Kathmandu, February 19
US President Donald Trump has described Nepal's aid as a fraud. In a White House press conference, President Trump described Nepal's federalism aid as a fraud.
"$20 million for 'fiscal federalism' in Nepal. Listen to these numbers. This is all fraud," said Trump. "$19 million for biodiversity conservation in Nepal."
The Trump administration has now cancelled both of these grants.
Trump's aide, Elon Musk, had advised the White House administration to cancel both of these grants. Based on that suggestion, the Trump administration decided to cancel both grants on February 16.
Previously, aid given to Nepal in the name of secularism was widely criticised. President Trump suspended foreign aid for 90 days after taking office. The suspension has also put projects in Nepal on hold.
The US-funded Millennium Challenge Corporation (MCC) project in Nepal has also been halted. It has long been at the centre of Nepal's political conflict, causing significant divisions in the parliament.
The Ministry of Finance announced on Tuesday that the US-funded MCC project has been suspended for 90 days.
This decision is also seen as a result of Donald Trump's policy of cutting foreign aid, which he implemented after taking office as president of the United States last month.
In the United States, Donald Trump's administration has shut down programmes of the US aid agency USAID, citing cost cuts. It has also had an impact in Nepal. However, nothing was said about MCC.
According to the most recent information from the Ministry of Finance, confusion about the MCC has increased. The MCC invested in Nepal's electricity and road infrastructure through a US grant.
The goal was to build 300 kilometres of electricity transmission lines and substations, as well as upgrade and repair 77 kilometres of roads, for a total cost of $500 million from the United States and $197 million from Nepal.
According to the New York Times report on MCC, large hydropower projects in Nepal will be affected if the transmission line is not completed.
Nepal signed the MCC Compact Agreement on September 15, 2017, during Trump's inaugural administration.
However, the agreement sparked intense debate in Nepal, with leftist parties in particular refusing to accept it as part of America's strategic Indo-Pacific strategy.
However, on February 27, 2022, Parliament passed the MCC Compact Agreement, which included a 12-point explanatory declaration. The Sher Bahadur Deuba-led government got the MCC approved by the House. The actual implementation of the MCC began a year-and-a-half ago.
According to reports, China claimed that the United States had forcefully imposed the largest grant ever given by any country in Nepal's history.
The New York Times report also states, "The infrastructure grant to Nepal was made through the Millennium Challenge Corporation, an agency established by the U.S. Congress in 2004 during the George W. Bush administration. It has an annual budget of only about $1 billion, but it provides funding for programs around the world, including ones aimed at limiting the influence of China in Asia and Africa."
