2 July 2025, NIICE Commentary 11399
Mohammad Taha Ali
The intensifying rivalry between the United States and China has transformed the Asia-Pacific into a dynamic arena in which even the smallest states must navigate complex pressures from both great powers. The Quad grouping and freedom-of-navigation operations underscore Washington’s commitment to countering Beijing’s assertiveness, while China’s “Made in China 2025” and “Digital Silk Road” initiatives signal its ambition to set technological and infrastructural standards across the region. Simultaneously, major-power competition extends beyond security, encompassing climate financing, digital governance and health diplomacy, forcing small capitals to weigh the benefits of foreign direct investment against concerns of strategic dependency. In this environment, South Asia’s smallest states Maldives, Bhutan and Nepal face a strategic dilemma: whether to maintain traditional non-alignment or recalibrate their policies in light of shifting power equations, domestic imperatives and evolving regional norms.
Constructivism and the Evolution of Non-alignment
Constructivist international relations theory posits that state identities and interests are socially constructed through discourse and practice; anarchy itself is “what states make of it” rather than an immutable condition. Under this lens, the classical doctrine of non-alignment as championed by Jawaharlal Nehru and Solomon Bandaranaike becomes an identity forged through normative commitments to sovereignty, anti-imperialism and autonomy. As Washington and Beijing actively court smaller capitals offering infrastructure financing, security partnerships, and diplomatic support, Maldives, Bhutan and Nepal are reinterpreting non-alignment, reconstructing their identities to balance material interests and normative aspirations in novel ways. This process involves domestic debates over national values, elite socialisation into new diplomatic norms and the selective appropriation of external ideas, resulting in hybrid strategic postures that reflect both traditional principles and contemporary exigencies.
Maldives: Inclusive Non-alignment through Strategic Hedging
The Maldives under President Mohamed Muizzu has shifted from principled non-alignment towards pragmatic hedging. In April 2024, Malé signed an Action Plan for comprehensive cooperation with Beijing through 2028, alongside twenty memoranda of understanding on port modernisation and green energy projects. Simultaneously, it has maintained maritime security dialogues with Washington, reflecting a nuanced approach designed to maximise geopolitical autonomy and economic dividends. By framing its foreign policy as “inclusive non-alignment,” Malé asserts agency in a competitive environment, leveraging Chinese infrastructure capital while sustaining US ties to prevent overreliance on a single patron. Domestic political debate emphasises parliamentary oversight of foreign agreements, and the government is also exploring partnerships with the EU, Japan and the United Arab Emirates for tourism development and climate-resilience initiatives, further broadening its diplomatic portfolio and reinforcing its stance as an independent actor in the Indian Ocean region.
Bhutan: Balancing Sovereignty and Gross National Happiness
Bhutan’s foreign policy has traditionally been characterised by cautious engagement, anchored in the 1949 Treaty of Friendship with India, which mandates Indian guidance on external affairs, and by a deliberate limitation of diplomatic ties. Yet the kingdom’s pursuit of “mindful capitalism,” epitomised by the proposed Gelephu Mindfulness City a USD100 billion eco-spiritual urban complex reveals a subtle shift towards diversified partnerships, including dialogues with Chinese investors concerned about environmental safeguards and spiritual authenticity. As Bhutan navigates Indian sensitivities and Chinese overtures, it constructs an identity that foregrounds Gross National Happiness alongside sovereignty. This has led to selective participation in multilateral forums such as SAARC and BIMSTEC, while eschewing formal security arrangements. Bhutan’s evolving stance thus reflects a constructivist reimagining of non-alignment, rooted in cultural values and ecological stewardship rather than mere geopolitical abstention.
Nepal: Multi-hedging between Giants
Situated between India and China, Nepal has long adhered to non-alignment in principle, yet its practice has oscillated between cautious bandwagoning and pragmatic hedging. Since formally joining China’s Belt and Road Initiative framework in December 2024, Kathmandu has sought hydropower and transportation projects while assuaging Indian concerns over sovereignty encroachment. Recent analysis concludes that Nepal rejects both pure balancing and bandwagoning, instead employing multi-hedging: engaging Beijing for infrastructure and credit, while preserving cultural, economic and security ties with New Delhi. This hedging strategy signals a reconstructed Nepali identity non-aligned yet opportunistic shaped by domestic developmental needs and cross-border cultural affinities. Furthermore, parliamentary debates in Kathmandu increasingly reflect a nuanced consensus that strategic autonomy must be underpinned by diversified partnerships, including selective engagement with other regional actors such as Russia and Japan. Civil-society actors and think-tanks play an active role in framing multi-hedging as a national imperative, arguing that blended diplomacy safeguards sovereignty while enabling Nepal to leverage competitive great-power offers for socioeconomic transformation.
Comparative Analysis
Across Maldives, Bhutan and Nepal, a shared pattern emerges: non-alignment evolves from passive neutrality to dynamic hedging, in which states actively construct their foreign-policy identities to extract maximum benefit from both US and Chinese overtures. Maldives pursues “inclusive non-alignment,” diversifying patrons; Bhutan upholds normative commitments of Gross National Happiness while selectively engaging external partners; and Nepal oscillates between hedging and restrained balancing to navigate its land-locked constraints. In each case, constructivist processes norm diffusion, identity redefinition and practice underpin the shift. These small states are not pawns, but active agents whose practices reshape the regional order and challenge the idea that non-alignment is a relic of Cold War bipolarity.
Implications for Regional Order and Conclusion
The reinterpretation of non-alignment by South Asia’s small states carries profound implications for the broader regional architecture. First, it complicates great-power efforts to forge exclusive alliances: hedging strategies dilute the coherence of blocs such as the US-led Indo-Pacific partnerships or China’s Belt and Road network. Second, it underscores the normative power of small states in promoting alternative paradigms such as Bhutan’s “Gross National Happiness” or the Maldives’ eco-tourism diplomacy that reframe development beyond material metrics, thereby challenging conventional growth models. Third, by reconstructing ‘non-alignment’, these states contribute to a truly polycentric regional order in which agency is diffused and power dynamics are contextually defined. Moreover, their practices serve as a catalyst for institutional innovation, compelling multilateral forums like SAARC and BIMSTEC to adapt to more diverse, interest-driven agendas. In this evolving landscape, small-state diplomacy emerges as a source of resilience, demonstrating that principled pragmatism can yield developmental and security dividends without sacrificing autonomy. Far from being mere spectators, Maldives, Bhutan and Nepal assert agency, reconstructing their identities, norms and interests to navigate strategic alignments on their own terms. Their dynamic engagement not only reshapes regional norms but also signals that influence is no longer the exclusive preserve of great powers; rather, it is shared with those who skilfully employ hedging, diversification and innovation in foreign policy. The future of non-alignment, therefore, lies not in static abstention but in the socially constructed practices of these empowered small states, which continue to chart distinct trajectories and redefine the contours of South Asian order in an era of intensifying US-China rivalry.
Mohammad Taha Ali is a second-year master’s student specialising in conflict analysis and peacebuilding at Jamia Millia Islamia. His research interests include small-state diplomacy and strategic studies in South Asia.
