As Oli steers his party to the right to woo India’s ruling BJP, China is courting Nepal’s left wing.

With the legality of the second dissolution of Parliament under review at the Supreme Court, political instability in Nepal has worsened. Moreover, China and India are likely to deepen their involvement in Nepal’s domestic politics.

Strategically located, Nepal has been a playground of great power competition for decades. The country’s political instability is homegrown, no doubt, but the Sino-Indian geopolitical tussle has fuelled it too.

In 2018, Nepal’s two main communist parties, the Communist Party of Nepal-United Marxist Leninist (CPN-UML) and the Communist Party of Nepal-Maoist Center (CPN-MC), formed an electoral alliance, leading them to win a near two-thirds majority in Parliament. Buttressed by this majority and riding on a nationalist (read: anti-India) wave, CPN-UML Chairman K.P. Sharma Oli built one of the strongest governments in Nepal in decades. Although India was not happy with the communist alliance, the communist parties formally merged to form the Nepal Communist Party (NCP).

After that, Nepal’s relations with India went south. When Pakistan’s then-Prime Minister Shahid Khaqan Abbasi visited Nepal – he was the first foreign dignitary to visit the country after the NCP government took charge – it raised eyebrows in New Delhi.

Then in September 2019, Song Tao, a leader of the Chinese Communist Party (CCP) and the head of its International Liaison Department, visited Nepal to participate in the “Ideological Discussion between the CCP and NCP on the CCP’s Opinion on Xi Jinping Thought.” As a result, the two parties agreed to formulate a joint program to exchange experiences. China was looking for a reliable partner in post-monarchy Nepal and found it in the NCP.

The growing proximity between the two parties alarmed the Indian establishment. A flurry of articles appeared in the Indian media stating that Nepal had become a Chinese ally.

Meanwhile, Chinese pressure on Nepal was growing. During his visit to Nepal in October 2019, when Chinese President Xi Jinping signed 20 agreements, he warned that “anyone attempting to split China will be crushed.” Why he chose to deliver that statement in Nepal was not lost to keen observers.

Nepal was under severe pressure from the Western powers not to sign an extradition treaty with China that would have forced it to hand over Tibetan refugees to China. The failure to secure the extradition treaty angered Xi, prompting him to warn foreign forces against playing geopolitical games that would cross China’s red lines. China also expressed its discomfort with the United States’ $500 million grant under the Millennium Challenge Corporation (MCC). While Chinese Ambassador Hou Yanqi welcomed foreign economic support to Nepal, the Chinese establishment hinted that it would not tolerate the MCC in its neighbourhood since it is a part of the U.S. Indo-Pacific Strategy, which aims at containing China.

China was pushing for geo-economic connectivity earlier with Nepal. But now, it is increasingly engaged geopolitically. Frustration with the glacial pace of implementation of Belt and Road Initiative (BRI) projects underlies this change.

China read correctly that bureaucratic red tape was the main reason for the slow pace of implementing Chinese projects in Nepal. For geo-economic enterprises to move forward, geopolitical manipulations are essential.

The Chinese seem to have identified corruption in Nepali society as one of the factors behind the lack of progress in the BRI and other Chinese projects. During the ideological discussions between the NCP and CCP, and even on earlier occasions, Chinese leaders had emphasized the role of Xi’s anti-corruption drives in China’s economic development. They had encouraged Nepalis to carry out such campaigns too.

However, in building ties with Nepal, China erred in focusing on the NCP entirely. This led to anger among leaders of other parties, especially the opposition Nepali Congress (NC). NC leaders were particularly aggrieved when the Chinese state-run Global Times carried reports of NC politicians colluding with India and other foreign forces to accuse China of encroaching into Nepali territory in the Humla district.

Meanwhile, under the Oli government, Nepal’s relations with India deteriorated sharply. In 2020, when India committed cartographic aggression by publishing a map showing the Kalapani-Lipulekh-Limpiyadhura stretch of land as its territory, the Oli government responded by issuing a map depicting it as a part of Nepal and getting it endorsed by the Nepali Parliament and including it in the constitution.

According to historical documents and evidence of tax collection from locals, this stretch of land in Nepal’s far west belongs to the country. However, in Indian eyes, Oli went too far by formally including it in the constitution. The Nepali move, which came at a time when India was hurting after the violent clash with China at Galwan in Ladakh, ended up stirring Indian suspicions over the Oli government’s intentions.

Oli went on to provoke India on several issues. He mocked the Indian national emblem and commented that the Indian virus was more lethal than the Chinese one. He also claimed that the Hindu deity Ram was born in Thori in Nepal and not in Ayodhya in India. His statement came when the Supreme Court of India had just settled the Ayodhya temple issue after decades. Indians saw Oli’s needling of New Delhi as being done at Chinese urging.

Chinese state media seem to have fuelled Indian fears about China’s intentions. An article published in Global Times, for instance, warned that a three-front war with Nepal and Pakistan would open up if New Delhi continued its aggression toward China. Nepali officials did not refute such claims. This indifference could have irked India.

Meanwhile, factional quarrels were brewing in the NCP. Leaders like former Maoist chief Pushpa Kamal Dahal and CPN-UML leader Madhav Kumar Nepal joined hands to oust Oli from power. They asked him to give up either the party chairmanship or the premiership. But Oli refused, thus deepening the rift in the new party.

Hou, the Chinese ambassador, repeatedly intervened to save the coalition from splitting. But she could only keep the lid on the proverbial can of worms for a short time. Then, as infighting worsened, she suggested that Oli vacate one of the posts to save the party.

This proposal being unacceptable to Oli, he reached out to India and signalled interest in fresh talks. New Delhi responded by sending top officials, including Indian Army Chief General Manoj Mukund Naravane, Foreign Secretary Harsh Vardhan Shringla, and Research and Analysis Wing chief Samant Kumar Goel.

Oli also ingratiated himself to India’s ruling Bharatiya Janata Party (BJP) by pandering to its Hindu nationalist line. He allotted huge funds to the Pashupatinath temple, a Hindu temple in Kathmandu. He gave interviews to Indian television channels considered pro-government and quoted Sanskrit verses liberally. But Oli’s pro-India tilt has had negative repercussions for Nepal. He made Nepal dependent on India for COVID-19 vaccines and neglected to arrange for vaccines from other countries. As a result, when India could not deliver over a million doses as promised when its second wave of infections swept the nation, Nepal was left grappling with a severe shortage of vaccines even as the COVID-19 infection rate surged.

To cosy up to India’s BJP government, Oli is steering his party to the right. However, China is persisting with its geopolitical manipulations in Nepal. Its efforts to build a solid communist bloc in Nepal continue, albeit without the fanfare evident earlier, when Hou was trying to save the coalition.

With India charming the right-wing forces in Nepal and China wooing its left-leaning ideologues, ideological polarization in Nepal is poised to continue. Only time will tell whether this polarization will help the country achieve stability or push it to the brink.