Nepal PM Greenlights China Rail Link Under BRI Just Before Losing Confidence Vote

In a dramatic turn of events, Nepal's Prime Minister Pushpa Kamal Dahal, known as 'Prachanda,' approved a significant agreement to connect Nepal with China by rail under the Belt and Road Initiative (BRI) just a day before losing a confidence vote in Parliament. This decision, finalized during a Cabinet meeting on Thursday, is aimed at strengthening development cooperation through the "Trans-Himalayan Multidimensional Connectivity Network" between Nepal and China.

The approval came as a surprise to many, especially given the imminent political upheaval. On Friday, Prachanda lost the confidence vote in the House of Representatives (HoR) after the Communist Party of Nepal-Unified Marxist Leninist (CPN-UML) withdrew its support. Prachanda received only 63 votes out of the 275-member HoR, far short of the 138 needed to maintain his position, with 194 votes cast against him.

Communication Minister Rekha Sharma, acting as the government’s spokesperson, emphasized the operational significance of the agreement rather than its political implications. “This is an initial decision; details of project implementation and BRI modalities are yet to be finalized,” Sharma explained.

Despite the political instability, this move is seen as a strategic step towards realizing key infrastructure projects under the BRI, such as the Kerung-Kathmandu railway. The project is expected to enhance connectivity and foster development along the Nepal-China border, contributing to broader economic growth.

The timing of Prachanda’s decision is critical, aligning with Nepal's longstanding involvement in Chinese President Xi Jinping's expansive infrastructure project. However, it also raises questions about the continuity and future direction of such initiatives under the new government, likely to be led by ex-prime minister K P Sharma Oli.

The BRI has been a contentious topic globally, with critics pointing to China's debt diplomacy, where massive loans are extended to smaller nations for infrastructure projects, often resulting in unsustainable debt burdens. Sri Lanka's Hambantota port is a notable example, leased to China on a 99-year debt-for-equity swap after Sri Lanka failed to repay the Chinese loans. This has fueled concerns over the potential financial pitfalls for Nepal.

India, a neighboring country with vested interests in the region, has voiced objections to certain BRI projects, particularly the $60 billion China-Pakistan Economic Corridor (CPEC) that traverses Pakistan-occupied Kashmir (PoK).

Prachanda’s administration had previously indicated a cautious approach towards BRI financing. Before signing a power-sharing agreement with UML, the Nepali Congress had insisted on accepting only grants, not loans, under the BRI framework. The government was also poised to revisit the 2017 BRI agreement with China, which had been pending cabinet approval.

As Nepal transitions to a new government, the future of its involvement in the BRI remains uncertain. However, Prachanda’s last-minute approval signals a continued interest in leveraging Chinese investments for infrastructure development, despite the broader geopolitical and financial concerns.

This development underscores the complex interplay between domestic politics and international diplomacy, highlighting how strategic decisions can be influenced by, and in turn, influence political fortunes.