China-US arm-wrestling in Nepal, played out over $500 million grant

On Sunday night, Nepal’s House of Representatives passed by voice vote the Millennium Challenge Corporation Nepal Compact, a $500 million grant from the US to build power and road infrastructure projects. The biggest American financial pledge to Nepal so far, it was signed more than four years ago, but ratification was delayed by criticism that it undermined Nepal’s sovereignty. The deal was ultimately approved with an 12-point explanatory note stating that it has no military or security component and nothing to do with the US strategy in the Indo-Pacific — and that Nepal would be free to pull out if the US violated this understanding. Two major constituents of the ruling coalition, Pushpa Kamal Dahal’s Communist Party of Nepal (Maoist Centre) and Madhav Kumar Nepal’s Communist Party of Nepal (Unified Socialist), did about-turns and supported the motion after Prime Minister Sher Bahadur Deuba read them the riot act.