Is the world moving towards multipolarity, or at least towards a new world order? In the last century, close to the end of the Second World War, Henry Morgenthau Jr., at the opening of the Bretton Woods conference, observed: “The transcendent fact of contemporary life is this: … the world is a community.” This thought had been enunciated thousands of years earlier in India, where the Maha Upanishad mentions the ancient Indian philosophical concept of “Vasudhaiva Kutumbakam” (The world is a family). But were the institutions created after World War II to govern the world order focused on creating an equitable world or to perpetuate the stranglehold over power in the hands of a few?

When India gained independence, the philosophy behind the phrase “Vasudhaiva Kutumbakam” found utterance in the voices of its leaders, but India was not a power that could influence global decisions. During India’s G20 presidency, the summit held in New Delhi in September 2023 was themed on Vasudhaiva Kutumbakam—One Earth, One Family, One Future. Prime Minister Modi has used this phrase while advocating for peace in the Russia-Ukraine War and the Israel-Hamas conflict and during his frequent interactions with world leaders for a more equitable world order.

Eight decades after the formation of global institutions such as the United Nations (UN), the International Monetary Fund (IMF) and the World Bank, the questions regarding their relevance in today’s world are becoming louder and more constant. When these institutions were established, the world order radically differed from the one we live in today. There was little concern then about issues such as climate change. Terrorism was confined to limited geographical pockets, and its spread was not difficult to contain. The world had yet to make those rapid technological advancements that define the present battle space, especially in communications and long-range precision weapon systems. The space race was in its infancy, and cyber warfare was not a threat. But all that has changed now. The world is literally “on fire,”^[i] as the rather provocative article by the Stockholm Environment Institute states. This raises the question: Can the existing institutions of global governance adapt to change? Or are new instruments required to replace the ones formed about eight decades ago?

Recognising the need for change, UN Secretary-General António Guterres issued a policy brief in July 2023 titled “A New Agenda for Peace.” It outlines his vision for peace and security in a world in transition, aiming to address current conflicts, foster sustainable peace, and promote international cooperation. “What is at stake,” Guterres wrote, “is not the future of the United Nations, but of our nations and humanity. The possibility of global devastation, whether from nuclear weapons, climate change, diseases or war, or even technology run amok, is tangible and increasing. Member States will need to find new ways of working together despite the increasing mistrust that has permeated international relations.”^[ii]

The BRICS (Brazil, Russia, India, China, and South Africa) Summit, held in Kazan, Russia, from 22-24 October 2024, is a pointer to how a future world order could emerge. A plurilateral organisation, BRICS was founded pursuant to a meeting of the four leaders of BRIC (Brazil, Russia, India, and China) in St Petersburg, Russia, on the margins of the G8 Outreach Summit in July 2006. Two months later, in September 2006, the group was formalised as BRIC during the first BRIC Foreign Ministers Meeting held on the sidelines of the General Debate of the UN Assembly in New York City. After that, the first BRIC summit was held in Yekaterinburg, Russia, on 16 June 2009.^[iii] The Kazan Summit has added more members to BRICS— Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates (UAE), to form the BRICS+. Many countries have applied for membership, so the organisation is set to grow.

BRICS+ challenges the structural advantages that advanced market economies continue to enjoy,^[iv] but it is not an anti-West grouping. It allows operating within and outside groupings like the G20 for India and other middle powers. This fact precludes the world from being divided into rigid blocs, a throwback to the Cold War years. The West, for now, is adopting a wait-and-watch attitude. Still, there is no reason for alarm or confrontation, especially if the West addresses emerging powers’ concerns, legitimate hopes and aspirations.

China’s Belt and Road Initiative (BRI) also seeks to reshape the geopolitical landscape by funnelling development finance to extend its economic and political influence. Decarbonisation will rewrite the geopolitical script by changing the value of specific resources—diminishing the relevance of fossil fuels while increasing the importance of rare earths.

An American political scientist, G. John Ikenberry, has viewed the emerging change as dividing the world into three major groupings—The West led by the US; the East comprising Russia and China; and the developing world. According to Ikenberry, these ‘three worlds’, as he put it, are not blocs but loose evolving factions with situation-specific dynamics. He characterises plurilateral organisations such as the Quad, BRICS, the SCO and other regional organisations in this manner. An interesting facet of the view is that Ikenberry posits that Asia is at the forefront of the change that will come about and that India will be a critical driver of that change.^[v]

India’s External Affairs Minister, Dr S. Jaishankar, alluded to these geopolitical shifts while addressing the Asia Society Policy Institute in New York on September 25, 2024. While emphasising the need to rebalance the global order, he noted that economic, political, and demographic transformations over the last eight decades have propelled several Asian countries into the top twenty world economies. Among these, India—ranked as the tenth-largest economy just a decade ago—has now risen to fifth place and is projected to become the third-largest by the decade’s end. He spoke of the inevitability of change and argued for a multipolar world with more independent decision-making centres as international politics was redirecting toward finding convergences and overlapping interests among nations.^[vi] The United States will contest this change and resist efforts to alter the status quo. China will continue its quest for global leadership, making a future conflict all the more plausible. The Global South, though not a pole in the conventional sense, will significantly influence the changes that occur in the world order. India’s role, too, will be critical.

India’s Neighbourhood

The volatility in India’s neighbourhood reflects the transformation underway in the global order. Power struggles, shifting alliances, increased cooperation in some areas, and intensified competition in others are all becoming more frequent. Asia remains the focal point of these developments, driven by India’s rise, Japan’s developed economy, China’s bid to challenge U.S. dominance, West Asia’s energy reserves and the growth of ASEAN. How the India-China contestation plays out will be critical to any future outcome of the new world order.

The recent rapprochement between India and China in Eastern Ladakh does not signify a significant forward movement in the relationship between the two countries. Still, it indicates that the two countries can find mechanisms to ratchet down tensions and work around each other’s core concerns. China, for now, advocates a multi-polar world but remains fixated on being the sole pole in Asia. The contestation for power will thus remain. China’s President Xi Jinping has clearly articulated his vision for China as a world leader in comprehensive national strength and global influence by 2049.^[vii] India, too, aims to be a developed country by 2047. There will thus be cooperation, competition and contestation between the two countries. How this plays out will impact the new world order.

In the quest for dominance while supporting India’s rise, the West would not like to see India grow to the extent that it would be a competitor to their economic and other interests. The overthrow of the democratically elected Sheikh Hasina government in August this year had US backing, as seen by Washington’s support for Nobel laureate Muhammad Yunus, perceived as a U.S. protégé, to head the interim government in Bangladesh. In Bangladesh, the US played for its long-term strategic interests, designed to keep pressure on India and influence Indian foreign policy to align with Western interests. Developments in India’s Northeast and some other parts of India also point to the role of external agencies in keeping India embroiled in internal issues to slow down India’s rise.

China, too, is wary of India’s rise, and the tensions along the India-Tibet border are a concomitant result of Beijing’s focus on a unipolar Asia. It also reflects in China’s support for separatist movements in India’s Northeastern states bordering Myanmar. For many decades now, China has also used Pakistan as a proxy to contain India. The China-Pakistan nexus extends to the strategic domain and manifests in the China-Pakistan Economic Corridor (CPEC), designed to open China to the warm waters of the Indian Ocean via the Gwadar port. China’s foray into the Indian Ocean also poses a challenge for India. The network of strategic ports from the Kyaukphyu Port in Myanmar to Gwadar in Pakistan, while designed to secure China’s energy routes through the Indian Ocean, also serve as tools to encircle India strategically.

In response, India has pursued its Act East Policy, with ASEAN at its core. The Quad—a partnership involving India, the U.S., Japan, and Australia—advances India’s vision of a Free and Open Indo-Pacific and extends its influence to Australia and beyond. While India aligns with the U.S. and other Western nations in the maritime domain, differences remain on continental issues, as seen in India’s neutral stance on the Russia-Ukraine conflict.

Some of India’s smaller neighbours—Nepal, Sri Lanka, and the Maldives—seek to maximise their advantage by balancing ties between India and China. However, India’s cultural and civilisational links with Nepal and Sri Lanka and its geographic proximity to the Maldives provide it with a strategic edge. Through its ‘Neighbourhood First Policy,’ India has prioritised deepening physical, digital, and people-to-people connectivity with neighbouring countries and expanding trade and commerce. Over the past decade, India has taken a generous and non-reciprocal approach to regional engagement, a strategy it will likely maintain despite occasional setbacks.

As India’s global influence grows, it would be unrealistic to expect a frictionless environment. The challenges India faces—geopolitical, economic, or strategic—must be factored into its long-term growth strategy. Connectivity will remain pivotal to India’s ambitions. The proposed India-Middle East-Europe Economic Corridor (IMEC), linking India with Europe and the Atlantic, and the Trilateral Highway through Myanmar, connecting India to the Pacific, illustrate India’s increasing centrality in global trade and geopolitics. This connectivity, stretching from the Atlantic to the Pacific, will have far-reaching strategic and economic implications, underscoring India’s evolving role in shaping the future of the global order.

Author Brief Bio: Maj. Gen. Dhruv C. Katoch is Editor, India Foundation Journal and Director, India Foundation.

References:

^[i] https://www.sei.org/perspectives/transitioning-to-a-new-global-order/

^[ii] https://dppa.un.org/en/a-new-agenda-for-peace

^[iii] https://brics2021.gov.in/about-brics

^[iv] https://carnegieendowment.org/research/2024/10/brics-summit-emerging-middle-powers-g7-g20?lang=en

^[v] G John Ikenberry, Three Worlds: the West, East and South and the competition to shape global order, available at https://academic.oup.com/ia/article/100/1/121/7506681

^[vi] https://www.mea.gov.in/Speeches-Statements.htm?dtl/38341/Remarks_by_EAM_Dr_S_Jaishankar_at_Asia_Society_Policy_Institute_in_New_York

^[vii] https://www.strategictranslation.org/articles/predicting-the-future-chinas-composite-national-strength-in-2049

Introduction

On July 15, 2024, when Nepal’s President, Shri Ram Chandra Paudel, appointed Shri K P Sharma Oli as the new Prime Minister of the Communist Party of Nepal-Unified Marxist Leninist (CPN-UML)-Nepali Congress (NC) coalition, it marked the appointment of Nepal’s 14th Prime Minister in just 15 years. According to a power-sharing agreement reached on July 1, 2024, Oli and Deuba will alternate as prime ministers, each serving an 18-month term until the next general elections in 2027.

This political reshuffling raises two essential questions: What does this new coalition mean for Nepal’s political stability? And, can this government address Nepal’s pressing economic and geopolitical challenges, particularly in its relations with India and China?

Much like observing a Monet painting from the Impressionist movement—where stepping back allows the whole scene to emerge from short, fragmented brushstrokes—understanding a country’s relationship, particularly with its neighbours, requires a similar approach. Political instability in Nepal is a product of its history and tryst with democracy, which is still a work in progress. A better understanding emerges when we view the events in Nepal in the larger framework of the nation’s recent history and geopolitical challenges.

The Political Precarity and Economic Instability

King Prithvi Narayan Shah’s unification of various principalities in 1768 laid the foundation for a centralised monarchy in Nepal. Since then, Nepal has been ruled by different dynasties until 1951, when, with the end of the Rana regime, the first shoots of democracy emerged, with efforts towards framing a constitution based on parliamentary democracy.^[1] Between 1951 and 1958, Nepal prepared for its first general election. During this period, rifts within and outside the political parties and frequent cabinet reshuffles led to chronic instability, with the country seeing five governments.^[2] The Nepali Congress won the elections held on February 18, 1959, and BP Koirala was elected the Prime Minister.

Nepal’s democracy dreams were, however, short-lived as King Mahendra banned political parties within a year in a coup and set up a Panchayat system. It took another 30 years to restore democracy. In 1990, a multiparty system was adopted with a constitutional monarchy and a new constitution was introduced. However, the 2001 royal massacre destabilised the monarchy, leading to further unrest. At the same time, Maoist insurgency was growing in the country. Finally, on 28 May 2008, the newly elected Constituent Assembly declared Nepal a Federal Democratic Republic, abolishing the 240-year-old monarchy^[3]. In 2015, a new constitution was drafted by Nepal’s Constituent Assembly.^[4] There was opposition from various groups, especially the Madhesis and some ethnic groups, who felt inadequately represented and feared their rights would be affected.

Nevertheless, the new constitution was adopted.^[5] Since 1948, Nepal has drafted seven constitutions—1948, 1951, 1959, 1962, 1990, 2007, and 2015—illustrating its ongoing efforts to shape a stable political framework. However, the shift to democracy has been marked by frequent changes in government, political infighting, and struggles to establish a stable system, leaving the country in a state of persistent political fragility.

The recent agreement between the Nepali Congress and CPN-UML, in which K.P. Sharma Oli and Sher Bahadur Deuba will alternate as Prime Minister^[6], is expected to work only in the short term. Previous coalitions have struggled to provide political stability. For example, the Maoist Centre, led by Shri Pushpa Kamal Dahal (Prachanda), has at various times allied with the Nepali Congress or with the Communist Party of Nepal-Unified Marxist Leninist (CPN-UML), but stability has remained elusive.^[7]

The leftist alliance between the CPN-UML and Maoist Centre, formed in 2017, merged a year later to form the Nepal Communist Party (NCP), but that too later broke apart. Due to fragile coalitions and intra-party conflicts, Nepal has witnessed over a dozen changes in government since the monarchy’s dissolution in 2008, with shifting permutations of political alliances. Power-sharing arrangements have remained unstable, as personal rivalries and party competition often lead to internal divisions. Given the history of fractured coalitions and shifting allegiances, it is evident that Nepal’s democracy requires more time to mature.

Much of Nepal’s woes have to do with the state of their economy. In December 2023, the International Monetary Fund (IMF) warned that Nepal’s financial system will face further strain if the country fails to address critical issues raised by the Asia Pacific Group of the Financial Action Task Force (FATF). A field visit by a group from the FATF noted significant shortcomings in Nepal’s adherence to anti-money laundering and terrorist financing standards. What was observed was a failure to criminalise private sector corruption, which exposed deficiencies in compliance mechanisms on issues related to money laundering and terrorist financing.^[8] Claims made by the former prime minister, Pushpa Kamal Dahal, in January 2024, of his government’s achievements sounded hollow as the country continues to grapple with rising unemployment,

Earlier in January 2024, when then Prime Minister Pushpa Kamal Dahal repeated a list of his government initiatives as achievements, public resentment was deepening with market anomalies.^[9] These claims came when the country faced a trade deficit, unemployment, failing agricultural and industrial production, and declining restaurant and hotel business activities^[10].

The agriculture sector is central to Nepal’s economy, as more than 70 per cent of the workforce is involved in agriculture. Yet, the sector generates only around one-third of the country’s GDP. The country that traditionally exported rice has been importing it for the past few years. Nepal imported around 1.4 million tons of rice from India in 2021-2022 (worth USD 473.43 million)^[11].

Nepal’s food inflation averaged 7.74 per cent, slightly above the annual targeted threshold of 7 per cent. More significant is the lack of employment opportunities outside the farm sector, which has led to a surge in Nepalis seeking employment abroad. In 2022-23, about 750,000 people left the country for foreign employment, turning many rural settlements into ghost villages or forests.^[12]

Nepal and its Neighbours

As a landlocked country between two giant neighbours, geography has significantly shaped Nepal’s relations with its neighbours and the world. Economic realities and deep-rooted historical ties with India are the other significant factors. Nestled in the Himalayas, Nepal shares a border with five Indian states to its South. Its northern border is with Tibet, which is now under Chinese occupation. Being hemmed between India and China, Nepal often balances its diplomatic and economic relationships with both.

Nepal’s bilateral relations with China began in 1950 when China annexed Tibet. China’s involvement with Nepal initially focused on preventing anti-China activities by Tibetans inside Nepal but has evolved over multiple sectors and now includes security cooperation, trade, and infrastructure connectivity. Since 2008, both countries have signed several intelligence-sharing agreements, primarily aimed at curbing pro-Tibet protests in Nepal led by exiled Tibetans. After the 2015 trade blockade by India, Nepal diversified its trade by deepening ties with China and, in 2017, joined China’s Belt and Road Initiative (BRI). As a part of the Belt and Road Initiative (BRI) for Nepal, China introduced a new platform called Silk Roadster. This initiative is anticipated to launch small projects to provide technical training, promote overseas study programs, enhance cooperation between enterprises, and organise cultural exhibitions and exchange visits. Nepalese political parties and social organisations are expected to participate in executing some of these activities. Initially, Nepal proposed 35 projects under the Belt and Road Initiative (BRI), but this number has now been reduced to nine.

Similarly, from 2014 to 2018, China allocated USD 1.53 million each year to Nepal to support the livelihoods of northern Nepal, focusing on health, education, and road infrastructure^[13]. China also played a role in Nepal’s internal politics despite its claims of not meddling in the internal affairs of other countries. In 2018, China played a significant role in forming the Nepal Communist Party (NCP) through the merger of the CPN-UML with the Maoist Centre.^[14]

Despite the Sino-Nepal rapprochement in the last few decades, the India-Nepal friendship is deep-rooted. Its historical, social, cultural, strategic, political, and economic ties cannot be ignored as they grow with their multifaceted bilateral engagement. As agriculture is central to Nepal’s economy, with over 70% of the workforce engaged in this sector, the two countries have been working on agricultural research, technology transfer, and capacity building. India also plays a significant role in alleviating Nepal’s lack of employment opportunities. About eight million Nepalese citizens live and work in India, while only around six lakh Indians reside in Nepal. In addition, thousands of Nepalese students study in India on a Government of India scholarship. As of date, the Indian government offers 3,000 scholarships to Nepali students annually. The Indian Technical and Economic Cooperation (ITEC) program also provides Nepalese officials and professionals capacity-building opportunities.

As India and Nepal extend visa-free entry, over the years, the movement from one country to another has not only increased tourism (Indians account for about 30% of foreign tourists in Nepal) but bilateral trade (India is Nepal’s largest trade partner). India and Nepal have been working on enhancing trade and market access through infrastructure improvements and new agreements. The Nepal-India Trade and Transit Treaty,  revised in 2023, allows Nepal access to India’s inland waterways. Additionally, cross-border connectivity is optimised through integrated check posts at locations like Sunauli and Bhairahawa. Among the many completed and ongoing projects, the new Motihari-Amlekhgunj petroleum pipeline is an example of improved trade infrastructure for trade cooperation, saving significant costs for Nepal.

As it is evident, Nepal, being a landlocked country, is heavily dependent on its neighbours for connectivity and trade. During the COVID-19 pandemic^[15], 21 trade points were halted in 2020, of which 14 were recently reopened in May 2024. This prolonged closure severely impacted Nepali traders and workers, particularly in villages near the Nepal-China border that rely on essential commodities and the sale of medicinal herbs to livestock^[16]. In contrast, India ensured the supply lines between the two nations remained open during the pandemic. India is also Nepal’s largest trade partner, with bilateral trade exceeding USD 11 billion in FY 2022-2023^[17].

Apart from this, Nepal is home to over 6,000 rivers, some of which significantly contribute to the Ganges River system. Against this backdrop, Nepal and India collaborate on water management, flood control, and irrigation projects, such as the Koshi Barrage and the Pancheshwar Multipurpose Project. These efforts are crucial for agricultural productivity in the Indo-Gangetic Plains, which depend on water from Nepal’s rivers.

Another key highlight of India-Nepal bilateral relations is humanitarian assistance, as Nepal is a highly vulnerable country to earthquakes. This is where India’s aid comes into the picture. For instance, the horrors of the 2015 earthquake, which killed nearly 9,000 people and caused massive destruction, are a poignant reminder. India was one of the first respondents to the crisis. With Operation Maitri, India provided and continues to provide rescue, relief, and reconstruction aid.

However, bilateral relations between India and Nepal have not always been marked by consistent cooperation. With political regimes in Nepal frequently changing, their relations also shift, oscillating between periods of close collaboration and moments of tension and conflict. For instance, during his previous terms, PM Oli had a more aggressive stance towards India. In 2020, under Oli’s leadership, Nepal released a new political map that included disputed territories such as Kalapani, Lipulekh, and Limpiyadhura, which escalated tensions with India.

The Indo-Nepal ‘open border’ has been looked at by experts through two lenses- a ‘springboard of opportunities’ with mutual interests or a ‘liberal paradox’^[18] as the 1880-kilometre border between the two countries has not been without disputes. The Kalapani area is strategically significant in South Asian diplomacy as it is a tri-junction between India, China and Nepal. As for Lipulekh, the Lipulekh Agreement, signed on 15 May 2015 between Indian Prime Minister Narendra Modi and Chinese President Xi Jinping, has sparked controversy due to its implications for Nepal’s sovereignty. Specifically, Point 28 of the 41-point joint statement allows India to use the Lipulekh corridor without Nepal’s involvement, violating its sovereignty. This agreement is not the first instance that India and China have referenced Lipulekh in a bilateral context without consulting Nepal.

Apart from this, several reports indicate that terrorist groups such as Lashkar-e-Taiba (LeT), Indian Mujahideen, and various insurgent factions are exploiting the open border with Nepal to advance their agenda. Despite the border checkpoints, supplying trained operatives, circulation of fake Indian currency, and smuggling are some of the illegal activities noticed along the border. Additionally, the open border is misused for smuggling subsidised consumer goods^[19]. For example, Nepal, which traditionally exported rice, has been importing it for the past few years. It imported around 1.4 million tons of rice from India in 2021-2022 (worth US $473.43 million)^[20]. Following this, India banned exports of broken rice. It imposed a duty on exports of various grades of rice amid the threat of El Nio disruption, as well as to boost domestic supplies and calm local prices after a below-average monsoon^[21]. However, as Indian media reports, villagers illegally smuggled rice into Nepal along the India-Nepal border.

Conclusion

Though India-Nepal diplomatic relations were established in 1950 with the ‘Treaty of Peace and Friendship’, the cultural and civilisational connections go back to ancient times, to the period of the Ramayana. Today, this spiritual and historical connection between these two countries can be seen cherished with the contemporary sister city agreements signed (Kathmandu-Varanasi, Lumbini-Bodhgaya, Janakpur-Ayodhya) and the India-Nepal Ramayana Circuit. Today, these historic and civilisational relations are cherished and enhanced as India prioritises its relations with neighbouring countries through its ‘Neighbourhood First Policy.’

A stable political system survives crises without internal warfare.^[22] Though coalition governments are one of the essential features of a parliamentary democracy, in Nepal, coalitions are unable to sustain themselves, let alone implement long-term plans^[23]. Historically, they have been proven unstable, non-dependable and far less effective in addressing the challenges.

Political volatility in Nepal has significantly destabilised the country. The changing government often leads to inconsistent long-term domestic policy plans and foreign relations, particularly with neighbouring countries. The tilt towards China shown by the previous administration of K.P. Oli and the strong pro-India stance seen during Deuba’s previous tenure are examples of the above.

The newly formed coalition government will likely provide short-term stability. Still, the ability of leaders to rise above personal interests and prioritise issues related to governance, especially issues related to employment, is open to question. India- Nepal relations have solid foundations, but Nepal will continue to hedge its bets with China. The recent visit by Foreign Minister Arzu Deuba to India highlighted the potential for enhanced cooperation, but contentious issues like the boundary dispute will need to be settled soon. Nepal’s democracy will, however, continue to be a work in being.

Author Brief Bio: Dnyanashri Kulkarni is a Research Fellow at India Foundation, focusing on the geopolitics of the Indo-Pacific and India’s Neighbourhood. She graduated with a degree in French Literature from Mumbai University and has completed her post-graduation in International Relations. She is also pursuing her PhD from the Jindal School of International Affairs.

References:

^[1] Nepal (02/05). (n.d.). U.S. Department of State.

https://20092017.state.gov/outofdate/bgn/nepal/47168.htm

^[2] Giri, A. (2021, February 19). Nepal’s democracy challenges. The Kathmandu Post. Retrieved October 18, 2024, from https://kathmandupost.com/politics/2021/02/19/nepal-s-democracy-challenges

^[3] Ministry of Foreign Affairs. History of Nepal. https://mofa.gov.np/about-nepal/history-of-nepal/#:~:text=On%20May%2028%2C%202008%2C%20the,Prime%20Minister%20heading%20the%20Government.

^[4] Phuyal, H. (2015, September 18). Nepal’s New Constitution: 65 Years in the Making. The Diplomat. https://thediplomat.com/2015/09/nepals-new-constitution-65-years-in-the-making/

^[5] Giri, A. (2021, February 19). Nepal’s democracy challenges. The Kathmandu Post. https://kathmandupost.com/politics/2021/02/19/nepal-s-democracy-challenges

^[6] Poudel, P. (2024, July 15). Oli becomes prime minister for fourth time, swearing-in today . Kathmandu Post.

^[7] PTI. (2024, July 2). Nepali Congress, CPN-UML strike deal to oust PM “Prachanda”; to form new alliance. The Hindu. https://www.thehindu.com/news/international/nepali-congress-cpn-uml-strike-deal-to-oust-pm-prachanda-to-form-new-alliance/article68358405.ece

^[8] Post Report. (2023, December 2). Nepali financial system may face further stress, IMF says
https://kathmandupost.com/money/2023/12/02/nepali-financial-system-may-face-further-stress-imf-says#

^[9] Pradhan, T. R. (2023, September 1). PM Painting Rosy Picture While Public Frustration Grows. The Kathmandu Post. Retrieved September 1, 2023, from

https://kathmandupost.com/politics/2023/09/01/pm-painting-rosy-picture-while-public-frustration-grows

^[10] Khadka, Sarahna  (2023, December 24). Economic Slowdown Hits Restaurant Business—And Budding Floriculture. The Kathmandu Post. Retrieved October 18, 2024, from

https://kathmandupost.com/money/2023/12/24/economic-slowdown-hits-restaurant-business-and-budding-floriculture#

^[11] Jha, Hari B. (2023, January 23) Deepening economic crisis in Nepal. Observer Research Foundation. https://www.orfonline.org/research/deepening-economic-crisis-in-nepal#:~:text=The%20country%20is%20facing%20a,several%20other%20business%20activities%20are

^[12] Jha, Hari B. (2024, March 15) Emptying Nepal. Observer Research Foundation. https://www.orfonline.org/expert-speak/emptying-nepal

^[13] Jha, H. B. (2024, June 18). Sweeping changes in Nepal-China relations. Observer Research Foundation. Retrieved October 21, 2024, from https://www.orfonline.org/expert-speak/sweeping-changes-in-nepal-china-relations

^[14] Jha, H. B. (2024, June 18). Sweeping changes in Nepal-China relations. Observer Research Foundation.

https://www.orfonline.org/expert-speak/sweeping-changes-in-nepal-china-relations

^[15] Shakya, D. (2023, April 27). Food shortage in Sankhuwasabha villages as China border closure continues since 2020. The Kathmandu Post. Retrieved October 20, 2024, from

https://kathmandupost.com/province-no-1/2023/04/27/food-shortage-in-sankhuwasabha-villages-as-china-border-closure-continues-since-2020

^[16] Shakya, D. (2024, May 26). 14 trading points along Nepal-China border reopen. The Kathmandu Post. Retrieved October 20, 2024, from https://kathmandupost.com/national/2024/05/26/14-trading-points-along-nepal-china-border-reopen

^[17] MEA. (2024). Annual Report 2023-24. India: Ministry of External Affairs.

^[18] Nayak, S. (2023, May 24). India and Nepal’s Kalapani border dispute: An explainer. Observer Research Foundation. Retrieved October 21, 2024, from https://www.orfonline.org/research/india-and-nepals-kalapani-border-dispute-an-explainer-65354

^[19] Hans Raj Singh asked: What are the major problems on the Indo-Nepal border and how they can be resolved? | Manohar Parrikar Institute for Defence Studies and Analyses. (n.d.). https://www.idsa.in/askanexpert/majorproblemsontheIndo-Nepalborder

^[20] Jha, Hari B. (2023, January 23) Deepening economic crisis in Nepal. Observer Research Foundation. https://www.orfonline.org/research/deepening-economic-crisis-in-nepal#:~:text=The%20country%20is%20facing%20a,several%20other%20business%20activities%20are

^[21] Post Report. (2023, December 26). India allows Nepal to import rice on quota basis. The Kathmandu Post. Retrieved October 18, 2024, from https://kathmandupost.com/money/2023/12/26/india-allows-nepal-to-import-rice-on-quota-basis

^[22] Heslop, D. A. (1999, July 26). Political system | Types, Components, Functions, & Facts. Encyclopedia Britannica. https://www.britannica.com/topic/political-system/Stable-political-systems

^[23] Yerankar, S. (2015). COALITION POLITICS IN INDIA: MERITS & DEMERITS. The Indian Journal of Political Science, 76(3), 402–406. https://www.jstor.org/stable/26534855

There is a certain strangeness about events in the West. For the first time in decades, Afghanistan is marginally more stable than Pakistan. Its economic indicators are also on the rise, unlike Pakistan’s, which is precarious. These are relative figures; indeed, Pakistan has the bare bones of governance and functionality while Kabul is still building up. But the downward spiral of Pakistan in multiple areas, like economic strength, social and political stability and violence, is remarkable by any standards. In contrast, Afghanistan’s upward graph of stability continues despite the worst predictions. This article reviews the trajectories of both countries in the most critical sectors of governance to formulate policy towards both.

Indicator 1: Violence tells its tale

A comparison of United Nations reports indicates a steady decline in armed clashes in Afghanistan, with a spike in recent months^[1] due to the ban on poppy cultivation. That is a second aspect of stability. There is no doubt that Afghanistan has cracked down on poppy and ephedra cultivation, with the latter being the favoured ingredient for the production of methamphetamine, according to experts^[2]. While the end effect of this on the narcotics market is yet to be seen, the intentions of the Taliban are clear, and the unevenness of such clearance operations is an indicator of their governance capabilities.

Meanwhile, the Taliban clashes with the elusive Islamic State of Khorasan (ISK), with the United Nations report noting over 100 attacks against the group in 2022-2023. These attacks undermine attempts to ensure security and prevent foreign investments, particularly from China. Last year, a leaked memo from a Taliban commander noted that some 7000 ISK cadres^[3] were being trained close to the Durand Line, probably in Nangarhar. Just in September, eight Afghan soldiers were killed and several injured in cross-border firing from Pakistani forces in the Khurram area, just opposite Nangarhar. These incidents in the central sector have been climbing, leading to tensions.

According to research, Pakistan’s violent incidents saw a record six-year high in 2023, with a 56 per cent increase in violence^[4]. Data for 2024 shows that areas bordering Afghanistan, like Khyber Pakhtunkhwa and Balochistan, totalled some 92 per cent of fatalities, significantly showing incidents not just of terrorism and violence due to security forces operations^[5]. As for narcotics, in September last year, there was a significant drug clearance operation in the Qila Abdullah district of Balochistan, which claimed to have destroyed hundreds of labs and crop acreages.^[6]

Reports on this are few, but what is apparent on the ground is that the thousands of tons of ephedrine and heroin seized in India originate from Pakistan. In this, the Haji Salim network based in Karachi has been identified, which operates across India, Sri Lanka and Maldives, among others^[7]. No operation against any mafia network has been launched. Meanwhile, Pakistan is facing significant drug abuse among its youth, with reports noting around 6.7 million Pakistanis are addicted to ‘controlled drugs’, cannabis identified as the most used drug for some four million users, and an estimated 860,000 and 320,000 regular heroin and opium users, respectively. The fact that most of these drug cultivation areas are in Balochistan and Khyber Pakhtunkhwa makes for a toxic combination in terms of rising violence in the country.

Indicator 2: Unity and Integrity

A second aspect of Afghanistan is the Taliban’s attempt to integrate its poorly governed outlying areas. UNAMA reports regularly note that the Taliban are engaged in a program of outreach to distant provinces and redrawing district boundaries in a bid to elicit support from local communities.  There have also been efforts to develop madrassa education professionally to recruit for civil administration from these institutions. While there is no doubt that overall freedoms are highly restricted especially for women, and there are still strong inter-tribal frictions, there are precise but tenuous efforts at normalcy, even while the opposite trend is apparent in Pakistan.

Instead of an outreach, Islamabad is worsening matters by proscribing the entirely peaceful Pashtun Tahaffuz Movement (PTM) led by Manzoor Pashteen. The original Mehsud Tahafuz Movement (MTM) has been demanding since 2013^[8] the demining of the Mehsud territory, impartial investigations and trials of those involved in the enforced disappearances of the tribe’s men, the ending of humiliating practices against locals at security checkpoints, extortions, and targeted killings (whether by the Taliban or during military operations), and the provision of fair compensation for properties damaged as a result of the conflict. With at least seven military operations taking place in these areas since 2001, the Pashtuns have had much to bear, including the backlash of three iterations of Pakistani interference, including mujahideen, the Taliban, and now a Tehrik-e-Taliban Pakistan (TTP) that has turned against it. In September 2024, there was the spectacle of Lakki Marwat police staging a protest^[9], blocking the Peshawar Karachi Indus Highway for 72 hours, after repeated targeting of policemen. Their demand was simple. The army should withdraw from the area and give powers back to the police. In short, they knew how to deal with the militants, and the army was more of a hindrance.  At least 75 policemen have been killed in ambushes and target killings in Khyber Pakhtunkhwa in 2024, according to police data^[10].

Then, there is the Baloch question. Pakistan’s policy of ‘forced disappearances’ has become part of the policy, with no precise figures available, except for almost daily reports of one or another young person abducted. The strength of Baloch resistance was apparent in the spate of attacks in August when the Baloch Liberation Army  (BLA) launched “Operation Herof.” The BLA attacked some 22 buses,  claimed to have captured a military camp for some 20 hours or longer, dominated critical parts of the coastal highway as well as major roads, and blew up the main railway line to Quetta and the rail link to Iran. The group claimed that some 800 fighters and Fedayeen squads had participated in the operations. This was a virtual war against years of oppression, given the breadth and ferocity of the attack. But the establishment promptly made things worse. It barred the charismatic and entirely peaceful activist Mehrang Baloch from attending an event organised by Time magazine,^[11] further alienating the people. She addressed it virtually anyway, which meant that Islamabad gained nothing.

The end result is two. The first is the Pashtun jirga, which demanded the removal of the army (and the TTP) and sought free movement of vehicles across the Durand line, reduced electricity costs and the ending of extortion, all to be done within 60 days^[12]. If these demands were not met, another jirga would be held. The second issue is that the two hugely divergent movements, Pashtun and Baloch, seem to have come together against the Pakistani state. That is dangerous for Pakistan and is the one trend to watch.

Indicator 3: State of the Economy

Pakistan’s economy has little excuse for its repeated dependencies on foreign assistance. Afghanistan in the 1970s was still poorly developed, though with islands of prosperity like the ‘bread basket’ that was Herat, Kunduz, a hub of the cotton industry, and a famous exporter of dried fruits and carpets, with the country as a whole at peace with itself and the world, and self-sufficient in food. Since then, it has been at war, and despite that, it has managed to improve its economy in 2002, and then again as some fragile peace returns. The World Bank reports an increased supply of goods and services in the market, and the Afghani averaged 79.0 to the US dollar in July 2024, when the Pakistani rupee was about 250 in the same period. Afghan revenue collection increased by 11 %, exceeding the target by 3%. All this is despite the steep decline in humanitarian aid, falling from USD 3.8 billion in 2022 to USD 1.9 billion in 2023. Further declines are likely as the UN Office for the Coordination of Humanitarian Affairs stated that it has received just USD 649 million—21 per cent of the USD 3 billion required to meet the enormous humanitarian need^[13].

Pakistan has been facing a ‘drip’ aid arrangement since the 1950s when it began borrowing from the International Monetary Fund. Deputy Finance Minister Ali Pervaiz Malik disclosed that Pakistan will have to repay a startling USD 100 billion external debt in four years, which would primarily be funded by securing rollovers from bilateral lenders. The federal government’s USD 100 billion external debt repayments are 10 times more than the current USD 9.4 billion gross official foreign exchange reserves. According to the Finance Minister, as told to the National Assembly Standing Committee on Finance, the IMF has identified a USD 5 billion financing gap for the 2024 to 2026 period.^[14] Notably, major benefactors like China have begun to pull back on financial commitments, with the Chinese Ambassador pointing out that despite investing USD 5.5 billion in the power sector^[15] and improving power output significantly, Pakistan had delayed payment of USD 1 billion. China, Saudi Arabia and the UAE have agreed to roll over a USD 12 billion debt for one year to facilitate IMF bail-out packages. Again, it seems that while Afghanistan is grappling with near starvation in some parts of the country, it is on an upward graph and retains its sovereignty. At the same time, Pakistan’s economic troubles have landed it in a trap where it is torn between major donors.

Indicator 4:  Relationship with Neighbours and the World

Afghanistan has been making definite strides towards greater acceptability. Its representatives have been travelling to Qatar, Iran and China, among other states, to participate in regional conferences. In addition, several other countries, including India, Britain and Norway, have closed embassies staffed by the previous incumbents. Around a dozen countries operate embassies in Kabul, some like India, at a limited strength. The Chinese and the Russian embassies are among the embassies operating at full strength. The former is far more active, as apparent from its embassy’s activities. In recent days, China has pursued a far more independent line on Afghanistan, with its Ambassador’s disapproval of Pakistan’s pushing back thousands of refugees from Pakistan. Beijing’s engagement with the Taliban is far more than it has had with the Karzai government and indeed predates its government formation, with engagements since 2015. It was also the first country to accept a Taliban Ambassador and appoint its own.

A report notes that bilateral trade more than doubled between 2022 and 2023 from USD 595 million to USD 1.33 billion. Still, few new noteworthy investments have been reported besides the Amu Dariya oil basin deal. Tangible engagement under China’s Belt and Road Initiative has yet to materialise^[16]. Russia is also standing firmly by Afghanistan, with both cooperating to deal with the Islamic State. Recently, it has proposed to remove the Taliban from the list of sanctioned entities^[17]. That is vitally important to Kabul. More critically, the Taliban have no real quarrels with their other neighbours (barring Pakistan) and are attempting to cooperate with them in reining in terrorism.

The contrast with Pakistan in this regard couldn’t be sharper. As of July 2024, Pakistan’s passport is ranked 102nd in the world by the Henley Passport Index^[18]. True, Afghanistan is even lower at 104, but consider their relative histories. Also, Pakistan has troubles with all its neighbours. Iran fired missiles on Pakistan in January 2024 after years of asking Islamabad to rein in terror groups. Afghanistan now has a live border with Pakistan, and India has seen a rise in cross-border terrorism into Jammu in recent months. China, though not a neighbour, has been struggling with attacks against its citizens inside Pakistan.

Conclusion

For India, the sum of it is this. There is no indication that these two countries’ trajectories will change in the foreseeable future. Afghanistan may falter as it goes along, but major neighbours like China and Russia are backing it in many ways that will make Kabul accountable to them. India has recently chosen to take a back seat in Afghanistan, which will mean losing out in a country that is on a rising trajectory. It should restart what it does best, namely, by giving small and effective aid packages. India announced Rs 200 crore in this year’s budget, among the lowest allocations. Consulates need to reopen, and the embassy should be made more functional, contingent on the security the Taliban is willing to provide. It certainly has the capability.

Pakistan, in its present trajectory of violence and insecurity, will continue to hit out in all directions. Still, there are some indicators that its major allies, like Saudi Arabia and China, do not want tensions between India and Pakistan to rise. The Saudis are impatient with the perennial instability in Pakistan, and China would prefer if it can get some returns from its massive investments in the country. For that, Pakistan must move spending towards infrastructure and development in places like Gwadar, where lack of finances is stalling multiple projects. Besides, Islamic extremism is not something China is comfortable with. However, the continuing spike in Pakistan-sponsored terror in J&K does not show that Islamabad wants to dial down tensions.

Yet, taken in entirety, quiet back-door talks with Pakistan could be considered. For India, the priority in national security is a stable western border, where troops can be reorientated towards a far more dangerous east, even should tensions with China be reduced. The quid pro quo for Pakistan is trade, exploiting its geo-strategic location. Trade with Russia and Central Asia is also a priority for Delhi, though not a top one. Recently, Pakistan accepted President Putin’s invitation to join the International North-South Trade Corridor (INSTC), the shortest route to get that trade going. This, in turn, has to be melded with the IMEC (India, Middle East Europe Corridor), which will be an attractive option for Indian consignments. Getting to that stage will take a while.

Meanwhile, given the profound implications for all concerned, it would be ideal for all three countries to engage in strong counter-narcotics cooperation. That in itself can be a test of Pakistan’s sincerity. Cooperation on climate change and water management would benefit both. In the long term, tying Pakistan to a web of trade and transit could create leverage that would motivate Pakistan to abjure terrorism as an instrument of its foreign policy. Quelling a dangerous neighbourhood is in the interests of India and Afghanistan. Pakistan must choose its future trajectory for itself: terror or trade.

Author Brief Bio: Tara Kartha is Director (R&A), CLAWS.

References:

^[1] United Nations Assistance Mission in Afghanistan, report to the Secretary General, June 2024 https://unama.unmissions.org/sites/default/files/sg_report_june_2024.pdf

^[2] https://www.alcis.org/post/meth-production

^[3] Malaiz Daud, Associate Researcher, “ Strange Bedfellows, soon to be estranged? “ Barcelona Centre for International Affairs, 01/2023.

^[4] Centre for Research and Security Studies, Annual Report 2023, https://crss.pk/pakistans-violence-related-fatalities-mark-a-record-6-year-high-56-surge-in-violence-recorded-in-2023-crss-annual-security-report/

^[5] CRSS Security report, 1st Quarter, https://crss.pk/balochistan-and-kp-dominate-violence-landscape-in-pakistans-q1-2024-crss-security

^[6] “High stakes anti-narcotics operation” Hum English , Sept 10, 2023. https://humenglish.com/pakistan/high-stakes-anti-narcotics-operation-in-qila-abdullah/

^[7] Tara Kartha, “As UN report warns of rising terrorism in Afghanistan, narcotics activity is picking up in Pakistan”, First Post, ( New Delhi) July 31, 2023.

^[8] Qamar Jafri “ The Pashtun Protection Movement in Pakistan”, ICNC SPECIAL REPORT SERIES | VOL. 8 SEPTEMBER 2021 , https://www.nonviolent-conflict.org/wp-content/uploads/2021/09/The-Pashtun-Protection-Movement-PTM-in-Pakistan.pdf

^[9] “Police protests continue in Lakki Marwat as Bajaur cops boycott polio duty over militant attacks”, Arab News, September 11, 2024. https://www.arabnews.com/node/2570917/pakistan

^[10] Ibid.

^[11] Yasmeen Serhad “ Pakistan Bars Activist From Traveling to TIME Event Honoring Her’, October 8, 2024

^[12] “Pashtuns Khyber Jirga Concluded With Key Decisions”, Tolo News, 14 October, 2024.

^[13] UN Press Release, 9663RD MEETING (AM)SC/15740, 21 June 2024

^[14] Shahbaz Rana, “$100b debt repayment looms in four years”, Express Tribune, Sept 20, 2024.

^[15] Muhammad Ali, “Capacity tariff of Chinese IPP’s “, Business Recorder , 6 September 2024.

^[16] Sarah Godek “ China’s Cautious Quest to draw Afghanistan back into the fold”. 9Dashline, 23 August 2024.

^[17] “Russia has decided ‘at highest level’ to remove Taliban from terrorist list” TASS reports in Reuters, October 4, 2024.

^[18] Henley & Partners, Global Passport Index 2024.