) it had helped restore, and the democratic set-up (headed by the Nepali Congress) which it helped to install. Neither survived for long; but the resentment generated by the excessively visible Indian role in 'guiding' the country's affairs while promoting India's own security interests vis-à-vis China had a lasting impact. In the subsequent decades India switched on and off its active support for friendly democratic forces (especially the Nepali Congress) depending on India's leverage at the given moment and prospects of receiving minimum security-related cooperation from the absolutist monarchs (first King Mahendra, then his son Birendra). There were many visits and agreements; and much Indian aid which went into building roads, hospitals, communications, irrigation and power projects, and self defence for the Royal Nepalese Army. The result (from an Indian perspective) was only declining levels of gratitude and increased anti-Indian sentiment at the level of the common man in Nepal, and at the level of the government playing the China card, cosying up to Pakistan, systematic non-observance of Nepalese commitments under the 1950 Treaty and other agreements, the campaign to declare Nepal a Zone of Peace, protests on Sikkim's merger with India, much brinksmanship on India's security concerns. The nationalist Nepali perspective on all this was, of course, quite different and has traditionally been dismissed by the Indian establishment. It is only comparatively recently that Indian experts have, for example, started conceding that the Nepalese sense of grievance on the poor quality of design, inefficient implementation and bad maintenance of Indian executed projects like Kosi and Gandak may not be unjustified; or that if King Mahendra had been handled differently, he would have been as friendly and accommodative of Indian sensitivities as his father; that the misunderstandings between King Birendra and Prime Minister Rajiv Gandhi could have easily been avoided if there had been a little more transparency.

By the end of the 1980s India was pitching in whole-heartedly with the democratic forces while maintaining a cold and formal relationship with the king, foreseeing a popular tide in favour of pro-India groups in any free and fair election. Poor personal chemistry between the monarchy and first Prime Minister Indira Gandhi, and later Rajiv Gandhi, along with other factors, created and sustained mutual suspicions and antipathy ultimately translating into confrontational politics during the government of Rajiv Gandhi.
When Rajiv Gandhi enforced a blockade against Nepal after King Birendra imported Chinese anti-aircraft missiles in contravention of the 1950 Treaty (and also incidentally permitted the Trade and Transit Treaty to lapse) tensions escalated. G. P. Koirala, leader of Nepali Congress, then in the vanguard of the pro-democracy and anti-King movement, is reported to have asked Indian Army ex-servicemen in Nepal's Gurkha districts as to what they would do if there was a war between India and Nepal. They are said to have insisted, 'India has given us our bread, we will never fight against India!' On the Indian side, the Army Chief of Staff is known to have protested to Rajiv Gandhi that the embargo must be immediately lifted, as it was causing great hardship to the families in Nepal of serving Gurkhas in the Indian Army who were willing to lay down their lives for India's national interests. This is mentioned simply to underline the fact that leaders are sometimes totally out of touch with the sentiments of the people they are supposed to be serving.

When the Panchayat system was replaced by constitutional monarchy and multi-party democracy, after a mass agitation enjoying cross-party political support, there were huge expectations of a new era in Indo-Nepal relations. Indeed, during the first few years, India and Nepal seemed to be making up for the lost time. Visits multiplied, agreements were signed and new vistas of cooperation in trade, economic development and water resources opened up. But the bold steps taken between the Nepali Congress Government and India in strengthening ties were to some extent undermined by the widespread (if largely unfair) perception that India was putting all its eggs in one 'pro-India' political basket in Nepal in order to promote its own interests. The monarchy was a passive spectator while the opposition (leftist as well as pro-Palace) exploited these sensitivities to create an anti-India vote-bank.

Political infighting within the Nepali Congress brought its government down necessitating mid-term elections, and brought a minority communist (Communist Party of Nepal-UML) government to power (1994) after an election campaign marked by anti-Indian rhetoric. Much to the relief of India, however, the basic direction of bilateral relations was maintained by the communists. While rejecting the concept of a special relationship with India, and raising 'national' issues like the need for the 1950 Treaty to be updated, the Tanakpur Agreement to be renegotiated and need to solve the Bhutanese refugee problem with greater persistence than its predecessor government, the UML Government of Manmohan Adhikari gave sufficient indication during its brief nine-month tenure, of its serious desire to strengthen relations with India on a long term basis. For his part, Prime Minister P. V. Narasimha Rao brought home to Adhikari that India would deal with Nepal as a country, irrespective of the political or ideological complexion of the party in power or the (alleged) pro or anti-India leanings of the prime minister of the day. With somewhat uncharacteristic crispness, Narasimha Rao made it clear that while India did not expect reciprocity in an arithmetical sense, there had to be reciprocity at least in spirit, and certainly in core areas of the relationship.

The Adhikari Government fell, after just nine months in office, and was replaced by a coalition of the Nepali Congress (NC), Rashtriya Prajatantra Party (RPP), and Terai-based National Sadbhavana Party (NSP) under Sher Bahadur Deuba. The following years saw political instability assume chronic dimensions. Prime ministers and governments changed with bewildering frequency. Every possible permutation and combination of political parties was forged through temporary alliances in their bid for power. The result of the general elections of 1999, held despite a threat of disruption by the Maoists, created hope for political stability since it restored a majority Nepali Congress government under K. P. Bhattarai. But history repeated itself; the Nepali Congress squandered away its advantage due to infighting between the Koirala and Bhattarai camps, and the musical chair game helped replace Bhattarai with Koirala and brought Deuba back in power. The Maoists took full advantage of the political instability. The tragic royal massacre of June 1, 2001, further boosted their prospects. In October 2002, the Constitution itself was derailed when King Gyanendra dismissed the Deuba government, and took one initiative after another, in an unsuccessful bid to find a solution to the Maoist insurgency while consolidating the position of the monarchy at the cost of the multiparty system. In India too, there was political uncertainty and change. Between 1996 and 2004, the office of the prime minister has seen six changes and there have been four general elections.

Both countries have paid a big price for this political turbulence. Yet initially at least they succeeded in maintaining a certain stability, continuity and direction in bilateral ties, which appeared to vindicate India's long-held conviction that multi-party democracy was not only good for Nepal but offered the best hope for developing bilateral cooperation on a long term basis. This was partly due to the transparency and public awareness resulting from democratic functioning and a free press, but also due to a consistent approach on India's part not to play favourites in dealing with Nepalese political leaders.

A refinement of the Narasimha Rao approach of 'non-arithmetical reciprocity' -- as a basis for Nepal-India relations -- came in Foreign Minister I. K. Gujral's Chatham House speech of 1996; the now famous 'Gujral Doctrine' of non-expectation of reciprocity in India's dealings with its neighbours (except Pakistan). The 'doctrine' made a huge impact on Nepal, where it generated somewhat unrealistic expectations. The first test it was subjected to was when the Trade Treaty came up for renewal in December 1996. Commerce Secretary Tejendra Khanna negotiated a far-reaching agreement under Gujral's personal instructions, providing for duty-free access to the Indian market for all goods manufactured in Nepal, irrespective of labour and material content. The idea was to stimulate Indian investment in export-oriented manufacturing activity in Nepal and thus expand the basket of exportable commodities from Nepal to India -- the only way to address Nepal's long-standing grievance of a huge trade deficit and the huge potential for Indian investment in Nepal, which had been largely untapped for decades. The treaty began to show results almost immediately. Over the following five years, Nepalese exports to India increased at the rate of 57 per cent per annum, India's at 14 per cent and a number of Indian companies including Hindustan Lever, Dabur and Colgate invested in joint ventures on the Nepalese side of the border for export to India and third countries. The Treaty has not had smooth sailing in subsequent years, but the principle of enabling manufacturing industry in Nepal to ride piggy-back on the vast Indian market for the good of both countries has been accepted.

The 'Doctrine' came under further scrutiny when I. K. Gujral, on becoming prime minister, visited Nepal in 1997 at the invitation of his counterpart, Prime Minister Lokendra Bahadur Chand. Apart from other agreements signed, Gujral overruled objections from his bureaucrats and agreed to a long time Nepalese request for an alternative transit route to Bangladesh (the so-called Phulbari route). In order to address the special security concerns posed by the fact that the route passes through the sensitive 'Chicken's Neck' area of West Bengal, it was decided to provide Indian security escort for the Nepal-bound or Nepal-origin cargo -- perhaps the most striking example of going the extra mile in accommodating a landlocked neighbour's aspirations in the history of transit agreements. The fact that this exceptional gesture was being made with a coalition government led by individuals who did not have a particularly 'pro-India' complexion, did not go unnoticed.

The message to Nepal that India's cooperation would not be influenced by the political orientation of the government in power in Nepal was further reinforced by the successor government of Prime Minister Atal Behari Vajpayee, when the Indo-Nepal Transit Treaty came up for renewal. By now three governments had changed in Nepal and Koirala was heading a Congress-communist coalition. In what was possibly a unique concession to a landlocked neighbour, the Treaty was made automatically renewable every seven years, unless either country gave notice to the contrary before its expiry. In other words, Nepal's access to the sea was in principle granted in perpetuity, not something to be renegotiated and renewed every seven years. To his credit, while other leaders in the ruling party and coalition pulled in different directions on Nepal and relations suffered as a consequence, Prime Minister Vajpayee himself showed the same sensitivity towards Nepal as had his predecessors prime ministers Narasimha Rao and I. K. Gujral, and frequently overruled his advisors in showing accommodation to Nepal's expectations. The hijacking incident of December, 1999, and the somewhat casual and insensitive way in which even close friends of India like K. P. Bhattarai and G. P. Koirala treated India's requests for cooperation, came as a personal shock to Vajpayee. Subsequently, Vajpayee's personal interest and sympathy for Nepal waned as the inter-ministerial bureaucracy in India took a hard-line position on various issues, often negating concessions earlier accorded to Nepal in the spirit of the Gujral doctrine.

To its credit, the political community in Nepal did make impressive efforts, especially before the hijacking incident vitiated the atmosphere of bilateral relations, to create cross-party consensus for constructive discussions on important bilateral issues. The experience of the Mahakali Treaty was particularly striking. The Treaty was first proposed to the Narasimha Rao government by the Communist Party of Nepal-UML in April, 1995. It proposed a mega-project at Pancheshwar on the Mahakali River, upstream of Tanakpur on which the CPN-UML, while in opposition, had created a major controversy. The idea was to subsume Tanakpur in a larger project to be jointly designed and implemented (unlike previous river projects in Nepal which had been entirely executed by India, like the Kosi). Pancheshwar is at a point on the Mahakali where the river forms a boundary stretch, and the proposal was to have two stations of equal capacity on either bank, with power surplus to Nepal's needs being exported to India at mutually agreed tariffs, and additional downstream benefits to be paid for by India.

The CPN-UML government fell before the proposal could be discussed. However, the successor Nepali Congress-RPP-NSP coalition led by Sher Bahadur Deuba, with Water Resources Minister Pashupati Rana and Foreign Minister P. C. Lohani taking the lead, picked up the threads of the same proposal, hoping that the UML, now the main Opposition party, would find it difficult to oppose a draft initiated during its own administration. The Treaty was finalised on the basis of a formal all-party consensus in Nepal, and signed in New Delhi by prime ministers Sher Bahadur Deuba and Narasimha Rao during the former's New Delhi visit in March 1996. By the time the Treaty was placed before the Nepalese Parliament for ratification the Gujral Government was in office in India; the Nepalese Parliament ratified the Treaty with the requisite 2/3 majority, after a thorough and occasionally divisive national debate. The Deuba Government fell soon thereafter; its successor was a coalition led by anti-Mahakali dissidents in the RPP and CPN (UML), Prime Minister Lokendra Bahadur Chand and Deputy Prime Minister Bamdev Gautam. The new government opted to honour past international commitments, and the Instruments of Ratification of the Treaty were exchanged during Prime Minister Gujral's official visit to Kathmandu in July 1997.

The Mahakali Treaty attracted attention in a number of countries as an important indication of the ability of India and Nepal as multi-party democracies to reach agreement on cooperation in water resources on the basis of equality, transparency and equitable sharing of costs and benefits. The Nepalese Constitution requires ratification by two thirds Parliamentary majority for any agreement affecting the country 'extensively, seriously or in the long term'; many had thought that with such a constitutional provision Nepal and India would never be able to reach an understanding on cooperation in such a sensitive area as water, since ratification by Parliament would be next to impossible, given the divisive nature of politics in the subcontinent. Nepal has some 83,000MW of hydropower potential, half of which is feasible for development. It presently has a demand of only 270MW. With India's energy deficit projected to reach 20,000MW by 2010, the compelling logic of economic complementarity is all too obvious. Also, large-scale export of hydropower is perhaps the only way Nepal can hope to achieve speedy growth and remove poverty within a decade. The only other resource it has is tourism, which has its limitations.

Thus, the fact that despite a hung parliament and considerable political uncertainty, Nepal's main parties could unite to the extent of securing parliamentary ratification for the Treaty was hailed in many quarters as an impressive demonstration of the maturity of Nepal's democracy and the promising prospects now available for investment in the power sector. That a Power Trade Agreement had already been signed between the two countries during Deuba's visit to India, providing in principle for private sector investment in hydropower projects in Nepal for export to private sector consumers in India, further encouraged interest of prospective investors world-wide.

It is unfortunate that the Treaty is being implemented at such a slow pace, mainly because of its over-politicisation in Nepal on the one hand and compartmentalised, overly-technical, poorly coordinated approaches to it in India, on the other. But for all its shortcomings (no Treaty is probably perfect), it does offer a model for India and Nepal on how to reach important understandings despite the uncertainties of democratic politics and coalition governments. It is waiting to be implemented the moment Nepal's polity can summon the political will, consensus and resolve it once showed, and India the priority it once accorded and sense of accommodation it earlier demonstrated. It is encouraging to note that meanwhile, India and Nepal are seriously discussing a number of other projects (including Kosi High Dam, Upper Karnali and Budhigandaki); and that at least one private sector hydropower project for export to India (West Seti) has been finalised.

During the period between 1990-2001, when King Birendra attempted with some success to play the role of a constitutional monarch, India's relations with the institution of monarchy improved. The king shed his reserve vis-à-vis India, and in various ways he sent out signals to India as well as his own people that the misunderstandings and bitterness of the 1980s should be forgotten by both countries, and that he was personally a strong supporter of closer India-Nepal relations. He maintained regular contact with the Indian leadership on all matters of mutual interest, so that to the extent possible, neither country was taken by surprise by developments in the other; graced private and public functions regularly at India House after more than twenty years of avoiding them; made unusual departures from protocol in dealing with the Indian Embassy or visiting Indian dignitaries; paid several private as well as official visits to India, including a pilgrimage to Hardwar, Kedarnath, Badrinath, Dwarika; warmly received President Narayanan on an official visit; and was himself invited to visit India as chief guest on Republic Day, 1999 -- the first time a King of Nepal had been accorded this honour in 50 years.

Mutual goodwill and the momentum for strengthening cooperation appeared to have reached unprecedented levels. Speaking in parliament in reply to a no-confidence motion, shortly after the king's visit as chief guest on Republic Day, Prime Minister Vajpayee defended his government's foreign policy achievements by giving the example of Nepal: an election campaign was in progress there, he said, but there was not a hint of anti-Indianism in the air! Indeed, unlike in previous elections, India-related issues like the 1950 Treaty, Mahakali Treaty or Kalapani border dispute did not figure in the campaign. Tanakpur, which had brought the Koirala government down in 1994 and had once seemed such an intractable issue, was not mentioned even once.

The results of the general elections in May, 1999, were widely perceived as a vote for stability, development and apparently also for good relations with India. Parties and individuals, professing a commitment to the politics of the far left as well as the extreme right, were categorically rejected. India's constant reiteration of its faith in the multiparty democracy-constitutional monarchy arrangement, despite its recent failures, has much to do with its experience of the positive achievements in Nepal and in the bilateral relationship, up to the time of the hijacking incident.

Old suspicions and mutual demonisation have, unfortunately, vitiated the atmosphere once again. As in the past, India's security concerns and Nepal's inability to satisfy them has become th