The Asian elephant in the room

A summer visit to Bhutan by the Indian premier reinforced the two countries’ longstanding ties. But, writes Sudha Ramachandran, for Bhutanese youth, another Asian giant beckons

Indian Prime Minister Narendra Modi’s two-day visit to Bhutan in mid-August has provided a boost to bilateral relations. Ten Memorandums of Understanding that envisage co-operation in the fields of hydropower, information technology, space research, aviation and education were signed by the Indian and Bhutanese governments.

Hydropower co-operation, which is the lynchpin of the bilateral partnership, is poised to deepen. During Modi’s visit, the 720 megawatt (MW) Mangdechhu hydropower project was inaugurated. In addition, the two countries have decided on an imminent start to discussions on the 2,500 MW Sankosh dam project.

Modi and Bhutanese Prime Minister Lotay Tshering also inaugurated the Ground Earth Station built by the Indian Space Research Organisation at Thimphu. It will enable Bhutan to hook on to the South Asia Satellite, which India launched in 2017 as a gift to its neighbours. This will enhance Bhutan’s capacity for broadcast services, tele-medicine, distance education, resource mapping, weather forecasting and disaster management.

Modi’s visit to Bhutan was significant for several reasons. It was his second as prime minister and the first after his re-election in May this year. Bhutan was the first country Modi visited after assuming charge as prime minister in 2014, underlining its importance to Indian security interests.

What is more, this was also Modi’s first visit to Bhutan since the Doklam crisis in 2017.

Situated in western Bhutan, Doklam is located close to the narrow Siliguri Corridor, a vulnerable point for India as it connects the Indian mainland with its northeastern region. China lays claim to the strategically significant Doklam.

This was Modi’s first visit to Bhutan since the Doklam crisis in 2017

In 2017, Indian security forces discovered the Chinese trying to construct a road in the area and, in support of Bhutan, objected to these actions. A massive build-up of forces by India and China was followed by a 73-day-long standoff, along with a sharp surge in tension.

Although India’s support of Bhutan arises largely from its own security concerns over Doklam slipping into Chinese hands, it also stems from the two countries’ close military ties. India trains Bhutanese security personnel and maintains a presence in the kingdom. Indeed, the Indian military is said to be virtually responsible for protecting Bhutan from external and internal threats.

China was the elephant in the room during Modi’s recent visit to Bhutan. Nestling in the eastern Himalayas, the small Buddhist kingdom is sandwiched between India and China, and thus acts as a buffer between the two Asian giants. Its value as such surged for India after its defeat in the Sino-Indian border war of 1962.

The India-Bhutan relationship has been long and warm, having endured for decades. A landlocked country, Bhutan is dependent on India for access to the sea. Its physical terrain has made contact, travel and trade with India easier than with China.

In addition, bilateral treaties have deepened Bhutan’s bond with India. Under Article II of the 1949 India-Bhutan Treaty of Perpetual Peace and Friendship, Bhutan was required to ‘be guided by the advice’ of India in the conduct of its external relations, while Article VI allowed Bhutan to import ‘arms, ammunition, machines, warlike material or stores’ for its ‘strength and welfare’ albeit with India’s ‘assistance and approval’.

Such advice, assistance or approval is no longer necessary, thanks to the India-Bhutan Friendship Treaty of 2007, an ‘updated’ version of the 1949 agreement. This treaty requires the two countries to ‘cooperate closely with each other on issues relating to their national interests’.

Narendra Modi (l) and Lotay Tshering inaugurating the Ground Earth Station at Thimphu on Aug.17
Narendra Modi (l) and Lotay Tshering inaugurating the Ground Earth Station at Thimphu on Aug.17

Unlike its deep co-operation with India, Bhutan is yet to establish formal diplomatic and economic ties with China. India appears to be the stumbling block but Bhutan itself has wanted to avoid ruffling feathers in New Delhi. Its extreme dependence on India underlies this cautious approach.

As Bhutan’s largest trade partner and aid donor, India dominates Bhutan’s economy. It has financed Bhutan’s Five-Year Plans and contributed immensely to infrastructure building in the country. India’s development of Bhutan’s hydropower has provided the Himalayan kingdom with electricity for domestic use as well as a huge surplus that is exported to India. Not only is the Bhutanese economy overwhelmingly dependent on India, but hydropower is its main source of revenue. Consider this: Bhutan’s income from its export of electricity to India accounts for 40 per cent of all the revenue it earns and 25 per cent of its Gross Domestic Product.

Should Bhutan ever establish official ties with China without India’s blessings, this could arouse New Delhi’s ire. Any blockade or other restrictions that India might subsequently impose on Bhutan would have serious implications for the latter.

There is a precedent for this. In June 2012, the then Bhutanese Prime Minister Jigme Yozer Thinley met Chinese Premier Wen Jiabao in Rio de Janeiro. As a result, India cut subsidies on gas and kerosene sales to Bhutan. Prices surged, culminating in Thinley’s defeat in general elections.

While Bhutanese of an older generation are grateful to India for its role in their nation’s development, the younger generation is less so. A small but growing number of Bhutanese, keen to benefit from Chinese investment, trade and so on, would like their government to establish formal ties with China. After all, as a sovereign country, Bhutan has the right to choose its own foreign policy, they argue.

Bhutan is yet to establish formal diplomatic and economic ties with China

The Doklam crisis and the real possibility of Bhutan becoming the setting for a Sino-Indian military confrontation have prompted calls in the kingdom to settle its border dispute with China. This will require Bhutan to establish official ties with its northern neighbour.

And, with mounting pressure from China to create a more formal, bona fide relationship, Bhutan is caught in a difficult situation between Beijing and New Delhi.

Bhutanese youth were an important focus of Modi’s recent visit to Bhutan. The two governments signed agreements providing for co-operation between the Royal University of Bhutan and the Indian Institutes of Technology, as well as other top Indian educational institutions. Modi addressed students of the Royal University of Bhutan and drew attention to their partnering with India, and benefiting from India’s achievements in space and technology.

The speech was inspiring and struck a chord with the Bhutanese students. But will that be enough to keep them from seeking opportunities that official ties with China would hold out for them?


Dr Sudha Ramachandran is a Bengaluru-based independent analyst. She writes on South Asian political and security issues. She can be contacted at Sudha.ramachandran@live.in

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