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NepalRelations with India
Even after India had achieved independence from Britain
in
1947, Nepalese-Indian relations continued to be based on
the second
Treaty of Sagauli, which had been signed with the
government of
British India in 1925. Beginning in 1950, however,
relations were
based on two treaties. Under the Treaty of Peace and
Friendship,
ratified in July 1950, each government agreed to
acknowledge and
respect the other's sovereignty, territorial integrity,
and
independence; to continue diplomatic relations; and, on
matters
pertaining to industrial and economic development, to
grant rights
equal to those of its own citizens to the nationals of the
other
residing in its territory. Agreements on all subjects in
this
treaty superseded those on similar matters dealt with in
the
previous treaties between Nepal and Britain. In the Treaty
of Trade
and Commerce, ratified in October 1950, India recognized
Nepal's
right to import and export commodities through Indian
territory and
ports. Customs could not be levied on commodities in
transit
through India.
India's influence over Nepal increased throughout the
1950s.
The Citizenship Act of 1952 allowed Indians to immigrate
to Nepal
and acquire Nepalese citizenship with ease--a source of
some
resentment in Nepal. And, Nepalese were allowed to migrate
freely
to India--a source of resentment there. (This policy was
not
changed until 1962 when several restrictive clauses were
added to
the Nepalese constitution.) Also in 1952, an Indian
military
mission was established in Nepal. In 1954 a memorandum
provided for
the joint coordination of foreign policy, and Indian
security posts
were established in Nepal's northern frontier
(see India
, ch. 5).
At the same time, Nepal's dissatisfaction with India's
growing
influence began to emerge, and overtures to China were
initiated as
a counterweight to India.
King Mahendra continued to pursue a nonaligned policy
begun
during the reign of Prithvi Narayan Shah in the
mid-eighteenth
century
(see The Expansion of Gorkha
, ch. 1). In the late
1950s and
1960s, Nepal voted differently from India in the UN unless
India's
basic interests were involved. The two countries
consistently
remained at odds over the rights of landlocked states to
transit
facilities and access to the sea.
Following the 1962 Sino-Indian border war, the
relationship
between Kathmandu and New Delhi thawed significantly.
India
suspended its support to India-based Nepalese opposition
forces.
Nepal extracted several concessions, including transit
rights with
other countries through India and access to Indian markets
(see Foreign Trade
, ch. 3). In exchange, through a secret
accord
concluded in 1965, similar to an arrangement that had been
suspended in 1963, India won a monopoly on arms sales to
Nepal.
In 1969 relations again became stressful as Nepal
challenged
the existing mutual security arrangement and asked that
the Indian
security checkposts and liaison group be withdrawn.
Resentment also
was expressed against the Treaty of Peace and Friendship
of 1950.
India grudgingly withdrew its military checkposts and
liaison
group, although the treaty was not abrogated.
Further changes in Nepalese-Indian relations occurred
in the
1970s. India's credibility as a regional power was
increased--and
Nepal's vulnerability was reinforced--by the 1971
Indo-Soviet
Treaty of Peace, Friendship, and Cooperation; the 1971
IndoPakistani War, which led to the emergence of an
independent
Bangladesh; the absorption of Sikkim into India in 1974;
increased
unofficial support of the Nepali Congress Party leadership
in
India; rebellions fomented by pro-Beijing Naxalite
elements in
1973-74 in West Bengal State bordering Nepal; and India's
nuclear
explosion in 1974. Nepal adopted a cautious policy of
appeasement
of India, and in his 1975 coronation address King Birendra
called
for the recognition of Nepal as a zone of peace where
military
competition would be off-limits. India showed some
flexibility in
placating Nepal by distancing, if not disassociating,
itself from
the Nepalese opposition forces based in India, agreeing to
a
favorable trade and transit arrangement in 1978, and
entering into
another agreement on joint industrial ventures between
Indian and
Nepalese firms. The latter agreement, by opening the
possibilities
of India's investment, indirectly furthered India's
domination of
Nepal's economy. India also continued to maintain a high
level of
economic assistance to Nepal.
In the mid-1970s, Nepal pressed for substantial
amendments to
the 1971 trade and transit treaty, which was due to expire
in 1976.
India ultimately backed down from its initial position to
terminate
the 1971 treaty even before a new treaty could be
negotiated. The
1978 agreements incorporated Nepal's demand for separate
treaties
for trade and transit. The relationship between the two
nations
improved over the next decade, but not steadily.
India continued to support the Nepalese opposition and
refused
to endorse Nepal as a zone of peace. In 1987 India urged
expulsion
of Nepalese settlers from neighboring Indian states, and
Nepal
retaliated by introducing a work permit system for Indians
working
in Nepal. That same year, the two countries signed an
agreement
setting up a joint commission to increase economic
cooperation in
trade and transit, industry, and water resources.
Relations between the two countries sank to a low point
in 1988
when Kathmandu signed an agreement with Beijing to
purchase weapons
soon after a report that China had won a contract for
constructing
a road in the western sector to connect China with Nepal
(see China
, ch. 5). India perceived these developments as
deliberately
jeopardizing its security. India also was annoyed with the
high
volume of unauthorized trade across the Nepalese border,
the
issuance of work permits to the estimated 150,000 Indians
residing
in Nepal, and the imposition of a 55 percent tariff on
Indian goods
entering Nepal.
In retaliation for these developments, India put Nepal
under a
virtual trade siege. In March 1989, upon the expiration of
the 1978
treaties on trade and transit rights, India insisted on
negotiating
a single unified treaty in addition to an agreement on
unauthorized
trade, which Nepal saw as a flagrant attempt to strangle
its
economy. On March 23, 1989, India declared that both
treaties had
expired and closed all but two border entry points.
The economic consequences of the trade and transit
deadlock
were enormous. Shortages of Indian imports such as fuel,
salt,
cooking oil, food, and other essential commodities soon
occurred.
The lucrative tourist industry went into recession. Nepal
also
claimed that the blockade caused ecological havoc since
people were
compelled to use already dwindling forest resources for
energy in
lieu of gasoline and kerosene, which came mostly via India
(see Energy
, ch. 3). To withstand the renewed Indian pressure,
Nepal
undertook a major diplomatic initiative to present its
case on
trade and transit matters to the world community.
The relationship with India was further strained in
1989 when
Nepal decoupled its
rupee (see Glossary)
from the Indian rupee
which previously had circulated freely in Nepal. India
retaliated
by denying port facilities in Calcutta to Nepal, thereby
preventing
delivery of oil supplies from Singapore and other sources.
A swift turn in relations followed the success of the
Movement
for the Restoration of Democracy in early 1990. In June
1990, a
joint Kathmandu-New Delhi communiqué was issued pending
the
finalization of a comprehensive arrangement covering all
aspects of
bilateral relations, restoring trade relations, reopening
transit
routes for Nepal's imports, and formalizing respect of
each other's
security concerns. Essentially, the communiqué announced
the
restoration of the status quo ante and the reopening of
all border
points, and Nepal agreed to various concessions regarding
India's
commercial privileges. Kathmandu also announced that lower
cost was
the decisive factor in its purchasing arms and personnel
carriers
from China and that Nepal was advising China to withhold
delivery
of the last shipment. The communiqué declared that
Kathmandu and
New Delhi would cooperate in industrial development, in
harnessing
the waters of their common rivers for mutual benefit, and
in
protecting and managing the environment.
Data as of September 1991
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