Nepal: The mountain goat between the Tiger and Dragon
May 23, 2010

The mountainous republic of Nepal, landlocked between China and India is once again gaining prominence due to its strategic location. Nepal has become  important to China in stemming Tibetan refugees that wind their way through the Himalaya’s into India. For India, which shares more than a common language, religion and strong trade ties with Nepal, the former kingdom will help curb trained terrorists infiltrating from Pakistan and keep a watch on China’s expansionist plans in the region.

Vying for security and stability in the region, both India and China are competing to build infrastructural links and sign trade agreements with Nepal, hoping to garner a bigger say in Nepali politics in the future. Last week a delegation from Nepal headed by Home Minister Bhim Rawal visited top security officials in Beijing, prior to which Indian Prime Minister Dr. Manmohan Singh met visiting Nepal President Ram Baran Yadav in New Delhi.

India and Nepal have shared a strong relationship for more than a century. India is Nepal’s largest trading partner and economic benefactor. Nepal’s Rupee is pegged to the Indian Rupee and more than a million Nepalese work and live in India. Borders between the two nations have always been open, friendly and profitable. Confirming, Nepal’s prominence in India’s foreign Policy, New Delhi recently signed a bilateral agreement and three Memorandum of Understanding (MoUs) strengthening rail and cultural links between the two nations.

Trade with China has however quadrupled since 2003, according to government statistics, prompting Nepalese business leaders to increase economic ties with their neighbor to the North, and causing India to pay closer attention to these expansionist plans. More recently, the Chinese have built air and rail links to Katmandu, Nepal’s capital and are concretizing plans to build Special Economic Zones to attract Chinese FDI.

In many ways, China’s efforts at courting Nepal are already paying off,
last September, Nepal, for the first time, stationed armed police officers in isolated regions like Mustang and Manang on the border with Tibet. Ordinarily, roughly 2,500 to 3,000 Tibetans slipped across the border annually, however with new check posts, stricter guards and enforcement in place, this number is expected to have fallen to 600, according to the office of the Dalai Lama.

As the two nations struggle to gain supremacy in the region, cut terrorism from their borders and invest in smaller surrounding nations, Nepal will remain a focal point for China and India, both physically web and strategically. What will be interesting to see unfold is whether Nepal will be used as a pawn between two superpowers or will the Himalayan Capital rise to prosperity with the support of its neighbors? Leave your comments on our forum.

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