The Limits of Power of a Small State-2
Professor SRIDHAR K. KHATRI, Ambassador designate USA
Like all small states, Nepal’s position in the international system is also conditioned by all these factors.
Although the “globalist”, “Indo-centric” and “isolationist” approaches discussed earlier convey either aspirations or limitations behind Nepal’s role within such systems, they do not factor these aspects into their calculations.
A more accurate way of classifying the country’s current status would be to say that even though Nepal has achieved the position of a viable actor in the international arena, it is essentially – though not totally — preoccupied by its dealings with India, and is often frustrated in its attempt to improve its status by the limited machinery at its disposal for implementing its policies.
Historically, Nepal’s rise in the international arena has been a slow and arduous process.
For a limited time after unification of the country in 1768, Nepal operated as part of an international subsystem with its external relations confined to its immediate neighbors.
In the subcontinent, this included contacts primarily with the northern Indian princely states, while further north, though initially confined to Tibet, its relations extended to China as a result of Chinese intervention on behalf of its vassal in the Nepal-Tibet War of 1792.
Unlike most wars, the 1792 conflict did not drastically transform the state of relations between Nepal and its neighbors.
Although Nepal had concluded a commercial treaty with the British in India in the hope of later inducing it to come to Nepal’s assistance against the Chinese threat, the war ended abruptly with the Chinese army getting the better of the Gorkhas.
The lenient terms of the treaty with China left two symbolic impressions.
First, signifying Nepal’s link with Central Asia, it required Nepal to send a mission to China every five years; and, second, China made assurances that in case Nepal was invaded by foreign powers it would not fail to help Nepal.
In the end, the commercial treaty with the British remained a dead letter from the day it was signed, while the Chinese security guarantee, though of some tactical importance to Nepal as a counterweight to the British, failed to have the desired effect when the country again became involved in a war.
Similarly, the five-yearly mission did not lead to a dependency relationship between Nepal and China.
Discontinued by Nepal after 1852, the missions were resumed in 1867, only to be stopped again by Nepal after 1908 without an understanding of any sort with the Chinese.
Unlike the 1792 conflict, the 1814-16 war with the British drew Nepal gradually away from the regional subsystem into the broader European imperial system under the British tutelage.
As a product of the expansionist drive of both countries in the Indian subcontinent, the war left Nepal in a dubious status in the emerging imperial structure.
Out of the nine articles in the Treaty of Seagull, six were devoted to territorial concessions by Nepal, while Article 7 restricted Nepalese authorities from employing Europeans and Americans without British consent, and Article 8 called for exchange of residential missions between the two countries.
The latter two articles had deeper meanings than a cursory reading of the text would suggest.
Theoretically, both articles restricted Nepal’s freedom of maneuver, not unlike that of some of the other Indian states.
Article 7 clearly considered Nepal to fall within the British sphere of influence and implied restriction on the country developing diplomatic relations with other European states. On the other hand, through Article 8 of the treaty, the British were finally able to establish a residential mission in Kathmandu, which the Nepalese authorities had resisted all along for fear of interference in their domestic affairs.
In practice, however, the treaty neither impaired Nepal’s right to conduct its foreign relations freely with its neighboring states, nor did it reduce the country to the status of a protectorate.
Unlike the Indian protected states, no agreement was made with the British to bring Nepal directly under British protection nor were any powers delegated to the British, expressly or through practice, to conduct Nepal’s foreign relations.
Nepal continued to maintain contacts with the Courts of Peking, Lhasa, Lahore, Burma, Herat, and Afghanistan without the consent of the British Government.
In 1854-56, Nepal fought a war with Tibet and concluded a peace treaty without any approval of the British Indian Government.
Moreover, due to the closed nature of Nepalese society, the authorities in Kathmandu remained ever vigilant against interference by the British Resident in the country’s internal affairs.
Whereas in the Indian states, British Residents had a decisive influence in the affairs of the state, in Nepal — except for a brief period from 1840 to 1842 — the advice of the British representative hardly carried a significant weight.
Even in terms of commercial interaction, which the Nepalese rulers feared would end their feudal system and lead to the subjugation of the country, they were able to procrastinate long enough till the British mercantile interests in Nepal dwindled significantly after the opening of the trans-Himalayan trade routes through Darjeeling and Chumbi Valley.
With a growing appreciation of the British power in India, followed almost concomitantly by the progressive decline in the power of the Manchu dynasty in China, Nepalese attitude toward its southern neighbor changed perceptibly.
Instead of viewing the British as a power to be contained through martial policies, the Nepalese rulers realized that by maintaining friendship with the formidable imperial power, their own position in Nepal as well as the independence of their country could be preserved.
Over a century, Nepalese rulers therefore made a series of accommodative gestures toward the British which were intended to have salutary affects, both personally and nationally:
# In the Indian Sepoy Mutiny of 1857, Nepal dispatched its troops in support of the British to put down the Mutiny. As a show of gratitude for that gesture, Nepal was given back lands which had been ceded to the British by Article 3 of the Treaty of Sugauli.
# Most issues which had been the cause of friction between the two sides were “either forgotten, shelved or solved” to mutual satisfaction.
The question of commerce, which had caught the interest of the British in the first place, was shelved; boundary disputes were solved by an agreement in 1875; the issue of freedom of movement of the British Resident in the kingdom was shelved; and, the problems of refugees and extradition of criminals were solved through a number of treaties in 1837, 1855, 1866, and 1881.
# After 1885, Nepal modified its position substantially to allow recruitment of the Gurkhas freely. As the recruitment of the Gurkhas was considered to be the centerpiece in relations between Nepal and British India, the open facilitation of recruitment by the Nepalese authorities was considered to be a major reversal from the obstacles which had been encountered earlier.
# The unlimited assistance provided by Nepal to British India during the First World War had the dramatic effect of doing away with any controversies that might have existed regarding the country’s sovereignty.
In 1919, the British Government in India made changes to the title of the Nepalese monarch to underscore the country’s independent status. The title was changed from “His Highness” to “His Majesty the Maharajah Dhiraj of Nepal,” while the title of “Nepal Durbar” was altered to “Government of Nepal.”
Four years later, in 1923, the “Treaty of Friendship between Great Britain and Nepal” removed the remaining restrictions on Nepal’s freedom of action, including the provision restricting the employment of Europeans and Americans.
Nepal was also free to import arms and ammunitions as long as it did not endanger the interests of the British Government in India. In recognition of this status, a number of European consuls visited Nepal, and in 1934 Nepal sent its first Minister to the Court of St. James’s in London. By the late forties, Nepal had established diplomatic relations with both the United States and France.
Nepal continued to remain a reliable ally of Britain, and following the earlier line of policy, it also supported the British both in the Afghan War and the Second World War.”
The strategy that Nepal had adopted in its external relations — at times like a reflex action bordering on the point of complacency — lost its significance with the British departure from India in 1947.
The new international environment, which was then just beginning to emerge, was more complex and thus less prone to succeed by dealing only with a single power as it had been possible earlier.
The rise of nationalism as a significant force was tearing down the basic pillars of centuries-old imperial system, while the newly emerging nations were hedging their bet on a more democratic international structure in line with the Wilsonian principles.
But, before the post-war vision of a world order could take hold, the onset of the Cold War, followed by the division of the world into two power blocs, made Nepal’s debut into the international society uncertain.
This adjustment process for a small power like Nepal was made more difficult by the uncertainty of independent India’s own policies toward its neighbors – particularly in the light of the partition of the subcontinent, a perennial fear that India was too diverse to hold together, and the emergence of communist China as a possible power contender in the north.
Given this backdrop, the new international environment that Nepal eventually entered after the War contained not a single system, but two systems, sometimes operating almost independent of one another.
First, the regional Indo-centric system reflected a continuity in the role of the hegemonic power in vicinity, similar to the earlier imperial system. As before, treaties defined new parameters in the relations between Nepal and India; but, unlike Britain in the old imperial system, India represented a hegemonic power which was neither confident nor secure enough to maintain the stability of the system.
With insecurity as the basic foundation of the new structure, there was therefore greater scope for punishment than reward in the Indo-centric system. And, second, the global post-war bipolar system opened new vistas which Nepal had not yet grasped fully.
Although there were obvious benefits like “visibility, acceptance, status, and dignity for small states in the global system, it also provided additional scope for maneuverability with the prospect for minimizing constraints imposed by the Indo-centric system.
If the 1923 Treaty was of historical importance in clearly re-affirming Nepal’s independence, the agreements between Nepal and India not only attempted to restrict Nepal’s freedom of action in both foreign and domestic policies, but also tried to make Nepal an appendage to the Indian security system and integrate its economy with India through a common market structure.
The 1950 Treaty of Peace and Friendship between Nepal and India, together with the letters exchanged with the treaty, established the basic framework of the hegemonic structure.”
Without any direct reference to creation of a military alliance between the two countries, the agreements require the parties to consult each other on matters which might affect the security of the other.
Although the wordings of the agreements imply mutuality of interests, greater obligations are imposed on the smaller state.
Article 2 requires the two governments to inform each other of any serious differences with the neighboring states that are likely to harm the relations between the two countries.
This issue is taken up further in Point 1 of the Letter of Exchange (LOE), where the parties agree not to tolerate any threat to the security of the other by a foreign aggressor and commit themselves to consultations in order to take “effective countermeasures.”
As India’s vast territorial size excludes landlocked Nepal from being involved in India’s security problems with its other neighbors, the clause imposes greater obligations on Nepal to include Indian participation on not only security matters that might affect the two parties, but also those matters that might have implications for India, as determined by New Delhi.
This one-sided obligation is reinforced further in Point 5 of the LOE in which both governments agree not to employ foreigners whose activity may be prejudicial to the security of the other.
The implication is obvious, as this clause has been used, historically, in restraining Nepal rather than the hegemonic power which may not be in need of a third party assistance to augment its security.
Finally, on Nepal’s right to import arms, Article 5 of the treaty, if read independently, is quite liberal as it allows Nepal to import them freely “from or through” the Indian territory.
The relevant provision of the LOE, Point 2, however, goes beyond the 1923 Treaty by stipulating that arms shall be imported “through” the Indian territory only “with the assistance and agreement of the Government of India” (emphasis added).
The clause, therefore, not only reserves India’s right to decide what type of armaments should come through its territory, but also allows it to determine the quality and quantity of armaments that Nepal should be free to import from others, if they are to be brought through India.
Similarly, the socio-economic aspect of the agreements also clearly favors the stronger of the two parties.
As a “token” of friendship, Article 6 of the treaty requires Nepal and India to give citizens of each country national treatment with regard to participation in industrial and economic development, including the granting of concessions and contracts for such purposes.
As Nepalese businessmen and industrialists have a difficult time in exploiting the benefits of their own markets in Nepal due to their limited capital, this provision favors Indian entrepreneurs who are economically in a better position to take advantage of the opportunities in Nepal.
Recognizing this situation, Point 3 of the LOE specially provides for preferential treatment to be given to Nepalese industries as protection from unrestricted competition, but leaves the nature and extent of such protection subject to further agreement.
But, in case Nepal should need foreign assistance in the development of natural resources and industrial projects in Nepal, Point 4 of the LOE requires Nepal to give first preference to the Government of India or Indian nationals, provided that the terms offered from the Indian side are not less favorable to Nepal than those offered by others.
And, finally, Article 7 of the treaty leaves Nepal more vulnerable as both governments are required to give the nationals of one country in the territory of the other the same privileges “in matters of residence, ownership of property, participation in trade and commerce, movement and privileges of a similar nature” on a reciprocal basis.
Given the unequal character of the 1950 agreements, it is but natural to inquire: Why did Nepal acquiesce to such an arrangement? Since the scope of this paper does not allow a detailed examination of the compulsion behind the negotiations, the simple answer would be that while India was visualizing the agreement in its long-term interest, the calculations of the Nepalese leaders were more short-term in nature.
For one thing, the agreements took place four months before the Revolution which actually overthrew the Ranas. The leaders then were neither secure in their position at home, nor were they confident enough to negotiate agreements of such far reaching consequences.
Another possibility is that, despite the threat felt by the Ranas to their own feudal system by the successor Indian regime, the Nepalese negotiators were too trusting of the Indian motives.
As the agreements would alter very little the political, military, and the socio economic aspects of relationship in the short run, it might have been beyond their imagination to think that an independent democratic India would favor a more retrogressive system than its colonizers.
As events would have it, India favored a rigid interpretation of the agreements and proceeded to implement it to the letter. In February 1952, the Indian Military Mission arrived in Nepal with the ostensible objective of assisting the Nepalese government in training and reorganizing its army, but parts of the Mission were also deployed on Nepal’s border with China for military intelligence purposes.
Another accord on arms import was reached between Nepal and India in 1965 to partly reinforce the understanding behind the 1950 agreements. In addition, India has also used the renewal time-frame of the trade and transit agreements as the moment to administer a shock-therapy for correcting any major deviations it feels Nepal might have made regarding the basic structure of the relationship. For instance, after instituting a year-long blockade of Nepal in 1989, India again attempted to plug all the loopholes of the earlier agreements through a comprehensive arrangement that would again integrate Nepal’s defense and economic structure into the Indian plan.
The reactions on the Nepalese side have not always been consistent.
Depending on the nature of the political regime, the personalities involved in the decision-making process, and the level of coherence displayed by the state in framing its policy toward India, Nepalese reaction has often swayed between placing unquestionable faith in Indian policy and attempting to confront India without due regard to the asymmetry of power between the two countries.
Most of the time, however, the country has followed a middle course by attempting to “progressively erode 20 the debilitative aspects of the treaty arrangements.
From the beginning, the locus of attack has been on the strategic arrangements.
Within a few years after the signing of the 1950 agreements, Nepal expressed its desire to change the basic feature of its policy with India from “special relationship” to that of “equal friendship.
By 1956, the consultative mechanism that had been set up to review and coordinate Nepal’s internal and external security was brought to an end. Likewise, the role of the Indian Military Mission was gradually curtailed: in 1958, the strength of the Mission was downgraded and reconstituted as Indian Military Advisory Group concerned only with external security; in 1963, it was downgraded further on Nepal’s insistence as the Indian Military Liaison Group ostensibly for the purpose of coordinating Indian military supplies to Nepal; and, finally, in 1970, Indian military presence was brought to an end after Nepal had insisted a year earlier on terminating any further consultations on security matters with India under the provisions of the 1950 Treaty and the 1965 arrangement.
Because of these developments, India still views arms import from Western countries with suspicion, while such imports from China, regardless of their quality relative to those in the Indian armory, are taken as an affront to Indian security, as was the case in 1988. Nepal’s attempt, from the early 1970s, to have the country excluded from the rivalry of other nations, in the form of a “Zone of Peace,” has also encountered objections from New Delhi, on the ground that the concept further attempts to dilute the 1950 agreements.
Although there has been less coordination on the socio-economic front, Nepal has begun to question the framework imposed by the 1950 agreements.
One area has been the problem posed by the influx of Indians into Nepal since the 1960s.
A study by a Task Force in 1983 recommended restriction on the free movement of people on the Nepal-India border as well as granting of citizenship to persons of Indian origin, and imposition of a “work permit” system for the foreigners.
Even though the “work permit” system was briefly tried in selected areas by the government, the report of the Task Force not only attracted attention, but also questioned the validity of the earlier agreements.
Another important area has been the participation of major donor countries in the development of natural resources and industrial projects in Nepal. India has remained highly sensitive to Chinese participation in projects in the Tarai close to the Indian border, and has attempted in recent years to reassert priority status in the development of natural resources; in particular, the water resources in Nepal.
Compared to the constraints imposed by the regional Indo-centric system, participation in the global system has offered Nepal opportunities not only to assert its independent identity, but also to minimize, to the extent possible, the pervasive influence of India over the country.
The key term of this policy has been diversification of contacts in both political and economic areas with the outside world.
Before 1951, Nepal had diplomatic relations with only five countries.
Today the number has grown to 108 (even more as of Now-Ed), with permanent diplomatic missions in twenty countries, including the major political and economic powers in the world.
As a member of the United Nations, it has served twice in the Security Council, and has recently stationed a residential ambassador to the European Union, in Brussels. Moreover, as one of the founding members of the Nonaligned Movement and a regular participant in multilateral fora, like SAARC, Nepal has stepped out from the diplomatic obscurity of the fifties and presented itself as a viable entity.
In the international arena, where being “part of the game” is considered as important as being “able to play the game” with maturity, the diplomatic contacts established by Nepal over the years have provided dividends in the form of prestige.
Although it may not be possible to always cash in on such assets, the image factor has its own value in diplomatic currency.
On the other hand, as Nepal operates as an adjunct of the Indian economy, economic diversification has not made it possible for Nepal to extricate itself totally out of this dependency.
Nevertheless, some changes were discernible during the Cold War period, when Nepal was able to reap the benefits of economic assistance from both power blocs.
By 1980, out of a total of Rs. 5,239.3 million received by Nepal as grants from bilateral sources, almost 17 percent had come from two communist powers — China and the Soviet Union. Diversification of foreign assistance sources also reduced aid dependence on India, as the figures dropped from 70% in the pre-Plan period (1951-1956) to 15.18% in the Fifth Plan (1975-1980).
This pattern of decreasing economic dependence on India has been more perceptible in the area of trade. Within the last two decades, the percentage of India’s share in Nepal’s total trade has decreased from 82.
2% in 1974/75 to 28.4% in 1993/94.25.
III
A relevant question at this moment is: How do the recent international developments affect Nepal’s role in the international system?
A logical conclusion to our discussion would suggest a cautious response.
The first thing we must accept is that the dual system in which Nepal operates will continue for some years to come.
At the Indo-centric level, much will depend on how India manages its own problems of domestic political stability, regional security, and prospects for economic prosperity in the days ahead.
Although futurological exercise can be hazardous, it is, nevertheless, possible to visualize three different types of scenarios.
# The optimistic scenario suggests that, as economic prosperity and domestic political stability are more firmly established, India may slowly shed some of its insecurity complexes and exhibit more empathy in its dealings with Nepal. Some have predicted that, assuming a 7% growth rate, by the year 2020, India’s GDP could surpass those of Britain, Italy, and (West) Germany, and possibly match that of France.
Should this prediction hold, Nepal could be in a relatively advantageous position to reap the benefits of economic prosperity with greater regional stability, through the rapid development of both India and China.
# The pessimistic scenario, on the other hand, visualizes a further deterioration of the present situation. With the possibility of India being further engulfed in domestic political turmoil and sectarian conflicts, this scenario foresees a reversal of the economic liberalization process which could lead to further economic stagnation and generate political frustration in India.
Should this prediction materialize, Nepal could possibly face the wrath of India’s frustration through a more conservative, as well as aggressive, interpretation of the 1950 agreements.
Given the fact that the world’s major economic and military powers have today grown tired of pocket conflicts in different corners of the world, Nepal could possibly be left on its own to fend off the Indian Design.
# A third mixed scenario, on the other hand, visualizes an intermediate position in which India is seen to be on the irreversible path of economy success, but at the same time unable and/or unwilling to change its present attitude toward its neighbors. Economic growth could, therefore, be translated to military strength, which could then lead to the escalation of tensions between India and its primary rivals, Pakistan and China. In this situation, Nepal could be thrown back into the midst of a regional cold war, left, in part, to India’s discretion and, in part, to its own ability to take its chances at propitious moments.
The implication for Nepal at the global level is less clear as the situation is too fluid to make any prognosis.
But, from the emerging trends, it is, nevertheless, possible to surmise that the international environment will be quite conducive to the diversification policy followed by Nepal earlier.
Increasing contacts with the major power centers are likely to generate a better understanding of Nepal’s difficulties, which could possibly, in the long run, encourage attitudinal changes in the region as well.
A global policy based on economic liberalism will also be complementary to the economic diversification policy as it will not only open more markets to Nepal for its growing international trade, but also encourage foreign investments in the country.
Moreover, with the revival of international institutions like the United Nations, Nepal will also have greater opportunities to build up contacts and establish its credentials in the comity of nations.
Ultimately, the question of how Nepal performs in the international environment will rest on the country’s own capabilities.
In contemporary language, this depends on whether the political parties in the country will be able to develop, not a politically oriented consensus,” but a policy oriented one on the salient themes of Nepal’s foreign policy.
United in a common front on the core issues, Nepal may not be able to address these problems immediately, but it can go a long way is that direction.
Divided, however, the country will certainly be subjected to the machination of outside powers interested in exploiting the vulnerabilities.
The other question is our ability to handle the issues in the days to come.
Over the years, if not decades, there has been an increasing tendency toward decentralization of decision-making powers in foreign policy, without developing the machinery to do so.
Attempting to handle sensitive foreign policy matters, from day to day without first developing/ reinforcing such a mechanism – based on dedication conviction, special knowledge and experience” — would be like attempting to go up the creek without a paddle.
Text courtesy: From the book “The Political Economy of Small States” edited by Professor Ananda Aditya and published by Nepal Foundation for Advanced Studies (NEFAS)/Friedrich Ebert Stiftung, Second Edition 2001.
The distinguished author of this academic article Khatri, a Professor of political science and is Ambassador designate to the United States of America.
Thanks NEFAS/FES and the eminent author Professor Sridhar K. Khatri: N. P. Upadhyaya (telegraphnepal.com).
# Concluded.