Events last week illustrated that the true fault line in India-China relations remains the 60 year-old acrimony over the Tibetan frontier.

From India’s increasing presence in the disputed waters of the South China Sea to the duel over diplomatic influence in Myanmar, developments in recent months (here and here) amply illustrate how India and China will bump into each other as they grow in power and aspiration. But events last week illustrate that the true fault line in bilateral relations remains the 60 year-old acrimony over the Indo-Tibetan frontier. The border area was the site for the month-long war between the countries in 1962, as well as serious military crises in 1967 and 1987. It is the only place where the outbreak of armed conflict is a realistic possibility, as well as the focus for much of India’s expansive plans for military modernization. And the chances are good that the frictions here will only intensify in the years ahead.

The border was to be the stage for an act of India-China cooperation last week, when high-level talks were to convene in New Delhi aimed at managing the increasing quarrels along the Himalayan boundary. The meeting was also intended to prepare the way for a visit to India early next year by Xi Jinping, China’s vice president who is heir apparent to Hu Jintao. But the Chinese side abruptly pulled out of the talks after failing to persuade New Delhi to prevent the Dalai Lama, the exiled Tibetan spiritual leader who is much reviled in Beijing as a separatist, from giving the valedictory address at an international Buddhist conclave that was meeting in the Indian capital at the same time.

The border talks will likely be rescheduled in the coming weeks. Both governments were circumspect in their official comments about the postponement. Notably, the Global Times, a Beijing-based tabloid that is an unfailing tribune of bemusing jingoism including recent fulminations aimed at New Delhi, reacted cautiously. In an editorial titled “China and India mustn’t go for the throat,” it counseled that:

“Both sides must keep the border issue from worsening by focusing on keeping good will talks alive and being mindful of the consequences of a sudden breakdown.”

A high-level defense dialogue between the two countries will also go ahead as scheduled in New Delhi this week. With the United States becoming more strategically assertive in East Asia – punctuated by President Barack Obama’s tour in the region last month – Beijing has high incentive to stabilize relations with India while it turns its attention to the challenges raised by Washington. The Global Times underscored this priority when it noted that even though India “appears to be highly interested in facing off with China,” the rivalry with New Delhi “is not the primary focus of Chinese society.”

With its own plate piled high with economic and governance challenges, not to mention the multiple insurgencies underway in its northeastern region, India also is keen to tamp down border ructions. Indeed, in deference to Chinese sensitivities, Pratibha Patil, India’s president who was supposed to inaugurate the Buddhist assembly, cancelled her participation, while Prime Minister Manmohan Singh, also scheduled to make an appearance, likewise stayed away.

But events are conspiring to upend each side’s preferences. As last week’s contretemps demonstrate, the border dispute is not simply a matter of contested claims over real estate. It also is bound up with the increasingly volatile issue of Tibetan nationalism. It is no coincidence that Beijing in recent years has turned up the volume about its territorial claims on the northeastern Indian states of Sikkim and Arunachal Pradesh (the latter of which China has taken to calling “South Tibet”) at the same moment that the ethnic Tibetan population inside China has become more restive. Beijing views the agitations as the handiwork of the Dalai Lama, who has been especially effective in making Tibet an international cause célèbre, as well as the Tibetan government-in-exile. Both the Dalai Lama and the Tibetan exile core are based in Dharamsala in northern India.

Adding to the combustible mix is the location of Tawang Monastery, a revered site in Tibetan Buddhism that is just inside the Indian side of the contested border. The monastery is close to the birthplace of a 17^th-century Dalai Lama who remains an immensely popular historical figure among Tibetans. Its significance has greatly increased after the current Dalai Lama stated that he might be reincarnated outside of Chinese-controlled territory and that the selection process for his successor might break with precedent, such as being hand-picked by him or chosen by popular acclaim. With Tawang likely to play an important role in the selection, Beijing is keen to assert control over it.

Beijing’s apoplexy over the Dalai Lama, once again on display last week in New Delhi, is a measure of its insecurity on the Tibet issue. This hypersensitivity has impelled the People’s Republic, officially an atheistic party-state, to entangle itself in deeply into the affairs of Tibetan religious institutions, including absurdly banning the current Dalai Lama from being reborn anywhere but inside China and insisting that it alone has the definitive word on the selection of his successor. It drove Beijing in 1995 to kidnap a six year-old Tibetan boy who the Dalai Lama proclaimed as the Panchen Lama, the second-ranking figure in Tibetan Buddhism. The boy’s fate remains unknown; Beijing has promoted its own candidate as the true Panchen Lama. While many Tibetans see this person as a pretender, he provides Beijing a key opening to manipulate the selection for the next Dalai Lama, since the Panchen Lama traditionally has a central part in the process.

China has also embarked on an extraordinary charm offensive (here and here) to win the hearts and minds of the international Buddhist community, including plans to build a multi-billion dollar pilgrimage and tourism complex at the Buddha’s birthplace in Lumbini, Nepal, which is right on the border with India. New Delhi is counter-punching by sponsoring Buddhist gatherings, including the one last week that raised Beijing’s ire and which in one of its final acts decided to create an International Buddhist Confederation that will be headquartered in the Indian capital.

Given the volatility of the Tibetan issue, one could envision without much imagination scenarios that result in a military confrontation along the frontier. One might involve the outbreak of serious unrest within Tibet, leading to a Chinese crackdown that spills into India. Beijing could bring military pressure on New Delhi to clamp down on the Dalai Lama and his compatriots in Dharamsala, setting off a dangerous spiral of misperception and miscalculation. Alternatively, the passing of the Dalai Lama, who is now 76, could spark a tumultuous search for his successor, leading China to seize Tawang so it can control the outcome.

Unfortunately, there is ample historical precedent for such scenarios. Indian support of the abortive Tibetan uprising in 1959, for example, colored Beijing’s perceptions in the lead-up to the 1962 border war. And in the mid-1980s, an isolated incident in the Sumdurong Chu Valley in Arunachal Pradesh led to a serious military stand-off in early 1987. As one of the WikiLeaks dispatches from the U.S. embassy in Beijing reported, some Chinese observers believe that policy on Tibet is even more inflexible than toward Taiwan, where Beijing at least tolerates some U.S. interference. And concern among Chinese leaders over internal unrest is rising.

A New York Times article has called Tawang “the biggest tinderbox” in relations between India and China. Expect to hear more about it in the coming years.