Who Is Winning The Battle Between India and China For Influence In Nepal, Bhutan, Maldives and Sri-Lanka?

India and China are two major powers and are aggressively competing for influence in the South Asian region. China is leaving no stone unturned to limit the Indian influence in what New Delhi terms as its backyard, while New Delhi continues to thwart Beijing’s debt-trap strategy. A EurAsian Times analysis.

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Narendra Modi, who won the general parliamentary elections this year and retained his premiership for a second term, is pursuing a policy of “Neighbors First.” The essence of this foreign policy is to counter the Chinese mega-project “One Belt, One Road” (BRI), aimed at establishing China’s leadership role in the region. In addition, PM Modi seeks not only to maintain the Indian influence in the region but also to strengthen it.

After winning the May elections, the Modi government is working energetically to implement the prime minister’s foreign policy strategy. Within the framework of this strategy, one should consider perhaps, the most controversial step of PM Narendra Modi after re-election – the revocation of the autonomy of Jammu and Kashmir.

The Indian government took this radical step to strengthen the territorial integrity of India, well aware of the uncertain reaction it will cause in the world. As you might guess, in neighbouring Pakistan, which also controls a part of Kashmir, the abolition of autonomy has caused shock and anger.

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Paying increased attention to the border territories, New Delhi, of course, does not forget about the foreign policy aspect of the “Neighbors First” strategy. New Delhi is making tremendous efforts to strengthen India’s influence in neighbouring countries including Maldives, Sri Lanka, Bhutan, Nepal and Bangladesh with the exception, of course, of Pakistan and China.

While in Kashmir, Pakistan is the main opponent of India, however, China is fighting for influence in all other South Asian nations. Beijing has accumulated vast experience in using “soft power” for diplomatic purposes and is actively using it in the fight against New Delhi to win over its neighbours.

New Delhi does not like the Chinese presence in their  “backyard” i.e. Maldives, Sri Lanka, Bhutan, Nepal and Bangladesh and wants to limit Beijing’s influence in the region. This means that the implementation of the Neighbors First Strategy is one of the top priorities of the Modi Government.

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Battle for the islands: the Maldives and Sri Lanka

The importance of Modi’s neighbourhood first policy is evidenced by the fact that he paid his first foreign visit after being re-elected as the PM to the Maldives. This tiny archipelago occupies a very strategic position and is located on key energy and transport routes in the Indian Ocean.

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The main task of the Modi Government is to challenge Beijing, which is trying to include the islands in its sphere of influence with the help of the BRI project. Relations with the Maldives are especially important right now for Beijing, as China expands its presence in the Indian Ocean.

Last year, elections were held in the Maldives. In general, New Delhi was satisfied with their results, as Ibrahim Mohamed Solih took over as the president of the country in November 2018. Unlike the predecessor Yameen Abdul Gayoom, Solih favours improving ties with India.

Under Gayoom, relations between the two countries, as you might guess, worsened between India and the Maldives. The Maldives Democratic Party, led by Solih, sharply criticized Yameen for the rapid growth of debts.

The former government took loans from China to finance very large, very expensive but not very necessary infrastructure projects such as the construction of the two-kilometre Sinamale bridge, which under the previous administration was called the Sino-Maldivian Friendship Bridge.

Given the geographical location of the Maldives, expanding trade and strengthening ties with the Island nation will remain one of the top priorities of the Modi Government. Among the steps taken by New Delhi in this direction, India installed the coastal radar monitoring system which allowed New Delhi to extensively monitor activities in the Indian Ocean region (IOR) besides keeping a tab on Sri Lanka, Mauritius, Madagascar and Seychelles.

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From Male, the capital of the Republic of Maldives, Narendra Modi went to Sri Lanka. He met President of Sri Lanka, Maithripala Sirisena and his colleague, Prime Minister Ranil Wickramasinghe.

In terms of the importance of its strategic location, Sri Lanka is not inferior to the Maldives. From the archipelago, this island nation, also located on the main sea routes between Southeast Asia and the Middle East, is distinguished by its solid size (65.6 thousand km²) and population (22 million people).

In 2009, a civil war ended on the island country which lasted for almost 26 years. The construction boom, like a magnet, attracted Chinese investment. Strengthening the influence of Beijing in Sri Lanka (who also was a key partner of Colombo during the civil war) was the debt-trap BRI project.

Such a situation, of course, could not but cause alarm in New Delhi, where Ceylon (the former name of Sri Lanka) was for centuries considered their sphere of influence. The investment boom in Sri Lanka, triggered by a construction boom, makes the island a great venue for competition between Indian and Chinese businessmen and companies that fight for contracts.

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The island is small, so often Indian and Chinese projects are nearby. For example, in the capital’s port, where China has invested half a billion dollars in the International Container Terminal, India and Japan, together with the Port Authority of Sri Lanka, are reconstructing the Eastern Container Terminal.

Or take the case of the Chinese operated Hambantota Port. Sri Lanka leased the Hambantota port to China for 99-years in exchange for writing off part of the debts. The port of Hambantota has become a prime example of the “debt trap” diplomacy of China.

Meanwhile, Indian firm Accord Group has reached a $3.85bn agreement with Oman’s Ministry of Oil and Gas to build a 200,000bpd oil refinery in Sri Lanka under a joint venture. The deal represents the biggest single foreign direct investment commitment ever made in the island nation.  The proposed refinery will be constructed on a parcel of land near the site of the new Hambantota international port and a related industrial zone on the country’s southern coast.

Tug Of War Over Bhutan and Nepal

The importance of two more South Asian nations i.e. Bhutan and Nepal is also a bone of contention between New Delhi and Beijing. Both nations are vital for their strategic position, albeit different in comparison with the island nations. Both Nepal and Bhutan are buffer states between India and China.

Bhutan is India’s strongest ally in the region. In addition, it is the only country in South Asia, except Afghanistan, which is not included in the Chinese BRI project.

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The main component of India-Bhutan relations is the development of hydropower. This was mainly discussed during the meeting of the Indian Prime Minister with his Bhutanese colleague Lotai Tsering on August 19 in Thimphu, the capital of Bhutan.

During a trip to the kingdom, Modi opened the Indian financed Mangetsu Hydroelectric Power Station. It is planned that New Delhi will buy surplus electricity from Bhutan.

Narendra Modi also took advantage of a visit to Bhutan to expand the use of the Indian national payment system RuPay, which allows Indians abroad to carry out payment transactions in rupees and help the government to develop the digital economy (RuPay is already operating in Singapore, Bahrain and the United Arab Emirates).

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During the visit, Prime Minister Modi also opened a communications station associated with the South Asia Satellite system launched in 2017, which will allow Bhutan to both send and receive information.

One of the top priorities for Indian PM is the Doklam plateau where Indian and Chinese had a severe face-off two years ago. PM Modi hopes to persuade the kingdom’s authorities not to cede any territories to China during the upcoming Sino-Bhutan negotiations on the disputed plateau.

Narendra Modi did not go to Nepal himself but sent his assistant – Indian Foreign Minister Subramanyam Jaishankar. The chief Indian diplomat participated in the fifth Indian-Nepalese joint commission. He held talks in Kathmandu with Nepal’s Foreign Minister Pradeep Kumar Gyawali and Nepal’s Prime Minister Khadga Prasad Sharma Oli, who, incidentally, leads the ruling party, the Communist Party of Nepal.

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Nepal is a mountainous country with a population of about 30 million people. Geography in Nepal plays, perhaps, one of the most important roles in the formation of Indian foreign policy. The Himalayas separate it from Tibet, but the grassy plains in the south for many centuries made it possible for exchange people, goods and ideas with India, the main partner of Nepal.

Everything is not smooth between New Delhi and Kathmandu. One can recall, for example, the blockade of the border, which lasted several months in 2015-2016 and ended in severe energy crisis in the country. Even though local Nepalese people organized the blockade, Kathmandu blamed New Delhi of pressure tactics to force Nepal to change its constitution.

This episode forced Oli to expand ties with Beijing. As a result, Nepal, after much deliberation, decided to join the BRI project. In 2017, Nepal and China held the first joint Sagarmatha Friendship exercise. And while the Himalayas limit Kathmandu’s ability to establish infrastructure ties with China, Nepal intends to further expand its ties with its northern neighbour in order to weaken the influence of India – its southern neighbour.

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