If you are uncertain about the future of your relationship, just add to the ambiguity. Kathmandu (Nepal) and Beijing perfected that transaction during Nepali Prime Minister Khadga Prasad Sharma Oli’s recent four-day official visit to China.
Prior to the visit, Nepal had made much about how it had changed the long-delayed BRI Implementation Framework to the BRI Cooperation Framework based on a rare political consensus. The two parties in the ruling coalition even asserted that they had done so to avoid taking loans from China under its flagship Belt and Road Initiative. In deference to his coalition partner, the Nepali Congress, Oli asserted that he would be flying into Beijing insisting Nepal would only accept grants under the BRI.
After Oli’s talks with Premier Li Qiang, the BRI did not figure in the official readout. The Nepali prime minister’s meeting with President Xi Jinping did not yield any progress on the initiative, either. So, Nepalis were forgiven for being flustered.
The unofficial word was that Beijing was not too impressed by Kathmandu’s insistence on the word ‘grant’ and would require more time to study the Nepali draft. Many thought that meant the can would be kicked down a long road, again.
However, the very next day, the news came out that Nepal and China had signed the cooperation framework. The reason for the swift progress? A bit of creative thinking by China and reciprocal flexibility by Nepal. The operative term ‘grant’ was replaced by ‘aid’ in the final agreement, the implication being that both grants and loans would be part of project financing modalities.
Or will they? Speaking to reporters at Kathmandu airport upon his return, Oli insisted Nepal did not sign anything suggestive of loans as part of the BRI.
Many believe the row over financing modality was only a fig leaf for the pressure India and the United States exerted on Nepal not to go all into the BRI. Lending credence to such perceptions is the reality that Nepal was somehow only disinterested in loans from China.
Granted, other donors have lower interest rates and better repayment schedules. But why the infantile fixation on grants when everyone knows that BRI is no charity. (The ‘debt trap’ notion has gained much currency but also has skeptics in some think-tank circles. But that is another debate.)
Some have suggested that all Nepal wanted was the free money China had already pledged over the years but had not disbursed. (Up to $740 million by one count). Spending that under the BRI should not be that difficult.
But maybe there is more to the picture here. what if Beijing does not see Kathmandu doing enough to nurture the overall bilateral relationship despite Nepal’s ritualistic reassertions of Chinese positions on Tibet and Taiwan? Similarly, what if Kathmandu sees Beijing as full of words but little action?
A lot of what-ifs swirling around.
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