There have has been instances when a powerful neighboring countries are observed as being difficulty for the smaller ones. Moreover, the phenomena of subjugation roots back to imperialism era and its loitered notion of superiority is still practiced by most of the developed and sturdy countries. But the most vital thing here to be considered is the other nations’ (or smaller nations’) action against the dominance, which sometimes is demonstrated either in a resilient fashion or completely in submissive manner. In the era of globalization where nations’ relationship is intricate in a complex web of dependency, the nations with limited resources, weak diplomacy and instable politics are mostly compelled to succumb itself in front of relatively huge powers. And if the powerful states happens to be the immediate neighbors than the things might get more complex. In addition to this, the situation can be worse if the nation is a Least Developed Country (LDC hereafter) and also Land Locked States like Nepal and Bhutan. This research paper intends to analyze situation of such two nations, namely Nepal and Bhutan that are squeezed between China– a rising global power and India- an aspiring regional power. The interfering and controlling nature of these giants, at times, through diplomatic and coercive tactics has been evident in both the nation. But, despite the similarities these two small countries are seen to have adopted different strategies while dealing with their neighbors. If we look at Nepal we can see that it has developed bilateral relation with its both neighbors. And Bhutan has bilateral relation only with India and still has not welcomed China in its friendship zone, and this puzzle drives the research paper. The paper attempts to understand the situation from the lens of realism, as the theory implies that the nation is the nucleus and whatever action it undertakes is based on the advantage and mostly concerned in their individual power growth. It believes that any nation’s behavior does not involve the utopian notion but functions solely on the self-indulgence manner. Furthermore, the paper has tried to make an analysis with the help of inductive theory. The research finds that realism along is to sufficient to understand the small country’s perspective. There are many other factors that have contributed in making the strategic choices that these small countries have opted in order to establish a certain kind of relationship with their neighbors. Along with this the area of study needs to be broadened in order to comprehend the situation completely.

This study discusses how the World Trade Organization could promote the development of an international gas market by playing a more prominent role in regulating rights essential to effective pipeline gas transit. Gas transit is network-dependent in the sense that it cannot be established without the existence of pipeline infrastructure in the territory of a transit State and the ability to access this infrastructure. Nevertheless, at an inter-regional level, there are no sufficient pipeline networks that would allow gas to travel freely from a supplier to the most lucrative markets. The existing networks are often operated by either private or State-controlled vertically-integrated monopolies that are usually reluctant to release unused pipeline capacity to their potential competitors. These obstacles diminish the gains from trade for States endowed with scarce and relatively immobile natural resources, such as gas, including developing land-locked countries that rely on revenues from gas exports. These obstacles can also undermine Members’ energy security and their sustainable development achieved by shifting domestic production from dirty fuels to cleaner energy sources – namely gas. From a technical perspective, gas transit can be established by invoking what is referred to in this study as ‘third-party access’ and/or ‘capacity establishment’ rights. The first main question that this thesis analyses is, therefore, whether, and, if so, how these rights are regulated by WTO rules relevant to transit, including: GATT Article V:2 (first and second sentences) establishing the principles of freedom of transit and non-discrimination, the ‘non-violation complaint’ provision under GATT Article XXIII:1(b), and the GATS. This question has not been answered by WTO panels or examined sufficiently by scholars. The key contribution of this study to the existing academic literature on energy transit lies in the fact that this study analyses the above rules through the prism of systemic integration of WTO law sources with other relevant rules of public international law, including principles of general international law and treaties regulating transit. By contrast, previous researchers discussed the regulation of third-party access and capacity establishment rights from a limited perspective of WTO law. The second main question examined in this study is how WTO transit rules could be improved through a legislative reform to regulate particular aspects of trade in pipeline gas better – namely third-party access and capacity establishment rights. This question is answered by exploring two options: the codification of the existing principles of general international law relevant to these rights in the WTO legal system and the progressive development of WTO transit rules through the expansion of additional commitments of Members on energy services under the GATS. While this study analyses the relationship between WTO transit obligations and inherent ancillary rights (namely third-party access and capacity establishment rights) implied in these obligations in the context of trade in pipeline gas, the conclusions reached here may have practical application in other areas of network-bound trade, such as trade in electric power.