Indian Prime Minister Narendra Modi’s government in recent weeks has offered infrastructure and financial assistance, apparently seizing an opportunity to pull these neighbours closer as part of a multi-pronged diplomatic strategy, which also includes strengthening security ties with the West and Japan through the Quad framework.
In early April, Modi held talks with Nepalese Prime Minister Sher Bahadur Deuba, praising the countries’ relations as a friendship that “cannot be found anywhere in the world”.
The relationship has not always been so cozy – Nepal and others in South Asia have long been suspicious of what they see as India’s hegemonic intentions.
After the talks, the Indian and Nepalese leaders issued a joint statement on energy cooperation. India will help develop power plants in Nepal, and electricity generated there will also be sold to India.
Deuba became Nepal’s prime minister for the fifth time in July 2021 after a bout of political turmoil. The previous Nepalese administration had been led by pro-China moderate communist KP Sharma Oli.
But Deuba has been more inclined to balance diplomacy between his country’s big neighbours, and Modi appears to have spotted a chance to woo Nepal with energy cooperation.
The statement said that in view of climate change, the countries would “make renewable energy production, hydropower in particular, a cornerstone of their energy partnership”.
They also agreed to “continue supporting each other’s national growth and prosperity guided by mutual respect and equality”.
The stakes in the region are high. In a Council on Foreign Relations report on “major power rivalry in South Asia,” published late last year, analyst Tanvi Madan wrote: “The fate of the China-India rivalry will help determine the balance of power in the region.
“But it could also influence the extent to which those countries choose to cooperate or compete with each other – and whether they collaborate with other major powers – regionally and globally.”
Just days before the Modi-Deuba talks, Indian External Affairs Minister Subrahmanyam Jaishankar had been busy with some courtship of his own, on visits to Sri Lanka and the Maldives.
In Sri Lanka, which is mired in a worsening political and economic crisis, Jaishankar met with President Gotabaya Rajapaksa and promised to continue Indian financial assistance worth around US$2.5 billion in 2022.
The Indian minister also agreed to carry out power development projects in the eastern part of Sri Lanka and supply software to schools.
India’s involvement with its debt-ridden neighbour goes beyond direct assistance. After the island nation began negotiations with the International Monetary Fund for rapid financial assistance on April 19, India requested the IMF lend assistance.
At a meeting with Kristalina Georgieva, managing director of the IMF, in Washington on the sidelines of the IMF-World Bank meeting, Indian Finance Minister Nirmala Sitharaman said that IMF “should support and urgently provide financial assistance to Sri Lanka”.
President Rajapaksa and his brother, former president and current Prime Minister Mahinda Rajapaksa, are regarded as pro-China and have a lengthy history of making deals with Beijing.
Port City Colombo, an ongoing China-backed economic zone project on reclaimed land off the country’s commercial capital, was first envisioned during Mahinda’s presidency.
The CFR report noted that another Chinese port project, at Hambantota in the south of Sri Lanka, contributed to the US seeing Beijing’s Belt and Road Initiative through “a more competitive prism”.
But the Rajapaksas are under heavy pressure as Sri Lanka’s foreign reserves dwindle and daily protests demand that they resign. India has made it clear during the crisis that it intends to actively support its neighbour.
“Reviewed various dimensions of our close neighbourly relationship,” Jaishankar tweeted of his meeting with Rajapaksa. “Assured him of India’s continued cooperation and understanding.”
In the Maldives, which has also turned to China for infrastructure support but has nagging concerns over debt, Jaishankar met with President Ibrahim Mohamed Solih and told him that India would cooperate on the construction of police stations and the installation of radars for port security, as well as on road and airport development.
Not to be outdone, China has also been doing the rounds in South Asia of late. State Councilor and Foreign Minister Wang Yi visited Pakistan, Afghanistan and Nepal as well as India on March 22-27.
In Nepal, Deuba assured Wang that his government would “never allow any forces to use Nepal’s territory for any anti-China activities”. China’s leadership is concerned about Tibetans defecting to India by way of Nepal and joining the Tibetan government in exile.
Beijing is especially eager to avoid any destabilising factors ahead of the Communist Party’s national congress this fall, when President Xi Jinping is expected to secure an unprecedented third term.
“Beijing continues to look askance at the Tibetan presence in India and the activities of the Dalai Lama and the Central Tibetan Administration,” the CFR report said.
Likewise, India, which sees South Asia as its backyard and has long sought a “sphere of influence” there, is sceptical of China’s moves and the potential for military cooperation with countries in the region.
India and China, after all, have their own simmering border dispute that saw a deadly clash in 2020.
“Delhi worries that Beijing’s unilateral attempts to change the status quo elsewhere – such as the South and East China seas and its borders with Bhutan, India, and Nepal – suggest it will not be a rule follower in the Indian Ocean, either,” the CFR report said, adding that such concerns have also fueled India’s willingness to work with partners like the US and Australia.