March 2023 Analysis: International Relations & Foreign Affairs
In the international front, Nepal participated in the 5th Conference on LDCs in Doha from March 5 to 9. Nepal Electricity Authority and Indian authorities reached several agreements regarding cross-border electricity imports and exports on March 17. Armed Police Force released new policies regarding border outposts on March 19. Nepal-US Army is set to hold Land Force Talk–their highest level of engagement from March 25 to 29 in Kathmandu. China-Nepal relations occurred through people-to-people engagement, business forum and tourism deal.
The Armed Police Force (APF) of Nepal is set to construct border outposts (BOPs) 500 meters away from the country’s international border. Until now, BOPs have primarily been located on rented land. The APF has specialized in border security and provided internal security since 2063 B.S., taking over these responsibilities from the Nepal Army.
Nepal and the United States are set to hold their annual Land Force Talks in Kathmandu from March 27 to 29. The fourth meeting will focus on military and defense cooperation, disaster response, relief, preparedness, and peacekeeping missions. The US is providing two M28 block 05 Skytrucks to Nepal under a US$ 30.4 million contract, with the order expected to be processed by April 30, 2025. The Land Force Talks, which began in June 2018, represent the highest level of engagement between the Nepali and US armies.
While Nepal decline to participate in the American State Partnership Program (SPP), the annual Land Force Talks between Nepal and the United States demonstrates a good cooperation between the two. Additionally, the provision of M28 block 05 Skytrucks to Nepal under a $30.4 million contract also shows the US’s continued support for Nepali Army’s capacity-building.
In its domestic political front, China held an annual session of the national parliament, where Xi Jinping was reinstated as President, and Qin Gang became the new foreign minister. In his first interview on March 7, China’s foreign minister Qin Gang stated that ‘kindness should be repaid with kindness and resentment with justice’. As Nepal-China maintains amicable relations till now, the Chinese government’s policy in Nepal is expected to be of continuity rather than change, according to political analysts. Following up with that, on March 10, China included Nepal in its destination of outbound tourists which has gladdened Nepali tour operators.
Kathmandu-Kerung railway’s field survey has started with a Chinese technical team having arrived in Nepal. Kathmandu-Kerung railway project is one of the flagship projects of BRI. This decision is in continuation with an agreement made with China’s former Foreign Minister Wang Yi to finish Kathmandu-Kerung study within 4 years.
The Confederation of Nepalese Industries (CNI) and China Council for Promotion of International Trade (CCPIT) jointly organized the Nepal – China Investment and Business Forum on March 12, 2023 in Kathmandu. Prime Minister Pushpa Kamal Dahal ‘Prachanda’ inaugurated the forum and highlighted the significance of trade between Nepal and China. He reinstated Nepal’s commitment to One-China Policy, reflected on the beneficial past treaties and agreements between the countries and also mentioned Nepal would soon have a ‘one-door service’ for foreign investors to encourage foreign investment in Nepal. Deputy Prime Minister Narayan Kaji Shrestha in a meeting with Zhang Shogang, Vice President of China Council for the Promotion of International Trade (CCPIT), also urged Chinese officials to operationalize Tatopani and Rasuwa borders for trade. Both sides agreed on strengthening trade relations with Nepal being open to foreign investment and China supporting Nepal’s development.
Following Nepal's request for "easy and more generous" market access to China, the two countries have come to an agreement to resume two-way trade and people-to-people movement through border points that were previously closed due to China's Zero-COVID Policy. The Rasuwagadhi/Kerung border is set to be fully operational from April 1, 2023, while Tatopani/Zhangmu will reopen from May 1, 2023. China has also agreed to consider setting up a lab on the Nepal-China border to facilitate exports from Nepal. The agreement was reached during a meeting on March 29, 2023, held at Lhasa, Tibet Autonomous Region, for the Nepal-China Coordination Mechanism on Border Trade and Cooperation. These developments hold the potential to narrow Nepal's trade deficit with China and strengthen the economic ties between the two nations.
China and Nepal continue to strengthen their bilateral relationship, collaborating across a range of sectors such as politics, tourism, infrastructure development, and trade. Notable recent advancements, such as the reopening of border crossings, Nepal's addition to China's list of approved outbound tourist destinations, and progress on the Kathmandu-Kerung railway project, are expected to bolster economic ties and yield significant benefits to Nepal's economy. However, to comprehensively assess the future trajectory of China-Nepal relations, it is essential to prudently evaluate geopolitical dynamics and other influential factors.
Nepali delegation led by Deputy Prime Minister and Minister for Physical Infrastructure and Transport, Narayan Kaji Shrestha participated in the 5th United Nations Conference on the Least Developed Countries held in Doha, Qatar from March 5 to 9, 2023. Prime Minister Pushpa Kamal Dahal ‘Prachanda’ was set to lead the delegation. However, he wasn’t able to do so to prevent disruptions in the impending presidential elections. So Deputy Prime Minister Narayan Kaji Shrestha attended the conference in his stead.
In the conference, Nepal had been given the responsibility of chairing the Coordination Bureau of the LDCs. Nepal reiterated the need for global financial help, COVID-19 challenges, and a need for coordination of climate action for LDCs to complete SDGs by 2030. Nepal emphasized issues such as duty- and quota-free market access, preferential rules of origin, and aid for trade. Nepal is taking over as the chair of the LDC group for three years, and the country will face both political and economic challenges in its transition to a developing nation. Alongside Bangladesh and Laos, Nepal has called for international support to help graduating LDCs with measures such as export diversification, climate mitigation, and continued official development assistance.
Nepal's Investment Board has granted Indian company NHPC Limited permission to conduct a detailed study of the 400 MW Seti-6 Hydropower Project on March 17. The proposed project will be constructed in the Achham and Doti districts. Similarly, Nepal-India also had several electricity import-export agreements. Nepal Electricity Authority (NEA) agreed to increase the rate of electricity per unit. Nepal will also be allowed to use border transmission lines in Bihar to export electricity to other Indian states. Nepal is also looking for an opportunity to export electricity to Bangladesh through Indian transmission lines which will be one of the several agendas to be discussed by Prime Minister Pushpa Kamal Dahal ‘Prachanda’ during his India visit.
Although dates haven’t been finalized yet, Prime Minister Prachanda is set to visit India for his first foreign visit in his third tenure as Prime Minister. Indian Foreign secretary Vijay Mohan Kwatra visited Kathmandu last month and extended an invitation to Prime Minister Prachanda for an India visit. During his visit to India, Prime Minister Dahal will discuss upon two hydropower projects, Phukot Karnali and Tamor, previously included in China's BRI, that are set to be handed over to Indian companies. The 480 MW Phukot Karnali project has already been awarded to NHPC Limited and Vidhyut Utpadan Company Limited, while preparations are underway to hand over the 756 MW Tamor project to SJVN Limited. This is done in order to trade electricity to Bangladesh via India.
This development reflects a shift in the involvement of different countries in Nepal's hydropower sector. While these projects were initially included in China's BRI, Nepal is now engaging Indian companies for their development. This could have various geopolitical, economic, and strategic implications in the region, as it indicates a changing dynamic of power and influence in Nepal's energy sector. It may also have implications for Nepal's relations with China and India, as well as the overall dynamics of the BRI initiative in South Asia.
However, the expansion of transmission lines along the Nepal-India border and the subsequent agreement for cross-border electricity trade with India is a positive development that could help Nepal meet its energy needs and potentially generate revenue by exporting electricity to India. Nevertheless, the challenges associated with land acquisition for transmission line projects in Nepal remain an obstacle to the country's energy sector development. Addressing this issue will require effective communication, compensation, and consultation with affected communities.
The issue of security, military and geopolitics will always be in the forefront of Nepal and India relations. However, India is also focusing on development activities in Nepal and other neighboring countries to create ‘soft influence’ in citizen stakeholders such as other line ministries, diplomatic circles, border residents etc.
Timeline of Major Events
| Date | Events |
| March 3 | PM's visit to Doha LDC conference canceled due to 'internal political reasons' |
| March 5-7 | 5th Conference of LDCs in Doha attended by Nepal; Nepal to chair coordination bureau of LDCs |
| March 10 | British state minister Anne Marie-Trevelyan's visit to Nepal |
| March 11 | China adds Nepal as approved outbound tourist destination for citizens |
| March 13 | Nepali and Chinese businessmen explored business opportunities in Nepal through Nepal-China Business Forum 2023 |
| March 13 | China's Nepal policy more continuity than change after new FM appointed |
| March 14 | Nepal – China Investment and Business Forum 2023 organized by Confederation of Nepalese Industries (CNI) and Chia Council for the Promotion of International Trade (CCPIT) in Kathmandu |
| March 14 | DPM Narayan Kaji Shrestha talked to Chinese officials to operationalize Tatopani and Kerung borders |
| March 16 | EU delegation in Sudur Paschim Nepal |
| March 17 | Indian Company to study on Seti-6 hydropower project |
| March 18 - 19 | Nepal-India cross border electricity import-export agreement;Nepal seeks India's approval to transport electricity to Bangladesh |
| March 20 | Border outpost to be constructed 500 m away from international border |
| March 25 - 29 | Nepal and US Army to hold Land Force Talks, highest form of engagement between Nepal-US Army |
High Level Visits
British State Minister for Foreign, Commonwealth and Development, Anne-Marie Trevelyan visited Nepal. While this wasn’t a much-publicized visit, Travelyan met with Prime Minister Pushpa Kamal Dahal and other government officials.
A European Union (EU) delegation also visited the Far West region of Nepal. Chief Minister Kamal Bahadur Shah of Sudurpaschim Province met with the delegation, led by the EU Ambassador to Nepal, Nona Deprez, to discuss bilateral cooperation. The discussion focused on promoting the energy sector, specifically hydropower and developing the health and education sectors. A hospital is under construction in Dadeldhura with financial support from the government of Germany.
The high-level visits from the UK and the EU, along with the US military’s continued support for Nepal demonstrates a fostering interest of the West to building stronger diplomatic ties with Nepal. The operation of different projects in Sudhurpaschim with support from the EU is an indication of the EU’s increased interest in Nepal’s development.
Nepal – US
The Armed Police Force (APF) of Nepal is set to construct border outposts (BOPs) 500 meters away from the country’s international border. Until now, BOPs have primarily been located on rented land. The APF has specialized in border security and provided internal security since 2063 B.S., taking over these responsibilities from the Nepal Army.Nepal and the United States are set to hold their annual Land Force Talks in Kathmandu from March 27 to 29. The fourth meeting will focus on military and defense cooperation, disaster response, relief, preparedness, and peacekeeping missions. The US is providing two M28 block 05 Skytrucks to Nepal under a US$ 30.4 million contract, with the order expected to be processed by April 30, 2025. The Land Force Talks, which began in June 2018, represent the highest level of engagement between the Nepali and US armies.
While Nepal decline to participate in the American State Partnership Program (SPP), the annual Land Force Talks between Nepal and the United States demonstrates a good cooperation between the two. Additionally, the provision of M28 block 05 Skytrucks to Nepal under a $30.4 million contract also shows the US’s continued support for Nepali Army’s capacity-building.
Nepal-China
In its domestic political front, China held an annual session of the national parliament, where Xi Jinping was reinstated as President, and Qin Gang became the new foreign minister. In his first interview on March 7, China’s foreign minister Qin Gang stated that ‘kindness should be repaid with kindness and resentment with justice’. As Nepal-China maintains amicable relations till now, the Chinese government’s policy in Nepal is expected to be of continuity rather than change, according to political analysts. Following up with that, on March 10, China included Nepal in its destination of outbound tourists which has gladdened Nepali tour operators.
Kathmandu-Kerung railway’s field survey has started with a Chinese technical team having arrived in Nepal. Kathmandu-Kerung railway project is one of the flagship projects of BRI. This decision is in continuation with an agreement made with China’s former Foreign Minister Wang Yi to finish Kathmandu-Kerung study within 4 years.
The Confederation of Nepalese Industries (CNI) and China Council for Promotion of International Trade (CCPIT) jointly organized the Nepal – China Investment and Business Forum on March 12, 2023 in Kathmandu. Prime Minister Pushpa Kamal Dahal ‘Prachanda’ inaugurated the forum and highlighted the significance of trade between Nepal and China. He reinstated Nepal’s commitment to One-China Policy, reflected on the beneficial past treaties and agreements between the countries and also mentioned Nepal would soon have a ‘one-door service’ for foreign investors to encourage foreign investment in Nepal. Deputy Prime Minister Narayan Kaji Shrestha in a meeting with Zhang Shogang, Vice President of China Council for the Promotion of International Trade (CCPIT), also urged Chinese officials to operationalize Tatopani and Rasuwa borders for trade. Both sides agreed on strengthening trade relations with Nepal being open to foreign investment and China supporting Nepal’s development.
Following Nepal's request for "easy and more generous" market access to China, the two countries have come to an agreement to resume two-way trade and people-to-people movement through border points that were previously closed due to China's Zero-COVID Policy. The Rasuwagadhi/Kerung border is set to be fully operational from April 1, 2023, while Tatopani/Zhangmu will reopen from May 1, 2023. China has also agreed to consider setting up a lab on the Nepal-China border to facilitate exports from Nepal. The agreement was reached during a meeting on March 29, 2023, held at Lhasa, Tibet Autonomous Region, for the Nepal-China Coordination Mechanism on Border Trade and Cooperation. These developments hold the potential to narrow Nepal's trade deficit with China and strengthen the economic ties between the two nations.
China and Nepal continue to strengthen their bilateral relationship, collaborating across a range of sectors such as politics, tourism, infrastructure development, and trade. Notable recent advancements, such as the reopening of border crossings, Nepal's addition to China's list of approved outbound tourist destinations, and progress on the Kathmandu-Kerung railway project, are expected to bolster economic ties and yield significant benefits to Nepal's economy. However, to comprehensively assess the future trajectory of China-Nepal relations, it is essential to prudently evaluate geopolitical dynamics and other influential factors.
Nepal in LDC Conference
Nepali delegation led by Deputy Prime Minister and Minister for Physical Infrastructure and Transport, Narayan Kaji Shrestha participated in the 5th United Nations Conference on the Least Developed Countries held in Doha, Qatar from March 5 to 9, 2023. Prime Minister Pushpa Kamal Dahal ‘Prachanda’ was set to lead the delegation. However, he wasn’t able to do so to prevent disruptions in the impending presidential elections. So Deputy Prime Minister Narayan Kaji Shrestha attended the conference in his stead.
In the conference, Nepal had been given the responsibility of chairing the Coordination Bureau of the LDCs. Nepal reiterated the need for global financial help, COVID-19 challenges, and a need for coordination of climate action for LDCs to complete SDGs by 2030. Nepal emphasized issues such as duty- and quota-free market access, preferential rules of origin, and aid for trade. Nepal is taking over as the chair of the LDC group for three years, and the country will face both political and economic challenges in its transition to a developing nation. Alongside Bangladesh and Laos, Nepal has called for international support to help graduating LDCs with measures such as export diversification, climate mitigation, and continued official development assistance.
Nepal-India
Nepal's Investment Board has granted Indian company NHPC Limited permission to conduct a detailed study of the 400 MW Seti-6 Hydropower Project on March 17. The proposed project will be constructed in the Achham and Doti districts. Similarly, Nepal-India also had several electricity import-export agreements. Nepal Electricity Authority (NEA) agreed to increase the rate of electricity per unit. Nepal will also be allowed to use border transmission lines in Bihar to export electricity to other Indian states. Nepal is also looking for an opportunity to export electricity to Bangladesh through Indian transmission lines which will be one of the several agendas to be discussed by Prime Minister Pushpa Kamal Dahal ‘Prachanda’ during his India visit.
Although dates haven’t been finalized yet, Prime Minister Prachanda is set to visit India for his first foreign visit in his third tenure as Prime Minister. Indian Foreign secretary Vijay Mohan Kwatra visited Kathmandu last month and extended an invitation to Prime Minister Prachanda for an India visit. During his visit to India, Prime Minister Dahal will discuss upon two hydropower projects, Phukot Karnali and Tamor, previously included in China's BRI, that are set to be handed over to Indian companies. The 480 MW Phukot Karnali project has already been awarded to NHPC Limited and Vidhyut Utpadan Company Limited, while preparations are underway to hand over the 756 MW Tamor project to SJVN Limited. This is done in order to trade electricity to Bangladesh via India.
This development reflects a shift in the involvement of different countries in Nepal's hydropower sector. While these projects were initially included in China's BRI, Nepal is now engaging Indian companies for their development. This could have various geopolitical, economic, and strategic implications in the region, as it indicates a changing dynamic of power and influence in Nepal's energy sector. It may also have implications for Nepal's relations with China and India, as well as the overall dynamics of the BRI initiative in South Asia.
However, the expansion of transmission lines along the Nepal-India border and the subsequent agreement for cross-border electricity trade with India is a positive development that could help Nepal meet its energy needs and potentially generate revenue by exporting electricity to India. Nevertheless, the challenges associated with land acquisition for transmission line projects in Nepal remain an obstacle to the country's energy sector development. Addressing this issue will require effective communication, compensation, and consultation with affected communities.
The issue of security, military and geopolitics will always be in the forefront of Nepal and India relations. However, India is also focusing on development activities in Nepal and other neighboring countries to create ‘soft influence’ in citizen stakeholders such as other line ministries, diplomatic circles, border residents etc.
CESIF Nepal