ISSN 2330-717X

Nepal: New Geostrategic Hotspot – Analysis


Nepal, currently one of the 21st century’s important locations in Asia, has to safeguard itself by its own initiative, not rely on guarantees from external actors. The authors, one of whom is a former minister of the country, suggest that a changed world order calls for more modern security forces and an independent defense policy.

By Madhukar SJB Rana and Atul K Thakur*

There is a case for Nepal to devise a new foreign policy that is more aligned to the contemporary emerging world order and a present era that is full of uncertainty. The rationale for this lies in a range of related factors. China has championed globalization and shared prosperity, but it has also pursued its own independent domestic policies through the One Belt One Road (OBOR) strategy.

Not surprisingly, this has come in for contestation. New hardliner American president Donald Trump has challenged the benefits of globalisation to his country, rejected the Trans Pacific Partnership Agreement (TPP), and is seeking to renegotiate the North American Free Trade Agreement (NAFTA) to promote deglobalisation with less free trade for more import substitution.

He may have geoeconomic imperatives, but geostrategically, this can spark a global, comprehensive arms race as the U.S. will insist that each ally do more to defend itself while targeting China as the main stumbling block to making America great again.

All this makes Nepal one of the global geostrategic hot spots of the 21st century that will grow with the simultaneous rise of India, and the forward movement of the other arm of the Chinese Dream, namely the Trans Himalayan Economic Corridors (THEC). This is evident in the China Pakistan Economic Corridor (CPEC) strategy that has garnered about $48 billion in investments.

Such a scenario calls for Nepal to first get its bilateral relations in order more than vie to be in the UN or join regional and sub-regional associations. It needs to enter into Comprehensive Strategic Partnerships (CSPs) with India, China and Bangladesh, its three most significant partners, with revisions being instituted in the peace and friendship treaties. These CSPs will be able to address Nepal’s looming internal security problems.

Nepal’s borders with all countries must be demarcated once and for all and a new national border policy spelt out to guide such negotiations.

The country has to safeguard itself by its own initiative, not rely on balance of power forces through alliances or guarantees from external actors. Nepal has to work solidly to become a stronger buffer state with more modern defense and security forces. This requires that it have an independent defense policy, currently denied by the India-Nepal Treaty of Peace and Friendship, 1950.

Security forces need to be brought under a unified command under a National Security Agency (NSA) whose priorities are clearly identified consensually by the political parties. This is the only path to national security coordination by the security forces, bureaucracy, civil society and government. The other way is to have the Election Commission declare political parties’ manifestos null and void if they don’t include a paragraph on their foreign policy priorities after due consideration of the National Security Policy (NSP).

Surprisingly, the Constitution provides for a National Defense Council (NDC), but not an NSA, whose task must be to formulate and reformulate a National Security Strategy by involving the active participation of both state and non-state actors.

To make these reality, Nepal needs to declare itself a nonaligned nation. This will be better than declaring it a ‘Zone of Peace’ (ZOP) – whether guaranteed by the UN or bilaterally accepted, as in the past, by 116 countries, except India.

What does nonalignment and neutrality mean in practical terms? It amounts to voting pragmatically and on merit as a ‘non-aligned power’ in the UN with due regard to its own national interest and values and international law to which Nepal is a party. On the other hand, it amounts to a position of complete ‘neutrality’ when war breaks out in the world or region or sub-region.

It will also put an end to the diplomatic card play of using one neighbour against the other and aspiring to ‘balanced diplomacy’, a strategy severely constrained by a weak Ministry of External Affairs (MEA) with a diplomatic cadre that is not professionally world-class.

Does this then mean that Nepal should not seek to be part of the UN Peacekeeping Mission? It should not only be a lead country in this as it goes on its defense modernisation drive, but also offer to serve as part of the UN Peace Enforcement Mission (UNPEM), if and when the world body deems this instrument desirable.

Nepal can also push the South Asian Association for Regional Cooperation (SAARC) to take up security issues as a Summit Agenda just as it can, henceforth, join the Shanghai Cooperation Organisation as a full member.

Economic diplomacy must be given as much importance as political and security diplomacy for the prosperity of Nepal and the best use of its natural and human capital resources.

It’s time too to re-strategise economic diplomacy as the world becomes deglobalised, with neither the WTO nor SAARC having brought the region much benefit. The suggested CSPs with Bangladesh, China and India will cover economic diplomacy, but Nepal must enter into new economic agreements with Japan, South Korea, Malaysia, Saudi Arabia, UAE, U.K., EU and the U.S. so that there is far more intensified cooperation that includes FDI in trade, transportation, tourism, labour, energy, manufacturing, and banking, insurance and educational services.

Strategically, its efforts have to be in the direction of integrating its national sub-regional economies with its immediate geographical neighbourhoods of Bihar, UP, West Bengal, Sikkim, Uttarakhand and Tibet. This will help Kathmandu develop as a Himalayan metropolitan hub par excellence in South Asia.

Finally, Nepal must strive to bring in international banks, and, as was envisaged in the 2005 Budget, work towards making itself a Regional Financial Centre. It can be the Regional Capital for SAARC and international organisations of the world, seeking business in the emergent new South Asia of the 21st century. As a part of economic diplomacy, it should try and become the Regional Legal and Arbitration Hub (RLAH) for settlement of international disputes by developing world class legal services. Nepal can thus centre itself as a new geostrategic location in Asia.

*About the authors:
Madhukar SJB Rana
is the former finance minister of Nepal and an economist.

Atul K Thakur is a New Delhi-based public policy professional and columnist.

This feature was written for Gateway House: Indian Council on Global Relations.

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Gateway House

Gateway House: Indian Council on Global Relations is a foreign policy think-tank established in 2009, to engage India’s leading corporations and individuals in debate and scholarship on India’s foreign policy and its role in global affairs. Gateway House’s studies programme will be at the heart of the institute’s scholarship, with original research by global and local scholars in Geo-economics, Geopolitics, Foreign Policy analysis, Bilateral relations, Democracy and nation-building, National security, ethnic conflict and terrorism, Science, technology and innovation, and Energy and Environment.

2 thoughts on “Nepal: New Geostrategic Hotspot – Analysis

  • September 23, 2017 at 11:33 pm

    Found the article very informative and economy centred. One important ingredient for Nepal’s foreign policy should be IN Peace Keeping Mission centred too. Nepal is one of the major troops contributing country but the govt doesn’t fully support the Army’s role in it. The Army has committed a Brigade Size force for the U.N. Peace Keeping Operations but it has to be economically supported by the govt.

    • October 2, 2017 at 12:48 am

      Thank you for your comment.Much appreciated. Did not mention Nepal’s UN Peace Keeping Force because we wanted to underscore the need for Nepal to enter Strategic Partnerships with Bangladesh, China and India. Actually, in other spaces we have mentioned that Nepalese, as one of the foremost martial race with proven experience over centuries, should be considered as a candidate for UN’s Peace Enforcement Force, too, in future.


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