[Burning Issue] India – Bhutan Relations after recent elections in Bhutan

Context

  • Tshering Tobgay will be new Prime Minister of Bhutan. Druk Nyamrup Tshogpa Party has won the recent general elections in Bhutan.
  • The National Assembly is the lower house of Bhutan Parliament. This is the third general election after democracy was adopted in Bhutan in 2008.

BHUTAN ELECTION BACKGROUND

  • Election to the House of Representatives also called the National Assembly, occurs in two rounds: the Primary Round and the General Round.
  • The first round, called the Primary Round, is contested by multiple parties. This year, four parties contested, two of which have existed from the first parliamentary elections.
  • The People Democratic Party (PDP) was led by a Harvard-educated former civil servant who was viewed as a popular political leader.
  • Opposing him was the Druk Phuensum Tshogpa (DPT), which formed the first democratic government, and was the opposition party in the last parliament.
  • The two new parties were the Druk Nyamrup Tshogpa (DNT), which was led by a popular medical doctor and social activist, and Bhutan Kuen-nyam Party (BKP), which is headed by the former chairperson of the Anti-Corruption Commission.
  • The parties did not vary substantially in terms of ideology or manifestos, but they represented their respective party leaders’ expertise and personal values.

India Bhutan Relations

  • India and Bhutan have had long-standing diplomatic, economic and cultural relations
  • Bhutan and India relations are governed by a friendship treaty that was renegotiated only in 2007, subjecting the Himalayan nation’s security needs to supervision.
  • Treaty of Friendship in 2007, which brought into the India-Bhutan relationship “an element of equality.”
  • The Treaty provides for perpetual peace and friendship, free trade and commerce, and equal justice to each other’s citizens.

India-Bhutan treaty of Friendship timeline

  • On August 8, 1949, Bhutan and India signed the Treaty of Friendship, calling for peace between the two nations and non-interference in each other’s internal affairs.
  • India re-negotiated the 1949 treaty with Bhutan and signed a new treaty of friendship in 2007.
  • The new treaty replaced the provision requiring Bhutan to take India’s guidance on foreign policy with broader sovereignty and not require Bhutan to obtain India’s permission over arms imports.
  • Under the 2007 India-Bhutan Friendship Treaty, the two sides have agreed to “cooperate closely with each other on issues relating to their national interests.”
  • Neither Government shall allow the use of its territory for activities harmful to the national security and interest of the other
  • A scheme titled “Comprehensive Scheme for Establishment of Hydro-meteorological and Flood Forecasting Network on rivers Common to India and Bhutan” is in operation.
  • The network consists of 32 Hydro-meteorological/ meteorological stations located in Bhutan and being maintained by the Royal Government of Bhutan with funding from India. The data received from these stations are utilized in India for formulating flood forecasts.

Importance of Bhutan

  • Bhutan in a buffer state between India and china. Bhutan shares a 470 km long border with China.
  • Strategic importance: The Chumbi Valley is situated at the trijunction of Bhutan, India and China and is 500 km away from the “Chicken’s neck” in North Bengal, which connects the northeast with rest of the country.
  • To contain the insurgency in North-East: Bhutan has in the past cooperated with India and helped to flush out militant groups like United Liberation Front of Asom (ULFA) and National Democratic Front of Bodoland (NDFB) from the Himalayan nation.
  • To check Chinese inroad in Bhutan: China is interested in establishing formal ties with Thimphu, where it does not yet have a diplomatic mission. Bhutan is strategically important for both India and China. Chinese territorial claims in western Bhutan are close to the Siliguri Corridor.
  • Beijing is reportedly insisting on Bhutan establishing trade and diplomatic relations as a quid pro quo for a border settlement.
  • Joint Group of Expert (JGE) on Flood Management has been constituted between India and Bhutan to discuss and assess the probable causes and effects of the recurring floods and erosion in the southern foothills of Bhutan and adjoining plains in India and recommend to both Governments appropriate and mutually acceptable remedial measures.
  • Bhutan is currently India’s only neighbour who has stayed away from joining China’s Belt and Road Initiative (BRI), but that may change if India can’t make itself an attractive ally and neighbour.
  • In the aftermath of the Doklam incident, Chinese vice foreign minister visited Thimphu to discuss a range of issues. It was at this meeting that Bhutan was invited to join the BRI and reap the “development dividends” – surely a tempting offer for a country looking to diversify its heavily India-dependent economy.

Commercial Relations between India and Bhutan

  • India is Bhutan’s largest trading partner. India and Bhutan have signed an Agreement on Trade, Commerce and Transit on 12th November 2016, which provides for a free trade regime between the two countries aimed at boosting the bilateral trade for mutual benefit.
  • The Agreement also aims at facilitating Bhutan’s trade with countries through an improved procedure for containerised cargo, striving towards use of electronic means to facilitate the movement of transit cargo, additional entry/exit points in India, etc.
  • Imports from India were Rs5,650cr accounting for 80% of Bhutan’s total imports. Bhutan’s exports to India stood at Rs3,270 cr (including electricity) and constituted 90% of its total exportsOne-third of Bhutan’s exports to India is electricity.
  • Other items of export include minerals such as ferro-silica (the Bhutanese have been complaining that these exports have been declining), cement and dolomite.
  • The Government is planning to build a mini dry port in the border town of Phuntsholing to promote exports, that are plagued by logistical difficulties due to the difficult terrain and poor connectivity. Bhutan sources the majority of its import requirements from India.

Impact of the election

India not a factor this time

  • In contrast to the 2013 elections, Bhutan’s relations with India did not figure prominently during the campaign by the four parties.
  • In the run-up to the 2013 polls, Bhutan was hit suddenly by high fuel prices, after India withdrew subsidies over kerosene and cooking gas. The Indian government claimed that the withdrawal was an “unfortunate technical lapse” due to the non-renewal of an agreement.
  • Despite Indian denials, the perception persisted that New Delhi wanted to ‘punish’ the ruling DPT for taking steps like the meeting of then prime minister Jigme Thinley with Chinese premier Wen Jiabao at Rio de Janeiro in 2012.
  • During that campaign, the PDP had accused the DPT of presiding over “deteriorating” ties with India. The DPT pushed back by asserting that relations with India should be kept “beyond and above party politics at all times”.
  • Five years later, India did not figure at all in the elections, beyond the general political consensus that relations have to be strengthened. This despite Bhutan having witnessed the armies of China and India standing eye-ball to eye-ball on its border region for 73 days in 2017.
  • In the DPT’s manifesto for the 2018 elections, the separate section on foreign policy mentions that the party “remains committed to maintaining and furthering the excellent relations with the people and the Government of India”.
  • If elected, the DPT had also pledged to execute at least three hydropower projects and “pursue others with the government of India”, with an emphasis on more balanced regional distribution of the mega projects. It has proposed to ramp up electricity generation from 1606 MW to a minimum of 10,000 MW in 2030.
  • The DPT had also stated that it would explore the “feasibility of using the Brahmaputra river port in India as a third-country exports and imports route for Eastern Bhutan”.
  • The DNT’s manifesto does not have a separate section on external relations, but India gets mentioned several times, especially in the context of diversification of the economy.
  • In the section on the economy, the DNT expressed concern over the export basket, with hydropower exports dominating this sector. The party claimed that since Bhutan’s economy is “driven by investments in the hydropower sector”, economic growth remains narrowly based and unable to create jobs for a young aspiring population. The party had also pointed out over 75% of Bhutan’s expanding external debt is accounted by hydropower loans.
  • “We are determined more than any other party to diversify the economy by accelerating private sector growth and investing in agriculture, mining, manufacturing and service,” said the DNT manifesto.
  • A similar concern in parallel with trade debt is the huge external debt, which currently stands at 170 billion BTN, or Bhutanese ngultrum, as of today. Of this amount, as per the State of the Nation Report (2018), hydropower loans comprise 132 billion BTN, while the rest is non-hydropower loan of 37 billion BTN. One ngultrum is worth one Indian rupee.
  • The DNT pointed to India accounting for an 80% share of exports from Bhutan as a weak point for the economy, which made it “highly vulnerable to exogenous shocks”.
  • The party also promised to review current fuel imports from India, so as to reduce dependence on fossil fuel and improve the balance of payment situation.
  • All the parties were silent over the BBIN motor vehicles agreement in their manifestos. The PDP government had tried to pass the relevant legislation, but it was defeated in the National Council. With popular opposition against the agreement, Bhutan withdrew from the agreement.

China factor

  • Until 2007, India had oversight over Bhutan’s relations with other countries. This changed after the two countries amended their friendship treaty, giving Bhutan full freedom to pursue ties with other countries.
  • While people in Bhutan are appreciative of the country’s close ties with India, there are those who feel that Bhutan also needs to establish diplomatic links with China, which has been trying to make inroads into the small country.
  • The debate on ties with China deepened following the Doklam crisis in June last year, which led to a standoff between India and China on the Doklam plateau.
  • The row arose when Indian border guards intervened as China was building a road in an area claimed by both it and Bhutan, close to a narrow stretch of land in India known as the Siliguri corridor.
  • The corridor connects seven north-eastern Indian states to the mainland. The issue was resolved after nearly a month.
  • China, of course, has so far been frustrated in wanting to have close diplomatic ties with Bhutan. But sooner or later Bhutan, despite the traditional friendship (with India), has to chart its own course in international affairs.
  • The sentiment echoes even today and Bhutan continues to dodge China’s courtship for formal diplomatic relations and a residential embassy in Thimphu. Bhutan’s leaders and policymakers are cautious about speaking openly about China.

Investing in trust

  • Bhutan has always been India’s most trusted ally in South Asia and has often put India’s security at the forefront. Come to think of it, in December 2003, Bhutan’s fourth king personally led the army to throw out Indian militants living in Bhutan’s jungles.
  • Bhutan was also the only South Asian country besides India not to attend China’s Belt and Road Initiative forum in May 2017. In other words, Bhutan has held its end of the bargain.
  • Unsurprisingly then, belligerent messages from Indian officials only serve to anger the Bhutanese who are now openly questioning India’s level of trust in its so-called best friend. Indian officials who claim the Chinese influence is increasing in Bhutan are wrong.
  • Bhutan’s contact with China remain the same, mainly to discuss the border issues. Bhutan, in fact, has never been tempted by the Chinese offers of development and technical assistance.
  • What India gives Bhutan in development aid is there for all to see, but what Bhutan offers India in strategic benefit, as a buffer along the northern border, cannot be put in figures.
  • Indeed, those in the corridors of power in Delhi do understand that Bhutan has saved India billions of rupees in defence spending.
  • Yet, India has not invested in Bhutan and other smaller neighbours that modicum of trust which is critical in building genuine goodwill.
  • This means not only increasing people-to-people contact but also being sensitive to Bhutan’s desire for a wider engagement beyond India’s borders. This means respecting Bhutan as an equal, sovereign nation state.

Conclusion

  • Bhutan’s leadership regards the Indo-Bhutan friendship as one “built on shared values and aspirations, trust and mutual respect, and a common dream of peace and prosperity for the people of the two countries”.
  • This means Bhutan’s foreign policy framework, which holds the relationship with India as being integral to its national interest, will not change no matter which party takes power in Thimphu.
  • The Indian approach to Bhutan has necessarily to be tailored while being sensitive to the growing Bhutanese aspirations of being considered as an equal.
  • The Bhutanese will also be loathed to be considered as just a pawn in the great game between India and China.
  • In the years ahead, their aspirations to have an independent strategic opinion as a sovereign state will recur more often.
  • Obviously, they will need to be treated as equals and as such integrated economically to ensure a better balance in mutual trade.
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