Indian sanctions against Nepal, 1988–1990
Indian sanctions against Nepal in the late 1980s represent an attempt by India to extract important political and economic concessions from Nepal such as the reversal of Nepal’s improving relations with China and the restoration of economic privileges for Indian nationals. Given the political significance of these demands, successful Indian economic sanctions in this case would be hard to explain with realist model (R). Given landlocked Nepal’s utter dependence on trade with and transit through India, the costs of the sanctions were immensely high for Kathmandu. Therefore, an economic statecraft failure for India would, on its own, be difficult to square with commercial liberal model (CL). Since the Nepalese monarchy was not democratic, successful economic statecraft would also be problematic for the conditionalist regime model (CR). This chapter investigates the utility of our own conditionalist model of economic statecraft, focusing on Nepalese TSI and stateness, for explaining this episode, and compares our model to the three models mentioned above. The chapter begins with a short case background and an overview of Indian economic sanctions. It then continues with a discussion of the likely impact of both compliance and non-compliance on Nepalese strategic interests. The next section analyzes the degree of Nepalese stateness during the period under study. After considering whether or not Delhi achieved its political objectives with economic statecraft, the chapter evaluates why sanctions were indeed successful. The chapter concludes by evaluating the implications of this case study for the study of economic statecraft.