Why a $630-million US investment project in Nepal has run aground

After Nepal entered the Belt and Road Initiative agreement with China relating to infrastructure development in May 2017, the United States intensified its efforts in the Himalayan state: in September 2017, it signed a deal to create the Millennium Challenge Corporation Nepal Compact.

Over the last few years, dignitaries from China and the US have frequented Nepal to give impetus to their respective projects.

The high-profile two-day visit by Chinese President Xi Jinping in October 2019 was the most significant. During the visit, Nepal and China signed 20 agreements, including the support for the Belt and Road Initiative, railways and roads construction worth about $2.75 billion.

However, the US-backed Millennium Challenge Corporation Nepal has failed to take off and has yet to be ratified by Nepal’s members of Parliament. Thanks to Nepal’s ever-bickering politicians, the Millennium Challenge Corporation Nepal has become the hottest topic of debate in Kathmandu and has divided the nation.

With a budget of $630 million (America’s $500 million contribution and Nepal’s $130 million), the Millennium Challenge Corporation Nepal Compact, has two projects in its portfolio: a 300-km 400 kilovolt electricity transmission line and an upgrade to a 100-km east-west highway.

According to its official website, the Millennium Challenge Corporation is a US Foreign Assistance…

Read more