A move by Beijing and Thimphu to work towards establishing diplomatic ties has come with a quiet nod from New Delhi, which views a resolution of the Bhutan-China border dispute in its interest.

The Prime Ministers of China and Bhutan met for the first time on Thursday on the sidelines of the Rio+20 conference on sustainable development in Rio de Janeiro. Wen Jiabao and Jigmi Y. Thinley agreed their countries should establish diplomatic ties and discussed the border dispute.

Ordinarily, the development should have alarmed South Block because Bhutan is India’s closest ally, but sources here said the development had come with India’s knowledge and approval.

Bhutan-China relations have remained strained because of the dispute over their 470km border, which 19 rounds of talks have failed to solve, and because of Thimphu’s close ties with New Delhi.

Beijing has offered Thimphu a deal: it wants Bhutan’s northwestern areas in exchange for recognising its claim to its central areas. However, the northwestern areas lie next to Bhutan’s Chumbi valley, which is a tri-junction of the Bhutan, India and China borders and is of immense geo-strategic importance to China as it borders both Sikkim and Tibet.

Any such deal, therefore, will have massive strategic concerns for India. So, New Delhi, as it has itself done with Beijing, favours Bhutan increasing its engagement with China and possibly come to a satisfactory resolution of the border dispute.

In November 2007, Chinese forces had intruded into Bhutanese territory and dismantled several unmanned posts near the Chumbi valley, distorting the Sino-Bhutanese border near Sikkim.

The move had alarmed New Delhi because it brought the Chinese forces within a few kilometres of the Siliguri Corridor or Chicken’s Neck, which connects the rest of India with the Northeast and Nepal with Bhutan.

Bhutan now has diplomatic ties only with India, Nepal, Bangladesh and Myanmar. It has consular relations with China but not diplomatic ties or an embassy there.

Chinese state-run news agency Xinhua has quoted Thinley as saying his Rio talks with Wen were of historic significance.

Wen told Thinley that China was willing to forge formal diplomatic ties with Bhutan based on the five principles of peaceful coexistence, the Panchashila.

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