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US engagement in Nepal to grow, with or without MCC

Published Date : January 5, 2022

The United States, over the past couple of years, has stepped up its engagement with South Asian, including in Nepal, promoted by  China’s growing military, economic and political footprints in these countries. Mainly after the promulgation of the new constitution in 2015—a period also marked by growing US-China tensions—Washington has substantially increased its presence in Nepal, say observers.

America was the second country, after the United Kingdom, to establish diplomatic ties with Nepal. Given its strategic location, Nepal has always been on the US radar. For a long time, there was an impression in Kathmandu that Washington sees Nepal through Indian eyes and it lacked an ‘independent Nepal policy.’ Indeed, during the Maoist insurgency and the subsequent signing of the peace deal between the Maoists and the Seven Party alliance, the US closely worked with India on Nepal-related issues.

But over the past few years there have been visible changes in US policy towards South Asia, including Nepal, as US officials seem to increasingly separate India from the rest of South Asia in their policy engagements. A series of high-level visits in the recent past suggest that the US wants deeper engagement with Nepal.   

Kelly Keiderling, Deputy Assistant Secretary for Public Diplomacy who oversees South Asia (except India), minced no words in saying that other South Asian countries get overshadowed as America’s political leadership naturally gives more attention to India.

Keiderling, who was in Nepal last week, said: “… We divided India from Nepal, Sri Lanka, Bangladesh, Bhutan, Maldives, and other South Asian countries because India naturally gets too much attention from our political leadership. We want to boost our relation with India but if we keep India with other countries including Nepal, they are going to be lost bureaucratically.”

She said that the US wants closer engagement on several issues. “There is much potential in a country like Nepal, and we want to be a part of that potential. We pay close attention to that potential,” she said. 

What then are the key American strategic interests in Nepal?

Also read: The many Indias in Nepal 

Assistant Secretary for South and Central Asian Affairs, Donald Lu, who visited Nepal last week, broadly highlighted three key interests. The biggest interest is collaborating with Nepal on its economic development to eradicate poverty. Second, he said, America would like to increase trade and investment. He then said America would also like to see Nepal as an independent and sovereign country.

“Nepal is a big country but you are between two bigger countries [India and China]. It is really important for the US that Nepal remains an independent and sovereign country,” he added.

A series of recent unprecedented visits also demonstrate the US’s growing interest in Nepal. Suresh Chalise, former Nepali Ambassador to Washington, says the US has increased its engagements not only in Nepal but in the entire region.

“There are several issues between the two countries,” says Chalise. “The US is supporting Nepal’s social and economic development. The MCC remains unsettled and there are engagements relating to the environment, mountains, among others.”

In the past couple of years, a $500 million grant under Millennium Challenge Corporation (MCC), has become a contentious issue in bilateral relations, overshadowing others.  

In 2017, the two countries signed the compact to spur economic growth and reduce poverty in Nepal. The MCC Nepal compact, the first in South Asia, purportedly aims to strengthen Nepal’s energy sector, improve regional energy connectivity, and control transport costs to encourage growth and the private sector.

As per the agreement, the compact should have come into effect in 2019—yet it remains to be endorsed by the Nepali parliament.

America is pressing Nepali political parties for its early parliamentary ratification, without which implementation can’t move ahead. Over the past few weeks, a series of meetings between Nepal and American officials have focused on the MCC compact, with Nepali leaders assuring that the compact would be ratified by political consensus.

In the second week of September, Millennium Challenge Corporation (MCC) Vice President of Compact Operations Fatema Z Sumar visited Nepal, again to press Nepal’s parties on early ratification.

Sumar and Jonathan Brooks, MCC’s Deputy Vice President for Europe, Asia, the Pacific, and Latin America, met community, business, and political leaders to discuss the economic opportunities provided by the compact and to offer any needed clarifications.

But whether or not the MCC compact is endorsed, say US officials, bilateral ties will continue to be on sound footing. Stating that it is up to Nepal political parties and parliament to settle the MCC, America wants the MCC debate done and dusted with soon. Though there are no specific deadlines, the MCC board convenes on February 14, and it is likely to take a final call on the compact. 

Amid growing Chinese influence, the US also wants to work closely with Nepal on democracy-promotion. America has invited Prime Minister Sher Bahadur Deuba to the ‘Summit of Democracy’ which President Joe Biden is organizing in December.

Climate change is another area where the US plans to work closely with Nepal. Former foreign minister Pradeep Kumar Gyawali says Nepal can benefit from the US leadership on climate change. The US Embassy in Kathmandu consistently says that the US wants to work closely with Nepal on climate change.

Over the past seven decades, Nepal has been blipping more and more on the US radar. In 1950, the principal aim of US policy was to minimize the influences of communist China and other powers. The year 1960 thus saw a huge surge in American aid.

In the 1970s, America’s aid decreased slightly; in the 1980s, America focused on human rights and in the 1990s, its priority was democratic governance and free markets.  

After 9\11, America’s interest and engagement with Nepal increased substantially. After 2015, Washington has set new priorities and it now seems more and more concerned over growing Chinese economic and military influences in Nepal.

Recent high-level US visits to Nepal 

17 November 2021: Assistant Secretary for South and Central Asian Affairs, Donald Lu, along with Deputy Assistant Secretary for South and Central Asian Affairs Kelly Keiderling

9 September 2021: Millennium Challenge Corporation (MCC) Vice President of Compact Operations, Fatema Z. Sumar

20 February 2020: Chair of the House Foreign Affairs Committee’s (HFAC) Subcommittee on Asia, the Pacific, and Nonproliferation, Representative Ami Bera  

7 February 2020: Millennium Challenge Corporation’s Deputy Vice President for Europe, Asia, Pacific, and Latin America Jonathan Brooks

1 November 2019: Ambassador at Large for International Religious Freedom Sam Brownback

24 Feb 2019: Deputy Assistant Secretary of Defense for South and Southeast Asia Dr Joe Felter

11 January 2019: Commander of the US Indo-Pacific Command Admiral Phil Davidson

25 May 2018: A delegation from the US Government’s Millennium Challenge Corporation (MCC) led by Jonathan Brooks, Deputy Vice President for Europe, Asia, the Pacific, and Latin America

3 March 2017: The US Pacific Commander Admiral Harry B Harris Jr

Recent high-level Nepal visits to US

18 December 2018: Minister for Foreign Affairs Pradeep Kumar Gyawali on 18-20 December 2018 for delegation-level talks with Secretary of State Michael Pompeo.

14 February 2017: Finance Minister Gyanendra Bahadur Karki

2017: Chief of the Army Staff General Rajendra Chhetri to take part in Global Chiefs of Defense Conference on Countering-Violent Extremist Organization.

Source: Annapurna Express

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