US President Donald Trump’s suspension of aid sparks political unrest in Nepal. (File Photo)
New DelhiFeb 24, 2025 16:34 IST First published on: Feb 24, 2025 at 16:33 IST
Political instability and uncertainty have been par for the course in Nepal for some years now, with the economy on a downward trajectory. However, some of the declarations by US President Donald Trump in the past two weeks have caused apprehensions in government circles.
Last week, Trump cancelled $39 million USAID support for fiscal federalism ($20 million) and biodiversity conservation ($19 fund million). He also suspended for three months the $550 million compact grant that Nepal has been show-casing to external donors with a message: We don’t want loans but grants, like the US has given. It’s uncertain whether the grant will be activated but Nepal has already spent about $190 million on land acquisition and compensation on the project, meant to build power stations, transmission lines and road up gradation.
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The impression that there has been a lot of corruption around US assistance – including in the drafting and implementation of Nepal’s constitution as well as development projects – is sticking to the rulers. There are loud demands from across the political spectrum for a high-level probe into corruption. Former King Gyanendra Shah in his message on Democracy Day — February 19 — went to the extent of soliciting support from the people and parties to “save” the country, and take it along on the path of peace and progress. The message came 17 years after he gave up the throne following the abolition of the monarchy by the constituent assembly. It seemed he was writing the obituary of the radical constitution that endorsed Nepal’s transition from a unitary Hindu kingdom to a federal secular republic. The voices against his message, some even demanding his arrest, appeared to be drowned out by the enthusiasm in his support.
Nepal signed an agreement with India for the supply of 400 MW power, and another 40 MW to Bangladesh, which is working. An agreement with the Millennium Challenge Corporation in 2017 – which the US said was proof of an enhanced level of bilateral friendship — was described as the largest hope for a prosperous Nepal. The agreement, after bitter debate and differences among Nepal’s political parties, was finally ratified in February 2022.
The likely demise of the compact unilaterally by the US will not only discourage investment – domestic and foreign — in the hydro sector; it will also affect Kathmandu’s agreement with India and Bangladesh on power supply. Worse, the Financial Action Task Force (FATF) finally found Nepal wanting to pass legislation to control black money and money laundering and put it on the “Grey List” which may invite further restrictions on external trade and discourage investment. Just about a month ago, Transparency International in its annual report showed that Nepal had risen further in the corruption index.
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All this has been happening when the country has been witnessing aggressive but scattered political protests — both in parliament and on the streets– mainly demanding that top leaders including present and past prime ministers be investigated for corruption. The Oli government’s response – trying to bring in investigative agencies under direct political control — is likely to backfire.
It was in these circumstances that the former king spoke out. He said his vacating the throne was not an act of weakness, but guided by the trust that political leaders will take the country forward. He directly appealed to the people for support and to move forward in a spirit of “forgive and forget” and promote national reconciliation.
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The message emanating from Washington has confirmed for many protesters that external aid came with strings attached and that elements of the constitution were thus influenced. Some members of the US Congress reportedly demanded a response from their government on why around $5,00,000, and possibly more, was spent in Nepal to promote “atheism”.
Perhaps the ruling forces – Nepali Congress, the Maoists and the Communist Party of Nepal-Unified Marxist Leninist – could have ignored the former king’s message. These parties have been in government by rotation, often in coalitions, for 18 years. Only three people — Sher Bahadur Deuba, Pushpa Kamal Dahal ‘Prachanda’ and K P Oli – have been PM. But the king’s message came along with the revelations from the US. That perhaps will make silence more difficult.
The writer is the Kathmandu-based contributing editor of ‘The Indian Express’
