Hydroelectricity Generation and the Dynamics of India-Bhutan Relations

Abstract

This study of the relations between India and Bhutan after the renegotiation of the India-Bhutan Friendship Treaty in 2007 seeks to show that India's investment in hydroelectricity generation in Bhutan is an important key to good relations between the two countries. The study does so by examining primary sources, namely, official documents and speeches, and secondary ones, namely, texts, books and newspaper items, in term of policy and organizational structure related to hydroelectricity generation. The findings are that while HEP generation in Bhutan contributed to India’s energy security, it in turn made Bhutan more dependent on India’s economy and investment. Cooperation in this field is found to have been an important part of India’s foreign policy of maintaining ties with its neighbours, especially Bhutan. Bhutan in turn extended to India a special relationship. Yet, Bhutan’s change of regime from Absolute Monarchy to democracy in 2006, as well as shifts in the international environment, notably China’s expanding role in the region, occasion Bhutan to seek to adjust its relations with India to give it, as an independent state, room to manouver such that its best interests are served. India thus needs to in turn adjust the nature of development assistances extended to Bhutan if it wishes to retain the special relationship.