Abstract

With growing India-China competition, smaller South Asian states like Nepal and the Maldives are coming under increased pressure to realign their foreign economic and security policies. Traditionally tied to India, these states are now facing a more turbulent and competitive regional order, further aggravated by the growing interests of the United States and other extra-regional actors in South Asia. This chapter looks at the case studies of Nepal and the Maldives to evaluate how this regional competition is affecting their external economic, security, and strategic decisions. We focus our analysis on three factors shaping their foreign policy behavior, two structural and one domestic: a changing distribution of power in the region, less concentrated in India as the traditional hegemon; the growing incentives to foster economic interdependence and cooperation, especially through new regional institutions; and the increasing political salience of foreign policy amid democratic transitions and partisan competition. Our insights into how Nepal and the Maldives are managing both external and internal pressures contribute to the comparative understanding of how smaller states' domestic conditions affect their foreign policy choices in competitive regional orders.