Jan 9, 2012

India can free Nepal from mountain chains

By Ding Gang

Land-locked Nepal is highly economically dependent on its neighbor, India. During a recent trip to Nepal, I could see clear signs of this dependence.

Indian oil companies had temporarily cut off their supply to Nepal due to an arrear in payments. There were long queues of cars and motorbikes in front of all the gas stations in Katmandu, Nepal's capital.

This situation would be alleviated if there was a land route to China sturdy enough to bear oil tankers. But at present, the Himalayas severely hinder Nepal from any chance of sharing the fruits of China's economic development.

The "highway" between the two countries barely deserves the name. Many parts of the road are narrow and constantly damaged by falling rocks.  But in the south, along the Nepalese-Indian border, it is a boundless plain.

In a recent article, Nepali Premier Baburam Bhattarai wrote, "Nepal stands between China and India. But as a matter of fact, we are surrounded by India because Nepal borders India on three sides. Nepal's trade with India accounts for two thirds of our annual total trade volume while that with China only makes up one tenth."

For Nepal, with its underdeveloped economy, striking an economic balance will help it maintain a political and diplomatic balance in turn.

Nepal is rich in water resources but short of electricity. Katmandu suffers over 10 hours of power cuts  everyday. Many institutions and households have to install power generators themselves, paying a heavy price in oil.

Nepal planned to build a hydropower station along Kosi River, which could help relieve Nepal's electricity shortage and also allow it to sell electricity to India. India, which also suffers power shortages, was also interested in this program. But Nepal proposed that India open the road to Bangladesh in southeastern Nepal first, which made the Indians hesitate.

Between southeast Nepal and Bangladesh is a piece of Indian land 25 kilometers wide, which is called the "narrow neck" connecting India and the north. It would be good for the Indian economy if Nepal and Bangladesh were connected there. But it would also mean Nepal will have another access route to the sea through Bangladesh. As a land-locked country, Nepal's imports must go through Calcutta. It is the lifeline of Nepal's economy. That India controls Nepal's lifeline sometimes makes the Nepalese feel helpless.

 The Nepalese government has already declared 2012 to be an investment year and welcomed Chinese companies to invest in Nepal. Even though Chinese businessmen have begun to come to Katmandu in recent years, but few Chinese enterprises choose to invest there due to the poor traffic, infrastructure and small-scale market.

Sino-Nepalese ties have long been politically warm but economically cold. Limited traffic is the major bottleneck.

China has a strategic choice to make about how to improve traffic between the two countries. If the roads and railway between the two can be improved, both nations will benefit. The extension of the trade between the two countries will help consolidate the relationship between China and Nepal and boost the South Asian economy.

Indian attitudes towards China's role in the region are cautious. China's influence in Nepal keeps India alert. Nepalese business circles widely believe that if China builds a hydropower station in Nepal, India will never buy its electricity.

It is easy to lock a small country, but it is difficult to control a region for a long term through the lock. What India needs to do is constantly open itself to enlarge its strategic influence.

India needs to be clear that it is both a challenge and an opportunity for India if China's assistance goes to Nepal and China has another route to South Asia. It is hard to imagine that India will maintain its competitiveness without such challenges. If Indian manufacturing can't compete with China, its attraction to its neighbors will not grow.

Courtesy: The Global Times

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