Is Nepal's Oli risking his coalition government with Chinese deals for nothing?

Nepal’s Prime Minister KP Sharma Oli has chosen to align the Himalayan nation closely with China.

His stance became clear when he picked China for his first diplomatic visit abroad since assuming office in July. The signing of Nepal-China agreements under the Belt and Road Initiative (BRI) has further highlighted the closeness he wants Kathmandu to build with Beijing.

The agreements look ambitious on paper. But are they truly serving Nepal’s interests? Or is Oli jeopardising his fragile coalition government and the nation’s long-term stability for lofty promises that might crumble under the weight of debt and unfulfilled expectations?

Looking at Nepal’s past experiences with China provides great insight about this.

A risky gamble with Chinese deals

During Oli’s latest visit to China, he finalised a framework agreement for BRI projects. While this is a new development, the deal itself is not. In fact, the initial signing between Kathmandu and Beijing took place seven years back in 2017.

The delay happened because a framework for cooperation had not been set as Nepal struggled to get consensus from its political parties.

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While the agreements have been signed, debt concerns have spurred debate within Oli’s coalition government.

The situation is not very different right now, though. Nepali Congress party, a key supporter of Oli, is opposing any project funded by loans.

Debt and differences within the ruling coalition are big problems, but not the only ones.

India, a significant ally of Nepal, views China as a rival nation and has tried to limit Beijing’s influence on Kathmandu.

The Pokhara airport fiasco shows the risk Nepal is taking with China-backed infrastructure.

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Pokhara airport fiasco

China has loaned Nepal $216 million to build an international airport in Pokhara, the second-largest city about 125 km (80 miles) west of Kathmandu, which began operating last year.

But the Chinese-built airport, claimed by Beijing as a symbol of Belt and Road success, has grappled with problems such as a lack of international flights, due to India’s refusal to let planes use its airspace.

This raises uncomfortable questions: Did Nepal’s government factor in the strategic realities of its dependence on Indian airspace? Why should Nepali taxpayers bear the brunt of a debt-ridden project that serves as little more than a Chinese trophy?

Is Oli playing on shaky ground for no returns?

Oli’s coalition government is held together by tenuous alliances, and his China-centric policies are already sowing discord.

Abroad, there is the risk of upsetting a key regional ally that has stood on Kathmandu’s side against Chinese belligerence on multiple occasions.

So, is Oli willing to sacrifice domestic harmony for international optics? Has he truly assessed the cost-benefit ratio of these deals- both domestic and international?

The answer doesn’t appear to be in Oli’s favour.

With inputs from agencies