The Himalayan kingdom of Bhutan, nestled between rival regional powers China and India, will soon receive a high profile visit from recently reelected Indian Prime Minister Narendra Modi.

It’s the Indian leader’s latest mission in his official “neighborhood first” policy, a gambit aimed at counterbalancing China’s rising influence in a region New Delhi has long considered its sphere of influence.

The same policy took Modi to the Maldives in June, on his first overseas trip since being reelected in May. After the Maldives, Modi traveled on to Sri Lanka, another close neighbor.

In the Maldives, a new pro-Indian government has taken over from Abdulla Yameen, the previous president who had forged close links with China. In Sri Lanka, the current president, Maithripala Sirisena, is balancing Indian and Chinese influences after defeating the pro-Chinese president Mahinda Rajapaksa at an election in 2015.

But Bhutan is especially hotly contested in this China versus India tussle for influence that is reshaping South Asia’s diplomacy and strategic relations.

Indian Prime Minister Narendra Modi is advancing a “neighborhood first” policy to counter China’s rising Influence in South Asia. Photo: AFP

Bhutan is a long-time close India ally. In recent years, however, Beijing has launched an effective charm offensive to establish links with the small but strategically important nation – the only neighbor with which China does not share official diplomatic relations.

India’s “neighborhood first” policy may officially be aimed at “boosting regional connectivity through multi-modal transport systems”, as Modi has declared.

But it is also no doubt designed to counter China’s influence in India’s backyard. Towards that aim, India has a faithful new ally in another of China’s strategic rivals: Japan.

In May, India and Japan joined hands to help expand and develop the main port in Sri Lanka’s capital, Colombo, in a clear move to counter China’s Belt and Road Initiative (BRI) in the island nation.

The agreement came in the wake of Sri Lanka being forced to cede control of Hambantota, the country’s second largest port opened in 2010, in a debt-for-equity swap after failing to service its debts to China’s Export-Import Bank.

The Hambantota affair sparked accusations that China is leveraging BRI as part of a “debt trap” strategy to build and then secure control of strategic infrastructure across the wider region.

Bhutan may be a small country squeezed between India and China, but Beijing is bidding to win influence there, too – though more through “soft diplomacy” than BRI loans and grants.

Chinese and Indian soldiers side-by-side at a Himalayan border outpost. Photo: AFP

In recent years, Chinese circus artists, acrobats and footballers have traveled to Bhutan to entertain local grounds, while a rising number of Bhutanese students have been give scholarships to study in China. Inward-bound Chinese tourism has also expanded apace.

Although China and Bhutan do not maintain embassies in each other’s capitals, the two neighbors have held a series of still inconclusive talks over their shared and contested border.

Twenty four rounds of talks have been held since 1984, providing a diplomatic venue for the two sides to meet and discuss issues of mutual interest.

India has reportedly been watching these developments with concern and started to respond beginning in 2014. Modi’s upcoming visit to Bhutan will not be his first.

In July 2014, Bhutan became his first foreign stop after becoming prime minister earlier that year. China’s attempts to gain a permanent presence in Bhutan, in the shape of an embassy or other representation, was high on the Indian leader’s agenda.

Bhutan’s strategic importance – and precarious location between Asia’s two main regional and rival powers – came to an explosive head in June 2017, when Chinese troops began constructing a new road through Doklam, a swathe of land claimed by both China and Bhutan.

Source: Twitter

India responded by sending troops into the area, resulting in a high plain standoff that lasted several weeks. The incident put Bhutan between a rock and hard place, as it still relies on India to defend its interests.

But it was clear that the Himalayan kingdom did not desire to be a proxy in a wider conflict involving its two powerful neighbors.
The Bhutanese, a local website, stated on August 5, 2017 that “Bhutan does not want India and China to go to war, and it is avoiding doing anything that can heat up an already heated situation.”

The armed showdown lasted until August 28, when both India and China announced that they would pull back their troops from Doklam. But the withdrawal failed to resolve a dispute that drew a new front line between China and India with Bhutan in the middle.

China will find it hard to supplant India’s still strong influence. Bhutan’s special relationship with India dates back to an 1865 friendship treaty between Bhutanese rulers and the then colonial masters of British India.

In 1910, Bhutan and British India signed a treaty whereby the British Raj recognized Bhutan’s internal sovereignty while maintaining control over its foreign relations. Bhutan and independent India signed a similar treaty in 1949.

Bhutan’s way out of its de facto status as a protectorate of India began in 1963 with a new constitution that changed the monarch’s title from the Indian maharaja to the more indigenous druk gyalpo, underscoring that Bhutan was not among the former princely states of pre-colonial India but rather an independent kingdom.

In 1971, Bhutan, supported by India, became a member of the United Nations. Nevertheless, under the terms of the 1949 treaty, Bhutan agreed “to be guided by the advice of the government of India in regard to its external relations.”

That was the case until 2007, when a revised treaty said that the two sides shall cooperate closely on national interests that neither would allow its territory to be used for activities “harmful” to the “national security and interests” of the other.

Indian troops positioned at a pass along the India-China border in a file photo. Photo: AFP/Biju Boro

Protecting those “interests” – which in plain language means countering China – is a major reason why Modi has placed such diplomatic importance on Bhutan.

The “neighborhood first” strategy aims to tie Bhutan even closer to India through new infrastructure projects that open new land and river routes through the region.

In one such initiative, cargo was shipped for the first time this month from Bhutan via a connecting Indian river to neighboring Bangladesh. The 1,000 metric ton load of Bhutanese stones were transported by truck from Phuntsholing in Bhutan to Dhubri on the bank of the Brahmaputra river and then on by boat to Bangladesh.

Although not as rich and grand as China’s BRI schemes, the initiative is not insignificant. Sending cargo along this new land-and-river route would cut travel time from Bhutan to Bangladesh by 8-10 days and reduce transportation cost by 30%, according to a July 12 official Indian statement.

Japan is also extending aid to Bhutan, including for disaster relief related to landslides and rural development projects.

More symbolically, Japan’s Prince Akishino, the younger brother of Emperor Naruhito, is expected to travel with his family to the Himalayan kingdom in August. Japanese imperial family members are frequent visitors to Bhutan; Naruhito, then as crown prince, visited the country in 1997.

Japanese Princess Mako, center, visits a flower exhibition in Thimphu with Bhutan’s King Jigme Khesar Namgyel Wangchuck, right, and Queen Jetsun Pema, left, on June 4, 2017. Photo: Bhutan Govt/Pool

Modi’s “neighborhood first” policy towards Bhutan, the Maldives, Sri Lanka and Bangladesh, combined with converging interests with Japan, makes good strategic sense from India’s perspective.

At the same time, the policy may also deepen the mutual suspicion with which Asia’s two giants increasingly view one another.
Small, remote countries like Bhutan and the Maldives, on the other hand, risk being caught in the middle of a regional power contest which could easily spiral out of their control.

That does not augur well for a part of the world already grappling with its position in a new Cold War, with an increasingly assertive China on one side and a host of loosely aligned rivals including India and Japan on the other.