Nepal's New PM Makes the Rounds

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Manish Swarup / AP

Nepal's Prime Minister Pushpa Kamal Dahal Prachanda, right, sought to allay Indian fears that his Himalayan nation would shift its focus away from New Delhi toward their other giant neighbor, China

When Pushpa Kamal Dahal departed for the 2008 Olympics' closing ceremony days after becoming the first Prime Minister of the Federal Democratic Republic of Nepal, the writing — for many Indians — was on the Great Wall. For citizens of the other rising Asian giant, the Games had already broadcast how far their India lagged behind China on the field of play. Now, the leader of Nepal — once virtually a client state of its vast southern neighbor — was marking his rise to power not with the customary audience in New Delhi, but in Beijing.

"Prachanda chooses China over India," growled a headline in the Times of India, referring to Nepal's new PM by the nom de guerre the ex-Maoist rebel had used during a decade-long insurgency waged in the Himalayan foothills. That war changed the political landscape of Nepal. Dahal's trip to the Bird's Nest, in the eyes of India's hawks, threatened to upset the order of things in the whole region.

A month later, New Delhi's fears have been calmed — if not fully dispelled. During a five-day trip to India in September, the Nepali Prime Minister warmly embraced his Indian counterpart, Manmohan Singh, stressing that good relations with India were "vital" for Nepal's future and downplaying his earlier Chinese visit as merely a happy opportunity to witness the greatest show on earth.

Dahal made clear, though, that Nepal will not be doing business as usual with India under his government. A treaty signed in 1950 will now be renegotiated to redress what many in Kathmandu consider India's historically domineering role in its affairs —to this day, Indian exports and businesses control much of Nepal's economy. "The time has come to effect a revolutionary change in bilateral ties," Dahal told reporters in New Delhi on Sept. 16. "I will tell Nepali citizens back home that a new era has dawned."

Nepal has undergone seismic change in the past half year. In April, Dahal and his Maoists won a majority of seats in an assembly charged with the task of reshaping a country that had existed for over two centuries under a rigid, feudal monarchy. Nepal's last king vacated the royal palace soon after, in June, and Dahal, who only a few years back was a fugitive in his own country, was sworn in as Prime Minister on Aug. 18. From the ashes of a civil war that claimed over 13,000 lives, his Maoist-led government now intends to revitalize one of Asia's poorest nations, swapping talk of armed revolution with praise for capitalist industry. They want to transform Nepal, a country whose landscape holds untold potential both for tourism and hydropower, into what one Maoist official described as "the Switzerland of Asia."

Dahal knows Nepal needs outside help. But the Maoists, who remain on the U.S. State Department's terror watch list with a reputation for vigilante violence, have yet to gain the full confidence of the international community. This holds most true for India, whose foreign policy establishment is still reeling from the overthrow of Nepal's ancien regime and the political elites it had previously patronized. Though India helped vault Dahal into the limelight by forcing Nepal's monarchy into peace talks with his rebels, certain circles in New Delhi harbor a fundamental distrust for the Maoists as India reckons with its own ongoing Marxist-Leninist revolt. Ajai Sahni, a prominent analyst and the director of the Delhi-based Institute for Conflict Management, insisted before the April elections that "Nepal's Maoists have no intention of honestly participating in the democratic process."

Fair or not, it's this stubborn sentiment that amplified the implications of Dahal's Olympic visit last month. Dahal himself eulogizes the Chinese path to prosperity and has referred to India in the past as an "expansionist" enemy. His government unflinchingly cracked down on Tibetan activists, further evidence, to some in India, of Beijing's growing influence over Kathmandu. Ironically, China backed the monarchy to crush the Maoists during the civil war, but Beijing — unburdened by the divisive rancor which grips India's democracy — has nimbly changed tack, expanding its already significant involvement in Nepal's hydropower sector, while promising rail links between Kathmandu and Lhasa.

But Dahal and Nepal's new breed of politicians "have not forgotten that the Chinese were once not on their side," says S.D. Muni, India's leading Nepal expert. They know that as Asia's two giants grow and flex their muscles, Nepal must deftly maneuver between them. Dahal's trip to India has also yielded a raft of new investment proposals, which tellingly preceded the Maoist-led government's announcement of its first budget on Sept. 19. "Anybody in power in Kathmandu would know that they need India more than China," says Muni. "The China card is played simply as a reflection of their relationship with India."

As India and China jockey for contracts, Nepal's new leader may be trying to communicate a larger message. After a decade of war, Nepal is still counting the cost of violence, chronic energy and food shortages, and the loss of its best and brightest to jobs overseas. It's easy for the country's neighbors to see it as it was in its kingly past — a helpless, compliant pawn in the geo-political games of others. But, as Dahal and his government attempt to refashion the nation, most Nepalis — beginning with the Prime Minister — want India and China to see a Nepal finally standing on its own feet.