TOPIC- EMERGING CHINA-BHUTAN AMITY AND THE CHALLENGES FOR INDIA

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THE CONTEXT: Recently, the Bhutanese Foreign Minister paid a visit to China to hold talks with the Chinese Foreign Minister to establish diplomatic relations and to conclude the boundary negotiations. This is seen as unprecedented on various levels as this visit is the first ever by a Bhutanese Foreign minister to China. This article analyses the various facets of China, Bhutan and India relations from the UPSC PERSPECTIVE.

THE HIGHLIGHTS OF THE RECENT MEETING

• China and Bhutan held their 25th round of boundary talks in Beijing and signed a Cooperation Agreement on the “Responsibilities and Functions of the Joint Technical Team (JTT) on the Delimitation and Demarcation of the Bhutan-China Boundary.”
• This advances their 3-Step Roadmap initiated in 2021 for border resolution, building on the positive momentum since their last talks in 2016.

What is the 3-Step Roadmap?

• The 3-Step roadmap MoU was signed by the Bhutanese Foreign Minister and Chinese Assistant Foreign Minister in 2021.
• Here, Joint Technical Team (JTT) aims to implement the roadmap by the Expert Group to draw a line clearly delineating Bhutanese and Chinese territory for the first time. The three steps are:

1. Agreeing to the border “on the table”

2. Visiting the sites on the ground

3. Formally demarcating the boundary

BHUTAN-CHINA RELATIONS

HESITANT DIPLOMATIC TIES

• Bhutan’s relationship with China is determined by its long-standing reservations about opening up to the world. Also, with China’s annexation of Tibet in the 1950s and the subsequent seizure of eight Bhutanese enclaves, Bhutan remains hesitant to establish ties with China.
• Till now, there has been very less number of meetings between both the countries. Bhutan’s bilateral relations with India and China can hardly be independent of broader China-India relations. Bhutan has thus maintained a special relationship with India and a largely neutral relationship with China without any diplomatic ties.
• Its foreign policy is determined by three factors: assuring territorial integrity and sovereignty, maintaining a balance of threat, and abiding by its self-interest.
• However, over the past two decades, Bhutan has been witnessing internal and external changes that are forcing it to settle its longstanding territorial disputes with China, diversify its foreign relations, and accelerate economic growth.

IMPROVING RELATIONS

• For China, diplomatic relations and dispute resolution with tiny-landlocked Bhutan is crucial for its status as an Asian power, and for improving its offensive position vis-a-vis India.
• Hence, bilateral talks began in 1984 where China explicitly narrowed the disputed region to two sectors: In the north, the Pasamlung and Jakarlung valleys; and in the west, Dramana and Shakhatoe, Sinchulungpa and Langmar Po valley, Yak chu and Charithang valleys, and the Doklam plateau.
• Later, Bhutan and China signed an MoU in 1988, finalised an agreement in 1998, and held 24 rounds of negotiations and 11 rounds of Expert Group Meetings (EGM) until 2016.

BORDER DISPUTES

• Starting in 1984, Bhutan and China started bilateral negotiations on their territorial disputes. In 1998, Bhutan suggested an expert technical group that will draw the boundaries by studying maps.
• By 2015, China and Bhutan had finished surveying the technical field survey reports of the Central and Western disputed sectors.
• Despite these engagements and efforts, Chinese intrusions in Bhutanese territories occurred on regular occasions.
• China had encouraged its citizens to settle in the disputed areas and built roads, infrastructure, and permanent settlements within Bhutanese territories.
• A similar intrusion in the Doklam trijunction in 2017 triggered a standoff between India and China. In July 2020, China made new claims in Bhutan’s east—in the Sakteng wildlife sanctuary.
• Between 2020-2021, several satellite images indicated that China is building new villages in Bhutan.

ECONOMIC ANGLE

• The domestic economy has provided an additional incentive for Bhutan to expedite the negotiations with China.  Bhutan now sees China as an inevitable and inalienable part of the new world order for its path to recovery and reforms.
• As a result, China’s exports to Bhutan have increased from ~2 billion in 2020 to ~15 billion in 2022.
• The youth exodus triggered by structural issues and the lack of opportunities has further necessitated the need for reforms.
• Bhutan’s imports are intense with capital and machine goods, durable items, and everyday appliances, indicating that as Bhutan grows, so will its reliance on China. Therefore, Bhutan has been hinting at ending the dispute and opening diplomatic relations with Beijing in recent years.

 INDIA’S PERSPECTIVE ON THE MEETING

• With respect to these developments, India has maintained a strategic silence, indicating that it understands Bhutan’s situation and does not anticipate these developments to harm its interest. This demonstrates its trust in this special relationship while understanding Bhutan’s security and economic challenges.
• India is respecting sovereignty of both the countries, and it has always held that an agreement between Bhutan and China is the sovereign decision of the two countries. India understands the situation and affirms that this is not a coalition against India’s interests, as even if the position does not remain identical to India Bhutan will remain mindful of Indian concerns.
• Also, solving the border issue between Bhutan and China is favourable to India as well for its security and sovereignty reasons.

INDIA-BHUTAN RELATIONS

HISTORICAL RELATIONS

• India and Bhutan have shared a cordial friendship for years. India and Bhutan enjoy a multifaceted relationship which are characterised by understanding and unique ties of friendship and cooperation.
• There is close consultation and co-ordination between the two sides with mutual interest. This “special relationship” is governed by the Indo-Bhutan Friendship Treaty of 1949, which was later updated in 2007.

BUFFER STATE

• Bhutan is not just a neighbour, but a very important and strategic one. Its border with India is over 600 km long, and it plays the role of a buffer between China and India.
• India views Bhutan as a “buffer” state against China’s aggression and military adventures.
• Its adjacent location to the Siliguri Corridor or “chicken’s neck” which connects India to the rest of the North East Region (NER) has reinforced and strengthened these anxieties over a Chinese invasion and a potential isolation of the NER from the rest of the mainland.

INDIA AS EQUAL PARTNER

• Article 2 of the treaty, which earlier stated that Bhutan would be guided by India “in regard to its external relations”, was revised in 2007. It now says that the two sides will cooperate “closely with each other on issues relating to their national interests”.
• India does aim to have Bhutan as an equal partner, as also mentioned in the Friendship Treaty of 2007. It lays emphasis on “perpetual peace and friendship, free trade and commerce, and equal justice to each other’s citizens” between India and the Himalayan kingdom.

ECONOMIC RELATIONS

• India is Bhutan’s biggest development partner. India is the largest source of imports for Bhutan. India imports nearly 70% of Bhutan’s total exports, and their trade has increased from ~94 billion in 2020 to ~134 billion in 2022.
• India’s assistance with hydropower projects and Bhutan’s hydropower exports form a significant component of this economic relationship.
• Similarly, India has offered assistance of nearly 4,500 crores for Bhutan’s current five-year plan.

SECURITY RELATIONS

• Bhutan is also the only South Asian country that has consistently respected India’s security concerns and has resisted joining either projects linking China’s Belt and Road Initiative (BRI) in the region or other forms of assistance such as grants and loans.
• Therefore, India’s policy has also tried to accommodate Bhutan’s interests in order to sustain their economic integration and pursuit of common security goals. Both countries also enjoy close security cooperation.
• The Indian Military Training Team continues to train Bhutanese soldiers, and the 2007 agreement legally obliges both countries to respect each other’s interest.

CULTURAL RELATIONS

• Bhutan is a constitutional monarchy and one of the last remaining sovereign Himalayan kingdoms, whereas India is a democracy.
• Despite their differences, both countries share an enduring relationship which is deeply rooted in history, spirituality and common values of Buddhist philosophies.

INDIA’S FOREIGN POLICY

• India and Bhutan relations are also guided by India’s foreign policy, and it aligns with India’s Neighbourhood First policy.
• India’s neighbourhood policy focuses on peaceful relations and collaborative synergetic with its South Asian neighbours.

 INDIA-CHINA RELATIONS

COMPLEX RELATIONS

• India and China share a complex relationship with lots of ups and downs. Though, both countries have established various dialogue mechanisms at different levels to discuss political, economic, consular, and regional issues. India was the first non-socialist bloc country to establish diplomatic relations with the People’s Republic of China in 1950. Both countries have jointly advocated the Five Principles of Peaceful Coexistence.
• Despite these, both countries does not have peaceful relations, and there is a constant struggle on various fronts.

TRADE

• Bilateral trade has grown significantly, reaching US$100 billion by 2022, with India becoming a large market for project exports from China.
• Also, the economic relations between India and China have undergone significant changes in the past two years.
• India has emphasized that it cannot be business as usual while tensions persist along the border. As a result, tighter restrictions have led to a decline in Chinese investment in India.

IMPORT DEPENDENCE

• India’s significant reliance on Chinese imports has resulted in a substantial trade deficit of $100 billion between the two countries. Annual two-way trade exceeded $100 billion in 2021, with India’s imports accounting for the majority.
• China accounted for over 5% of India’s total exports and more than 14% of imports.
• According to sources, a staggering 70% of electronic components, 45% of consumer durables, 70% of Active Pharmaceutical Ingredients (APIs), and 40% of leather goods come from China.
• Products such as fertilizers are 76% cheaper, electronic circuits 23%, and data processing units around 10% cheaper if made in China.

UNSC ISSUE

• China has repeatedly blocked India’s permanent membership of UNSC. It has also supported and blocked at the United Nations Security Council to designate Lashkar-e-Taiba and other Pakistan-based operatives as international terrorists.
• China believes that granting India a permanent seat at the UNSC will lead to Indian interests being of paramount importance in the geopolitics of the subcontinent,

SIMILAR CULTURE

• Both India and China same similar culture as being part of Asian civilisation. Also, both countries got the independence at the almost same time and share the colonial impact.
• China and India share common thoughts on the future and destiny of mankind.
• The Chinese people have cherished the vision of “a world of fairness and justice for the common good” since ancient times. Ancient Indian literature also records the motto of “Vasudhaiva Kutumbakam”.

BORDER ISSUES

• Two countries share a long border that isn’t fully demarcated, and have overlapping territorial claims. India says it is 3,488km long; China puts it at around 2,000km.
• India-China relations have gone through cycles of conflict and cooperation over nearly 75 years.  There have been several instances of conflict and tensions over the last few decades, including the 1962 Sino-Indian War and border clashes that occurred as recently as 2021 and continue to this day. For example, there is constant issue of Border in Arunachal Pradesh and Doklam.
• Two sides should seize historical opportunities, complete the important process as soon as possible, and designate and develop the friendly relations between the two countries in legal form,

USE OF CHINA’S CURRENCY

• Recent tussle over payment to Russia for oil in Chinese currency yuan amid Russia-Ukraine war has raised another concern in India-China relations.
• India is seeking immediate alternative to reduce its dependence on China to continue trade relations with Russia.

THE CHALLENGES FOR INDIA

With Bhutan’s normalisation of diplomatic relations with China, India will face a new set of challenges.  Some of which are mentioned below:

SECURITY CHALLENGES

• Considering growing relation between China and Bhutan and both moving towards border demarcation can have security challenges for India because of the strategic location of Bhutan.
• One of the important area involves of Doklam which overlook India’s “Siliguri corridor”, if Bhutan and China consider a “swap” between territories in the valleys of the north and on the Doklam plateau in the west.
• It will have huge security implications for India as the Doklam trijunction cuts very close to India’s Siliguri corridor a narrow area that connects the North Eastern States to the rest of India.

DIPLOMATIC CHALLENGES

• By establishing diplomatic relations with China, Bhutan will be the latest and the last South Asian country to enter the competitive India-China dynamic.
• And China has already hinted at new areas of economic, cultural, and people-to-people cooperation following the establishment of diplomatic relations with Bhutan.
• This shows that an emerging new phase of relations will also call for fresh redlines between India and Bhutan. If Bhutan establishes formal diplomatic relations with China, it could affect its traditional pro-India foreign policy and challenge India’s influence in the region.

ECONOMIC IMPLICATIONS

• Bhutan and India have a strong economic partnership, mainly based on hydropower cooperation. India is Bhutan’s largest trading partner and the biggest source of foreign direct investment, aid and loans.
• India also imports most of Bhutan’s surplus electricity, which accounts for about 40% of Bhutan’s revenue. If Bhutan diversifies its economic ties with China, it could reduce its dependence on India and affect India’s economic interest.

INFRASTRUCTURE AND CONNECTIVITY

• Bhutan’s participation in China’s Belt and Road Initiative might have implications for regional infrastructure development and connectivity.
• India has concerns over the BRI’s strategic and security implications as it can hurt India’s security and sovereign interest.

INFLUENCE IN REGIONAL ORGANIZATIONS

• Bhutan’s alignment with China could impact India’s influence in regional organizations like the South Asian Association for Regional Cooperation (SAARC) and the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC).

 THE WAY FORWARD

• India’s stand: India should strive to understand Bhutan’s reasoning and motivations in its dealings with China. India should respect Bhutan’s sovereignty in dealing with any other countries until it is not harming India’s interests. India must also not allow hyper-nationalism and its antagonism with China to pressure Bhutan. India’s time-tested ties with Bhutan have always anticipated each other’s interests before taking any step that could affect their long-cherished partnership.
• Diplomacy and dialogue: India should continue diplomatic engagement with Bhutan with an open and transparent communication to maintain trust that has been built over the years. This collaborative approach will strengthen the long-standing friendship between the two nations.
• India’s foreign policy: The new phase of cordial diplomatic relations between Bhutan and China calls for the establishment of fresh relations between India and Bhutan.
• Resolving border disputes: India should work closely with Bhutan and China on border negotiations. There should be a mutually acceptable border deal that addresses all three countries interests for a win-win situation.
• Use of multilateral forums: India and China are both members of BRICS, SCO, WTO etc, which reflect common agenda for growth and development.  There is a need to use these forums to resolve each other’s differences with efficient dialogue.
• People to People: There is a need to build people-to-people relationships with Bhutan as the younger Bhutanese are conscious of the importance of the Indian relationship. Bhutan-India relationship has survived mainly because it was built on mutual trust, which means Bhutan has equally driven the relationship. This needs to be continued by reaching out to younger generations.

THE CONCLUSION: The recent visit of Bhutan minister to China underscores increasing signs of normalisation of relations between the two countries. India must approach the boundary negotiations with a greater understanding of Bhutan’s reasoning, and with confidence that India’s long-trusted neighbour will take both India’s interests and its own into consideration before any final agreement.

MAINS QUESTIONS

Q.1 In the context of emerging normalisation of relation between Bhutan and China, India-Bhutan-China relation is set to face another challenge in the new world order. Comment.

Q.2 What are the potential implications of Bhutan-China relationship on the India-Bhutan relations? What steps India should take to balance the relation while prioritizing security, economic diversification, and regional diplomacy?