Sandwiched between giants China and India, Bhutan is politically, economically and military vulnerable. This makes it susceptible to external influences. Its foreign policy has been carried out in consultation with India. Bhutan does not carry much significance in the dynamics of international politics. Its geostrategic size, political, historical traditions, domestic milieu, international setting and economic prowess primarily shape the foreign policy of a small state. A combination of these has shaped Bhutan's foreign policy choices and its national interest calculations.

Moreover, Gross National Happiness (GNH) is a crucial element of Bhutan’s economic policy with good governance, sustainable socio-economic development, cultural preservation and environmental conservation. It believes in values in sync with Buddhist ethics. Bhutan is only the country that defines its developmental goals to maximize people's happiness with materialistic progress.

Bhutan has maintained a closed-door policy to preserve its unique life and autonomy. The start of planned development in 1961 ended its isolationism. It endeavored to strengthen relations with neighbors. It also joined SAARC, Colombo Plan, and United Nations to meet political and economic interests. 

Bhutan joining the BBIN-MVA envisioned similar benefits from regional cooperation on energy, power trade, information, communication and technology. It also realized the importance of physical connectivity to expand economic cooperation. Its push towards greater regional/sub-regional economic cooperation was a move towards improved connectivity and tapping of regional tourism.

On recognizing the importance of connectivity, Bhutan initially signed BBIN-MVA in Thimphu when four transport ministers of BBIN countries met on June 15, 2015.

Poor infrastructure

Bhutan has been bearing high expenses in commercial activities due to poor and inadequate connectivity and rugged mountainous terrain. The BBIN connectivity, it was hoped, would help reduce transportation costs and take domestic products into international markets. BBIN provided intrinsic rationality to trade facilitation and increase exports to other three member states. It was expected to facilitate Bhutan’s missed opportunities and address glitches in doing business at lower costs.

Regionalism also creates an excellent prospect for member states to reduce informal trade, thereby boosting formal trade. The lack of deeper economic integration and inadequate economic juxtaposition left little opportunity for Bhutan to access regional and international markets. It is pivotal for largely import-driven Bhutan to expand its small-scaled economies on the international stage. BBIN-MVA also held tremendous potential for member states in integrating their tourism industry, cultural exchanges and institutional building.

It was hoped that economic integration will be a win-win situation. However, BBIN-MVA's economic expansion is not without challenges. Poor infrastructure, insurgent politics, political violence mixed with radicalization and geopolitical constraints are significant challenges among the South Asian countries for Bhutan to want to remain isolated from them. 

Bhutan's reservations

Bhutan has confronted multiple constraints to achieve economic development due to inadequate and poor physical infrastructures. It further needs to be supplemented through building and upgrading existing infrastructure as the poor road conditions will add woes to the movement of goods and people. The unbridled international trade may not benefit all as Bhutan’s domestic market is ill-equipped to compete in global markets.

Bhutan’s economy is fragile. It is reliant on external aid for economic growth. Still, the developmental strategy in Bhutan is guided by Buddhist ethics rooted in enriching cultural and environmental values. Bhutan’s economy is limited to product diversification. It is daunted by investment in new economic activities as it will require new sets of capabilities and experts, which is expensive to accomplish on equal terms with other countries. The problems of border skirmishes and terrorism through porous borders have the propensity to affect economic integration and diplomatic relations. 

Therefore, the political objectives and policy priorities of BBIN member states may not be on the same page. Bhutan repeatedly emphasizes maintaining its top primacies in the GNH index (sovereignty, culture, and environment). While other countries desire increased economic progress, Bhutan fashioned its strategies towards prosperous and sustainable development, low-carbon future to battle climate change. Bhutan pays for others’ climate sins without contributing anything or very little to climate change. These challenges can severely hinder the swift implementation of the BBIN-MVA.  

Bhutan has always been sensitive and conscious about the nation’s survival while engaging with the outside world.  Its decision to pull out from BBIN-MVA was due to concerns of domestic stakeholders. The National Assembly and apolitical National Council raised many concerns about the BBIN-MVA. Most members from both houses were against it. After exhaustive engagement with stakeholders, Bhutan dropped out of BBIN-MVA on April 20, 2017.

There is a perception that the BBIN-MVA would have been implemented without affecting Bhutan’s security, environment, tourism and cultural sensitivity. Bhutan had other concerns too.

Bhutan is conscious of the military and technological asymmetry of China and India. It is felt these two Asian regional powers are competitors rather than partners, thus creating a challenging and hostile atmosphere for their small neighbourhood. Besides shared commonalities and contiguous boundaries, BBIN did not share a progressive economic unity since the region is characterized by suspicion. An open border is critical for any cooperation dynamics. However, many countries are wary of the porous border. South Asia has faced challenges of cross-border terrorism, human trafficking, drug smuggling and other environmental-related risks.

Illicit activities may spill over rapidly across the border through modern technologies. BBIN-MVA could lead to Indian militants entering Bhutan. The influx of more foreigners with different backgrounds and intentions will threaten Bhutan's peace, unity, security and sovereignty. Bhutan putting security apprehensions over economic policy is seen as the reason for its rebuttal of the accord.

Environmental fears

Bhutan is famous for its holistic approach to environmental conservation. It is known for GNH and as a carbon-negative state. The Fourth King of Bhutan famously said: “We do not wish to be swept away by materialism and consumerism; instead, we are determined to preserve spirituality, culture, and tradition along with the high level of economic growth.” Buddhism dynamically leverages the life of Bhutanese, and people are more intimate with protecting environmental principles. The regional connectivity and improving infrastructure would need building and upgrading existing infrastructures, which would again be a burden for nature.

The BBIN-MVA is an invitation to more cars and risking the environment in exchange for little economic opportunities. The framework of GNH linking to environmental conservation itself is often contested as a national development strategy to the economic development of Bhutan. It seemed ambiguous to unmatched economic progress, given Bhutan’s hunger for economic growth to graduate from the Least Developed Countries.

GNH, to some extent, ignores economic development since the exploitation and overconsumption of natural resources dilute the environmental value. Environmental preservation is the top priority and motor vehicles are the biggest emitters of greenhouse gases. This too was a reason to not be part of BBIN-MVA. Also, unprecedented economic activities and increased tourist inflows will negatively affect the environment and cause congestion and pollution.

More losses than gains 

Tourism in Bhutan is the most important economic sector with immense potential to bring about balanced socio-economic development. However, it has been conscious of the unrestricted flow of tourists and disproportionate impact on environment and cultural values. Hence, Bhutan has imposed a high-value, low-volume tourism policy. It has advocated controlling the type and quantity of tourists by imposing high daily tariffs to minimize environmental impact. 

The National Council’s decision to reject the BBIN-MVA was due to the government’s failure to regulate and control regional tourists. Bhutan cannot handle the enormous influx of tourists or vehicles due to shortage of standard hotels and good roads. Bhutan realized that MVA would devastate the environment and jeopardize its tourism policy.

The necessity to address physical and soft infrastructure is the top priority as Bhutan has done little in developing trade infrastructure. Bhutan was yet to find a solution for traffic congestion. The BBIN-MVA will only aggravate these problems. Increased regional tourism can violate domestic law and endearing cultural and environmental principles. 

The covenant will not be compatible with Bhutan's needs unless other BBIN countries provide security support to the Bhutanese commuters. Paradoxically, harassment of Bhutanese truckers became rampant after Bhutan revoked this agreement and faced difficulties in shipping boulders to Bangladesh. The government did not consider the limited carrying capacity of road infrastructures.

Prime Minister Dasho Lotay Tshering has said that if Bhutan’s infrastructure, economy and trade improves, the country will undoubtedly want to be part of BBIN-MVA. The current infrastructure cannot even cater to local needs, and so it cannot consider this compact despite its economic potential.

Bhutan initially signed MVA in anticipation of integrating its economic development vis-à-vis other member countries of BBIN. It provided numerous potential benefits but challenges were of equal importance. Bhutan is sensitive to its national independence and security. The perceived threats to national independence, its pristine environment and unresolved tourism problems impelled Bhutan to change its position on BBIN-MVA. Congestion, poor infrastructure, informal trade, cultural beliefs and domestic law were also factors.

With more possible disadvantages and fewer gains, Bhutan should hold off on joining BBIN, at least for now.

(The author, from Bhutan, did a Master's in International Relations from South Asian University, New Delhi. His thesis was on understanding Bhutan's changed stance on BBIN-MVA)