Dear Readers,

With Trump’s inauguration on January 20, South Asia is bracing for potential shake-ups in U.S. foreign policy. What will the new administration’s South Asia strategy look like? Who will lead the charge as ambassadors in this critical region? While those answers simmer, December was anything but quiet. Let’s unpack last month’s big stories and what’s ahead.

Between Sanctions and Allegations

The U.S.-Pakistan dynamic is under strain. Washington recently sanctioned Pakistan’s National Development Complex (NDC) and three other entities over their role in Islamabad’s long-range missile program. What’s more, U.S. Deputy NSA Jon Finer didn’t mince words, suggesting these capabilities pose an emerging threat to the United States. 

Pakistan deemed the sanctions and Finer’s remarks "unfortunate," accusing Washington’s policies of being “biased” and warning that they could deepen regional military imbalances. For context, this isn’t a one-off: earlier last year, the United States had imposed sanctions, on similar grounds over proliferation, on Chinese entities for working with the NDC.

Shifting to neighboring India, the overall narrative of U.S.-India relations remains upbeat. But, as they say, even roses have thorns. Last month, India’s ruling and PM Modi’s own, Bharatiya Janata Party (BJP) accused the U.S. State Department and “deep state” actors in the United States of being involved in efforts to destabilize India.

Central to these accusations is alleged U.S. funding for the Organized Crime and Corruption Reporting Project (OCCRP), a global investigative journalism organization. According to BJP leaders, OCCRP’s reports on issues like Gautam Adani’s business practices—Adani being a perceived close ally of PM Modi—and the use of Pegasus spyware in India have repeatedly armed the opposition Congress party with material to criticize PM Modi’s government. The U.S. Embassy in Delhi described these accusations as " disappointing."

Why it matters: The sanctions on Pakistan underscore the U.S.’ firm stance on proliferation. Despite the pressure, Pakistan is unlikely to scale back its missile program. Nevertheless, with a new U.S. administration, Islamabad must tread carefully to avoid further strain and foster meaningful cooperation on key policy priorities. These moves may also drive Islamabad closer to Beijing, deepening South Asia’s web of alliances.

On the India front, the BJP’s accusations emphasize that navigating the U.S.-India partnership isn’t always smooth sailing. India's domestic politics are growing increasingly polarized, often turning international criticism into fuel for domestic posturing that can shape its external outlook. While these moments can feel like speed bumps, they’re unlikely to throw the U.S.-India relationship off course. Optimism around expanding bilateral cooperation remains strong, and there is continued high-level engagement , but it’s a good reminder that even the closest partnerships need a steady hand on the wheel.

Bangladesh: A Democratic Dawn or Another Delicate Balancing Act?

Bangladesh has been in the spotlight since student-led protests led to the ousting of Sheikh Hasina last August, with The Economist crowning it “Country of the Year.” A bold choice, given the mixed reactions, but the magazine lauded the nation for " toppling a despot and taking strides towards a more liberal government." Bangladesh is also revising history, with new student textbooks now stating that Ziaur Rahman declared independence in 1971, replacing earlier versions crediting Mujibur Rahman.

But let’s be clear: this democratic renaissance is still very much a work in progress. Led by Dr. Muhammad Yunus, the interim government faces the herculean task of rebuilding a fractured political landscape while laying the groundwork for credible elections. Yunus is steadfast in his insistence on economic, governance, and electoral reforms before any electoral timelines are finalized, potentially pushing elections to late 2025 or beyond. In the meantime, the interim government faces a tough road including managing delicate diplomacy with key neighbors.

Speaking of neighbors, Bangladesh’s interim government has formally requested India to extradite Sheikh Hasina to face trial for alleged crimes committed during her tenure, including the events of last summer . Both countries share an extradition treaty that has certain exceptions, which may give India grounds to refuse. It is clear that Hasina’s presence in India remains a significant sticking point in bilateral relations.

Communal tensions have heightened the friction, with attacks on Hindu minorities in Bangladesh fueling outrage and retaliatory incidents targeting a Bangladeshi diplomatic mission in India, further complicating an already strained relationship.

Why it matters: For the interim government, the challenge is twofold: sustaining the current wave of democratic optimism while managing external pressures. The reforms Yunus seeks are crucial for building trust in the electoral process and seizing this unique opportunity to set the country on a progressive path. However, delays in elections could risk disillusioning an already impatient populace and potentially empowering the military’s political role.

Moreover, prolonged tensions with neighboring India, with which Bangladesh shares a long porous border, could hinder its economic growth and regional integration prospects. For India, too, Bangladesh is both a vital partner and a diplomatic challenge, requiring nuanced engagement.

India and China: Progress and Caution

Remember the meeting between PM Modi and President Xi in October last year? Fast forward to last month, and we saw one of the tangible outcomes of that meeting: the resumption of Special Representative (SR)-level talks after a five-year hiatus. Indian NSA Ajit Doval and Chinese FM Wang Yi sat down in Beijing for wide-ranging discussions on the border and the broader bilateral relationship. The good news? China announced reaching “ a six-point consensus” aimed at improving coordination and working to reach an ‘acceptable package’ on the boundary issue. India’s Ministry of External Affairs distanced itself from the said ‘consensus,’ but echoed similar ideas about fostering exchanges and reducing tensions. 

Why it matters: Trust between the two countries remains fragile, and with good reason. Border stabilization is vital, but it’s not enough. Real progress will need sustained de-escalation, troop withdrawals, broader coordination—including on transboundary waters—and a genuine commitment to avoid future clashes. Plus, India’s rise as an important player in the Indo-Pacific and its positioning as a counterweight to China—particularly in the Western calculus—has added layers of complexity to the bilateral dynamics. For now, cautious optimism is the name of the game.

India’s Global Playbook: Partnership with Russia and a Historic Kuwait Visit

India's strong ties with Russia continue to power ahead, especially in energy. In a game-changing move, Russia’s Rosneft will supply nearly 500,000 barrels of crude a day to India’s Reliance—marking the biggest energy deal yet between the two countries. This development comes ahead of President Putin’s planned visit to India early this year.  Indian Defense Minister Rajnath Singh was also in Moscow last month where he met with President Putin.

On the Gulf front, PM Modi made a historic visit to Kuwait—the first by an Indian premier in almost four decades. During his trip, PM Modi was honored with Kuwait's highest civilian award, "The Order of Mubarak Al Kabeer." The visit elevated bilateral relations to the level of a strategic partnership.

Why it matters: While New Delhi has steadily reduced its defense dependence on Moscow and strengthened ties with the West, Russia still holds an essential place in India’s strategic calculus. Part of this balancing act involves ensuring Moscow has alternatives to Beijing, reflecting India’s broader strategy of managing great-power dynamics in a world that’s anything but simple.

India is also placing an increasing focus on strengthening ties with the Gulf region. With a massive Indian diaspora and shared goals around economic growth and regional stability, the Gulf is rapidly becoming a top priority for India’s foreign policy.

Sri Lanka and Nepal: Navigating the India-China Equation

Since taking office, Sri Lanka’s President Dissanayake made his first official overseas visit to India. In his meeting with PM Modi, Dissanayake reassured that Sri Lanka would not allow its territory to be used in ways that could undermine India’s security interests—in a subtle signal to China, perhaps? In contrast, Nepal’s PM K.P. Oli embarked on a trip to China. While there, Nepal and China signed a 9-point agreement, which includes memorandums of understanding on expanding bilateral trade and financial cooperation. Most notably, Nepal and China also officially inked the Belt and Road Initiative (BRI) Cooperation Framework, paving the way for closer collaboration and implementation of BRI projects in the landlocked South Asian nation. 

Why it matters: These trips reflect the nuanced diplomacy smaller South Asian nations must engage in to safeguard their sovereignty while leveraging the geopolitical competition between India and China. Most would love to keep both giants in their corner. The real question is: Will they stay on the fence, or will they eventually tip the scale in favor of one over the other?

Stay Tuned!

What a packed edition! As we step into the new year, I’m excited to bring you even more insights and updates from this dynamic region. Stay tuned, stay engaged, and don’t miss out on everything that South Asia has to offer!

Warmly,
Farwa Aamer