Ongoing tensions between India and China over the territorial dispute in the Doklam region between China and Bhutan highlights the foreign policy challenges that Bhutan faces and we expect these challenges to persist as both China and India seek to expand their respective spheres of influence. With concerns rising within Bhutan over the scope of India's influence, Thimpu will likely seek to gradually develop relations with China to counterbalance India.
Bhutan has historically leaned towards India, having historical, economic, and cultural ties with New Delhi. However, ongoing tensions between India and China over the territorial dispute in the Doklam region (which both China and Bhutan claim) have led some in Bhutan to question the extent of New Delhi's influence over Thimpu. On June 18, Indian troops crossed the border with China in the Doklam plateau to interrupt China's road building activities while Bhutan remained silent, only issuing a statement ten days later. We believe that Bhutan is likely to come under greater pressure over the coming years as both China and India seek to expand their respective spheres of influence. With domestic concerns rising over Thimpu's relationship with New Delhi, we believe that Bhutan will seek to develop bilateral ties with Beijing in a bid to counterbalance India's historical influence in the country.
Summary Of Events
Sino-Indian border tensions are not unusual, and recent escalations have largely been resolved peacefully. However, the latest standoff that started on June 18 appears to have been the result of India acting on Bhutan's behalf instead of defending Indian territory. As such, we believe that India's moves suggest that it is seeking to protect its existing sphere of influence, with New Delhi claiming that it sent its troops into Doklam to protect Bhutan. Conversely, Beijing has accused India of entering China's territory illegally. In response, Bhutan's foreign ministry issued a statement on June 29, almost ten days after India moved its troops into the disputed territory, stating that China's road construction was a 'direct violation of the agreements'.
In its statement, the Bhutanese foreign ministry noted that boundary talks are ongoing and that both sides have written agreements to 'maintain peace and tranquillity in the border area pending a final settlement on the boundary question and to maintain the status quo on the boundary'. The agreement also noted that 'both sides will refrain from taking unilateral action, or use of force, to change the status quo of the boundary' and that Bhutan hoped that 'the status quo in the Doklam area will be maintained'.
Thimpu's Muted Response Suggests Unwillingness To Back Either Side
We note that Bhutan's response was rather measured, having omitted the presence of Indian troops and stopping short of explicitly condemning Chinese actions. This suggests that Thimpu is unwilling to escalate the conflict and could be looking to pursue its own agenda and seek to resolve the standoff through diplomatic means.
Bhutan's strategic location means that it has long been caught between China and India, with both countries viewing influence in Bhutan as necessary to their security interests. India views the Doklam plateau as vital to its security interests, as that is where the Siliguri Corridor (a narrow stretch of land known as the 'chicken neck' that connects India's north-eastern states to the rest of India) is located. This narrow strip of land is of strategic importance to both China and India, as it would enable the Chinese military to cut off India's land access to the latter's Seven Sister States (in the event of hostilities), should China control the area. In addition, the building of the road could also enable the Chinese army to exert a greater influence in both Bhutan and India's Sikkim region.
|Asia - China, India And Bhutan|
While Thimpu has historically sided with India due to historical and cultural reasons, there have been rising calls within Bhutan for the country to shift away from its overreliance on New Delhi and to adopt a more autonomous foreign policy. With elections set to occur in 2018, we believe that the issue of foreign relations, especially with India, is likely to be a hotly contested issue. Some within Bhutan fear that India's move in Doklam could be viewed as a step towards the reversion of Bhutan to an Indian protectorate as it was under the British Empire. As such, the government is likely to heed calls to gradually shift away from India and seek to strengthen relations with other countries.
Indian-Bhutan Ties To Remain Good
That said, it will be extremely difficult for Bhutan to completely shift away from India due to its economic and political reliance on its larger neighbour. Throughout history, Bhutan has depended heavily on India, with the landlocked country being tied to New Delhi through a series of treaties signed in 1910, 1949, and 2007. On the economic front, India remains Bhutan's largest trade partner, accounting for 75% of total trade and is a key purchaser of Bhutan's electricity. Hydroelectricity remains Bhutan's main economic engine, accounting for 8.0% of GDP in 2016 and we expect it to remain the mainstay of the economy over the coming years as the Bhutanese government continues to invest heavily in the sector. As such, Bhutan will be hard pressed to wean itself off its economic reliance on India.
In addition, Bhutan is dependent on India for foreign aid as well as for its security, with India both training and paying the salaries of the Royal Bhutan Army. Furthermore, the Border Road Organization, an outfit affiliated with the Indian Army, has built roads all over Bhutan.
However, we believe that Thimpu recognises that it will come under increasing pressure over the coming years as Sino-Indian rivalry in the region intensifies and expect Bhutan to seek to improve relations with China in a bid to counterbalance India (see 'Sino-Indian Himalayan Standoff Portends Rising Long-Term Tensions', August 7). In recent years, China has been actively seeking to improve relations with Bhutan, which is the only neighbouring country that Beijing does not have diplomatic ties with. It appears that Thimpu has responded well to lower level diplomatic initiatives, with reports suggesting that talks between China and Bhutan over their border dispute have been smooth and peaceful. Bhutan's rather muted response to China's road building also suggests that it could be seeking to mend relations with China while maintaining its relationship with India, boding well for the longer term trajectory of Sino-Bhutan relations.