NEW DELHI: India confronts a new strategic situation in its neighborhood as its staunchest ally Bhutan prepares to establish full diplomatic ties with China. Until now, Bhutan had been the only South Asian country where China did not have a presence. That is about to change.

After a surprise meeting between Bhutanese PM, Jigme Y Thinley and Chinese premier Wen Jiabao on the sidelines of the Rio+20 summit in Brazil, the two countries reportedly discussed ways to resolve their border dispute. While Bhutan and China have had a long dialogue on the border dispute, India would be interested in the contours of any resolution as it would have huge implications for its strategic calculations in the region.

Chinese media quoted Wen as saying, "China is willing... to establish formal relations with Bhutan, resolve the border issue between the two nations at an early date, strengthen exchanges in all areas and advance Sino-Bhutanese relations to a new stage." Wen told Thinley that China respects Bhutan's choice for its developmental path according to its own national conditions. Thinley reiterated Bhutan's stand on a One-China policy.

However, there was no corresponding confirmation from Bhutan. Sources said Thimphu had clarified to New Delhi that they had not given any commitment to Beijing yet. But the Rio meeting was not accidental since a special Chinese envoy had been sent to Thimphu recently for talks with the Bhutanese government. But as Indian officials said, it's not as if Bhutan and China have no ties — the Chinese ambassador, for instance, was invited for both the coronation of the young king as well as the royal wedding last year.

India has huge economic and security stakes in Bhutan, and is its closest neighbour. But India's strategic policymakers have anticipated Bhutan's shift in stance. Long used to being its window to the world, New Delhi now has to get accustomed to the fact that a new Bhutan is on the rise and will make choices apart from India. After the king devolved power to a democratic system, the elected government has taken several steps to diversify from Bhutan's almost complete dependence on India. India will have to take a more mature approach to Bhutan wanting to spread its wings, if it doesn't want to antagonize its closest neighbour.

Bhutan is vital to India's security calculus not only vis-a-vis China, but also in tackling some of the north-east insurgent groups like its crackdown on the ULFA groups in 2004. Bhutan's position in the Chumbi Valley, the tri-junction with India and China, makes its border resolution decisions key from a security point of view for India.

Sources said that some time ago the Chinese had offered some of the northern grazing grounds to the then king to settle a border dispute — China and Bhutan share a 500-km border. But Bhutan was unwilling to give the Chinese what they wanted — some of the key ridges in the tri-junction area. India controls all the ridges in that area giving it an edge, but possible Bhutanese concessions to China could affect that situation.

Japan has announced it will open its diplomatic mission in Bhutan by 2014, a commitment given to the young royal couple, when they visited Japan in November. Bhutan's sovereign investment institution is wooing FDI in data centre related businesses, renewable energy, organic farming as well as alternative building materials to reduce dependence on timber for construction. Bhutan is also pitching itself as the least corrupt country in South Asia, which is a big draw for foreign investors. China is also an attractive source of investment for the Himalayan nation, and most Indian officials are unhappily aware that Beijing can secure a quick advantage over India with its obvious strengths.

http://timesofindia.indiatimes.com/india/Chinas-coziness-with-Bhutan-rings-security-alarm-for-India/articleshow/14361713.cms