Explained : Nepal’s new PM inherits India-China-US balancing act and Its Impact

Balendra Shah, an ex-rapper popularly known as “Balen,” was sworn as Nepal’s prime minister on Friday, capping off months of political upheaval in the Himalayan nation after a Gen Z-led uprising last year toppled the previous government.

At 35 years old, Shah’s is one of Nepal’s youngest-ever leaders, and his rise to power reflects discontent with Nepal’s traditional ruling class.

Former Prime Minister K.P. Sharma Oli, who has been Nepal’s prime minister four times since 2015, stepped down on September 9 amid violent demonstrations over corruption and economic malaise.

Shah’s centrist Rastriya Swatantra Party (RSP), which was founded in 2022, won a thumping majority in the March 5 election, taking 82 ​out of 275 seats in the lower chamber of parliament. Oli’s long-dominant Communist Party of Nepal (Unified Marxist-Leninist) only took 25 seats.

Shah, along with RSP chairman Rabi Lamichhane, have challenged the dominance of Nepal’s old political guard, which has rotated in and out of power since the country’s democratic transition in the 1990s. Since then, instability has been the norm, with 32 governments taking office none of them completing a five-year term.

Both Shah and Lamichhane are relative newcomers to politics. Lamichhane is a former media personality who previously served as deputy prime minister and home minister. Shah is an entertainer and a former engineer, whose previous political experience is serving as mayor of Kathmandu city.

Newcomers to diplomacy

While the RSP was given a sweeping mandate by voters to fight corruption while overhauling governance, analysts ask if this will translate to a different approach to Nepal’s complex ties with India, China and the United States.

The foreign policy of Nepal’s traditionally dominant parties has cut along ideological lines.

The liberal Nepali Congress has often been considered to lean towards India and the US. The leftist CPN-UML and Maoist Centre parties have openly expressed ideological affinity towards communist China.

“As both Balen and Lamichhane are new to diplomacy, they have no biases in international relations,” Rameshnath Pandey, a former foreign minister of Nepal, told DW.

Although it is too early to predict how the new government will frame its foreign policy priorities, the RSP’s election manifesto and a recent statement by Lamichhane suggest its focus is more economic than ideological.

The party manifesto calls for Nepal to become a “vibrant bridge” between China and India, and proposes expanding relations with the US.

India, the US, China, Russia and the United Kingdom have extended congratulatory messages to Shah and Lamichhane for their electoral success.

After speaking with Indian Prime Minister Narendra Modi, Lamichhane highlighted that the new government would focus on “development diplomacy.”

In its congratulatory message on Nepal’s successful elections, the US said it would work with the incoming government on “shared goals of prosperity and security.”

A tricky strategic balance

Kathmandu’s foreign policy has traditionally focused on maintaining a delicate balance among the US, China and India. Nepal sometimes refers to the US as a “third neighbor, “given Washington’s influence and development support

The government’s first diplomatic test could come from India and China, and their recent decision to reopen a trade route through Lipulekh Pass. The pass, though currently under Indian control, has also been claimed by Nepal.

In late 2015, Nepal’s ties with India were strained after Kathmandu accused New Delhi of stopping trade at the border. The dispute centered on changes to Nepal’s constitution that critics said marginalized ethnic minorities with strong cultural ties to India.

After the de-facto blockade, which India denied carrying out, ended in February 2016, Kathmandu began diversifying its trade routes and energy sources, and gradually moved closer to Beijing under the dominance of left-leaning parties.

Nepal shares a 1,750-kilometer-long border with India, along with deep cultural, economic and security ties. With China, Nepal shares its northern frontier with the Tibet Autonomous Region.

Security remains a key concern, and both India and China seek a stable and reliable partner in Kathmandu.

Since 2017, Nepal has been part of China’s Belt and Road Initiative (BRI), which aims to enhance trans-Himalayan connectivity networks, including railways, roads, energy grids and digital links.

China insists that Nepal upholds the “One China” principle and prevent “anti-China” political activities on its soil. Meanwhile, Kathmandu maintains engagement with the US and its allies for development support such as civil society funding.

In 2022, Nepal and the US signed a $550 million agreement called the Millennium Challenge Corporation (MCC), which is a developmental grant aimed at scaling up Nepal’s road and electricity infrastructure.

Both the MCC and the BRI are frequently interpreted as part of the broader strategic competition between China and the US.

In its congratulatory message on Nepal’s successful elections, the US said it would work with the incoming government on “shared goals of prosperity and security.”

China has also sought to include Nepal in its vision for a global security order under what Beijing’s has dubbed the Global Security Initiative (GSI). Nepal had also been in talks to join the State Partnership Program (SPP), a US Defense Department outreach and cooperation initiative, but the Nepalese government decided to opt out in 2022, citing a policy of non-alignment.

What could come next?

These strategic pushes from the US and China were set aside by previous governments. But with the RSP at the helm, there are questions over whether they could resurface.

Bimala Rai Paudyal, a former Nepalese foreign minister, told DW that the new government should avoid hasty decisions regarding the SPP or GSI as both are seen as potentially contradicting Nepal’s long-standing principle of non-alignment with strategic or security alliances.

However, she argued that Nepal should “update” its foreign policy priorities in response to changing geopolitics around the world.

“We need to update our foreign policy priorities, not because we have a new powerful government in place, but rather due to evolving global contexts.”

Bikram Timilsina, a member of the RSP’s international relations department, says that Nepal’s external relations under the new government would be guided by national interests and constitutional frameworks, which emphasize a non-aligned foreign policy — meaning Nepal will avoid joining any global security or strategic alliances.

“We will pursue a pragmatic foreign policy, keeping national interests at the core, while learning from past mistakes,” he told DW, adding that it would avoid “ideological” or “ultra-nationalist” impulses.

Analyst Chandra Dev Bhatta, however, told DW that the new government will not be spared from unfolding geopolitical complexities.

“Although the RSP does not necessarily carry any ideological baggage, concerns are that it might carry some geopolitical baggage. If the latter proves true, the country could face serious problems in navigating the geopolitical situation,” he said.

Edited by: Wesley Rahn