Article 5 of the 1950 Indo-Nepal Treaty implicitly forbids arms imports directly from third countries. Opposition to this provision has become the bedrock of Nepali nationalism over the years, and the demonstrated ability to flout it has catapulted some to become national heroes.

From King Mahendra onwards, Nepal’s rulers have been tempted to use this shortcut to fame. India’s response has also been consistent: violators are made to pay a heavy price. The latest to play the nationalism card is Prime Minister Oli in fiery rhetoric against the Indian Blockade that landed him a thumping victory in the 2017 elections.

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Since then, he has pushed pro-China policies, signed the Belt Road Initiative (BRI), clumsily withdrawn Nepal from a BIMSTEC joint military exercise in Pune last September, and pressed ahead with the bilateral military exercises with China which could have been prompted by his party Co-Chair going down on his knees during a visit to India.

Nepal now has been given access to four Chinese ports, ending the Indian monopoly on transit. Though symbolic for now, this is of monumental significance for Nepal since it is now no more India-locked. Article 5 has become redundant.

But in a multi-polar world, Nepal has to tread carefully. Barely a month after Foreign Minister Pradeep Gyawali met US Secretary of State Mike Pompeo in Washington DC and discussed the Indo-Pacific Strategy, Co-Chair Dahal dashed off a statement supporting the beleaguered Venezuelan regime which the West is trying to bring down. An Indian Army Chief recently said Nepal’s ‘geography’ required it to tilt towards India, like Bhutan.

Nepal now finds itself squarely in the middle of these two once bitter enemies, and now competing economic giants. The West has made common cause with India and other Asian countries in an attempt to contain China’s rise. Oli unwittingly finds himself in the middle of this widening power game — now he does not just need to balance India and China, but also the West. How well he handles these competing interests will determine whether Nepal will remain at peace with its territorial integrity intact, and whether Oli’s own political career will remain on track.

Nepal’s politicians used to spout anti-India rhetoric at election time, and then undertake their very first official trip abroad to Delhi to expiate for their sins and start a fresh page of cooperation based on the rhetoric of historical ties and cultural affinity. Nepal’s elite and their Indian counterparts ended up with business as usual.

It is noteworthy that neither Nepal nor India have made any attempt to stabilise Nepal’s economy, and ensure prosperity. The main preoccupation of Nepal’s politicians has been to remain in power as long as possible for which they sought Indian blessings. New Delhi, for its part, was happy as long as Nepal remained a source of soldiers and doormen. For this arrangement to work, Nepal was expected to pay deference and remain aligned southwards. This marriage of convenience lasted nearly six decades through absolute monarchy, the Maoist uprising, a royal massacre, and the writing of a disastrous constitution that threatens the nation’s very existence.

But this status quo has changed with the awakening of the sleeping dragon, China. The reconfiguration of regional and global power, if handled well, could bring considerable economic benefit to Nepal. Failure to manage it may spell mortal danger. Prime Minister Oli is also at the crossroads of his political life, and given fragile health, his focus will be on the legacy he wants to leave behind.

Ideally, India could swallow its pride, accept that fact that the 2015 Blockade was a mistake, recognise Chinese influence in Nepal as inevitable, and work with Beijing to lift Nepal out of poverty for a win-win-win situation for all three sides. This is the best, yet least likely, outcome.

Indians, like the Nepalis, are an emotive lot and logical long term thinking is not their forte. New Delhi is currently playing Oli off against Dahal and wants a more favourably aligned government in Nepal which they have easily executed in the past and know they can repeat. Oli thinks (wrongly) that he can get China, India and Nepal to work together for the benefit of all, even though New Delhi abhors the idea of Nepal as an intermediary between India and China.

For Nepal, India is a known entity. China is an unknown quantity. We do not know if China will come to Nepal’s rescue in times of need, and many Nepalis feel more comfortable with India (despite shortcomings) than with China. There are lessons here for India too, and it cannot be business as usual. New Delhi has got to be more serious about the promises it makes to Nepal.

The Indian focus on the Tarai region since 2015 has ruined whatever was left of trust between Kathmandu and New Delhi. ‘One Madhes One Pradesh’ would have divided Nepal horizontally, triggering unimaginable problems. Both sides made a complete mess of it, and it is time for India to let Kathmandu handle this problem to the best of its ability.

India’s policy on Nepal has been to keep it at the level of ‘controlled anarchy’ so Nepali leaders have to keep shuttling to New Delhi. But history has shown anarchy cannot always be controlled. And instead of blaming China for trying to encircle India, it would behoove New Delhi to be magnanimous towards its smaller neighbours and nudge them along on the road to development.

A stable and economically vibrant Nepal will contribute to the success of both economies, and help stabilise the region as a whole. Spheres of influence are obsolete, it is time to get on with improving the lives of our people.

Bhairaja Panday is a former senior UN official and he is currently MD of Invest Nepal Pvt. Ltd.