In the latest escalation between two nuclear powers (aside for the US and North Korea of course), the Indian Army has ordered the evacuation of a village close to the Doklam India-Bhutan-China tri-junction amid to a standoff between Indian and Chinese solders, India's News 18 reports. This takes place just days after, as we reported earlier this week, China turned the war threat amplifier up to '11' by threatening India (in an article published a Chinese state-controlled newspaper) that it could conduct a "small-scale military operation" to expel Indian troops from a contested region in the Himalayas.
As a reminder, the latest standoff started in June, after Chinese troops started building a road on a remote plateau, which is disputed by China and Bhutan. Indian troops countered by moving to the flashpoint zone to halt the work, with China accusing them of violating its territorial sovereignty and calling for their immediate withdrawal.
After adding a large number of troops to the region, China then sharply escalated when a Chinese Ministry of Defense warned explicitly that Indian troops must leave the contested area if they do not want war.
Then, on Monday, the Independent reported that Chinese and Indian media have taken a strident approach, with an article in the Chinese state-owned Global Times quoting a research fellow at the Institute of International Relations of the Shanghai Academy of Social Sciences saying China is preparing to initiate a "limited war" to push Indian soldiers out of the area.
Which brings us to today when according to Indian media sources, a few hundred villagers living in Nathang village have been asked to vacate their houses immediately. Nathang is 35 km from the site of the two-month old standoff between Indian and Chinese troops.
As News 18 reports, it was not immediately clear if the order had been issued to accommodate thousands of soldiers of the 33 Corp who are reportedly moving from Sukna towards Doklam or whether it was a precautionary measure to avoid civilian casualties in case of a skirmish. Villagers of Nathang, a small village with just a few hundred inhabitants, whom News18 spoke to, confirmed witnessing heavy troop movement in the area of late.
While the Army officially did not talk about the troop movement, some senior military officers called it an annual exercise that takes place in September, but has been advanced this year. According to some reports, the Indian Army has called the troop movement in the area a regular maintenance move. The reports went on to quote army sources as saying that the military is in a 'no war, no peace' mode.
This, in military parlance, means being in a confrontational position with the enemy.
Meanwhile, the state-controlled Chinese media "has in the last few weeks been beating war drums quite incessantly" as the Indian press puts it. In a recent editorial published in China Daily, India was warned that "The countdown to a clash between the two forces has begun, and the clock is ticking away the time to what seems to be an inevitable conclusion."
The editorial, titled New Delhi should come to its senses while it has time, went on to state that the window to peacefully resolve the standoff in Doklam was closing as the row enters its seventh week.
Following the news of the latest border escalation, there were some wild swings in the USDINR, which spiked higher, hitting a high of 64.28 (1m NDF) on the day.
The reason markets are so sensitive to what is going on in an obscure border road is because the two of the world’s largest countries by population locked horns in the Sino-Indian War of 1962. And you guessed it – this was triggered by a disputed Himalayan border. The conflict lasted one month but resulted in over 2000 deaths. The reason markets remain sensitive to what is going on is because the two of the world’s largest countries by population locked horns in the Sino-Indian War of 1962, which as we reported before, was triggered by a disputed Himalayan border. The conflict lasted one month but resulted in over 2000 deaths.
And like in the North Korean crisis standoff, while conflict seems avoidable a resolution is not in sight, with the two countries likely to continue maintaining opposing stances, and refusing to budge. It seems like a war of words isn’t only being fought between US and North Korea, and regional markets are likely to remain vulnerable to ongoing uncertainty.