Challenges for the new government in Bhutan

New Government, Old Challenges:

On January 25, 2024, Bhutan's National Assembly elected Hon. Lungten Dorji as Speaker and Hon. Sangay Khadu as Deputy Speaker and on January 28, 2024, His Majesty the King conferred Dakyen onto the Prime Minister, Speaker of the National Assembly, and government Ministers, establishing the Royal Government of Bhutan's new government [2]. The liberal-oriented PDP had gained 30 seats, with the Bhutan Tendrel Party securing the remaining 17 in the country's 47-member parliament. In a preliminary round of voting in November, the ruling center-left Druk Nyamrup Tshogpa (DNT) party was ousted, and voters chose two of five parties to compete in the final election on January 9. Historically, the voters have voted out the incumbent administration in each of the country's four national elections since it adopted a parliamentary system [3].

This election took place against the backdrop of devastating problems to the country's three-billion-dollar economy, including a staggering youth unemployment rate and a record "exodus" of job-seeking young people to foreign countries [4]. Tobgay faces the problem of reviving the economy which was negatively impacted due to the COVID-19 pandemic and providing jobs to keep young Bhutanese from moving abroad, in search of better prospects. Furthermore, on the geopolitical front, Bhutan continues to be in the middle of two major powers and an ongoing border situation. On one hand, given Bhutan has strong economic and cultural ties with India and is its largest donor and trade partner, PM Tobgay has expressed his desire to preserve a close relationship with the country. On the other hand, although it does not have formal diplomatic relations with China, but it is in talks with Beijing to address border concerns, which India is closely watching [5]. In October 2023, Bhutan and China convened their 25th round of discussions in Beijing to resolve a boundary issue spanning 477 kilometers. If a settlement is reached, Bhutan and China are anticipated to establish formal diplomatic relations [6].

Post-Pandemic Economic Challenges:

Despite Bhutan's excellent advances in health, education, and infrastructure over its 15-year democratic journey, there is growing worry about translating these efforts into actual economic gains and effectively addressing youth unemployment. The 2019 United Nations Development Programme report highlights Bhutan's human development achievements, but economic concerns remain [7]. The economic situation also suffered heavily due to the pandemic and continues to struggle in a post-pandemic landscape. Though the country is no longer on the UNGA's list of least developed countries (LDCs), economic statistics indicate that it is far from prosperous. The pandemic heavily impacted its tourism industry which was a significant source of foreign cash and continues to struggle to reach the pre-COVID level of tourist influx. Further exacerbating the situation are rising oil costs, inflation, economic downturns, and job losses. The former government explored some economic diversification schemes, including a special economic zone near the Indian border, and plans to raise funding for a cryptocurrency mining scheme with a Singaporean company. The government continues to focus on its hydropower and tourism sectors, which produce cash from outside the country [8].

The 2024 elections therefore focused on crucial topics such as youth unemployment, economic growth, a dwindling private sector, poverty, migration, and a declining fertility rate. Notably, Bhutan's youth unemployment rate rose from 20.9% in 2021 to 28.9% in 2022. Both the PDP and the BTP have issued comparable manifestos, promising to address these issues, particularly the alarming trend of trained people fleeing abroad. In the last year alone, about 15,000 Bhutanese people, including professionals and skilled workers, have fled the nation, putting a burden on public service delivery in critical institutions like hospitals and schools [9].

Continuous Chinese Challenge:

Despite no formal diplomatic ties, Bhutan and China have shared borders since 1951, when Tibet became Chinese territory. Following the Dalai Lama's escape in 1959, Bhutan, a devout Vajrayana Buddhist kingdom, sealed its border with Tibet. However, in 1984, both countries began negotiating territorial dispute resolution, and 25 rounds of consultations were held till October 2023. Here the bilateral MoUs signed in 2012 and 2021 also accelerated the border talks. With diplomatic talks underway, China used Mao Zedong's tried-and-true tactic of "tan, tan, da da" [talking, talking, (but) preparing for war]. This is speculated as China steadily developed settlements, and mercantilist strategies of aid, loans, and coercive diplomacy, converting the 477-kilometer-long frontier into a potential conflict zone [10]. In recent years, the boundary dispute has been aggravated by the construction of permanent facilities within Beyul Khenpajong by China, which happens to be ancestral lands for many Buddhists as well as the Bhutanese royal family [11]. Satellite imagery acquired in December 2023 shows China continues to illegally cut up northeast Bhutan by building townships along a river valley in Beyul Khenpajong as Bhutan is left with no choice but to watch China continue to salami-slice its northern, western, and southwestern boundary, a pattern of unlawful land grabs seen across the Himalayan border. Beijing's construction effort comes despite continuing border talks with Bhutan, and the scale of the construction there and in the adjoining Jakarlung region suggests that Beijing may be too far along to consider withdrawing from these areas. The significance of this region was highlighted by Chatham House’s John Pollock and Damien Symon, stating that "The royal family traces its ancestral heritage to the mountainous region, yet the government has been powerless to stop Chinese settlement there" [12].

Furthermore, China began developing "well-off society" communities at Gyalaphug (on the Doklam Plateau in 2015) alongside numerous other sites, and later in June 2020, began claiming 650 square kilometers of the Sakteng Wildlife Sanctuary in Bhutan's eastern district of Trashigang. Bhutan believes that these channels will give China's military access to Bhutan and can also send Chinese migrants to assist in regional dominance attempts. Additionally, China's Power Construction Corporation is involved in two hydropower projects: Chukha and Punatshangchu. Sinohydro Corporation, China Gezhouba Group, China Road and Bridge Corporation, and other Chinese state-owned enterprises are also involved in numerous construction initiatives in Bhutan, while China Railway Eryuan Engineering Group Co is looking into railway connectivity via the Lhasa-Gyantse route. These Chinese firms also constructed the 220-kilometer Friendship Highway in 2008, the 290-kilometer Lateral Road in 2013, the 100-kilometer Gelephu-Gomtu Road in 2016, and the 60-kilometer Wangdue-Trongsa Road in 2017, in addition to mining operations of copper and gold. China also dominates Bhutan's critical telecom sector, which includes the installation of fiber optic cables, the expansion of mobile networks, and the establishment of internet access points. Since 2009, Huawei has been active in Bhutan's 3G and 4G telecom networks [13].

Unlike Doklam, which is close to India and where the PRC has pushed ahead with the construction of roads and bunkers, control over Beyul Khenpajong would have no “strategic relevance” in the case of an India-China conflict. Here, Ambassador Phunchok Stobdan is of the view that the spiritual importance of the region for the Drukpas and Nyingmapas living on the Tibetan side could be used by China to gain support. Alternatively, by strengthening its grip on the Beyul, China can persuade Thimphu to accept the previously rejected package proposal (in which China offered to recognize Bhutanese sovereignty over Pasamlung and Jakarlung in exchange for Bhutan giving up control of Doklam). Ambassador Stobdan has further argued that Chinese infrastructural development and "nomadic Tibetan infiltration" have been successful in the past citing an example from 2006 when Bhutan removed Kula Kangri (a Himalayan peak) from its national map, allegedly under pressure from the PRC making China believe that this approach of applying pressure can be effective [14]. Bhutan's major diplomatic challenge in dealing with China is therefore to strike a fine balance between resolving the border issue and avoiding large-scale territorial concessions that alienate India or promote Chinese ambitions [15].

The India Factor:

Formal diplomatic relations between Bhutan and China have never been established and China has occasionally pushed the issue with Bhutan to start direct border negotiations. Back-channel diplomacy saw conversations begin in 1984, led by the Embassy of Bhutan in India, indicating India's involvement in any Sino-Bhutanese rapprochement. Since then, there have been 24 rounds of border negotiations with Bhutan, often walking a fine line between China's demands and India's security worries. The regular people of Bhutan are aware of the boundary concerns, but the general mood is in favor of the current government policy of continuing negotiations, balancing ties with India, and avoiding antagonizing China [16].

Former PM Lotay Tshering attempted to break the impasse in border discussions in 2020, when India and China clashed in Galwan and China asserted new claims in Bhutan's Sakteng region. The administration used the pre-existing Expert Group Meetings (EGM) process to quietly resolve disagreements. Both countries agreed on a three-step boundary demarcation strategy in 2020 and signed an MoU during the 10th EGM in 2021. Border delimitation is likely to be the first step in the three-step roadmap MoU, followed by a visit and finalization of the defined borders. However, the administration has repeatedly stated that these conversations exclude the Doklam trijunction, which will be handled individually and will involve India, Bhutan, and China [17].

In this context, Indian Foreign Secretary Vinay Mohan Kwatra recently made the first high-level visit from India (from January 29-31, 2024)since the formation of the new government by PDP leader Tobgay [18]. According to a press release from the Ministry of External Affairs, Mr. Kwatra met with His Majesty The King, addressed Prime Minister H.E. Tshering Tobgay, and Foreign Affairs Minister, H.E. D. N. Dhungyel. He also had bilateral meetings with Bhutan's Foreign Secretary, Aum Pema Choden, on diverse collaboration between India and Bhutan. The press release further stated that the visit allowed for extensive discussions about all aspects of the bilateral relationship, including development cooperation, the 13th Five Year Plan, energy, trade, technology, connectivity, infrastructure, economic ties, and people-to-people connections between the two countries and was in accordance to India's long-standing history of regular exchanges, and will reinforce the two nations' already strong bonds of friendship and collaboration [19].

India feels under pressure in its neighborhood as China builds connections with countries that New Delhi has historically regarded as close regional partners. Many of these countries have resented Indian domination in the region and regard China as a potential counterbalance to India. Even if the current administration supports India, there is always a political opposition that is pro-China, implying that attitudes toward India and China could shift after an election. This occurred lately in the Maldives and was viewed as a potential concern in Bangladesh as well [20].

Conclusion:

Bhutan’s challenges lie in its geographical location and the continued Chinese expansionist policies. As a small nation, it finds itself at the forefront of a salami-slicing tactic that gradually engulfs its sovereignty but does not allow a proactive response of any violent nature. Furthermore, the economic situation in Bhutan is something that China would like to leverage with financial assistance and incentivizing closer ties with China rather than India. However, Bhutan is skeptical of Chinese intentions and stands powerless in front of the land-grabbing efforts. In this regard, Bhutan would seek India’s protection and support even while it bilaterally negotiates a border demarcation.

While the solution is perceived to come from the demarcation of borders, Bhutan is clear on the issue of Doklam that it would only be discussed with all three parties on the table. Hence, if Bhutan goes ahead with establishing formal ties with China it would be only to resolve the border demarcation issue and would stand clear from Doklam. This is a collective challenge that has proved to be persistent in the region which the new government will have to navigate through.

Endnotes:

1.       Gopal Sharma, Bhutan’s liberal Tobgay becomes prime minister after fourth free vote, Reuters, 28 January 2024 https://www.reuters.com/world/asia-pacific/bhutans-liberal-tobgay-becomes-prime-minister-after-fourth-free-vote-2024-01-28/

2.      His Majesty The King conferred Dakyen to Prime Minister, Speaker, and Cabinet Ministers on 28th January 2024, Ministry of Foreign Affairs and External Trade, Royal Government of Bhutan, 30 January 2024 https://www.mfa.gov.bt/his-majesty-the-king-conferred-dakyen-to-prime-minister-speaker-and-cabinet-ministers-on-28th-january-2024/

3.      Bhutan’s New Government Will Face Economic Challenges, Regional Power Competition, Asia Pacific Foundation of Canada, 16 January 2024 https://www.asiapacific.ca/publication/bhutans-new-government-will-face-challenges

4.     Bhutan’s New Government Will Face Economic Challenges, Regional Power Competition, Asia Pacific Foundation of Canada, 16 January 2024 https://www.asiapacific.ca/publication/bhutans-new-government-will-face-challenges

5.      Gopal Sharma, Bhutan’s liberal Tobgay becomes prime minister after fourth free vote, Reuters, 28 January 2024 https://www.reuters.com/world/asia-pacific/bhutans-liberal-tobgay-becomes-prime-minister-after-fourth-free-vote-2024-01-28/

6.     Bhutan’s New Government Will Face Economic Challenges, Regional Power Competition, Asia Pacific Foundation of Canada, 16 January 2024 https://www.asiapacific.ca/publication/bhutans-new-government-will-face-challenges

7.      Bhutan's 2024 Elections: Economic Complexities and Regional Dynamics, Asia Society Policy Institute, 29 January 2024 https://asiasociety.org/policy-institute/bhutans-2024-elections-economic-complexities-and-regional-dynamics

8.     Majid Alam, Why is Bhutan, Famous for Its 'Happiness Index', Seeing Economic Crisis | Explained, News 18, 09 January 2024 https://www.news18.com/explainers/why-is-bhutan-famous-for-its-happiness-index-seeing-economic-crisis-explained-8733719.html

9.     Bhutan's 2024 Elections: Economic Complexities and Regional Dynamics, Asia Society Policy Institute, 29 January 2024 https://asiasociety.org/policy-institute/bhutans-2024-elections-economic-complexities-and-regional-dynamics

10.   Srikanth Kondapalli, Bhutan under China’s shadow, Deccan Herald, 03 December 2023 https://www.deccanherald.com/opinion/bhutan-under-chinas-shadow-2794475

11.     Sudha Ramachandran, China Alters Status Quo Along Bhutan Border, China Brief Volume: 24 Issue: 3, The Jamestown Foundation, 02 February 2024 https://jamestown.org/program/new-bhutan-government-unlikely-to-resist-prc-incursions/

12.    Vishnu Som, China's Biggest Land Grab Carves Into Ancestral Areas Of Bhutan's Royal Family, NDTV, 06 January 2024 https://www.ndtv.com/india-news/chinas-biggest-land-grab-carves-into-ancestral-areas-of-bhutans-royal-family-4811168

13.    Srikanth Kondapalli, Bhutan under China’s shadow, Deccan Herald, 03 December 2023 https://www.deccanherald.com/opinion/bhutan-under-chinas-shadow-2794475

14.   Sudha Ramachandran, China Alters Status Quo Along Bhutan Border, China Brief Volume: 24 Issue: 3, The Jamestown Foundation, 02 February 2024 https://jamestown.org/program/new-bhutan-government-unlikely-to-resist-prc-incursions/

15.    John Pollock, Bhutan’s Borders: The China Challenge and the India Factor, London School of Economics, 23 January 2023 https://blogs.lse.ac.uk/southasia/2023/01/23/bhutans-borders-the-china-challenge-and-the-india-factor/

16.   John Pollock, Bhutan’s Borders: The China Challenge and the India Factor, London School of Economics, 23 January 2023 https://blogs.lse.ac.uk/southasia/2023/01/23/bhutans-borders-the-china-challenge-and-the-india-factor/

17.    Aditya Gowdara Shivamurthy, Bhutan elections: What is at stake for India?, Expert Speak, Raisina Debates, Observer Research Foundation, 22 January 2024 https://www.orfonline.org/expert-speak/bhutan-elections-what-is-at-stake-for-india

18.   Foreign Secretary Vinay Kwatra calls on Bhutanese Prime Minister Tobgay, discusses bilateral ties, Hindustan Times, 30 January 2024 https://www.hindustantimes.com/india-news/foreign-secretary-vinay-kwatra-calls-on-bhutanese-prime-minister-tobgay-discusses-bilateral-ties-101706553520520.html

19.   Visit of Foreign Secretary to Bhutan (January 29-31, 2024), Media Center, Ministry of External Affairs, Government of India, January 30, 2024 https://www.mea.gov.in/press-releases.htm?dtl/37538/Visit_of_Foreign_Secretary_to_Bhutan_January_2931_2024

20.  Rajeswari Pillai Rajagopalan, Indian Foreign Secretary Visits Bhutan as New Government Takes Charge, The Diplomat, 05 February 2024 https://thediplomat.com/2024/02/indian-foreign-secretary-visits-bhutan-as-new-government-tales-charge/

Pic Courtsey- Nihar Modi at unsplash.com

(The views expressed are those of the author and do not represent views of CESCUBE.)