Kathmandu: Soon after Donald Trump’s administration issued a “stop-work” order for all existing foreign assistance and paused new aid, concerns in Nepal have been raised about the fate of US assistance, already announced or proposed one, for Nepal.
“Every dollar we spend, every program we fund, and every policy we pursue must be justified with the answer to three simple questions,” new secretary of state Marco Rubio, announced on January 22. “Does it make America safer? Does it make America stronger? Does it make America more prosperous?”
The US, Nepal’s second oldest diplomatic partner country, is among the largest donor to Nepal.
Trump administration’s stop work decision has also raised question about what will happen to the MCC-funded projects in Nepal.
MCC had signed 500 US$ grant assistance to Nepal in 2017 to build road infrastructure and electricity transmission lines. The Compact ratified by Nepal parliament in 2022, amid controversies and criticisms from various left-leaning political parties, reached entry into force in August, 2023 and is under implementation in Nepal at the moment.
Early this month, the Millennium Challenge Corporation (MCC) Board of Directors in Washington DC had approved $50 million of additional funding for the Nepal Compact for advancing Nepal’s development priorities through transformative, high-quality infrastructure projects.
Likewise, USAID’s funding to Nepal has also increased in recent times.
In May, 2022, Nepal and USAID signed a new Development Objective Agreement for five years. The grant, amounting to $659 million (equivalent to NRs 79.71 billion) over the five-year period, was meant for supporting Nepal’s goal of graduating to a middle-income country.
In February, 2023, during her visit to Nepal, USAID Administrator Samantha Power had announced to provide up to $58.5 million to advance democratic progress in Nepal.
In March, 2024, the USAID announced up to $85 million over five years to expand access to quality education for children in Nepal.
Commentators have raised questions about the implications of the US foreign aid cuts for countries like Nepal, including for MCC funded projects.
“Who is going to pay financial damages arising out of suspension of all US foreign assistance programs for 90 days by President Trump, including aid to Nepal under the Millennium Challenge Corporation (MCC)?” Katak Malla, geopolitical analyst and columnist, asked on his Facebook page. “A period of 90 days for a development project like MCC (to be completed within set limits) is of serious concern. Which country’s law (US or Nepal) governs the situation? Or should it be accepted as ’big fish eating small fish’ situation?”
The MCC Nepal Compact was signed in September 2017 during the first presidency of Donald Trump.
“Nepal’s oldest most important bilateral dev partner is USAID,” wrote Kashish Das Shrestha on X. “Trump’s recent stop-work order for USAID’s existing grants, contracts & new foreign aid has big implications for Nepal” including in public health, agriculture, environment and climate, disaster preparedness and response, among others, he wrote.
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