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Guest Column

Bhutan has long been the object of an intense competition between China and India, centered on the territorial dispute between China and Bhutan. New Delhi has consistently enjoyed the upper hand in this competition and played a key role in the politics of the unresolved dispute. Nevertheless, the gradual development of relations between Beijing and Thimphu and their recent push to resolve their territorial dispute are upending the Sino-Indian balance of power in Bhutan. Will this lead to a settlement of the Sino-Bhutanese dispute? In what way? What will be the impact on the larger China-India relationship? To answer these questions, it is necessary first to understand both Bhutan’s importance for China and India and the dynamics of the Sino-Bhutanese territorial dispute.

Bhutan’s Importance for China and India

Bhutan, as a result of its importance for both Asian giants, is an arena of competition. There are four reasons for this importance. First, the Himalayan kingdom plays an important role in the military balance along the contested and militarised Sino-Indian border. India’s military presence in Bhutan helps secure its northern borders against the People’s Liberation Army (PLA) in a vital segment and creates a buffer. Just as important, Bhutan stands at the two border trijunctions between China and India, close to the disputed areas of Tawang in the east and Doklam in the west. Doklam, the site of a long military standoff between China and India in 2017, is particularly important as it sits close to India’s militarily vulnerable Siliguri corridor which connects India’s Northeast region with the rest of the country.

Second, the Sino-Bhutanese territorial dispute is intimately linked to the China-India territorial dispute. It involves many of the same controversial issues as the China-India one, such as claims based on historical Tibetan connections, disputed colonial-era agreements, and tactical military security concerns based on the border’s topography. Settling the Sino-Bhutanese dispute will have serious legal and political implications for the China-India border quarrel and the interests of Beijing and New Delhi. Hence, it is difficult to fully resolve it without progress on the other dispute.

Third, Bhutan is closely connected to Tibet and might play a role in the future of the ‘Tibet issue.’ Bhutan, a Buddhist-majority country with close ethnic, religious, and cultural ties with Tibet, is home to a Tibetan diaspora and the Drukpa subsect of the important Kagyu school of Tibetan Buddhism. All this, together with Bhutan’s long border with Tibet, means that Bhutan will play a role in recognising the next reincarnation of the Dalai Lama and in post-reincarnation politics. Therefore, China has an interest to ensure that Bhutan is on its side on the ‘Tibet issue.’

Finally, Bhutan is China’s only neighbour that has not established diplomatic relations with Beijing. This situation is usually explained by India’s guidance of Thimphu’s foreign and security policies since their 1949 agreement, revised in 2007, and its concerns about great power competition in the small Himalayan country. New Delhi is particularly concerned about the potential establishment of a Chinese embassy in Thimphu which will strengthen Beijing’s influence in Bhutan.

Bhutan’s importance has engendered an intense competition between China and India. Beijing has sought to push Thimphu to establish diplomatic relations through a mixture of pressure and diplomatic seduction, whereas New Delhi has defended its predominant position with economic carrots and sticks, such as the 2013 halting of a fuel subsidy in an alleged response to Thimphu’s pro-China moves. In the middle of this competition, Bhutan has striven to sustain its special relationship with India without antagonising China and to develop some limited relations with Beijing.

Territorial Dispute Negotiations

The territorial dispute is the central issue in the relationship between China and Bhutan and the focus of the Sino-Indian competition in the kingdom. It blocks the establishment of diplomatic relations between Beijing and Thimphu and is a function of Bhutan’s alignment with India and distancing from China. While China has sought to use the dispute to push Bhutan to establish diplomatic relations and thus spread Chinese influence, India has consistently resisted a resolution of the dispute to the potential long-term detriment of its security interests in Bhutan and the Himalayas. The result has been a stalemate in resolving the dispute.

The territorial dispute features two territories to the north, Pasamlung and Jakarlung valleys, and several to the west, including the disputed Doklam area. In addition, in an attempt to pressure Thimphu and New Delhi during the 2020 crisis on the Sino-Indian border, China laid claims to the Sakteng Wildlife Sanctuary in the east, an area not contiguous to the Sino-Bhutanese border but close to India’s Tawang district that Beijing has long claimed. For its part, Bhutan has also expanded its claims. In 2000, it made new claims in the west, likely under Indian influence and as a negotiation tactic.

China and Bhutan have been negotiating to resolve their dispute since 1984, but with no result. In 1997, Beijing proposed a “package deal” in which China would give up its claims in the north in exchange for Bhutanese concessions in the west, close to the sensitive Doklam trijunction with India. While Thimphu initially seemed to agree, it eventually rejected the deal, reportedly under Indian influence. In 1998, China and Bhutan signed an agreement to stabilise the border and respect the territorial status quo. Over the past decades of dispute negotiations, Beijing has reportedly made a linkage between the resolution of the dispute and the establishment of diplomatic relations. It has also used often pressure tactics, such as infrastructure building and incursions by Tibetan herders and PLA soldiers, in a clear violation of the 1998 agreement.

Recent Push to Resolve the Dispute

The last two years have seen a growing push to resolve the dispute between China and Bhutan. In 2021, both sides signed a “three-step roadmap” to reach an agreement on boundary delineation and demarcation. In 2023, China and Bhutan conducted the twenty-fifth round of the border talks and expert group meetings on the border negotiations. Bhutan’s foreign minister also visited China and had a landmark meeting with China’s foreign minister Wang Yi, while the then Bhutanese PM said in an interview that border negotiations between the two sides were “inching” toward completion.

There are multiple reasons behind this recent push. First, the Doklam crisis of 2017 convinced Thimphu that without a negotiated resolution, Bhutan would eventually lose territory to China, a conviction reinforced by Beijing’s building of infrastructure in disputed areas and new territorial claims. In short, China’s pressure tactics have begun to yield results. Second, the 2020 deadly border crisis between China and India demonstrated to a shocked Bhutan that it might be dragged into an armed conflict between the two, and that waiting for Beijing and New Delhi to settle their differences is an unpromising strategy. Third, Bhutan’s democratisation and its need for economic development have increased popular pressure on the government to engage China. Unsurprisingly, momentum for settling the dispute grew as Bhutan’s 2023-2024 parliamentary elections approached.

More importantly, India’s position on the Sino-Bhutanese dispute seems to be cautiously evolving. Bhutan carefully coordinated its dispute negotiations with China with India’s government, which knowingly kept quiet on the subject in comparison to the panicked Indian media. Moreover, there are reports that in 2020 New Delhi asked Thimphu to resolve the territorial disputes with China in the north. Most likely, this was an attempt to deny Beijing leverage and stop a potential “package deal” in which China would give up its claims in the north in exchange for concessions in the west. The move also aimed to make the remaining Doklam dispute the subject of three-party negotiations, as hinted by Bhutan’s former PM. More generally, it is possible that India has realised that blocking a Sino-Bhutanese agreement is not a sustainable strategy.

Resolution, at last?

Will this push resolve the dispute? On balance, it seems more likely that the dispute will move toward partial resolution, i.e., a resolution without a complete settlement of the Doklam trijunction. There is substantial high-level momentum between China and Bhutan and the Bhutanese public is pushing toward an agreement. China’s pressure also means that a Bhutanese rejection of a settlement will be very costly for Thimphu. Crucially, India seems to be cautiously open to some type of agreement, as long as its redlines are respected.

Nevertheless, progress toward an agreement is likely to be gradual. The advent of a new government in Thimphu led by the cautious and pro-Indian Tshering Tobgay is likely to slow progress, as will India’s parliamentary elections in April and May. Moreover, any agreement will need to be coordinated with India and its details carefully worked out, especially at the trijunction where the location of each “border pillar” will have to be determined, according to a former Indian official.

Naturally, there are factors which can scuttle an agreement between China and Bhutan. First, China might overplay its hand by conditioning a deal on the speedy establishment of diplomatic relations and on concessions in the Doklam area. Second, it is uncertain if the three sides can agree which should come first, the opening of a Chinese embassy in Thimphu or settling of the dispute. Ultimately, this comes down to the question of whether each party trusts the other side to carry out the rest of the agreement if they make the first move. Third, it is possible that New Delhi might change its mind after reckoning with the prospect of China’s greatly expanded influence in Bhutan, something it already witnessed recently in the Maldives. Finally, renewed military tensions in the China-India territorial dispute, always a possibility, might easily block an agreement.

Larger Impact

What would be the larger impact of a potential settlement of the Sino-Bhutanese dispute, even a partial one? As a Sino-Bhutanese agreement would involve de facto trilateral negotiations between China, India, and Bhutan, it would be a major diplomatic breakthrough with substantial positive implications. For Beijing and New Delhi, such an agreement would act as a confidence building measure that would soften the Sino-Indian competition in the Himalayas and provide impetus for reinvigorated negotiations on the China-India territorial dispute. Ideally, all this can contribute towards a complete disengagement along the militarised China-India border, still tense from the 2020 crisis, and to a compromise on the Doklam issue which will stabilise this troublesome part of the border. More broadly, an agreement between China and Bhutan might play a role in bringing about the long-awaited but elusive thaw in the extremely strained China-India relationship.

Nevertheless, the long-term impact looks much more negative. A Sino-Bhutanese settlement would increase Beijing’s influence in the Land of the Thunder Dragon and lead to an Indian backlash. As a result, the China-India competition over Bhutan might actually escalate. Equally important, an agreement does not guarantee the end of tensions around the Sino-Bhutanese territorial dispute and Bhutan’s disputed borders. The competition between Beijing and New Delhi in Bhutan and the Sino-Indian territorial dispute reflect larger geopolitical dynamics. As such, India’s attempts to balance China, as well as Beijing’s use of coercive diplomacy, might cause border tensions to flare up again. After all, many previous agreements have been breached. Beijing breached the 1998 Sino-Bhutanese agreement by building infrastructure in disputed areas, including in the Doklam area in 2017. Allegedly, China’s road building in Doklam violated a 2012 Sino-Indian understanding to settle trijunctions trilaterally. China also flouted the 1993 and 1996 China-India border agreements by amassing troops along the disputed China-India border in 2020. Partly in response, India also breached the spirit of the same agreements by conducting military exercises with the US close to the border in 2022.

In conclusion, the complex relationship between China, India, and Bhutan seems to be entering a new phase. The chances for a breakthrough in the China-Bhutan territorial dispute, the fulcrum of the Sino-Indian competition in the Himalayan kingdom, seem surprisingly decent. While such a breakthrough would be difficult and slow, it is gathering momentum. But even if Beijing and Thimphu do not resolve their dispute, the status quo of a Bhutan fully aligned with India and in minimal contact with China looks increasingly unsustainable. Against this shifting background one thing remains certain, China and India will continue to compete over Bhutan.

Ivan Lidarev, PhD, King’s College London, is an Asian security expert who specialises in China-India relations. He recently served as the 2023/2024 Mladena and Dianko Sotirov Visiting Fellow at LSE IDEAS.

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The views expressed in the article are solely those of the author(s) and do not necessarily reflect the position or policy of the Lee Kuan Yew School of Public Policy or the National University of Singapore.

Image Credit: pmindia.gov.in

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