India-Bhutan Ties post Doklam

TOPIC: General Studies 3

India and its neighbourhood- relations.

Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests

Background

India and Bhutan talked recently at top levels post the Doklam stand-off between India and China. The discussion was held by Indian foreign secretary with Bhutan’s PM as well as monarch on range of bilateral relations including implementation of the ongoing government of India’s assisted projects- trade and economic ties, hydropower cooperation and people to people contacts.

Post doklam, certain things needed to be clarified between India and Bhutan. The problem in Doklam was about legitimacy of Indian intervention to counter Chinese move. But Bhutan was not very keen in coming forthright about India helping it to safeguard its territories. So India wanted to talk about it.

The Doklam standoff was military standoff. There was need of diplomatic conversation with Bhutan as the main relationship between both countries is cultural and deep political trust.

India-Bhutan: Recent relationship

Demonetisation, GST have impacted on the ground in the Indo-Bhutanese relationship as well as with Nepal. GST has created a lot on confusion within Bhutan in terms of trade. The economy is small and largely dependent on Indian export. So these issues were required to be discussed.

Bhutan remains India’s closest partners. Apart from India, Bhutan is the only country that stayed away from OBOR, Bhutan is not part of china’s infrastructure bank. India-Bhutan have closer ties on UN issues. At the same time, the way India sees Bhutan through a Chinese prism has to change to an extent. The Bhutanese people no longer consider themselves as India’s taken for granted partner. For instance, India has to act more responsibly on hydropower cooperation. Bhutan has perhaps only major trade relations with India. So India has to deal in better way and put extra effort to maintain the relationship.

Need to revisit Bhutan policy

India has to centrally rebuild its foreign policy towards Bhutan along different structure. Demonetisation and GST have hurt neighbouring countries where Indian currencies is a legal tender. The Bhutanese want to up the revenue from the hydro power plants to generate electricity for Bhutanese people. It is a natural resource that they are helping to exploit and they benefit hugely from it. But they want it to be revenue rated appropriately.

Hence, the old fashioned diplomacy will not work anymore.

The make in India programme is going to impinge on the economy of Bhutan and Nepal and other small economies countries in South Asia. For instance, the small companies in Bhutan will be finished if their sensitivity, productivity and industrial production is not taken into consideration. The economic policy reforms done in India should me made feasible for other neighbouring countries too by giving way outs with the difficult situations arising post structural changes.

A boon

Doklam was blessing in disguise, India learnt some lesson in military and security front. It also helped India to take precaution on what new things can be done to maintain relationship with Bhutan. The interesting part is that the relation between both countries has always been driven by Bhutanese and not by India. However, this in the last couple of years since 2013 has not been same. Only the top political and diplomatic people should be allowed to handle the relationship. No third part interference (military) should be allowed in the relationship.

Address two existing issues-

With regards to GST, India has to assist 4500 crores in grants to Bhutan. Bhutan’s trade deficit is 3200 crore with 90% of trade deficit with India. It is not a sustainable position if India doesn’t address such trade deficit. There is commitment from India to buy 10000MW of power and the Bhutanese has been requesting India to let them take part in primary market. But India says that only companies which has 51% stake held by Indians can take part in this. India has to allow Bhutan to prosper too through more revenues through power.

Closest ally should be responded

China is continuously trying to assert itself into the region. The people within Bhutanese government and their representative assembly are advocating getting nearer to china to increase the leverage with India.

Another aspect to sustain Bhutanese economy through hydropower diplomacy. That is if the Bhutanese are happy with the arrangement of selling hydropower to India, it could be the model for mahakali and other rivers in Nepal. The Bhutanese have benefited, they have the highest per capita income of all south Asian countries. But equally they don’t want to be treated as second to India.

India should not exercise control democracy in Bhutan. India is in in-charge of conduct of Bhutanese foreign affairs. This puts greater weight on India. India should not always think of its interest only.

Chinese for many years have tried to distance Bhutan from India offering all kinds of inducements- infrastructure projects, connectivity. These is found to be attractive by many yet they have resisted. The degree of friendship they feel for India and sensitivity to India’s concerns is showed. So India has to consider as a closest ally not just in region but in world.

Conclusion

The Bhutan relation with china is through India. Now there is a trust deficit between Indian and Bhutanese diplomats as well as military level, it would dent the strong friendship both countries share. If India has trained the Bhutanese army, then they have to trust them in safeguarding their territories vis a vis china.

Also, India can consult with Bhutan on India’s national security that doesn’t concern Bhutan. This will make them feel involved. India can take Bhutanese views on India’s relationship with Nepal, Pakistan, china and other countries in Indian Ocean region. They are after all the part of Indian military policy matrix. This way the Bhutanese government will feel that they have a stake in India’s well being just as India has it in Bhutanese well being.

Connecting the dots: