India has a problem in South Asia.
And, it stems from a simple fact – New Delhi’s relationship with Colombo, Male, Dhaka, and Kathmandu does not fall into the conventional paradigm of state-to-state ties.
India historically has had a role -- sometimes willing and sometimes reluctant -- in the internal politics of these countries. It has been involved in their creation (Bangladesh), moments of regime-change (Nepal), civil war and reconciliation (Sri Lanka) and regime-stabilisation and democracy promotion (Maldives).
This role lends it influence and power but also breeds resentment among the “nationalists” and those who lose out. And this section now has an ally -- an increasingly assertive China willing to play the same game as India in a region New Delhi considers its own.
Nowhere has this been more acutely felt than in Nepal, which gets a new prime minister, Maoist chairman Pushpa Kamal Dahal ‘Prachanda’, on Wednesday. This has been greeted with a sigh of relief in Delhi.
There is a good reason for it. India has had a difficult year with its closest neighbour and had a hand in Prachanda’s elevation to the top job.
But, it is not the end of the story. For, Nepal is a case study in the challenges India will confront as it implements Prime Minister Narendra Modi’s “neighbourhood-first” policy.
Internal polarisation, external shocks
Nepali society is diverse. Nepali politics is exclusionary. This contradiction is at the heart of the political impasse in the Himalayan country.
The political elite -- from hill Hindu upper-caste communities -- pushed through a constitution in September 2015 that entrenched it in power and alienated the Madhesis of the plains bordering India.
The Madhesis protested. The state cracked down and deployed the army.
Delhi stepped in. It wanted Nepal to pause the process or make swift corrections to the constitution, warning a conflict at the border could spill over.
But this time, the Nepali hill elite, which has lobbied with Delhi countless times for power, did not want Indian advice -- it would have led to a gradual power-shift to other social groups.
As Madhesis protested at the border, disrupting fuel and goods supplies to Kathmandu, India backed the pressure tactic. The Nepal government used it to whip nationalist sentiment, painting India as the external aggressor and Madhesis its pliable agents.
It also used the moment to turn to China for help. Beijing promised fuel but delivered so little it barely met Kathmandu’s demand. Costs, logistics and geography made it inviable.
Nepal and China subsequently signed a transit agreement. But the pact does not identity either the ports, routes or the custom formalities. The pact’s operational value is doubtful but it symbolised Nepal’s attempt to break out of dependence on India.
But the pressure from the Madhesi movement and India was immense. Kathmandu amended the constitution, enhancing Madhesis’ political representation and promising their inclusion in state organs. It did not however deliver on their key demand for revision of federal boundaries. The border opened up and the movement dissipated by February but the alienation persisted.
India was not happy with Nepal prime minister KP Oli for his refusal to address Madhesi grievances, his use of the nationalism and “anti-India” card and his enthusiasm in inviting China to counter India.
It used its old links with Prachanda -- the Maoist leader who had first signed a peace deal with other democratic forces against the king in Delhi in 2005 -- and encouraged him to get out of the government.
China, political and diplomatic sources confirm, wanted the Maoists to stay on in the Oli government and preserve “Left unity”. But Prachanda sensed an opportunity to get to power himself. He had other concerns on transitional justice and peace process and was reassured he would not be victimised. The opposition party, Nepali Congress, and the protesting Madhesi forces backed him.
India will, after a nine month interlude, have a friendly government in Kathmandu. Prachanda, in an interview to the Hindustan Times last week, committed to addressing Madhesi concerns and keeping a balanced foreign policy, amid the perception of a tilt towards China.
The change in government re-establishes Indian primacy in Nepal but does not necessarily answer the fundamental question confronting Delhi’s diplomats across the region.
How do you retain traditional influence and shape outcomes in a diverse society and fragmented polity?
In Nepal, India wants a Madhes that is accommodated within the political mainstream and can punch proportionate to its substantial demographic strength. But, it also wants cordial ties with Kathmandu, which is reluctant to make this concession.
The dilemma is eerily similar to the one India faces in Sri Lanka, where it swings between the impulse to push Tamil accommodation and keep Colombo in good humour. In both cases, while balancing interests, India must continue to nudge dominant actors towards an inclusive constitutional settlement.
How does India counter a new China, willing to invest in building up regional elites who may no longer be as sensitive to Indian interests? Beijing is in South Asia to stay.
In terms of resources, it will be difficult for Delhi to compete with Beijing. But India has natural advantages in terms of geography, connectivity and people-to-people ties. And it has to build on that.
There is widespread perception in Nepal that Delhi does not deliver on visible big development projects. India will have to get its processes in order to assist with infrastructure, step up development assistance, enhance investments, tie in smaller economies to its market, and maintain extensive political networks from the top to the bottom.
As Nepal shows, the neighbourhood will require constant political engagement, a wise mix of hands-on and hands-off approach, a wider diplomatic arsenal and transforming lives by delivering on development promises. India has a Himalayan task ahead.