Bhutan Watch

ABSTRACT

A breakthrough in Nepal-Bhutan relationship in the past had been rendered near impossible given the mistrust over refugee issue coupled with lack of autonomy in Thimpu vis-à-vis conduct of its foreign and defence policy. With resettlement of most Bhutanese refugees in third-countries and revision of Bhutan-India Friendship Treaty 1949, there is tremendous scope for strong bilaterally beneficial relationship now. But this will only gain meaningful traction by addressing the refugee saga in some manner. Since only a handful of refugees remain in camps now, Bhutan can offer to repatriate the remaining refugees under the same process agreed during Joint Ministerial Committee (JMC) meetings and Joint Verification Team (JVT) mechanism without any significant costs. At this stage this may symbolic at best, but will help provide a closure to all parties involved: Nepal can declare success in its bilateral diplomatic dealings; it will help Bhutan salvage its reputation in international forums while further cementing its autonomy in the conduct of its foreign policy; and this will also help close a painful chapter for thousands of Bhutanese refugees who have now become citizens of some other countries.

Keywords: Bhutan; diplomacy, Nepal; refugees, relationship;

Introduction

There are many similarities between Nepal and Bhutan. Both countries straddle the Himalayas and are landlocked—surrounded by India and China. The two countries have huge hydropotentials and can be energy powerhouse of the region. Both the countries are members of Non-Aligned Movement (NAM) and founding members of South Asian Association for Regional Cooperation (SAARC) (Bhattarai, 2019). The two countries have joined Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) since 2004 (BIMSTEC, 2019). Historically, the two countries have been friends. Even as Nepal began experimenting democratic rule since the 1950s, it was not until early 90s that Bhutan transitioned to some semblance of democracy. Bhutan is home to a sizeable population of Nepali origin—with records of migration dating back as far back as early 17^th century (Dhakal, 2003).

The current state of Nepal Bhutan relationship can be best described as lukewarm. “Ties are neither cordial nor strained,” a Nepali foreign minister put it curtly (Bhattarai, 2019).  Even as both countries have shared interests, no serious efforts have been made from both sides to increase engagement. The two sides are working towards finalizing a trade deal that would see mutual preferential treatment for goods, but progress has been very slow. Historically both countries had very close ties. Though there are claims that ties began as early as sixth century AD, recorded events show relationship dating back to early 17^th century (Dhakal, 2003).

After the emergence of a unified Bhutan in 1625, the first Dharmaraja Shabdrung Nawang Namgyal is said to have visited Kathmandu valley and during his return to Bhutan was accompanied by 40-50 Gorkha and Newari families. The Gorkhali migrant contingent led by Bisan Thapa Magar included Brahmins, Chhetriyas, Vaishya and Sudras (Dhakal, 2003). This could have been the beginning of migration of Nepali population into Bhutan.

Modern relationship

The two countries established modern diplomatic relations in 1983 despite monarchies of the two countries developing ties three century earlier (Dhakal, 2003). Neither Nepal nor Bhutan have opened embassies in each other’s country. The ambassadors in New Delhi have been mutually accredited as non-resident representatives. Soon after the diplomatic relationships were established, a very sore point in the bilateral relationship emerged: the issue of Bhutanese refugees.

Beginning in late 1980s Bhutan saw protests for democratic rights from the minority Lhotshampa community, who were of Nepali origin. This led to crackdown and subsequently, Thimphu began expelling these communities en masse. By the early 1990s, thousands had been picked by Indian security forces from Indo-Bhutan border and then left at Indo-Nepal border in the east. Nepal opened doors for these refugees—who at their peak numbered over 117,000. After the process of third-country resettlement began in 2007, less than 6,500 refugees remain in the camps in eastern Nepal

As Nepal is not a party to the UN refugee convention and protocol, it had rejected the idea of local assimilation in the past. Kathmandu wants to resume negotiations with Thimphu stalled, since 2003, to repatriate the remaining refugees (D’Ambrogio et al, 2019).

Tale of Bhutanese refugees

There was a build up to the expulsion of Lhotsampas. A law passed  in 1985 and subsequent census made the determination that thousands of Nepali speaking persons were not citizens of Bhutan given that they could not provide proof of residence in 1958. The cut-off date was repeated by ‘poorly trained census officials’ in subsequent census in 1988-89 (Morch, 2016). Those unable to provide the proof were labelled as illegal immigrants and then expelled (United States Department of State, 2018). The two subsequent censuses made officials in Thimphu aware of the size of the Nepali speaking population living within the territory of the Bhutan. After the census, officials estimated figure of Lhotshampas at 28% but informal estimate that circulated spoke of up to 40% (Morch, 2016). This clearly influenced the imagination of majority Drukpa population and officials. This came very close to the annexation of Sikkim by India in 1975. Ever since the concern in other two remaining Himalayan States, Nepal and Bhutan have been to avoid similar fate. The reaction to Sikkim incident has been very similar in both Bhutan and Nepal: promotion of single national identity fashioned on the image of dominant group.

Perhaps this is the reason why Bhutan was never keen on repatriating the refugees; while under international pressure it agreed to a bilateral process, but its intent was very clear from the beginning. The Nepal-Bhutan Ministerial Joint Committee (MJC) had held 15 meetings to resolve refugee issue. A Joint Verification Team (JVT) was formed to verify the refugees into four categories and eventually to repatriate them. The JVT was tasked to categorise and verify the refugees into four groups: i) Bonafide Bhutanese who were forcibly evicted, ii) Bhutanese who emigrated, iii) Non-Bhutanese, and iv) Bhutanese with criminal background (Human Rights Watch, 2007).

The JVT had completed its process in Khundunabari Camp. In its’ 15^th meeting held in Thimphu on 20-23 October 2003, MJC had agreed to repatriate the refugees failing under categories 1, 2 and 4 while assigning the JVT to review the appeals submitted by those falling in category 3. The meeting had also agreed to assign the JVT conduct the process of categorisation and verification in Sanischare Camp. But a security incident in Khudunabari Camp on 22 December 2003 stalled the process (Nepal: Foreign Policy and Government Guide, 2009). There have been repeated verbal agreements to resume the process even at the prime ministerial level, but with no forward movement on the ground.

Current relations

Despite the size asymmetry, the two countries have much in common. A Memorandum of Understanding was signed between Federation of Nepalese Chamber of Commerce and Industries and Bhutan Chamber of Commerce and Industry to promote trade and economic relations between the two countries in March 2005 (Bhattarai, 2019). Subsequently, the first meeting of Nepal-Bhutan Bilateral Trade at the level of Joint Secretaries of the Ministries of Commerce was held in Kathmandu on 17 March 2010 and the second meeting in Thimpu on 24-25 May 2011 to discuss the Draft Agreement on Bilateral Trade (Ministry of Foreign Affairs Nepal, 2019).

The two sides are close to finalising a trade deal that would see preferential treatment for goods from each other’s country. A closer cooperation would be a win-win situation for both countries. A draft agreement has been finalised in August 2019. As the draft of bilateral agreement requires approval from Bhutanese parliament, the date for signing of the agreement has not been fixed so far. In 2018 and 2019, Nepal imported goods worth NPR 1.6 billion from Bhutan (The Himalayan Times, 29 August 2019). Nepal’s exports include sculptures and statuary, electric transformers, soaps, garments and footwears. Major imports from Bhutan include gypsum, coal and cement. “Even though the balance of trade has traditionally been in Nepal’s favor, Nepal has sustained trade deficit in recent years” (Ministry of Foreign Affairs Nepal, 2019).

Nepal is a major tourism destination for Bhutanese and their numbers are increasing. Between 2016 and 2017 the number of Bhutanese arrivals jumped from 6, 595 to 10,923 (Ministry of Foreign Affairs Nepal, 2019). Historically Nepal has been a major pilgrimage as well as shopping destination. After the 2015 earthquake, Bhutan rushed to aid Nepal by contributing US$1million to relief fund while deploying a 78-member relief team (Bhattarai, 2019).

Way forward

Nepal has shown considerable interest in developing a mutually beneficial relationship with Bhutan, but refugee issue coupled with lack of autonomy in Thimpu vis-à-vis conduct of foreign and defense policy made it difficult for the two sides to make  a breakthrough.  Bhutan had been a protectorate of British India (Mahajan, 2018) and that special relationship continued even with independent India under the 1949 treaty when it came to foreign and defence policy. But a revision to the treaty in March 2007 gave Bhutan autonomy in conduct of its foreign and defence policies (Mahajan, 2018). The revision substantially changed Article 2 of the 1949 treaty removing any reference to ‘Indian guidance’ on the conduct of Thimphu’s external affairs. Instead the updated version of the treaty emphasises closer cooperation.

Even as Bhutan wants to diversify its relations, its economic overreliance on India makes it near impossible for it to take any drastic measures. “Beside receipt of budgetary support, Bhutan’s trade with India accounts for 85% of the total trade volume. Based on the national statistical figures, presently, about 80% of the Bhutanese import comes from India and 95% of total exports goes to India” (Kharka, 2018). Bhutanese currency is arbitrarily pegged at parity with Indian currency. In addition, ‘all most all the hydropower projects in Bhutan, the primary export, are financed by India. Nearly one quarter of the Bhutan’s government expenditure is financed through Indian grants or about 10 percent of the GDP (Kharka, 2018).

While strong direct collaboration may still be under the shadow of refugee saga and India factor, cooperation through multilateral forums is the emerging norm. As India seeks to avoid sharing a platform with Pakistan, SAARC is effectively on animated suspension. Bangladesh Bhutan India and Nepal (BBIN) and BIMSTEC are emerging as new platforms of cooperation at the sub and super-regional levels. In bilateral areas, there is tremendous scope for technical collaborations and joint ventures at the public and private level. Rijal Tashi Industries is an example of technical collaboration between Nepalese and Bhutanese private sectors. There is a need for more business to business and people to people diplomacy. Despite the size of the country Bhutan is an important contributor to Nepal’s tourism revenues.

So far these gains in bilateral relationship have been as a result circumstantial action. Both countries need to take proactive actions to jumpstart the stalled relations. This can begin through a high-level exchange and subsequent establishment of permanent bilateral ministerial level mechanism to review and push forward ideas and avenues of bilateral cooperation. Geopolitics in the region is rapidly changing as United States, China and India are tangled in a complicated phase of conflict and cooperation. Traditional understanding of ‘spheres of influence’ is rapidly evolving as technology, globalization, market forces and interplay between the three continue to produce complex scenarios. It is in the interest of medium sized and smaller states to collaborate to have their collective interests represented as big powers shape and reshape the global order.

As Bhutan seeks to exercise relatively independent foreign policy, it can do so by building an alliance with like-minded states like Nepal. But this will only gain meaningful traction by addressing the refugee saga in some manner. Since only a handful remain in camps now, Bhutan can offer to repatriate the remaining refugees under the same process agreed during JMC meetings and JVT mechanism. This will be a tokenism at best, from Nepal’s point of view too, one of the biggest fiascoes in its diplomacy, can have some dignified closure. Prime Minister KP Sharma Oli, during his first tenure as Prime Minister in 2015-16 had offered to locally assimilate the remaining refugees. Even if Bhutan accepts a handful as a goodwill gesture, there is political will in Nepal to have the rest locally resettled—permanently closing the camps. It will also help Bhutan salvage some reputation in the international forums. By agreeing to four verification categories during the joint ministerial meeting Bhutan has already accepted that some Bonafide Bhutanese may have been forcibly removed. Not just for states involved, this will also help close a chapter for thousands of Bhutanese refugees who have now become citizens of some other countries.

Bhutan can also benefit from these Diaspora communities, who may be Nepali speaking, but are Bhutanese at heart, nonetheless. The expertise they have acquired in last 12 years as residents and citizens of developed western countries can be used in the development process of the country. In addition, Thimpu can also tap into potential the remittance as many have family and friends in Bhutan. The remittances from over 100,000 Bhutanese refugees settled in developed countries can have sizeable impact on the economy.

Conclusion

Since the early 90s Nepal-Bhutan relations have been under the cloud of refugee saga – created due to eviction of Nepali speaking citizens from Bhutan. But that seems to be changing as interactions between the two sides increase. The two sides are close to finalising a trade deal that would see preferential treatment for goods from each other’s country. A much closer cooperation would be a win-win situation for both countries, yet breakdown of negotiations on repatriating Bhutanese refugees in 2003 continue to perpetuate an environment of mistrust between Kathmandu and Thimphu. Now that only a handful of refugees remain in the camps in eastern Nepal, it is imperative that both sides find a solution. This may be symbolic at best, yet it would remove a major barrier to fuller cooperation. An exchange of high-level visit coupled with establishment of ministerial level mechanism can help jumpstart the relationship.

References

Bhattarai, K. (21 December 2019). Two Himalayan Lands. The Annapurna Express. Retrieved from https://theannapurnaexpress.com/news/two-himalayan-lands-2111

BIMSTEC. About Us. 2019. Retrieved from https://bimstec.org/?page_id=189

D’Ambrogio, E., Johannes van der V. and Hannah N. (April 2019). Nepal, Bhutan and their neighbours. Briefing. European Parliamentary Research Service. Retrieved from  http://www.europarl.europa.eu/RegData/etudes/BRIE/2019/637908/EPRS_BRI(2019)637908_EN.pdf

Dhakal, S. (2003). Nepal – Bhutan relations: a study of its past). Journal of Himalayan Studies, University of Cambridge.

Human Rights Watch (May 2007). Last Hope: the need for durable solutions for Bhutanese sefugees in Nepal and India, 19(7c). Retrieved from https://www.hrw.org/sites/default/files/reports/bhutan0507webwcover.pdf

Kharka, D.S.. (November 2018). Dependence of Bhutanese economy on India: empirical analysis of inflation dependency. Journal of International Economics4(2), 4-20. 

Mahajan, S. (6 March 2018). India-Bhutan relations: past, present and future. South Asia Program at Hudson Institute. Retrieved from http://www.southasiaathudson.org/blog/2018/3/6/india-bhutan-relations-past-present-and-future

Ministry of Foreign Affairs Nepal. Nepal-Bhutan Relations. 2019. Retrieved from https://mofa.gov.np/nepal-bhutan-relations/

Morch, M. (21 September 2016). Bhutan’s dark secret: The Lhotshampa expulsion. The Diplomat. Retrieved from https://thediplomat.com/2016/09/bhutans-dark-secret-the-lhotshampa-expulsion/

Nepal: Foreign Policy and Government Guide Vol 1 (2009). International Business Publications. Washington, DC.

Himalayan News Service, (29 August 2019).  Nepal, Bhutan finalise draft of trade agreement. The Himalayan Times. Retrieved from https://thehimalayantimes.com/business/nepal-bhutan-finalise-draft-of-trade-agreement/ 

United States Department of State, Bureau of Democracy, Human Rights and Labor (2018). Country Reports on Human Rights Practices for 2018

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[1] ¹Imadol, Lalitpur, Nepal