Nepalese policemen use shields to protect themselves as protesters opposing a proposed US half billion dollars grant for Nepal clash with them outside the parliament in Kathmandu, Nepal,Feb 27, 2022. (NIRANJAN SHRESTHA / AP)
Despite fierce protests across the country, Nepal's House of Representatives passed the Nepal Compact of the United States Millennium Challenge Corporation on Feb 27.
The war in Ukraine may have distracted public attention from it. But this is a matter that will have far-reaching consequences economically and geopolitically, not just for Nepal, but for Nepal's neighbors as well.
On the surface, the compact is about a $500 million grant from the US to build power and road infrastructure projects. Which is all benefit, no harm. It is the biggest US financial pledge to Nepal to date. And it is money that Nepal can use.
But it took more than four years for the Nepali parliament to ratify it, and many people in Nepal have been protesting it for good reason. They rightly believe the compact undermines their country's sovereignty.
For one thing, it explicitly stipulates that in the event of a dispute over the law of Nepal and the deal, the latter will prevail.
Nepal's ruling party warned that it goes against their country's longstanding non-aligned foreign policy, and may create conditions for the US to dictate Nepali foreign policy.
Few issues have divided Nepal as the compact has done. On Feb 16, for instance, thousands of people gathered in several cities to protest against the upcoming endorsement of the compact by parliament.
To many in Nepal, greater US engagement means greater troubles for the country. Having witnessed the worrying consequences of US intervention in many developing countries, much of the Nepali public doubt the wisdom of subjecting their country to US dominance as the latter escalates geopolitical competition with China, a longtime friendly neighbor.
And the Americans haven't even bothered to conceal what they are after.
Some US officials have reportedly acknowledged the compact is a part of their Indo-Pacific Strategy.
To address public concerns and facilitate the compact's approval, Nepali authorities came up with a 12-point explanatory note promising there is no military or security component in the projects, they will have nothing to do with the US Indo-Pacific Strategy, and Nepal will pull out when the US violates the understanding.
No matter how the Nepalese see it, the US has its own agenda and its own geopolitical objectives. And the consequences may be serious should any part of the compact be used against neighboring China.
Considering China's commitment to helping Nepali development, especially its latest promise to help it turn from a "land-locked" country to a "land-connected" one under the Beijing-proposed Belt and Road Initiative, it is in Nepal's best interest to stay out of the US' geopolitical games.