Nepal’s Foreign Minister Ramesh Nath Pandey was back Tuesday from his 11-day visit to China and Finance Minister Madhukar SJB Rana left the capital the same day for a visit to the same northern neighbour. Nepal is in a budget crunch because of the worsening economic and security situation. The government was reported to have asked for Rs 3 billion from China as a budgetary support. China announced a grant of about Rs 870 million. These are testing times for Nepal’s domestic and foreign policies indeed.

There were reports of many Nepalis building their houses across the border in India because of the deteriorating security situation in the western Terai districts where the Indian currency was in short supply as a result. This may just be a trickle now turning into a torrent of money flight.

India and China have strategic interests in Nepal. Respect for our independence, sovereignty and territorial integrity commonly accommodates the interests of the three countries. However, we in Nepal cannot take such a respect for granted, nor can we remain complacent about it as it does not necessarily provide sufficient guarantee to our security. The lack of equitable social and economic development can result in a severe internal instability. True security requires first a stable, progressive society internally and, secondly, a peaceful, comparatively friendly environment outside, both regional and world-wide.

However, in this most unfortunate situation for Nepal, the parties that have a serious responsibility are in a state of confusion, as they are in organisational disarray and in the process of fragmentation.

World powers like the US and the UK are also interested in Nepal probably because they are interested in our neighbours more than Nepal itself. Both the Asian giants attract much greater attention from them. As they are concerned about the situation in Nepal, it may not be totally surprising if they seek the solution to our problem in consultation with our neighbours rather than with us.

Howsoever undesirable that may be for us, there are already such indications. Our strategic location has its own advantages as well as disadvantages. There seem to be misgivings in India that Nepal often tries to play the so-called ‘China Card’ but Nepal knows that India and China, with their much larger geographic size and population and their rapidly growing economic, political and military power, have much greater interests in each other than they may have in Nepal. They share a much longer border with each other than they do with Nepal. The visits to India by the Chinese Premier Wen Jiabao, followed by the army chief Lian Guanglie, and the agreements and joint communiqués a few months ago were indications enough of such interests. Sandwiched as we are between the two giants, we can only make a plea to them for a better understanding of our sensitivities.

Regarding the so-called ‘China Card’, we are also reminded of what a veteran Nepali diplomat said: “The Chinese are realists. They recognise that the relations between Nepal and China, between Nepal and India and those between China and India are basically independent. Each of them has its own logic of development. Each must be pursued on its own merit. The Chinese leaders value Sino-Nepalese friendship and respect our independence and sovereignty.

Again, however, much they value Sino-Nepalese friendship, they are realistic enough to recognise that this friendship cannot be a substitute for either Indo-Nepalese friendship or Sino-Indian friendship. As they are working independently to improve their relations with due respect to the sensibilities of their friends with a hard look at their own national interest, so they expect us to do the same in our pursuit of relations with India.” Sino-Indian ties are improving, and we welcome such developments. Cross-border trade between the two countries is growing in geometric proportions. Nepal can also be a transit point for Sino-Indian trade. We would like only to see that our great neighbours do not pursue their relations at the expense of Nepal. The recent reports on the Kalapani and Susta area are a matter of concern for the Nepalis.

Nepal has extensive relations with India dictated by geography, culture, languages, and economic and trade relations. These relations are only roughly comparable to the US-Canada relations but not quite so. Ours are much more complex relations. Such extensive relations are naturally bound to have ups and downs. Open border between the two countries makes things very easy and complicated at the same time for the people on both sides of the border. But all the problems that may arise in such relations can be, and have to be, resolved amicably. It is often said that we may choose our friends but not our neighbours.

Acharya is a former Nepali PR to UN