China Bhutan Border Talks

Context: Bhutan’s fifth King Jigme Khesar Namgyel Wangchuck is set to arrive in India at the invitation of President Droupadi Murmu, all eyes will be on his talks with Prime Minister Narendra Modi, and any possible discussions on the progress in Bhutan-China border talks.

This will be the first such high-level meeting between the two leaders since Bhutan and China’s talks on their boundary made rapid progress. Mr. Modi and Bhutan’s PM Lotay Tshering have spoken often on the phone, but last met for bilateral talks in Thimphu in August 2020.

The leaders were expected to discuss India’s support to Bhutan for its five year plans. At present, the Indian government’s assistance towards Bhutan’s 12th five year plan (2018-23) amounts to ₹4,500 crore.

Cause of concern

In October 2021, Bhutan and China signed a Memorandum of Understanding for a “three-step roadmap” to expedite border resolution talks.

The discussion centres on two valleys to Bhutan’s north and the Doklam area to the west of Bhutan, close to the trijunction with India, which was the site of a stand-off between Indian and Chinese forces in 2017.

India has been particularly watchful of any possibility of a “swap agreement” between the two countries that could affect its security at the trijunction.

In January 2023, Bhutan and China held talks in Kunming, and reached a “positive consensus” on how to move forward with the talks.

Earlier Bhutanese PM has in an interview to a Belgian newspaper has explained that he hoped to complete boundary demarcation talks on disputed areas in the next “one or two more meetings” and that a visit by a Chinese “technical team” was expected shortly in Bhutan.

The Bhutanese PM’s comments on discussing the Doklam trijunction dispute “trilaterally”, with Bhutan, India and China as “equal” interlocutors, set off a storm in Delhi

Border Dispute between Bhutan and China

Disputed region between Bhutan and China

Like the Sino-Indian border, the entire 477-km Bhutan-China border is also disputed. Significant Chinese claims range from three areas in western Bhutan, including Doklam, three regions in the north

Border talks between the two sides(Bhutan and China) began in 1984, and from the seventh round in 1990,China has continued to push a “package proposal”, which would see it concede its northern claims with an area of 495 sq km, in exchange for Bhutan agreeing to China’s western claims, including 89 sq km of Doklam.

Why China is pushing for Package Deal

There were two reasons for this.

First, adding territory in the west would help enlarge the narrow and strategic Chumbi Valley.
Second, possession of Doklam would give it a military advantage over India. The Doklam area is not of particular strategic significance for Bhutan, but it is important for India since it gets the Chinese to the Zompelri (Jampheri) ridge, which gives them a commanding view of India’s Northeastern jugular, also known as the Siliguri Corridor.

Breakdown of Talks

The two sides were very near for the finalisation of deal during the 10^th round of talks, however when the two sides met for their 11th round in November 1996, Bhutan backed off, and many believe that India played a role in this. So in 1998, China and Bhutan signed an agreement to freeze the border as of 1998, pending further talks
The problem for the tiny Himalayan kingdom is that, unlike, its neighbourhood, it is not very populous, with just some 750,000 people in an area of 38,000 sq km — a little smaller than Denmark but with one-seventh of its population. Its capacity to police its disputed borders is limited, as has been evident over the years that it has dealt with China.
In Asia, China sees Bhutan, where it does not yet have an embassy, as the last frontier. Having made inroads into Indian pre-eminence in Nepal, Sri Lanka and Bangladesh, Beijing would like to challenge New Delhi’s special relationship with Bhutan as well. Recent events, including Doklam and the revival of its claim in the eastern region, can be seen as systematic Chinese pressure to push the Bhutanese to comply with its demands.
Beijing’s surprise move came during a virtual conservation meeting in June, when it laid claim for the first time to Sakteng Wildlife sanctuary, which spans about 740 sq km (285 sq miles) in eastern Bhutan. Chinese foreign ministry explained that “the boundary between China and Bhutan is yet to be demarcated, and the middle, eastern and western section of the border are disputed”. The eastern section was an obvious reference to the Sakteng reserve.
Scholars believe that inclusion of Sakteng as a disputed territory by China, was an effort by the Chinese diplomacy to strong arm Bhutan, to bring it back on negotiation table and the diplomatic effort has yield a positive result for China.

The relationship between India and Bhutan

History of relationship between India and Bhutan

Ancient kingdom of Bhutan was originally the State of Monyul and also as the country of Drukpas or the ‘land of thunder dragons’.
India’s relations with Bhutan go back to 747 AD when a Buddhist monk Padmasambhava went from India to Bhutan and led the Nyingmapa sect of Buddhism India contributed to the cultural growth of Buddhism in Bhutan.
Among India’s South Asian neighbours, India’s relations with Bhutan remain a model worthy of emulation
The trust deficit shown by other South Asian neighbours is not visible in Bhutan’s attitude towards India.
Both have historically shared a very close relationship with each other.
A trusted partner: India Bhutan ties are governed by 1949 Friendship Treaty (amended in 2007)

1949 : India-Bhutan treaty of friendship & co-op : treaty’s origin can be traced to treaty of punakha.

When India became independent in 1947, Nehru went on a horseback to Bhutan to build relations and advised King J D Wangchuk to build relations with India.
Bhutan also preferred India over China as, in 1949, when China took over Tibet, it did create tensions and fears of annexation in Bhutan.
In 1949, India and Bhutan concluded a Treaty of Friendship.
Treaty stated Bhutan and India are natural partners with inseparable future.

The features of the treaty are :

Art. 1: India-Bhutan friendship is for all times to come.
Art. 2: Suggests that Indian government shall not interfere in the internal affairs of Bhutan, in return Bhutan gave an undertaking, that it would be guided by India in context of its external affairs.
Treaty provided for other special provisions like visa free travel, national treatment of goods etc.
states that both countries will ensure perpetual peace, friendship and protect each other’s national interests.
As per the precepts of national treatment, Indian citizens have same right for employment in Bhutan as Bhutani nationals do in India. The treaty has a special mention of a clause of extradition.

The 2007 Treaty : India’s Bhutan friendship treaty from a guiding role in Bhutan’s modernization, India & Bhutan moved forward now standing as “close friends” & the “equal partner” in the global arena.

Following Bhutan’s insistence, the 1949 treaty was revised. The article-2 of 1949 treaty was replaced.

Article-2 of 2007 treaty : replaced art-2 of 1949 which had replaced Bhutan would be guided by India in context of its external affairs/foreign policy matters.

Now it states : India and Bhutan shall co-op closely with each other on issues relating to their national interests/security. Neither govt shall allow the use of its territory for activities harmful to the national security & interest of the other.

Significance of revision of treaty

The 2007 treaty addressed any fears among Bhutanese Elite, against the possibility of India unfairly holding people hostage for its own geopolitical interests.

India anyways had never invoked article 2 of 1949 treaty in the past. If anything, the clause had been a Burden, for if allowed Indian adversaries to Accuse it of having hegemonic and expansionist ambitions.

Changing Dynamics of relationship between India and Bhutan

Friendship under strain: Though the friendship treaty is the bedrock of relationship it is ironical that Bhutan takes it with the pinch of salt. India’s big brotherly attitude in its neighbourhood is not taken well even by Bhutan. Though Doklam was a diplomatic victory but some political analysts branded it as India’s self-image as a protectorate.
Also, the political meddling, regime management and economic arm twisting (blockade in 2013) increases Bhutan’s mistrust for India’s intention
Biased strategic approach: Bhutan has often accused India of India first approach rather than a bilateral one. Bhutan sees itself a sovereign and often India’s sovereignty comes first anytime when there is instability in the neighbourhood. E.g. To India the most immediate concern is Chinese increasing incursion in the trijunction area in general and its physical presence in Chumbi valley in particular. Chumbi valley is very close to the Siliguri corridor (Chicken neck) to which if China gets complete access from Bhutan and its contested territory settlement; it can give a strategic edge to China threatening Indian sovereignty once and for all. That is why India held its ground during Doklam.
Also, China is expanding through Belt Road Initiative (BRI) a mega connectivity project with strategic implication for India particularly. The western contested China-Bhutan territory is essential for the project i.e. for the railway line from Lhasa-Shigatse to Nepal and later to Bhutan. Therefore, China is keen to swap northern part for territories in western Bhutan.
India sees Bhutan from a Chinese prism, increasing sensitivities on the Bhutanese side. Doklam upstanding of India was seen by many to protect its own interest not the territorial interest of Bhutan. Bhutan has become sceptical of India protecting its national interest as China looms larger in the region due to its growing military and economic prowess.
Economic Drift: India Bhutan economic ties are stronger but Bhutan now sees itself as a self-reliant economy which is being thwarted due to one sided Indian commercial policy. According to Bhutanese analysts, Bhutan’s economy has become auxiliary to India’s economic intervention model. The study has found that over 60% of government expenditure goes into the import of goods from India. Further, 75 per cent of the country’s external debt is accounted by hydropower loans and India accounts for 80 per cent of Bhutan’s exports.
India’s stranglehold over Bhutan’s economy along with unfair business practices often leads to economic crisis such as the debt and rupee crunch. The fundamentals of economic dependency including the hydropower projects are becoming subjects of debate, with the unfair tariff rates, time runs and a jobless growth.
The remedy they see lies in diversifying its economy from a hydropower based economy to Multi-diverse one and China has a great role to play in this diversification being an economic powerhouse.

Current issues: Bhutan has raised with India at the highest level, several issues related to the hydropower projects. They are:

New projects finalised as joint-venture with India have stringent financing terms (high interest rates) i.e. a 70:30 loan grant ratio.
India has become a power surplus country and questions have been raised in Bhutan about the availability of India’s market for Bhutan’s power exports.
Delay in execution of projects, issues related to Settling tariff rates and impact of GST, all such concerns need to be addressed at the earliest.
The 1200 MW Punatshangchhu-I , the 1020 Punatshangchhu-2 and 720 MW Mangdechhu project need to be completed at the earliest.
The Indian side witnessed massive flooding in the downstream state of Assam in 2014. Bhutan alleges today that due to hydro cooperation with India, there is a dominance of Indian firms in Bhutan.
It feels that an overwhelming presence of Indian firms in Bhutan has restricted the space of growth for the Bhutanese corporate sector.
The Indian firms end up recruiting cheap Bangladeshi labour, as a result of which Bhutanese don’t stand to benefit from the diplomacy.

Suggestions

Recalibrating the friendship: India should take Bhutan’s perspective of India’s dominant status in south Asia for a balanced approach in implementing the friendship treaty
It has to build Bhutan’s trust on India’s intention by following the treaty in letter and spirit and not on a chose and pick basis. The carrot and stick policy should be abandoned to rebuild the faith in the friendship treaty.
Strategic balancing: Bhutan and India, bilaterally should look at all matters of territorial incursions. India needs to develop a standalone Bhutan policy that is independent of Chinese lens.
Regional grouping: India-Bhutan should cooperate and coordinate their national interests. The BRI of China can have huge implication for sovereignty and security of both countries therefore both needs to connect by lessening the barriers.
The operationalisation of BBIN motor vehicle agreement (Bhutan Bangladesh India Nepal) can be good for starters.
Inclusive Economic ties: India has to make efforts to reduce Bhutan’s debt fears. Operationalisation of the pending projects can reduce the fears.
There is no harm in diversifying one’s economy and India should see it as a new opportunity to partner with Bhutan and help diversify its economy. It should transform its relation from an aid provider to an investment led developer. Skilling Bhutan’s youth, developing a bilateral tourism policy and increasing private investment can be helpful for both.

Way forward for India

Bhutan has supported the Indian stance on most issues except for a few affirmations of independent strategic policy making on a few occasions
Bhutanese politics, despite the transition to democracy, respect the monarchy heavily. For India, this is a major pivot to ensure continuity in India-Bhutan relations and mutually arrived at geopolitical stances
With our longstanding relationship with Bhutan, the Indian focus needs to be on contributing in areas that affect the populace more and in areas that are a priority for the man on the street
Such issues include education, healthcare, agriculture, development of the tourism industry
India already purchases hydropower from Bhutan and is committed to constructing additional hydropower projects in Bhutan
In fact, the sale of power to India is Bhutan’s biggest foreign exchange earner
India-Bhutan relationship has a huge ancient cultural linkage which needs to be leveraged. The revered Guru Padmasambhava associated with Vajrayana Buddhism that has a huge following in Bhutan was from India
The Indian approach to Bhutan has necessarily to be tailored while being sensitive to the growing Bhutanese aspirations of being considered as an equal.