top of page

By:

Hridbina Chatterjee

29 August 2024 at 10:13:30 am

How Power is Rewiring India–Nepal Ties

For decades, the geopolitical narrative between India and Nepal was dominated by a traditional, friction-ridden pattern of interactions. Diplomatic discourse frequently hit roadblocks over sensitive issues, such as complex border disputes, revisions to historical treaties, and Kathmandu’s anxieties regarding economic overdependence on New Delhi. These disputes regularly fuelled political rhetoric and stalled deeper bilateral integration. However, beneath the radar of standard diplomatic...

How Power is Rewiring India–Nepal Ties

For decades, the geopolitical narrative between India and Nepal was dominated by a traditional, friction-ridden pattern of interactions. Diplomatic discourse frequently hit roadblocks over sensitive issues, such as complex border disputes, revisions to historical treaties, and Kathmandu’s anxieties regarding economic overdependence on New Delhi. These disputes regularly fuelled political rhetoric and stalled deeper bilateral integration. However, beneath the radar of standard diplomatic reporting, a profound shift has occurred. The rapid expansion of cross-border electricity trade- frequently referred to as “hydro-dollar diplomacy,” is fundamentally redefining relationship dynamics. By replacing old ideological disputes with transactional, highly profitable economic ties, energy cooperation has emerged as an effective tool for smoothing regional relations. Nepal has transitioned into a power-surplus country. This transformation has been due to Nepal’s success in eliminating the chronic shortages of electricity in the country, and now Nepal produces an immense amount of seasonal electricity from its clean river system, primarily during the monsoon season when the river flows reach their highest levels. India has an enormous and expanding domestic economy that is also suffering from energy scarcity; therefore, India has established itself as a natural and highly receptive market for this electricity. A landmark 25-year power trade agreement between Nepal and India created a solid long-term trade agreement that provides for the export of 10,000 MW of electricity to India over the next ten years. Today, Nepal is currently exporting over 1,000 MW of electricity per day to India. As a result, the electricity trade has drastically changed the financial situation of Nepal, as the Nepal Electricity Authority has now become a significant exporter and is generating large amounts of revenue in Indian rupees, which will effectively be treated as “hydro-dollars” for the Nepalese economy. Strategic Balance This arrangement is strategically brilliant because the underlying structural balance of the two countries has shifted. The previous bilateral relationship was characterized by constant discussions, including concerns expressed by Kathmandu regarding a large trade imbalance, and continuously referred to as having caused considerable tensions between the two nations in past years. As of today, hydro-dollar revenue provides Nepal with an export income source, which allows for Nepal to achieve its export income goals; ultimately, this will be narrowed down to the overall fiscal gap that existed prior to establishing this export income source. Also, when the political relationship changes from an aid-dependent relationship to a mutually beneficial business relationship, the political tone of the relationship changes (Nepal’s status has changed from a country seeking to gain additional economic support from India to a strong participant in India’s energy transition efforts). In addition, when the political relationship changes, there is also a significant change as it relates to the negotiating positions of both countries. Nepal has transitioned from being a land-locked country seeking greater support from India to a very active participant in India’s ambitious carbon emission reduction goals committed to under global climate agreements. Ultimately, the two countries have invested massively in infrastructure to create a lasting economic partnership that provides long-term stability to the two countries. One of the first major infrastructures created was a 400 kV connectivity between Dhalkebar (Nepal) and Muzaffarpur (India), which proved that large grid integration is not only technically feasible but also profitable. After the success of the first cross-border 400 kV connection, India and Nepal signed multiple agreements to develop two more high-voltage cross-border transmission lines (the Inaruwa-New Purnea 400kV line and the Lamki-Bareilly 400kV line) with an aim to finish building both lines by 2030. These two transmission systems mark substantial capital commitments made by both countries. When two neighboring countries spend hundreds of millions of dollars building physical connectivity through high-voltage transmission lines, they create a significant practical reason to manage their political differences in a positive way. The enormous financial costs associated with the breakdown of the diplomatic relations between the two countries serves as a deterrent for both countries to make reactionary decisions regarding their foreign relations with each other. The bilateral energy framework has set the stage for additional sub-regional cooperation, breaking down traditional geopolitical constraints. India’s decision to permit Nepal to use its domestic power transmission system to sell electricity into third-party markets has opened up the door to sub-regional commerce. A historic tripartite agreement among Nepal, India, and Bangladesh has allowed for the export of hydropower generated in Nepal into Bangladesh through the Indian grid. By enabling this, New Delhi has shown itself to be a constructive partner in the region instead of simply being a limiting neighbour. This new cooperative approach to economic relationships has greatly diminished Kathmandu’s political narrative that views economic relations between India and Nepal as necessarily limiting. Persistent Risks While this commercial integration successfully dampens diplomatic friction, it is not entirely without risks. Climate change introduces a layer of unpredictability, threatening the long-term reliability of Nepal’s run-of-the-river hydropower projects. Additionally, geopolitical restrictions persist under India’s Cross-Border Electricity Trade (CBET) guidelines, which exclude power sourced from plants that involve foreign investment or construction by countries with which India does not have a bilateral land-border power agreement (specifically targeting Chinese-funded or Chinese-built projects in Nepal). This restriction acts as a key diplomatic pressure point for Kathmandu. While exporting over 1,000 MW per day during the peak wet/monsoon season is a major milestone, Nepal still faces domestic transmission bottlenecks and structural seasonal imbalances (generating vast surpluses during the monsoon, but occasionally needing imports during dry winter months when river flows drop). Furthermore, minor frictions occasionally persist regarding domestic regulatory differences and precise tariff pricing structures. Yet, despite these operational hurdles, the broader trajectory remains remarkably stable. By anchoring bilateral relations in the tangible, mutual benefits of the energy trade, both nations have discovered an effective formula for stability. The steady flow of hydro-dollars across the border proves that practical economic integration can quietly and effectively resolve historical diplomatic tensions. (The writer is a policy analyst with a focus on South Asian geopolitics. Views personal.)

Imran Khan’s Fall from Grace

Updated: Oct 21, 2024

Imran Khan’s Fall from Grace

Imran Khan, once hailed as Pakistan’s most charismatic and resilient leader now finds himself in a position unprecedented for a man of his stature.

The former Prime Minister of Pakistan, once known for his unyielding spirit and fierce determination, now shows signs of strain. Imprisoned and facing numerous charges, Khan appears to be a shadow of the leader who once inspired millions.

Khan’s recent meeting with journalists revealed a man who is a shell of his former self. Once confident and commanding, his body now shows a sense of unease and agitation. Those who met him describe a waning spirit, a stark change for a leader once known for his steadfastness in adversity.

The journalists described Khan as a man who is aware that his political party, Pakistan Tehreek-e-Insaf (PTI), is losing its once-iron grip on the nation’s imagination―a realisation that visibly shook him.

The PTI, once a magnet for massive crowds and inspired loyalty among its supporters, is now struggling. The much-hyped rally scheduled for August 22 in Islamabad, was embarrassingly cancelled due to a lack of public interest. Khan, in a bid to save face, claimed that the rally was called off to avoid potential violence. In a sign of growing desperation, Khan rescheduled the rally for September 8 and directed his party leaders to overcome any obstacles. This defiant stance is typical of Khan’s confrontational style, and his public directives highlight his insecurity about his party’s ability to mobilise support.

While Khan outwardly appears calm and composed, the multiple cases against him and his time in jail have left him isolated and struggling with loneliness. Even in this difficult situation, he remains in the headlines, thanks to his uncanny ability to stay in the public’s eye. Khan recently made headlines by applying for the University of Oxford Chancellorship, a move initially dismissed as a rumor but confirmed by his spokesman, Sayed Zulfikar Bukhari. As an Oxford alumnus, Khan would be the first Asian to take the role. Many see this bid as a strategic play to leverage his international profile against Pakistan’s establishment, a move that has kept him prominently in the media spotlight.

The political landscape in Pakistan is deeply divided. Prime Minister Shahbaz Sharif, in his second term, has failed to address critical issues including unemployment, soaring inflation, and deteriorating law and order. His administration’s inability to deliver on its promises has only deepened the public’s disillusionment, leading to growing nostalgia for Khan’s past leadership.

Shahbaz Sharif’s government is a source of frustration for the Pakistani people and a cause for concern for the country’s military. Historically, the military has shaped Pakistan’s political trajectory, stepping in when civilian governments falter. The military reportedly is growing uneasy about the government’s performance especially Sharif’s inability to stabilize the country and mend relationships with key neighbors, particularly India. Additionally, its deteriorating ties with Afghanistan and Iran have left Pakistan increasingly isolated. Even China, Pakistan’s longstanding ally, has expressed dissatisfaction with the government’s policies, a worrying sign given the importance of the China-Pakistan Economic Corridor (CPEC) to the country’s economic future.

It is within this context of political turmoil and international isolation that Imran Khan remains a potent force. Despite his legal troubles and the challenges facing his party, Khan’s popularity endures. For millions of Pakistanis, his tenure as Prime Minister is seen as a time of relative stability and hope, a stark contrast to the current administration’s ineptitude. This perception has kept Khan’s political base intact, even as his party faces an uphill battle in the coming months.

However, Khan’s ability to navigate the current political landscape is far from guaranteed. The PTI’s diminishing support, coupled with the increasing pressure from the establishment, raises questions about Khan’s long-term strategy. His recent moves, including the application for the Oxford Chancellorship, suggest a leader willing to explore unconventional avenues to maintain his relevance. But whether these tactics will translate into a successful political comeback remains to be seen.

Pakistan’s political future is more uncertain than ever. Imran Khan’s journey from cricketing legend to political maverick has been extraordinary. Still, as he faces the toughest challenge of his career, the question remains: Can he once again defy the odds and reclaim his place at the helm of Pakistani politics, or is this the beginning of the end for a once unstoppable leader?

Khan’s story is a testament to the complexities of power and the unpredictable nature of political life in Pakistan. His rise, driven by charisma, populism, and a genuine desire for change, now faces the realities of personal and political challenges, raising the possibility that his time may be running out.

Imran Khan is a beacon of hope for his supporters, and a polarizing figure for detractors, whose ambitions have often clouded his judgment. As the nation watches, the world is left to wonder: What will Imran Khan’s next move be? And more importantly, what does it mean for the future of Pakistan? The coming months will be critical not only for Imran Khan but for Pakistan as a whole. The decisions made during this period will shape the country’s trajectory for years. Whether Khan emerges victorious or is consigned to the annals of history as a fallen leader, one thing is certain: The story of Imran Khan is far from over.

(The writer is a senior jounalist based in Islamabad. Views personal)

Comments

bottom of page