When Prime Minister Modi first came into office, he made his first international visit to Bhutan which was soon followed by a visit to Nepal. This was accompanied with a warming of ties with Bangladesh.
The result of such diplomatic efforts resulted in more understanding between the four countries within SAARC, leading to further cooperation between them. One of the key outcomes was a SAARC Framework Agreement for Energy Cooperation to promote cross border electricity trade between the four countries.
For friendly countries like Bhutan and Bangladesh this was an opportunity to appraise and push the 1,125 MW Dorjilung project important to both countries. There was real potential for energy trade between the four countries which would benefit everyone.
However, the Ministry of Power in India in consultation with the Ministry of External Affairs has come up with ‘Guidelines on Cross Border Trade of Electricity,’ which threatens a lot of the diplomatic goodwill that has been built up between the four countries.
This is because the guidelines which were never consulted in the first place are inherently unfair to countries like Bhutan, who ironically is also India’s closest friend.
It seeks to maintain a strong Indian government grip over hydro investments, tariff rates and also the Indian energy market in complete favour of the Indian government and Indian companies to the detriment of other countries and especially so for the sole power exporter, Bhutan. The guideline while giving lip service to the SAARC Framework has no mention of trilateral or quadrilateral cooperation between the four countries, putting at doubt the entire Dorjilung project and others like it in the future.
Already there is reported unhappiness over the guidelines in not only Thimphu but also Dhaka and Kathmandu whose officials all seem to have been caught by surprise.
India is by far the largest country and the largest economy in the region set to become a global economic and military superpower in the coming decades.
India’s friendlier neighbors like Bhutan has always supported the rise of India, not only because of our old and deep ties of friendship, but also to contribute to and thereby gain from India’s economic rise.
Bhutan’s best bet here was our hydro exports to India which is why we have put all our economic eggs in this one basket. While it may be a big deal for countries like Bhutan it is just a drop in the Indian economic ocean.
Therefore, it beggars belief that New Delhi would put a tight rein on this economic drop from Bhutan, that would anyhow benefit India and hardly make a ripple on the surface.
China, for a while, has been aggressively courting the SAARC region with various incentives, but Bhutan has stuck by its friendship with India and will continue to do so for the foreseeable future.
However, given our democratic transition there has been a small but growing political faction within Bhutan that wants closer ties with various big powers. Petty moves like this will only play into their hands, and that too, just before the election season in Bhutan.
Don’t be afraid of failure; be afraid of petty success.