India-Bhutan Ties: New Delhi Got it Right
Amb Kanwal Sibal

Many in India believe that we have failed in our policy towards our neighbours. For them the hall mark of any successful foreign policy is good relations with neighbours. Because we are so big, many think that we must make an extra effort to win the trust of our neighbours, deal with them generously, without seeking reciprocity, and show greater sensitivity to their concerns, however misplaced. They should be given a stake in our growing economy through unilateral concessions, with any shorter term loss being traded for longer term gains that economic dependence brings.

Such thinking overlooks the objectives of third countries in our neighbourhood who get more space by playing upon the insecurities of small countries living under the shadow of a behemoth. It also ignores the political thinking, perceptions of national interest, personal preferences and even prejudices of ruling elites in our neigbourhood that too determine the quality of their relationship with India.


India cannot unilaterally mould ties with neighbours who may, in fact, not want to be embraced too tightly and may want to court other powers both to balance India and extract more concessions from us.

They may believe that because of our internal problems, our high tolerance levels, lack of an internal consensus on treatment of neighbours, existence of sympathetic local lobbies and sensitivity to accusations of hegemony, they have scope to disregard our interests and concerns with some impunity.

Critics should ask themselves whether other big countries surrounded by smaller neighbours, whether China, Russia or the US, have smooth, conflict free relations with them. It is not axiomatic for smaller countries to be always right and the bigger to be always wrong in any conflict of interest.

All this is pertinent to the controversy generated by our ‘mis-step’ to cut subsidies on cooking gas and kerosene in the midst of parliamentary elections in Bhutan, putting the Ministry of External Affairs (MEA) in the eye of the media storm.

Actually, the best managed relationship with any of our neigbours is with Bhutan, in which the extremely sensible policies of the Bhutanese monarchy towards India is a key factor. Unlike Pakistan, Nepal, Bangaldesh, Sri Lanka and lately Maldives, the monarchy has not played the Chinese card against us. Bhutan is also monetising its water assets for mutual benefit, which Nepal has failed to do with India.

Criticism of the government for wanting to put foreign policy constraints on Bhutan and pursuing the British imperial tradition of treating it as a “protectorate” is misplaced. India has in fact promoted Bhutan’s international personality; it has revised in 2007 the 1949 treaty that required Bhutanese foreign policy to be guided by India. Bhutan is often voting differently from India as in the case of the Arms Trade Treaty, Iran, Syria and North Korea, without Indian objections.


India has more reason to create buffers to protect its sovereign territory from the Chinese threat than the British had to protect their colonial fiefdom. Bhutan adjoins Arunachal Pradesh which China claims. Any Chinese penetration into Bhutan outflanks us politically. The Chumbi valley’s strategic sensitivity for our defences requires that India and Bhutan cooperate with each other to prevent a deeper Chinese encroachment southwards. The Chinese are keen to have a diplomatic presence in Thimphu. So far the monarchy, in rejecting the establishment of any P-5 embassy in Thimphu, has been sensitive to India’s security interests.

Outgoing Premier Thinley injected an element of suspicion about Bhutanese dealings with China by meeting his Chinese counterpart in Rio last year, with China tweaking us by announcing that diplomatic ties were discussed, a fact suppressed by the Bhutanese government. Given Bhutan’s delicate position, it must calculate carefully the pluses and minuses of its overtures to China that make India nervous.

Our media commentary on the subsidy issue has been disproportionately critical of the government, overlooking the generous record of India’s assistance to Bhutan. In the 10th Plan period- July 2008 to June 2013- we have provided Rs 6055 crores of assistance, which included Rs 1500 crores for Refunds and Subsidies, of which the kerosene and the LPG subsidy (jumping up from Rs 33 crores in 2011 to Rs 52 crores in 2012 ) is a minor part.


Some concerns about transparency in the utilization of Indian assistance to Bhutan have persisted, with calls within MEA for corrective action, which is not abnormal. Following MEA’s request to the Ministry of Petroleum to examine ways to make the supply of all POL products to Bhutan commercially viable, the Indian Oil Corporation (IOC) apparently conveyed to Bhutan, without further consultations with the MEA, that prices would be increased from July 1, causing wide speculation in the Bhutanese media whether this was a political move.

To suggest that the MEA suddenly lost its diplomatic sense by initiating this move amidst Bhutanese elections would be unjustified. In reality, after the February visit of Premier Thinley, the MEA released a further standby credit of Rs 400 crores to tide over Bhutan’s rupee crunch and in May the last tranche of the Excise Duty Refunds of Rs 300 crores was released, which refutes any intention to apply a politically calculated squeeze. MEA’s already announced in-principle decision to restore the LPG and kerosene subsidy next month closes the unfortunate episode.

Despite an unpleasant hiccup, all’s well that ends well. The PDP, which campaigned on developing stronger ties with India has won, even as the losing DPT has emphasized the importance of maintaining good relations with us. The monarchy, which has always given paramount importance to ties with India, should welcome the election results as it is unlikely that the PDP will gratuitously create during its tenure undercurrents of suspicion in India-Bhutan ties.

Published Date: 30th July 2013, Image source:

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