The Bhutanese are in a dilemma: Should they continue to be tied to India economically and in the conduct of foreign policy or should they be independent in every way as a sovereign country and a member of the United Nations? To put the question more bluntly, should Bhutan be continually tied to India’s apron strings or be free to negotiate with China formore favorable economic terms and settle the long pending border dispute? Should it sacrifice its interests to accommodate those of its supposed “protector” India, in the latter’s endless spats with China? Should Bhutan be a victim of Sino-Indian rivalry in the Himalayan region, or should it have the option to take sides or remain neutral? The Bhutanese’s fear is not only vis-à-vis India, it is vis-à-vis China too. China could take it over as it took over Tibet in 1959. However, studies have revealed that fear of India is more pronounced. In fact, the Bhutanese fear that if they continue to be handmaidens of India and take an anti-China stand continually, China will punish them by unofficially taking more territory than it already has in the Northern region.

ENODO Survey

Last year, ENODO, an international risk rating agency, found that 76% of Twitter and 65% of Facebook users in Bhutan have questioned their government’sover-reliance on India’s diplomatic channels to broker a deal with China on the border issue. Messages on Bhutanese news websites, blogs, and Facebook reveal “anxiety”about the absence of a direct dialogue between Bhutan and China, say ENODO analysts Akhilesh Pillamarri and Aswin Subanthore in an article in The Diplomat in August 2017. “The people of Bhutan do not want to be seen as pushovers, which is reinforced by the Bhutanese people’s sense of identity and nationalism. This is illustrated by the large number of tweets, including #WarClouds, #Thunder, #Dragon that center on pride in Bhutanese culture and values,” the authors say. Former Indian Ambassador and Himalayan area expert, P.Stobdan,writes in The Wirethat Indian Prime Minister Narendra Modi was acutely aware of the changing strategic imperatives in the Himalayas when he took over in 2014. That is why his first foreign visit was to Bhutan. But Modi’s solution was not to re-fashion the basic principles of Indo-Bhutan relationship. His solution was to do more of the same failed thing, which is to pump more money into Bhutan unmindful of the fact that the Bhutanese think that Indian “aid” is nothing but a “millstone” around their necks.

Economic Stranglehold

Over 60% of Bhutanese government’s expenditure goes into the import of goods from India. “India’s stranglehold over Bhutan’s economy along with unfair business practices often leads to economic crisis such as the debt and rupee crunch,” Stobdansays. India’s limitless budgetary support loans, grants and lines of credit in billions of rupees, including the setting up of hydropower-plants have been useful for Bhutan, but have also helped India make money disproportionately says a study by the Institute of Defense Studies and Analysis. Ninety five percent of Bhutan’s exports and 75% of its imports are to and from India and a common saying in Bhutan is that 90 to 95% of what the country borrows from India goes back to India! “In 2012,when the grants inflow did not match the rupee outflow a rupee crunch occurred,” Stobdan recalled. Because of the close links between the two countries, the Bhutanese market is highly susceptible to Indian inflationary trends. The other detrimental aspects highlighted by the IDSA study are: illegal cross border trade, under-invoicing, tax evasion, illegal bank transactions and unfair, exploitative, monopolistic commercial practices by Indian contractors especially in the mining and construction sectors. Cheap food imports from India weakened Bhutanese agriculture,the share of which in the GDP declined to 14%. Public debt in Bhutan is over 80% of its GDP (in 2011) and this is due to the loans from India. Because Bhutan has not been vocal about its grievances vis-a-vis India, unlike Nepal and Bangladesh, Indian government have tended to take the country for granted assuming that Indian “paternalism” is being appreciated, Stobdanobserves.

Political Pitfalls

Some good things India did for Bhutan also backfired. After India helped Bhutan secure UN membership in 1971, and toned down the basic bilateral treaty in 2007, Bhutan’s dependence on India on foreign policy declined. “Bhutan started to take a divergent approach, siding with China and others on Cambodia’s Khmer Rouge issue at the NAM’s Havana summit in 1979. It did not follow India’s stance on the status of landlocked nations at the UN. It signed the Non-Proliferation Treaty in 1985 and supported Pakistan’s Nuclear Free Zone South Asia proposal,” Stobdanpoints out. India was dismayed. But what really set alarm bells ringing in Delhi was Bhutan’s inching towards China in 2012 under the democratically elected Prime Minister Jigme YoserThinley.Thinley met the Chinese and discussed some purchases as well a deal to end the border dispute. The Chinese had apparently offered economic assistance in exchange for some adjustments on the border issue such as exchanging Doklam for territory in the Northern border. In July 2013 an enraged India is said to have rigged the general elections and thrown Thinley out of office. In the run up the polls India had cut subsidies on gas and kerosene saleswhich sharply increased the prices of these articles of daily use in Bhutan. Karma TemphelNgyamtso, a writer and an political observer added: “Our friends in India, unwittingly ensnared in this game of political brinksmanship, must remember that such inadvertent, mercenary and gravely injurious attitudes and moves do not bode well at all for Bhutan-India friendship in the long run.” “In a tsunami of public outcry, bloggers wrote at length about how the Indian intelligence service had rigged the elections,” Stobdan pointed out. “The world’s biggest democracy throttled the youngest democracy” was another popular comment. Critics urged the Indian media and politicians to stop their “over-lordship” over the Kingdom’s affairs and stop treating Bhutan as a “pawn” and manipulating the Bhutanese like “lambs in a pen to slaughter whenever India desires a dish of lamb stew,” were other comments. “One could not imagine such ferocity amongst ordinary Bhutanese against India ever before,” Stobdanobserved. Modi’s advisors had become more ham-handed than their predecessors as they seemed to be more obsessed with China’s intentions. According to Stobdan, the prevailing sentiment in Bhutan is in favor of resolving the border issue with China amicably and without further delay, so that the country can have a peaceful boundary with its northern neighbor as it has with India.But India would not allow it. Therein lies Bhutan’s frustration with India.

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