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lines, believing such an institutional structure would
undermine its control of “anti-China” activity in Nepal. 76
Nonetheless, despite the growing role of China in Nepal
and despite vociferous and widespread resentment against
India’s intrusion into its affairs, Nepal’s cultural affinity to
India is thick and the historic connections between the two
countries are deep. Religiously, culturally, and linguistically,
its bonds with India are far stronger than those with China.
In the border areas of the Terai, complex familial links span
the border and Nepali patronage networks extend into the
Bihar and Uttar Pradesh state governments. Geography –
namely, an easily-crossed open border with India, but a
difficult mountainous barrier separating Nepal from China
– also privileges Nepal’s interactions with India. Although
it originally supported the emergence of an identity-based
form of federalism in Nepal, India has apparently become
less enthusiastic about it, viewing the polarized political
competition, government paralysis and paucity of good
governance in Nepal as potentially generating negative
spillovers, including violence, into India. 77
Being the principal exporter of goods to Nepal, India also
maintains strong economic relations with the country.
Some Nepali politicians have come to see the highly
asymmetrical economic relationship as problematic
dominance by India. The Bilateral Investment Protection
and Promotion Agreement (BIPPA) which the Nepali
Maoist government signed with India in 2011 was widely
criticized within Nepal as ceding too much of Nepal’s
national interest to India, giving India unrestricted access
to Nepal’s airspace, for example, and by failing to restrict
the practice of Indian investors in Nepal to bring over their
own skilled workers instead of hiring Nepalis. 78
Nepal a victim of a difficult regional neighborhood and
use that analysis as an excuse for their inability to deliver
better governance. 79 This combination of a sense of both
impotence and importance also leads them to believe that
they do not need to yield to external – principally Western –
pressures to improve governance. Thus despite the political
stalemate in the country, relations between the United
States and the Maoist government improved in 2012: in
September, the United States revoked its designation
of the Maoist UCNP(M) as a terrorist organization and
removed it from the Terrorism Exclusion List. 80 The Peace
Corps also resumed its presence and activities in Nepal.
79. Author’s interviews with leaders of all four main political parties in Nepal as well as members
of the bureaucratic establishment, Kathmandu, May 14, 17, 29, and 30, 2012.
80. Jo Biddle, “US Strikes Nepal Maoists from Terror Blacklist,” Agence France-Presse, September
6, 2012.
69
All that said, various Nepali political actors, including the
Maoists, have grown rather skillful in playing China against
India and extracting aid and rents from both countries. In
fact, Nepal’s political leaders tend to be highly focused
on, and often exaggerate, the importance of Nepal to the
outcome of the geostrategic competition among India,
China, and the West. At the same time, they often consider
76. International Crisis Group (August 2012a). (p.27).
77. Ibid.
78. For some of the criticism, see, for example, “BIPPA Should Be Corrected as It Is Not in National
Interest: Narayan Kaji,” NepalNews.com, July 23, 2012. Available at: http://www.nepalnews.com/
archive/2012/jul/jul23/news10.php.
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