Since the appointment of the new PM, the US has been actively engaging with the Deuba and other ministers. The US provided 1.5 million doses of Johnson & Johnson vaccines to Nepal though COVAX facility. The American Ambassador to Nepal stated that the US will not engage in the vaccine trade to derive political gains. ‘The vaccine provided is a gift from the US,’ he noted. The gesture, although appreciable, is indicative of an underlying agenda as ‘free gifts’ are often doubtful in international relations.

Timeline of Major Events

Geopolitical Manoeuvres and Changing Domestic Political Regime

After months of political upheavals, K.P Sharma Oli finally stepped down and the Supreme Court appointed Sher Bahadur Deuba as the new Prime Minister (PM) on July 13. The Indian envoy met newly appointed Prime Minister at his private residence on July 14 to congratulate him. Followed by the US envoy on July 15 and Chinese envoy on July 16, who also met the PM. However, there was no immediate response from the Indian Prime Minister which was bewildering. India in the past swiftly acknowledged the new Nepali Prime Minister each time. Nepal’s foreign relation analysts have raised concerns over the Indian Prime Minister’s delay in congratulating the new PM.

Finally, on July 19, the Indian Prime Minister, on telephonic conversation, congratulated PM Deuba on winning the Vote of confidence in the Parliament. It appears that the PM’s Indian counterpart was awaiting the result of vote of confidence before extending congratulations. This also shows that the Indian PM was rather dubious about whether Sher Bahadur Deuba would indeed win the vote of confidence.

Further, Australian envoy and Japanese envoy to Nepal separately met PM Deuba at the Prime Minister’s Quarter. In the meeting, Japanese envoy informed that there are efforts being made to bring vaccines to Nepal as promptly as possible. Japan had previously announced to provide 1.6 million doses of AstraZeneca vaccines to Nepal through COVAX facility. In the meeting PM expressed gratitude to Japan for the vaccine cooperation and other support in fighting the COVID-19 pandemic. Similarly, various aspects of Nepal-Australia ties along with cooperation to fight the pandemic were discussed in the meeting with the Australian envoy.

With the change in leadership, there seems to be a shift in Nepal’s geopolitical scenario as well. It is no secret that Nepal, due to its strategic location, has been a battlefield for emerging global powers – India, China, and the US – for a prolonged period. Geopolitical factors have always heavily influenced the internal politics of Nepal.

The US Influence

Since the appointment of the new PM, the US has been actively engaging with Deuba and other ministers. The US provided 1.5 million doses of Johnson & Johnson vaccines to Nepal though COVAX. The American Ambassador to Nepal stated that the US will not engage in the vaccine trade to derive political gains – the vaccine provided is a ‘gift’ from the US. This gesture of US is appreciable, nonetheless is indicative of the US’s interest in Nepal, as ‘free gifts’ often come with hidden agendas.

Further, the ambassador also met the Finance Minister of Nepal on July 27. In the meeting, the Ambassador promised to support Nepal in the forthcoming days. He also stated that vaccine against COVID-19 is Nepal’s priority and the US will cooperate and facilitate the import of vaccines.

Along with this, the US is pushing the newly formed government to take immediate action to pass the MCC. Deuba has always remained in favour of ratifying MCC grant. Moreover, the perceived distant relation between Nepali Congress and China has also made it conducive for the US to exert pressure to pass the MCC. The US Secretary of State, Antony J Blinken, as soon as he landed in Delhi made a telephone call to PM Deuba on July 27. The conversation touched upon various matters regarding bilateral cooperation, COVID vaccines and assistance of medical supplies. Besides that, he laid special emphasis on the MCC.

Nepal- US relation cannot be seen in isolation. The phone call made by the US Secretary from Delhi holds a significant meaning. It may perhaps be understood that the alliance between US and India is getting stronger. This could have serious implication for Nepal, although a positive one nonetheless. Nepal however, needs to be mindful of its impact on China.

India Influence

Indian Ambassador met newly formed government’s spokesperson/ Minister of Law in Singha Durbar on July 15. The Ambassador recalled the historical ties between India and Nepal and stated that support, cooperation and goodwill between two countries shall be stronger in the upcoming days. India is putting all efforts to strengthen overall Indo-Nepal bilateral ties in terms of diplomatic relation, trade, humanitarian aid and development of infrastructure. Moreover, the ruling party of India has perceived the appointment of a Congress Leader as the new PM as ‘good news’.

India provided 150 ICU beds to Nepal to support the fight against COVID-19 pandemic. Indian envoy stressed upon India’s commitment to support Nepal in tackling the pandemic by providing assistance to advance health infrastructure of the country, in a statement released by the Indian Embassy in Kathmandu.

Likewise, as per the Ministry of Foreign Affairs, Indian PM has assured that Nepal will soon receive COVID-19 vaccines. In a telephonic conversation, the duo talked about bolstering bilateral ties. However, there is ambiguity as to whether he assured early supply of one million vaccines from the Serum Institute of India which is already paid for or is it additional doses of vaccines.

Further, after almost 13 months, India has lifted the ban on import of refined palm oil from Nepal. Industrialists believe that it will take at least a month for the export to resume. Nepal also signed an agreement with Satluj Jal Vidyut Nigam to build a Lower Arun Hydropower Project of 679 MW in eastern Nepal. The project will be built under the Build-own-operate-and-transfer (BOOT) model.

China Influence

Amidst the heightened US-China rivalry in the South Asian region, China is already apprehensive about the increasing US influence in the region. Further, with the change in the domestic political regime of Nepal and the ruling party’s perceived affinity towards India, China has been anxious. The Chinese Newspaper – Global Times that runs by party line has clinched that Nepal’s new PM is ‘pro-Indian’. Nevertheless, Deuba has stated that his foreign policy will be based upon mutual friendship and cooperation, while maintaining that the relationship with the northern neighbour shall not face any turbulence.

China views India and the US in consolidation, as India’s moves are usually supported by the US. The US State Secretary meeting with Dalai Lama in New Delhi on July 27 has riled China. US and India getting involved with Dalai Lama and increasing its influence in Nepal could increase the risk of inducing Anti-China activities in Nepal. This is a great concern for China.

China is keeping close tracks of Nepal’s changing domestic political scenario. China is closely observing how the new government takes MCC further. China in the past has constantly pressurised Nepal to not ratify MCC.

Further, China established China-South Asian Countries Poverty Alleviation and Cooperative Development Center in Chonqing City on July 8. 5 out of the 8 members of SAARC have joined this initiative. Three countries that have refrained are India, Bhutan and Maldives. Foreign relation experts have stated that China has come up with this initiative to counter India and enter into the South Asian region. This holds an important underlying geostrategic meaning.

Chinese endeavor to remain influential in Nepal, is on the brink of failing. For instance, Nepal had signed a Transit and Transportation Agreement with China in May 2016. In April 2018, Nepal and China signed the protocol on implementing the agreement, which allowed Nepal to use seven Chinese land ports for the trade with other countries. However, Nepal and China is yet to formulate a standard operating procedure on enforcing the transit agreement. The transit agreement has seen no progress since then. The status is similar regarding BRI as well.