IMAGE VIA WIRED
FOR A SMALL, landlocked country, geography is destiny. For Nepal, wedged between China and India, it is a daily lesson in the art of survival. Two nuclear-armed giants, each with a history of border skirmishes, loom on either side. The conventional wisdom for decades held that a state so exposed would eventually have to choose: balance against one or bandwagon with the other.
Nepal has done neither. Instead it has pursued a strategy of hedging: a calculated refusal to tie its fate to either neighbour. It is a risky game. Yet in a neighbourhood where picking the wrong side could be fatal, it may be the only rational one.
The logic of hedging is obvious. Instead of aligning with the stronger power, as a bandwagoner would, or actively countering the threatening one, as a balancer would, a hedger tries to keep its options open. It builds ties with both rivals, diversifying its dependencies so that no single relationship can be used to strangle it. Nepal’s neighbours are powerful as well as rivals. India sees Chinese influence in its Himalayan backyard as a direct threat. China views India’s historical dominance over Nepal as a nuisance to be overcome.
For Kathmandu, that hostility is a curse as well as an opportunity. The curse is the constant pressure to align. The opportunity is playing one off against the other.
That opportunity has grown as the power dynamic between China and India has changed. When both were roughly comparable, Nepal had less room to manoeuvre. Today China’s economy is five times the size of India’s; its military budget dwarfs that of its neighbour. From a purely realist perspective, Nepal should have long ago thrown in its lot with Beijing. But it has not.
The reason is not just about money or missiles. It is about sovereignty: Nepal has watched what happens to states that bandwagon too eagerly. Sikkim, which leaned heavily on India, was absorbed as a federal state in 1975. Bhutan, India’s other close Himalayan ally, has found its border disputes with China complicated by the Indian army’s presence on its soil. Nepal has no desire to become the next Sikkim, nor to find itself a passive frontline in a Sino-Indian war.
This fear of absorption explains Nepal’s long-standing, if often uneasy, relationship with India. For all its cultural and economic ties to the south— from the open border and the currency union to the fact that it handles some 80% of Nepal’s exports—there is deep-seated resentment in Kathmandu of Indian high-handedness. The 2015 blockade, imposed by India in response to political changes in Nepal, was a painful reminder of what over-dependence looks like. It pushed Kathmandu firmly towards Beijing. China, ever alert to a chance to diminish Indian influence, responded with aid, investment and promises of a trans-Himalayan railway.
Yet a full embrace of China is equally unpalatable. Nepal is no Bhutan. Its democratic politics, however fractious, are fiercely protective of autonomy. And China, for all its economic might, is a more distant neighbour, both physically and culturally. The relationship is transactional. Beijing wants to keep Nepal out of the Indo-Pacific alliance system and to ensure its territory is not used by Tibetan exiles. Kathmandu wants roads, bridges and investment. They have found a useful accommodation but it is not one built on trust.
This is where the strategy of hedging becomes more sophisticated. It is not only a passive balancing act. Nepal actively uses its engagements with one power to create space from the other. The Millennium Challenge Corporation (MCC) compact with America, which India’s Hindu nationalist government viewed with suspicion, was ratified in part to signal to New Delhi that Kathmandu has other friends. Simultaneously, Nepal participates in China’s Belt and Road Initiative, using the infrastructure projects to reduce its historic dependence on Indian ports. The goal is to create enough alternative pathways that neither giant can take Nepal for granted.
The risks, however, are mounting. India’s ruling party has grown more assertive, with elements of its Hindu nationalist ideology viewing Nepal as a lost province to be reclaimed. Chinese diplomacy has become more aggressive, using economic ties to build political influence. The war in Ukraine has shown what happens when a buffer state fails to manage its relationships; Ukraine’s attempt to hedge between Russia and the West ended in invasion. Nepal’s geography, unlike Ukraine’s, provides some protection. The Himalayas are a formidable barrier. But the political pressure is no less real.
For the moment Nepal’s hedging has worked. It has avoided military alliances, kept its borders intact and secured aid from both sides. But the strategy requires constant, agile diplomacy. It demands that domestic politics not be captured by either neighbour’s agenda—a challenge when political parties in Nepal have their own patrons in Delhi and Beijing. And it depends on the great powers themselves remaining preoccupied with each other, leaving room for the small state in between.
That room is shrinking. China’s rise has made India more anxious, and Indian anxiety has made it more interventionist. Nepal’s hedge is a high-wire act without a net. It may continue to succeed as long as the two giants are more focused on each other than on the small state between them. But if either decides that Nepal is a prize worth taking, the fine art of hedging will quickly become a desperate scramble for survival. For a country that has spent centuries squeezed between empires, that is a familiar feeling. It is not, however, a soothing one. ■
