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BusinessNepal

Nepal's parliament approves contentious US aid

February 27, 2022

Lawmakers in Nepal voted in favor of the $500-million grant by Washington for new road and power projects. But its opponents say the US move undermines Nepal's sovereignty.

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Riot police used bamboo batons against protesters outside Parliament
Police moved in to disperse protesters who are against the US infrastructure grantImage: Niranjan Shrestha/AP Photo/picture alliance

Nepal's Parliament on Sunday approved a controversial $500 million (€444 million) aid grant from the United States that critics say undermines the Himalayan nation's sovereignty.

The government was able to convince enough lawmakers to approve the proposal following a brief debate, Speaker Agni Sapkota said. While the session was ongoing, protesters against the measure clashed with police outside the parliament building.

Power and road projects can now proceed

The grant was agreed in 2017 by the Millennium Challenge Corporation (MCC), a US aid agency, to provide funds for a new electricity transmission line and road improvement project.

The Nepalese government, which originally sought the grant, says the aid is critical for the socio-economic development of the country and will benefit 24 million of Nepal's 30-million population.

The aid does not need to be repaid and Washington says it comes with no strings attached.

Excavation on Nepal's first road tunnel project in 2020
Nepal has received funding from India and China for infrastructure projects, and now US aid will help build new roads and power linesImage: Aryan Dhimal/ZUMA Wire/Zumapress/picture alliance

Deal opposed by China-linked political parties

Opposition to the aid package came mainly from Communist parties, two of which are part of the coalition government.

The parties also have close links to Beijing, which the US says is behind a smear campaign against the project.

Opponents say they believe the aid would undermine Nepal's laws and sovereignty as it will not have sufficient control over the projects.

They say it's part of Washington's Indo-Pacific strategy, which has military components that could bring American soldiers to Nepal.

"The agreement will bring Nepal under the security umbrella of the United States and should be rejected," Bhim Rawal, a member of the opposition Nepal Communist Party, told Parliament.

Police use tear gas, bamboo batons against protesters

Finance Minister Janardan Sharma had assured deputies that the aid would not undermine the constitution and laws.

"It will promote the interest and welfare of the country and should be accepted," Mahant Thakur, a deputy of the Loktantrick Samajwadi Party, said during the debate.

For several days, protesters have violently clashed with the police.

On Sunday, demonstrators chanted slogans, pelted police with stones and pushed barbed wire and metal barricades that were blocking the streets leading to Parliament.

Riot police responded with tear gas and water cannons, and beat protesters with bamboo batons.

mm/dj (AP, Reuters)