Two days before Nepal ratified the new constitution, Indian Foreign Secretary Subrahmanyam Jaishankar traveled to Kathmandu, ostensibly to convince outgoing Nepalese President Ram Baran Yadav not to approve the constitution until further changes were made to appease the Madhesi. Jaishankar was unsuccessful, and the new constitution went into effect Sept. 20. While China praised the document, India instead proffered a list of seven suggested constitutional amendments. When the Madhesi erected their blockade at the border crossing in southern Nepal, right on the Indian border, some Nepalese concluded that a disapproving India had helped organize the blockade as a way of forcing Nepal to revise its constitution. The stoppage angered traders from both countries, especially because Nepal is still in desperate need of vital imports to help rebuild and recover from last year's earthquake, which killed more than 8,000 people. Eventually, Nepalese traders — possibly joined by some of their Indian counterparts — torched the Madhasi protesters' tents and forcibly removed barriers from the road.
Whether or not India directly aided in blocking trade to Nepal, it has a clear rationale for supporting the Madhesi: If the pro-Indian Madhesi can gain greater representation in Nepal's parliament, India will have more influence over its northern neighbor. India must maximize its influence across the Indian subcontinent and hamper China's penetration into Nepal and South Asia. However, the blockade has only intensified concern over China's expanding influence because Chinese-owned companies stepped in to fill the oil shortages created by the blockade. In October, China granted Nepal 1.2 million liters of fuel for immediate use. Meanwhile, Nepal Oil Corp. and PetroChina — both state-run companies — signed a memorandum of understanding for future trade. If that preliminary document leads to a formal trade agreement, it will break India's forty-year monopoly on Nepal's oil imports.
China seeks influence in Nepal for several reasons. The landlocked nation provides China with an entry point into South Asia and by extension into Indian Ocean ports. Access to Nepal complements the growing list of Chinese projects in South Asia, which already include the $210 million Pokhara airport in Nepal, the $900 million Hambantota mega port in Sri Lanka and the $46 billion China-Pakistan Economic Corridor. Additionally, gaining influence in Nepal enables China to affect the management of the country's sizeable Tibetan community and gives Chinese businesses more access to another large export market.
Constrained by India's Strength
Despite strong anti-Indian sentiment in Nepal, Nepalese Prime Minister Khadga Prasad Sharma Oli will make his first state-level visit later this month to India. The decision to pass up China in favor of India is a function of geographical and cultural realities that force Kathmandu to cultivate strong ties with New Delhi. In contrast with the enormous Himalayan wall that demarcates the Sino-Nepalese border, Nepal's 1,080-mile open border with India sits along the low-lying Indo-Gangetic Plain, which facilitates trade and travel. Nepal also shares longstanding ethnic, cultural, religious and economic ties with India. Until the new constitution enshrined secularism, Nepal was the world's only official Hindu country. Hindus make up more than 80 percent of Nepal's population, just as they do in India, and Madhesi and Indians frequently intermarry. Moreover, India is Nepal's largest trade partner and serves as its only viable transit route. Bilateral trade between the countries was $5.5 billion in 2014, and Indian goods accounted for 65 percent of Nepalese imports.
Indian Prime Minister Narendra Modi has emphasized foreign policy because it is extremely hard for him to advance any domestic reform. Still, his involvement in Nepal is driven at least partly by domestic concerns: In October, voters in Bihar — a state that borders Nepal and has a Madhesi population — went to the polls. By advocating on behalf of Nepal's Madhesi community, Modi aimed to galvanize support for his Bharatiya Janata Party in Bihar. His tactic failed, and his party lost the election. Still, India was pleased with the Oli administration's January announcement of plans to implement a key demand of the Madhesi: seat allocation in parliament on the basis of population and proportional representation. Even so, the changes were not sufficient for the United Democratic Madhesi Front, which vowed to continue protesting despite ending the blockade.
Oli's decision to visit India rather than China reflects Nepal's limited options as a small state caught between two larger powers. The prime minister is eager to keep the peace with Nepal's powerful neighbor to the south, but meanwhile China will keep pushing for trade opportunities in Nepal and throughout the region. Chinese efforts may even be helped by rampant anti-Indian sentiment in the small country: As the Nepalese public grows to resent what it perceives as Indian attempts to bully its neighbors, China may have an opportunity to deepen its involvement in South Asia. If so, India's strategic attempt to influence Nepalese politics in the short term, whether directly or indirectly, may actually compromise some of its influence in the region.