A significant agreement was signed in Beijing today paving the way for China to make major inroads in Nepal. Seven years after an initial understanding for Kathmandu to be part of Beijing's Belt and Road Initiative or BRI, today's agreement lays the framework of how projects will be executed.
Breaking tradition of making New Delhi a Nepalese prime minister's first port of call after election results, KP Sharma Oli chose to visit Beijing instead. He has been in China since Monday to work closely with Xi Jinping and finalise the deal.
China and Nepal have "signed the framework for Belt and Road Cooperation today," Nepal's foreign office said in a post on X today, but shared no further details.
Sources familiar with the agreement have said that today's deal means both countries will not plan and coordinate the details of each project. It also paves the way for China to fund these projects and how exactly each project would be financed by Beijing.
The Government of Nepal and the Government of the People's Republic of China signed the Framework for Belt and Road Cooperation today. pic.twitter.com/6oTlDvTzIe
— MOFA of Nepal 🇳🇵 (@MofaNepal) December 4, 2024
In 2017, Nepal had agreed in-principle to be part of China's mega Belt and Road project - a massive network of roads, transport corridors, airports, and rail lines connecting China with the rest of Asia, Europe and beyond. However, no progress was made in the last seven years because of the lack of a proper framework of executing them. Kathmandu also struggled to find political consensus on the issue. That now seems to have been addressed with today's pact.
China's Belt and Road Initiative, though ambitious, has been a red flag for many countries due to Beijing's suspicious dealings and ulterior motives. Several countries have fallen in a debt trap, often called China's "debt diplomacy" wherein China builds a mega project on credit in a smaller country in terms of economy, and when the country cannot pay back the loan or interest, Beijing either takes over the project for a lifetime or cuts a deal to forward its expansionist agenda.
China's Belt and Road Initiative has also had a history of ignoring the national security concerns and violating the sovereignty of other nations.
Several leaders in Nepal's government and opposition are concerned over debt concerns mounting in an already-stretched economy. Even within Prime Minister Oli's government, there is fierce debate over the potential risks in mega projects executed by China. Nepal Congress, which is a key ally of PM Oli's party, has vehemently opposed any projects funded by Chinese loans.
China had funded the airport project in Pokhra - Nepal's second-largest city - by loaning more than $200 million. Nepal went ahead with the project despite India raising serious concerns and opened the airport last year.
But the airport has had to deal with losses due to lack of international flights. This can partially be due to a slender demand for airlines, but also due to India's refusal to planes using its airspace to do so.
Pokhra, located around 120 kilometers from Kathmandu, is less than 20 minutes from the India border by commercial flight. India had to shut its airspace out of a national security compulsion because Kathmandu ignored New Delhi's concerns that China may use the airport to station its military aircraft and helicopters - a massive national security threat for New Delhi.
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