BRI On Political Radar Again

China’s trillion-dollar global project - Belt and Road Initiative (BRI) - is once again on the political radar in Nepal ahead of Prime Minister KP Sharma Oli’s visit to China slated for December 2 to 5. In Nepal, BRI is discussed and debated much but little is done to draw up a consensus modality for its implementation to the benefit of the country. As the BRI discourse comes to the fore, some political parties apply geopolitical lens in thwarting progress against it.

Prime Minister Oli is apparently poised to make some sort of a breakthrough for the implementation of viable projects under the BRI framework during his China visit but his main ally Nepali Congress (NC) has not budged from its stance that it will not accept loans but only  grants to implement the BRI. The NC that believes neo-liberal and pro-market economy doggedly refuses to take loans from China but has no qualms about accepting soft loans from multilateral agencies like World Bank and Asian Development Bank or bilateral loans from different nations regularly. This is quite bizarre and yet mysterious.

Growing loans

It is true that Nepal cannot afford loans with heavy interest rates as it has already taken huge foreign and internal debt. But there is no rational behind the logic that loans must not be taken from China. In order to iron out their differences over the BRI, PM Oli and NC president Sher Bahadur Deuba held talks on last Monday and Tuesday but they yielded no outcomes. When Oli asked Deuba not to take a rigid stand on BRI, the latter gave a curt reply: “How much loan do we take? If grant, take it now. Let’s not add further burden.”

In fact, the BRI projects are implemented through a blended financing that consists of both grants and concessional loans but the portion of loans is far higher than that of the grants. The NC’s anti-BRI posture has put PM Oli in a quandary. It has forwarded the idea of directly executing the projects instead of implementing the BRI agreement signed between Nepal and China in 2017. In an apparent reference to NC’s position, UML general secretary Friday posed a question: Is it wrong to secure concessional loans from the neighbouring nations for the development of Nepal?

BRI is considered a development strategy but some parties have made it a geopolitical issue. It is worth mentioning here that when the NC and UML forged an agreement to form their joint government on July 2 this year, the then Pushpa Kamal Dahal Prachanda-led government was close to sign a deal on the implementation of BRI. Following his exit from power, Prachanda has even claimed that his government collapsed as it was going to ink an accord to implement the BRI projects. It is also interesting to note that one day after forming an alliance with the UML, the NC had made its position on BRI public, stating that it would not take loans under the BRI framework at all cost. It was a clear signal to Oli that it would not give him a free hand when it comes to handling relations with China.

Although the NC and UML leaders are aware that their alliance will not suffer any ruptures due to the BRI, UML secretary Pradeep Gyawali has expressed dissatisfaction over the NC’s approach to China’s flagship project at a recent press meet. “At a time when the BRI projects need to be executed, it has been tampered with. The NC is demonstrating immature behaviour in the way the CPN-Maoist Centre had done over the MCC.” Gyawali, also a former foreign minister, criticised the NC after their joint mechanism failed to form a common ground on the BRI.

The NC and UML have assigned general secretary Gagan Thapa and UML Dr Yuba Raj Khatiwada, economic advisor to the Prime Minister, respectively to resolve their differences on the implementation of BRI projects. PM Oli has reportedly proposed accepting Chinese loan on concessional interest rate during his meeting with Deuba. If Dr. Khatiwada and Thapa forge an understanding on it, Foreign Minister Dr. Arzu Rana Deuba and Finance Minister Bishnu Paudel will submit a proposal to PM Oli.

When Nepal and China signed a memorandum of understanding on the One Belt One Road, later known as Belt and Road Initiative (BRI), it was just Nepal's consent to participate in it. This requires the investment modality, selection of projects and deals on their implementation. Nepal has already proposed nine projects with the Chinese side. They include Upgradation of Rasuwagadhi-Kathmandu road, feasibility study of Keyrung-Kathmandu rail, construction of Kimathanka-Hile road, road from Dipayal to the border of China, Tokha-Bidur road, Galchhi-Rasuwagadhi-Kerung 400kv transmission line, 756-MW Tamor hydroelectricity project, 426-MW Phukot Karnali Hydro Electric Project and Madan Bhandari University. 

Implementation capacity  

Apart from signing the BRI implementation plan, Nepal government aims to implement trade and transit treaty that the two nations signed in 2016. However, Nepal side needs to improve its implementation capacity. For example, during the visit of Chinese President Xi Jinping in 2019, China had announced to provide Rs. 100 billion in grant but there has been no progress in securing this fund. 

PM Oli is now treading a tightrope. He has to take the NC, the main ally of the coalition, into confidence so that he will make some significant gain from the China visit. Nepal's political leaders should demonstrate their ability to navigate the geopolitical complexities. But their real leadership test lies in taking bold steps in the interest of the nation while avoiding the potential geopolitical pitfalls.  

(The author is Deputy Executive Editor of this daily.)