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STRATFOR

China, India Wary of U.S. Involvement in Nepal
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25 April 2002

Summary

The White House hopes to send $20 million in military aid to help Nepal
fight Maoist insurgents, a likely precursor to further military involvement.
Though Nepal is relatively insignificant, its neighbors -- China and
India -- are not. And both are trying to decide how to react to an
aggressive U.S. basing policy.

Analysis

The Bush administration has asked Congress to grant $20 million in military
aid to help Nepal's government fight Maoist insurgents. The announcement of
the aid package comes on the heels of a visit by Nepal's foreign secretary
to Washington early this month and a trip by U.S. Secretary of State Colin
Powell to Kathmandu in January.

U.S. military aid will likely lead to some sort of American military
presence and thus is probably already raising eyebrows in India and China,
Nepal's two giant neighbors. Each has different motivations, and though
neither is likely to immediately object to the U.S. moves, Washington's
involvement sets the stage for a future confrontation.

The Nepalese government needs all the help it can get. Six years of the
Maoist insurgency has left thousands dead and the Maoists in control of
about a quarter of the country. The government has slowly lost ground and
has been embarrassed by recent attacks such as the destruction of the prime
minister's country home earlier this week. The attack came two weeks after
3,000 rebels attacked two rural police posts, killing over 80 policemen and
capturing their equipment.

Nepalese defense officials told Agence France-Presse that their government
wants foreign financing for night-vision equipment for helicopters,
automatic weapons and rocket launchers, among other items. Some of this
equipment is relatively easy to operate, but some will require training from
U.S. forces. This will likely allow the necessary opening for a more
extended U.S. deployment.

Washington has relatively little interest in Nepal's insurgency, but the
Pentagon likely wouldn't mind having another emergency air base or logistics
center close to Pakistan and Central Asia. In looking toward the longer
term, the United States definitely wants as much of a presence on the border
with China as possible.

Beijing is well aware of Washington's intentions and is no doubt concerned
about the U.S. encirclement that is already taking place. The U.S. military
has bases in Pakistan, throughout Central Asia, Japan, South Korea and the
Philippines, and it has relations with Mongolia, Taiwan, Singapore and
Thailand. Nepal is another link in the chain.

But Beijing will probably offer little resistance to the United States,
simply because its options are relatively constrained. On one level, the
leadership is quite busy keeping the economy intact and demonstrations to a
minimum while also preparing for President Jiang Zemin to transfer power to
Vice President Hu Jintao later this year.

The Chinese regime also has relatively few levers to force the United States
to halt its involvement in Nepal. Public statements and accusations will be
ineffective and are bad publicity for Beijing since Washington is cloaking
the aid under the anti-terrorism banner. And covert support for the Maoists
would be a nightmare if it came to light. Supporting a rebellion against a
U.S.-backed government would likely put a serious crimp in foreign
investment coming into China.

India's position is more complex than China's. New Delhi made a strategic
decision in the mid-1990s to move closer to Washington, a decision that was
reaffirmed in the wake of Sept. 11. New Delhi hoped to benefit from
increased trade, eventual access to U.S. weapons systems and the formation
of a strong alliance to counter China.

However, American involvement with Indian satellite states like Nepal and
Sri Lanka raises conflicting impulses. On one hand, New Delhi is glad to see
Washington trying to clean up the insurgencies that have spilled over into
its borders for years. On the other hand, there is a visceral reaction
against foreign involvement in India's backyard, especially when those
foreigners maintain strong ties with Indian rival Pakistan.

Many in India's foreign policy circles are concerned that Washington may
replace India as the dominant power in South Asia, assuming that vassal
states like Nepal, Sri Lanka, Bangladesh and Bhutan prefer the freedom that
comes with casting their allegiance with a distant giant rather than one
close to home.

India had aspirations of becoming the dominant power in the Indian Ocean and
interacting with Washington as a near equal. But this dream is threatened as
the United States moves into South Asia, both in Nepal and at a <potential
naval base in Sri Lanka Depending on the shape of the U.S. deployments,
India may find itself a junior partner at best.

New Delhi's foreign policy establishment isn't quite sure what the future
will bring and is hesitant to challenge the United States now. This
hesitation, combined with a glacial policy-making process, will keep the
Indian government from challenging U.S. action over the next few quarters.

However, India is slowly reaching an inflection point over its relations
with the United States and must eventually come to a decision. A debate will
begin to percolate in India about exactly how it wishes to shape its
interaction with Washington, due in part to events in tiny Nepal.

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