Nepal's Foreign Policy and Emerging Global Trends

About this book

Author : Mohan Krishna Shrestha, Pramod Jaiswal, Mitra Bandhu Poudel Format: Hardcover Pages: 428 Nepal as a weak, landlocked and underdeveloped state has been a major recipient of foreign aid since India took de facto control in 1951 because of fears communist China would invade the country after Beijing reincorporated neighbouring Tibet in 1950. Nepal ever since has been receiving bilateral aid from the international community, primarily the US, India, and China, and multilateral aid from financial institutions like the Asian Development Bank (ADB) and United Nations (UN) agencies in the form of loans, grants and technical assistance. However, donor states have mostly provided the conditional aid according to their own interests and wider strategic designs over South Asia. Rather than assisting in infrastructural development and poverty reduction, conditional aid has only consolidated a culture of aid dependency that has increased the poverty gap and political corruption in Nepal. With the collapse of the US-dominated unipolar world order and China’s emergence as a Great Power to establish a multipolar system, Nepal is one of many fronts where an economic Cold War is taking place between Washington and Beijing despite Delhi being the critical player in deep-rooting Nepal’s aid dependency. Although Washington is struggling to maintain global economic hegemony, China’s rapid rise to global economic dominance remains inevitable in the short-term. Nepal plays a critical role in expanding China’s economic dominance into South Asia through the Belt and Road Initiative, in which India remains the region’s only country to not join the initiative because of its own strategic goals. The chapter analyses why a Great Power Rivalry between Beijing and Delhi is taking place in Nepal in the context of a new multipolar world system, and what opportunities and challenges arise from this culture of aid dependency.