Success Or Failure Of Economic Sanctions As A Tool Of Foreign Policy

Nepal, a south Asian Himalayan Kingdom is located in between two giants of Asia; India, China. Relationship between the states has faced so many ups and downs. Nepal’s relations with its neighbor with comparison to other state, is peaceful. Nepal has policy of non-alignment and strongly based on Panchasheel. Nepal and India share long regulated open border. Cultural sharing, religious faith, people to people basic relation makes this relation more strong and ’special’. With having all season good and peaceful relations, during March-1989- April, 1990 this relation fall in to crisis more than never before.March 23, 1989 the expiration date of Trade and Transit Treaty. On behalf of government of India, Indian embassy in Kathmandu send the letter to Ministry of Export stating that treaty can’t be renewed. The government of India put the conditions of single Trade and Transit Treaty whereas government of Nepal was taking stand with the previous Trade and Transit separate Treaty. So many attempts for agreement was done by the Kingdom of Nepal but got no positive result. After the expiration of Trade and Transit Treaty India posed Economic Blockage, which long last for 13 months. The first reason behind imposing Economic sanction was to put pressure on government of Nepal to sign single unified treaty of trade and Transit and second, to pressure the government of Nepal not to purchase weapons and warlike material from China. This research has been done to examine the effectiveness of economic sanction.Economic sanction as tools of foreign policy implementation has been taken as Theoretical framework for this thesis. Why and how state pursue economic sanction as tools to carry out their foreign policy. The critical review on empirical data has been done to give insightful knowledge about the economic sanction as a means of foreign policy implementation. Furthermore, this research has critically analyzed the effectiveness of economic sanctions that were imposed throughout the history by the sates to achieve their foreign policy goals. And therefore examined the effect of economic sanction imposed by India in 1989-1990. It further deeply analyzed the outcome of Indian foreign policy. Whether or not economic sanction as tools to carry Indian foreign policy was successful?As methodology, and analytical study has been done. Extensive literature review, interviews with the policy maker and involved people, national and international newspaper publications have been the object of careful analysis.An argument has made on the ground of trade dispute that economic sanction was completely failure. After imposing the economic sanction the government of Nepal made no compliance and the government of India revive the previous expired treaty right after the regime change in Nepal with New interim government. Instead of signing single unified treaty of trade and transit, the V.P. Singh government revived the previous two treaties; treaty on trade and treaty on transit. In this respect economic sanction as tools of Indian foreign policy implementation was completely failure.Another argument is based on arm purchase from China. Government of Nepal took initiation to imports arms form China in 1988. The arms purchase with China has been kept secret until the trucks started shipment through Kodari highway. Nepal decided to purchase three thousand truck-loaded arms and warlike materials from China including sixteen anti-craft guns worth of $20 million. India felt threat by Nepal’s growing security relations with China. At the same time the government of Nepal and China signed an agreement on exchange of intelligence for further security cooperation. India posed economic sanction to stop arm purchases deals with China. But the outcome was seen that the government of Nepal successfully imports all the arms from China accept the delivery of last consignment of arms, which account for 10 percentage of all the purchase. Even in this respect the government of Nepal was not forced by the economic sanction to delay the final consignment of arms import rather motivated by the restructuring of the Indo-Nepal relations accommodating political changes in both country.And the third argument has been made on the draft of agreement that was proposed by Indian foreign Secretary S.K. Singh to pressure government of Nepal signed the agreement by accepting Nepal’s demands on trade and transit. Six points of the draft of that agreement were designed to take control over Nepal’s security and economic sphere. After the rejection of that agreement government of India become more reluctant towards Nepal and tightened economic sanction. The government of Nepal, particularly monarchy changed his strategy and accepts the demand of political party and collapse Panchayat regime rather to surrender before India. In this respect economic sanction could not succeed accomplishing Indian foreign policy goal as an instrument of foreign policy implementation. The King’s move to share his power with domestic political power made economic sanction less effective and lead to failure.To counter the growing threat of spread of communism from China, India felt to take effective measures and chose economic sanction to pressure the government not to be closed with China. Furthermore Nepal’s imports arms and warlike material from China was clear signal for Indian policy maker losing their influence in Nepal. So they seize the moment and refused to renew old Trade treaty and posed economic blockage. Available literature projects that Indian economic sanction, as a tool of foreign policy implementation was successful. The gap in literature is existing literature just incorporating with economic sanction was successful on stop developing close relations with China where they do not take in to account the treaty factor. The government of Nepal did not comply single unified treaty even after economic sanction. This thesis analyzed both growing Nepal’s relations with China and treaty factor.This research has been conducted with five chapters.Chapter I: this chapter reviewed the history of Indo-Nepal relation. Nepal’s relations with British India and Nepal’s relations with independent India has been briefly discussed and analyzed. The objectives of the study and main argument have been presented. As a methodology single case study has been done where process tracing has been taken to justified co-relations. Both secondary and primary materials have been taken as data sources. Extensive literature review has been done. The literature gap and theoretical frame has been discussed. For this case study economic sanction as tool/instrument of foreign policy implementation has been taken as theoretical framework.Chapter II discuss more on economic sanction as tool or instrument or means foreign policy implementation. How and why state prefers to choose Economic statecraft as an instrument of foreign policy implementation. Over going debate among scholar about the positive economic statecraft and negative economic statecraft has been discussed in details. Furthermore, the analysis has been given about effectiveness of economic sanction. Concluding the chapter by economic sanction are less effective means of foreign policy implementation by analyzing the outcome of economic sanctions from 1914 to 1990.Chapter III discuss about the effect of Indian economic sanction on overall economy growth and economic development of Nepal. It provides more analysis about the tension between Nepal and India that help to fall the relation into crisis. This chapter is furthermore focused on why India imposed economic sanction. The historical background of trade dispute, discriminatory policy adopted by contrasting government for their citizen in their country, debate of violation of treaty of peace and friendship in 1950, Nepal’s deliberate and consistence willingness to build its own security policy bypassing India. This chapter more discuss about Nepal foreign relations during the time of economic sanction. How government of Nepal tried to internationalized economic sanction to pressure India for withdrawal in International economic and political forum.Chapter IV has been focused on analyzing Indo Nepal relations before economic sanction and after economic sanction. How attempts were made from both countries to normalize the relation. It briefly discussed about domestic political dynamics in both India and Nepal. This chapter focused more in explaining the effectiveness of economic sanction imposed by India. Why economic sanction has been successful or failure has been discussed.Chapter V SWOT analysis has been used as analytical tools for foreign policy of both Nepal and India during the time of economic sanction. To draw the conclusion strength, weakness, opportunity and threats of foreign policy in both countries has been explained.Chapter VI concludes that India economic sanction less effective achieving its foreign policy goal even though the domestic politics of Nepal had been going through the political transition. It summarized the thesis by saying India economic sanction had been partially successful and greatly failed to achieve its intended goal.Finally this research can be useful to know about Indo-Nepal as a whole and particularly during the crisis in started from 1988-1990. It can be more useful to know more about the domestic politics of Nepal and India as well as during the same year. It will be useful for studying sanctioning behavior of state. It will be useful for conducting the further research on hos domestic changes effecting foreign policy behavior of the state. It will tell us more about India foreign policy, Nepal’s foreign policy and contrasting and assimilating behavior of these two state. This whole thesis gives more emphasis restructuring Indo-Nepal relations accommodating political change and changing dynamic of time for the peaceful and friendly relations between two states.