34 Asia The Economist March 12th 2022
O
n march 1st, even as Russian shells
and missiles rained down upon Kyiv,
Kharkiv and Mariupol, Antony Blinken,
America’s top diplomat, made time for a
chat with Sher Bahadur Deuba, the prime
minister of faraway Nepal. Ukraine was
one subject of conversation—Nepal
voted to condemn Vladimir Putin’s in
vasion at the unthe following day. It was
also an occasion to mark 75 years of
diplomatic ties between the two coun
tries. “Neighbours”, as Ronald Reagan
put it, “on the other side of the world.”
But the most important item on the
agenda was the approval by Nepal’s
parliament two days earlier of the Mil
lennium Challenge Corporation (mcc)
compact, a $500m development grant
from America. The ratification marked
the culmination of a decadelong saga
that has riven the country, caused angry
protests and irritated both the United
States and China. As the war in Ukraine
forces small and mediumsized coun
tries to take stock of their allegiances and
relationships, Nepal’s experience bodes
ill for those trying to avoid getting caught
between rival powers.
Ever since the British left South Asia
in 1947 Nepal has been bossed around by
India. More recently China, with its
tempting offers of investment and loans,
has been throwing its weight around. It
has widened its focus from quelling
proTibet activities in Nepal to influenc
ing foreign policy more broadly. In the
past few years America has become more
interested in the region as well, seeing it
as a venue to counter China. “There is an
old adage of Nepal being a yam between
two boulders,” says Amish Raj Mulmi,
the author of “All Roads Lead North”, a
book on Nepal’s relations with its hu
mongous neighbours. “Now we know it
is three boulders.”
The grant from the mcc, a foreignaid
programme, should have been an easy sell
for Nepalese politicians. It is the biggest in
the country’s history. It is transparent,
aimed narrowly at improving eastwest
road links and building power transmis
sion lines to India, and has a fixed, five
year lifespan. Investments in hydropower
have given Nepal a surplus of energy, and
India is a keen customer. The longterm
benefits of trading electricity with India
are immense. It is for these reasons that
Nepal applied for the grant in 2012, and
signed an agreement in 2017.
Yet the mcc became controversial soon
afterwards. In 2018 Mike Pompeo, Mr
Blinken’s hawkish predecessor, declared
that it made Nepal a part of America’s
“IndoPacific strategy”, designed to coun
ter China in Asia. Other American officials
echoed the suggestion. China was livid.
Nepali politicians were aghast.
The grant became politicised at home,
too. Some of the language in the compact
gave rise to the notion that its terms would
override Nepal’s laws, and thus its sover
eignty. More imaginative conspiracists
suggested that it was a Trojan horse to
place American troops on Nepalese soil.
Such theories were aided by Chinese
orchestrated disinformation campaigns,
which found many takers amid the coun
try’s fractious politics. “It became contro
versial at the level of the common man,”
says Nishchal Nath Pandey of the Centre
for South Asian Studies, a thinktank in
Kathmandu, the capital.
By the time a new coalition govern
ment came to power in July last year, the
Americans were losing patience. Not
only would Nepal cease to be eligible for
the grant if its parliament did not ratify
the agreement by February 28th; in addi
tion, American diplomats privately made
clear, they would be forced to review
bilateral relations with Nepal, and might
conclude that it no longer had an in
dependent foreign policy, according to a
person close to the prime minister.
In the end a fix was found. Parliament
approved the mcc, but attached to it an
“interpretative declaration” stressing
Nepal’s sovereignty and the supremacy
of its constitution. Now it was the turn of
theGlobal Times, the Chinese state’s
Englishlanguage mouthpiece, to warn
that “it remains uncertain whether the
mccwill undermine ChinaNepal co
operation in the future”. In seeking to
balance rival powers, Nepal found itself
in exactly the squeezedyam position it
had long sought to avoid.
In the cold war Nepal extracted fa
vours from all powers. The Chinese built
cement factories, the Indians construct
ed roads, Americans helped with health
care. But the lesson for small states, says
Mr Pandey, is that it is becoming much
more complicated to avoid taking sides:
“That is not going to satisfy these major
powers. They will want these smaller
countries to be completely on their turf.”
It is getting harder for small states to balance great powers
Banyan The yam and the boulders
regional forces, often led by reformist dis
sidents from within Congress and built on
local resentments, have sheared off votes
from the oncedominant bigtent party.
But these upstarts have typically remained
big fish in small ponds. At the national lev
el, the bjp has become an increasingly
lonely shark. Unless its opponents work
out how to join forces, Mr Modi’s party will
continue to swim unchallenged.
The result in Uttar Pradesh proves the
point. Taken together, the bjp’s rivals won
a majority of votes, as they did in the previ
ous state election, in 2017. But with Con
gress’s tally of seats having shrunk yet
again, there are only local parties, nearly
all built on narrow caste alliances and tac
tical voting by minority groups, to vie with
Mr Modi’s behemoth. The bjp’s formula of
“Hindu consolidation”—posing as the pro
tector of upper castes while wooing lower
ones with handouts and hate speech
against Muslims—works again and again.
Mr Modi’s man in Uttar Pradesh and the
state’s chief minister, Yogi Adityanath, has
been the face of this political strategy since
coming to power in 2017. Despite having
held the state, however, the saffronrobed
priest does not appear strengthened by the
vote. After all, the bjp’s tally of seats
dropped substantially, and some of the op
position’s biggest inroads came on Mr Adi
tyanath’s own home turf in the state’s east.
Many voters say they like his nononsense
approach to law and order. More still have
praised the bjp’s covidera programme to
supply free food. When this comes to an
end later this month, and when fuel prices,
peculiarly flat throughout the election sea
son despite aneardoubling of world pric
es, inevitablysurge,some bjpvoters may
feel less happy.n