NIAS Area Studies


PAKISTAN READER

Photo Source: US Embassy Nepal
   NIAS Course on Global Politics
National Institute of Advanced Studies (NIAS)
Indian Institute of Science Campus, Bangalore
For any further information or to subscribe to GP alerts send an email to subachandran@nias.res.in

Nepal and the US
The controversial MCC Nepal Compact

  Kabi Adhikari 

Unnecessarily, the MCC compact is being mired in controversies.  Some leaders of the ruling government argue that the MCC is a part of the Indo Pacific Strategy (IPS).

What happened?

The largest-ever bilateral grant agreement between Nepal and the US under the United States Millennium Challenge Corporation's Nepal Compact has courted controversy. The grant was offered when Nepal improved its record on human rights, governance, social sector along with sixteen out of twenty policy indicators. The issue got highly contentious in Nepal only after one and a half year of the agreement due to objections of some ruling communist party leaders. 

Leaders from the ruling Nepal communist party (NCP) have gone public over its interpretation and remain fundamentally divided on whether to ratify the US Nepal compact or not. While a section of the ruling party led by Prime Minister and Chairperson of NCP, K P Oli and his Foreign Minister Pradeep Gyawali is lobbying for its endorsement from the parliament, powerful leaders within the NCP including another NCP Chairperson and former Prime Minister Pushpa Kamal Dahal along with two other former Prime Ministers are opposing the compact's requirement of House approval. The most important part to acknowledge is that the opposition party the Nepali Congress is lobbying in favour of the compact and wants it to be ratified from the House of Representatives.  Usually, in Nepal, the opposing parties hold different views from that of the government position but in case of MCC, there appears to be a broad national consensus.  

What is the background?

The Millennium Challenge Corporation (MCC) is a bilateral United States foreign aid agency established by the U.S. Congress in 2004. MCC Nepal Compact was signed in 2017 in Washington D.C. There are certain requirements to be completed to start the implementation of the agreement.  MCC will provide technical assistance for the power sectors of Nepal receiving the US $500 million grant to construct 312 km of 400 kV electricity transmission lines and three substations.  In this respect, no prior agreement of Nepal with a third country was needed as the cross- border transmission line is a critical part of the Electricity Transmission Project. The active engagements with the Governments of Nepal and India, MCC played an imperative role for mutual interest. However, the parliamentary ratification from Nepal's side got more complex. 

Those against it feel that they do not need any sort of assistance from the US. Their unwillingness to accept such a huge amount of money for development is not only questionable but also makes it clear that the agreed amount of $500 million can be sent back to other developing countries as the MCC Board has approved compacts for 37countries including Nepal. While the competing views on MCC continue, Nepal is dreaming for Cross Himalayan Railway with a hefty loan from China which boasts of the most expensive railways. Given the topography at the border areas in the northern side, this becomes one of the most complex tasks.  China is yet to build the 540 Km road from Shigatse to Kerung. It definitely takes years to reach Kathmandu from Kerung. The railway process to connect Nepal further moves ahead only then when the railway gets constructed to Kerung. Nonetheless, superfluous arguments are coming out against the transmission lines to be constructed with the US assistance through which Nepal can export excess electricity in the near future to SAARC countries and also import according to its needs. Leaders must understand the direction in which the country is moving ahead and the public should be aware of it.

What are the issues?

Unnecessarily, the MCC compact is being mired in controversies.  Some leaders of the ruling government argue that the MCC is a part of the Indo Pacific Strategy (IPS). The Indo Pacific Strategy Report 2019 published by the US Department of Defence nowhere mentions MCC. In fact, MCC compact existed much before the emergence of IPS.  MCC compact to does not mention any specific strategy while disseminating its budget to the region. As a democratic country, such issues are an open book in the US. Therefore, it seems to be a waste of time to argue whether the grant is a part of the strategy or not.  

Let's take an instance of Belt and Road Initiative (BRI) of China. BRI was formed with the objective of economic impact. Some observers have taken it as a push for Chinese dominance and leadership in global affairs. Doesn't China have any strategy besides this? Chinese President Xi Jinping termed BRI as the project of the century, which implies various meanings. Every country has its own interests while granting assistance. One cannot, therefore, deny the fact that none of the countries pursues collaboration with other countries without considering their own interests or benefits. This strategy prevails even in the conversation between two people. Therefore, while granting people’s tax paid money to other countries, obviously some sort of self-interest becomes the dominant factor. Nevertheless, the agreement takes place to ascertain the welfare of the grant receivers also. Therefore, disagreement over a self-made agreement is bizarre in our context. Indeed, such decisions take the country years back in progress.  It is the current need to collaborate with donor and neighbouring countries for the sake of development of the nation without compromising self-esteem. 

History and geography are the two eyes of any nation.  While we cannot ignore lessons from history, geography remains a compelling factor that has to be factored into the process of foreign policymaking.  Nepal seriously lacks investment in research. The knowledge manufacturing industry is not the government’s priority.  Moreover, it takes years to draw insightful outcomes from experts and implement them while formulating policies.  'Prosperous Nepal, Happy Nepali' will remain only a slogan if we follow the same track ever.  In the rapidly shifting geopolitics focused on China and India, there is a growing focus on Nepal.  In this great game, Nepal appears to have been already trapped in the strategic radar of India, China and the US. It is not an easy task to come out of a triangular trap for which it has to be robust with in-depth research and strong democratic institutions along with clear strategy and a long-term vision. Given this situation, it is advisable not to make any issue unnecessarily debatable without knowing the details of development-oriented grant projects.

What next?

A section of party leaders who have stood against the MCC Compact should know the fact that the Nepal and US armies are taking part in the joint Military Training/Exercises under the Indo Pacific Command. The Military Exercises have helped to enhance friendly ties and peacekeeping capacity of Nepal. Besides them, the US has handed over two M28 Skytrucks to the Nepal Army (NA) representing the first part of one of the largest security grants to Nepal in history with approximately $15 million grant from the United States along with spare parts, pilot and maintenance training and support to facilitate modern maintenance management practices. The US has already announced to handover other two Sky trucks to the Nepal Army within 2021.

In addition to these, Nepal has been receiving grants from the United States Agency for International Development (USAID) for years. Similarly, the World Bank, Asian Development Bank (ADB) and International Monetary Fund (IMF) are also providing a grant to Nepal.  The compact offer that was made by the American government under the MCC for the improvement of roads and construction of power transmission lines awaits parliamentary approval before it goes for implementation.  The report submitted by the task force formed by the ruling party NCP on MCC has overtly stated that it would be passed by the parliament only with amendments arguing that the existing agreement greatly impacts national sovereignty and freedom of Nepal and its people. Nepal will unquestionably fail to receive the grant from the US with a prolonged process. 

 

Ms Kabi Adhikari is a Visiting Research Fellow in Centre for South Asian Studies (CSAS), Kathmandu.

Print Bookmark

August 2026 | CWA # 2241

Urja R Kudalkar | Urja R Kudalkar is a postgraduate student at the Department of Public Policy, Ramaiah University of Applied Sciences, RUAS, Bengaluru. She is currently a research intern at the National Institute of Advanced Studies (NIAS), Bengaluru.

The Board of Peace Plan for Gaza:
August 2026 | CWA # 2235

Adwaith Sankar | Adwaith Sankar is an undergraduate student pursuing Political Science and International Liberal Studies through the NUS-Waseda Double Degree Programme. He is currently an intern at NIAS.

Southeast Asia (April-June 2026)
August 2026 | CWA # 2232

Dattesh D Parulekar | Dr Dattesh D. Parulekar is an Assistant Professor at the School of International and Area Studies, Goa University.

Latin America (Apr-Jun 2026):
August 2026 | CWA # 2226

Nithin V | Nithin V is a postgraduate student in International Relations, with an interest in geopolitics, international political economy, and climate governance. He is currently an intern at the National Institute of Advanced Studies (NIAS), Bengaluru.

Colombia's ban on Female Genital Mutilation:
August 2026 | CWA # 2222

Namrata L Ghanghatkar, Priyanka Makhijani and Urja R Kudalkar | Namrata L Ghanghatkar, Priyanka Makhijani, Urja R Kudalkar are postgraduate students at the Department of Public Policy, Ramaiah University of Applied Sciences. They are currently Research interns at the National Institute of Advanced Studies (NIAS)

Peru's new President Netanyahu's Washington visit
July 2026 | CWA # 2217

Namrata L Ghanghatkar, Priyanka Makhijani, Urja R Kudalkar | Namrata L Ghanghatkar, Priyanka Makhijani, Urja R Kudalkar are postgraduate students at the Department of Public Policy, Ramaiah University of Applied Sciences. They are currently Research interns at the National Institute of Advanced Studies (NIAS)

The Berlin Pride attack
July 2026 | CWA # 2216

Manikranth Chakravarthula | Manikranth Chakravarthula is a doctoral student at the Conflict Resolution and Peace Research Programme, School of Conflict and Security Studies, National Institute of Advanced Studies, Bengaluru.

The Houthis:
July 2026 | CWA # 2213

Brighty Ann Sarah | Brighty Ann Sarah is a Research Assistant at the National Institute of Advanced Studies. Bengaluru

The US-Iran War, Week 22:
July 2026 | CWA # 2211

Priyanka Makhijani | Priyanka Makhijani is a postgraduate student at the department of Public Policy, School of Social Science, Ramaiah University of Applied science. She is currently an intern at NIAS.

AI's Rogue Agent Breach:
July 2026 | CWA # 2210

Adwaith Sankar | Adwaith Sankar is an undergraduate student pursuing Political Science and International Liberal Studies through the NUS-Waseda Double Degree Programme. He is currently an intern at NIAS.

ASEAN Regional Forum:
July 2026 | CWA # 2209

Namrata L Ghanghatkar | Namrata L Ghanghatkar is a postgraduate student at the Department of Public Policy, Ramaiah University of Applied Sciences, Bengaluru. She is currently a research intern at the National Institute of Advanced Studies (NIAS).

The return of US-Canada Tariff Tensions:
July 2026 | CWA # 2208

Madhura Meenakshi Tanikella | Madhura Meenakshi Tanikella is an undergraduate student from the Department of Political Science, School of Liberal Arts, Alliance University, Bengaluru. She is currently an intern at NIAS.

The US-Saudi Arabia Nuclear Cooperation Agreement:
July 2026 | CWA # 2204

Brighty Ann Sarah | Brighty Ann Sarah is a Research Assistant at the National Institute of Advanced Studies (NIAS), Bengaluru.

The Houthis target Saudi Arabia:
July 2026 | CWA # 2203

Brighty Ann Sarah | Brighty Ann Sarah is a Research Assistant at the National Institute of Advanced Studies (NIAS), Bengaluru.

US-Iran War, Week 21:
July 2026 | CWA # 2197

Madhura Meenakshi Tanikella | Madhura Meenakshi Tanikella is an undergraduate student from the Department of Political Science, School of Liberal Arts, Alliance University, Bengaluru. She is currently an intern at NIAS.

The US-Iran War, Week 20:
July 2026 | CWA # 2195

Radhika M Agarwal | Radhika M Agarwal is a an internt at NIAS and also a postgraduate student at the Department of Politics and International Relations in Pandit Deendayal Energy University, Gandhinagar.

The C5+1 Critical Minerals Dialogue: 
July 2026 | CWA # 2189

Dhivya KM | Dhivya K M is an intern at NIAS and is also a postgraduate student from the Department of Financial Economics, Madras School of Economics, Chennai.

The IMF World Economic Outlook: 
July 2026 | CWA # 2184

Deb Dutta | Deb Dutta completed his graduation from the Department of Political Science, Sir Aurobindo International Centre of Education (SAICE), Puducherry. He is currently an intern at NIAS.

UNHCR Global Trends Report 2025: 
July 2026 | CWA # 2180

Madhura Meenakshi Tanikella | Madhura Meenakshi Tanikella is an undergraduate student from the Department of Political Science, School of Liberal Arts, Alliance University, Bengaluru. She is currently an intern at NIAS.

Iran after Ali Khamenei
July 2026 | CWA # 2177

Deb Dutta | Deb Dutta completed his graduation from the Department of Political Science, Sir Aurobindo International Centre of Education (SAICE), Puducherry. He is currently an intern at NIAS.

PM Takaichi's India visit: 
July 2026 | CWA # 2174

Yesasvi Koganti | Yesasvi Koganti is an undergraduate student at the Department of Political Science, Madras Christian College, Chennai. She is also an intern at NIAS, Bengaluru. 

The Israel-Lebanon Framework:
July 2026 | CWA # 2172

Brighty Ann Sarah | Brighty Ann Sarah is a Research Assistant with the Global Politics team at the Science, Technology and International Relations (STIR) Programme at the National Institute of Advanced Studies (NIAS), Bengaluru.

The US-Iran negotiations:
June 2026 | CWA # 2164

Shreya Upadhyay | Dr Shreya Upadhyay is an Assistant Professor at Christ (deemed to be) University, Bengaluru, and Fellow, Kalinga Institute of Indo-Pacific Studies.

The United States (April-June 2026)
June 2026 | CWA # 2159

Madhura Meenakshi Tanikella | Madhura Meenakshi Tanikella is an undergraduate student from the Department of Political Science, School of Liberal Arts, Alliance University, Bengaluru. She is currently an intern at NIAS.

The US-Iran MoU
June 2026 | CWA # 2151

Rohini Reenum | Rohini Reenum is a doctoral student at NIAS. She is working on Governance in Areas Beyond National Jurisdiction using the case study of the BBNJ Agreement.

Israel's Ultra-Orthodox Jews:
June 2026 | CWA # 2149

Brighty Ann Sarah | Brighty Ann Sarah is a Research Assistant with the Global Politics team at the Science, Technology and International Relations (STIR) Programme at the National Institute of Advanced Studies (NIAS), Bengaluru.

The US-Iran MoU:
June 2026 | CWA # 2136

Acsah H | Acsah H is a postgraduate student at the Department of Geopolitics and International Relations, Manipal Institute of Social Sciences, Humanities and Arts, MAHE, Manipal, Udupi. She is currently a research intern at NIAS.

The Blue Origin Rocket Explosion:
June 2026 | CWA # 2135

Madhura Meenakshi Tanikella | Madhura Meenakshi Tanikella is an undergraduate from the Department of Political Science, School of Liberal Arts, Alliance University, Bengaluru. She is currently an intern at NIAS.

Shangri-La Dialogue 2026:
June 2026 | CWA # 2134

Aishal Hab Yousuf | Aishal Hab Yousuf is a postgraduate student at the Department of International Studies. Stella Maris College, Chennai. She is currently an intern at NIAS, Bengaluru.

Shangri-La Dialogue 2026: Four Major Takeaways
June 2026 | CWA # 2132

Brighty Ann Sarah | Brighty Ann Sarah is a Research Assistant with the Global Politics team at the Science, Technology and International Relations (STIR) Programme at the National Institute of Advanced Studies (NIAS), Bengaluru.

The US-Iran War, Week Fourteen:
June 2026 | CWA # 2131

Rohini Reenum | Rohini Reenum is a doctoral student at NIAS. She is working on Governance in Areas Beyond National Jurisdiction using the case study of the BBNJ Agreement.

Israel-Lebanon Tensions:
May 2026 | CWA # 2127

Madhura Meenakshi Tanikella | Madhura Meenakshi Tanikella is an undergraduate from the Department of Political Science, School of Liberal Arts, Alliance University, Bengaluru

The Quad Foreign Ministers' Meeting 2026:
May 2026 | CWA # 2124

Glynnis Winona B | Glynnis Winona B is an undergraduate student at the Department of International Relations, Peace Studies, and Public Policy, St. Joseph's University, Bengaluru. She is currently an intern at the National Institute of Advanced Studies (NIAS), Bengalur

The Crisis in Cuba:
May 2026 | CWA # 2121

Deb Dutta | Deb Dutta completed his graduation from the Department of Political Science, Sir Aurobindo International Centre of Education (SAICE), Puducherry. He is currently an intern at NIAS.

Israel, Lebanon, Hezbollah, and the Border Tensions:
May 2026 | CWA # 2120

Brighty Ann Sarah | Brighty Ann Sarah is a Research Assistant with the Global Politics team at the Science, Technology and International Relations (STIR) Programme at the National Institute of Advanced Studies (NIAS), Bengaluru.

Conflicts in the Middle East
May 2026 | CWA # 2116

Yesasvi Koganti | Yesasvi Koganti is currently pursuing undergraduate studies at the Department of Political Science, Madras Christian College, Chennai. 

India, the UAE, and PM Modi’s visit:
May 2026 | CWA # 2114

Glynnis Winona B | Glynnis Winona B is an undergraduate student at the Department of International Relations, Peace Studies and Public Policy, St. Joseph's University, Bengaluru. She is currently an intern at the National Institute of Advanced Studies (NIAS), Bengaluru

What makes the UAE a global player?
May 2026 | CWA # 2112

Nithin V | Nithin V is a postgraduate student in international relations at Loyola College, Chennai. He is currently an intern at the National Institute of Advanced Studies (NIAS), Bengaluru.

Why does the Falkland Islands dispute keep recurring?
May 2026 | CWA # 2109

Aishal Hab Yousuf | Aishal Hab Yousuf is a postgraduate student at the Department of International Studies, Stella Maris College, Chennai. She is currently an intern at the National Institute of Advanced Studies (NIAS), Bengaluru.

North Korea's Constitutional Amendment 2026:
May 2026 | CWA # 2104

Brighty Ann Sarah | Brighty Ann Sarah is a Research Assistant with the Global Politics team at the Science, Technology and International Relations (STIR) Programme at the National Institute of Advanced Studies (NIAS), Bengaluru.

The Israel-Lebanon Ceasefire:
May 2026 | CWA # 2091

Brighty Ann Sarah | Brighty Ann Sarah is a Research Assistant with the Global Politics team at the Science, Technology and International Relations (STIR) Programme at the National Institute of Advanced Studies (NIAS), Bengaluru.

Conflicts in the Middle East:
May 2026 | CWA # 2090

Brighty Ann Sarah | Brighty Ann Sarah is a Research Assistant with the Global Politics team at the Science, Technology and International Relations (STIR) Programme at the National Institute of Advanced Studies (NIAS), Bengaluru.

The US-Iran War, Week Ten:
May 2026 | CWA # 2088

Nithin V | Nithin V is a postgraduate student in International Relations, with an interest in geopolitics, international political economy, and climate governance. He is currently an intern at the National Institute of Advanced Studies (NIAS), Bengaluru.

King Charles's US Visit:
May 2026 | CWA # 2087

Siddhi Halyur | Siddhi Halyur is an undergraduate student at the Department of International Relations, Public Policy and Journalism at St Joseph's University, Bengaluru. She is currently an intern at the National Institute of Advanced Studies (NIAS), Bengaluru.

Japan, Vietnam and PM Takaichis Visit
May 2026 | CWA # 2086

Aishal Hab Yousuf | Aishal Hab Yousuf is a postgraduate student at the Department of International Studies, Stella Maris College, Chennai. She is currently an intern at the National Institute of Advanced Studies (NIAS), Bengaluru.

UAE's Exit from OPEC:
May 2026 | CWA # 2085

Glynnis Winona B | Glynnis Winona B is an undergraduate student at the Department of International Relations, Peace Studies and Public Policy, St. Joseph's University, Bengaluru. She is currently an intern at the National Institute of Advanced Studies (NIAS), Bengaluru

US troop withdrawal from Germany:
May 2026 | CWA # 2083

Brighty Ann Sarah | Brighty Ann Sarah is a Research Assistant with the Global Politics team at the Science, Technology and International Relations (STIR) Programme at the National Institute of Advanced Studies (NIAS), Bengaluru.

The US-Iran War, Week Nine:
May 2026 | CWA # 2081

Jenin Raj S | Dr Jenin Raj S is an Assistant Professor and Head of the Centre for Media, Department of Journalism, Mount Carmel College (Autonomous), Bengaluru.

Media freedom hits a 25-year low:
April 2026 | CWA # 2079

Aishal Hab Yousuf | Aishal Hab Yousuf, Postgraduate student, Department of International Studies, Stella Maris College, Chennai. She is currently an intern at the National Institute of Advanced Studies (NIAS), Bengaluru.

Japans New Defence Posture:
April 2026 | CWA # 2074

Brighty Ann Sarah | Ms Sarah is a Research Assistant at NIAS and Assistant Editor of NIAS Conflict Weekly.

Israel-Lebanon Ceasefire:
April 2026 | CWA # 2073

Akshath Kaimal | Mr Kaimal is a Research Assistant at NIAS. He works on Pakistan and Africa.

The US-Iran War, Week Eight:
April 2026 | CWA # 2065

Lakshmi Venugopal Menon | Dr Lakshmi Venugopal Menon is an academic and policy researcher specializing in Gulf studies, cultural heritage trafficking, geopolitics, migration, Afghan politics and the Taliban.

The Middle East (JanMar 2026):
March 2026 | CWA # 2042

Preetha Renganarayanan

March 2026 | CWA # 2001

Preetha Renganarayanan

February 2026 | CWA # 1986

Preetha Renganarayanan

February 2026 | CWA # 1959

Yesasvi Koganti | Yesasvi Koganti is an undergraduate student from Madras Christian College, Chennai.

UK and China
February 2026 | CWA # 1957

Preetha Renganarayanan | R Preetha is pursuing post-graduation in the Department of International Studies, Stella Maris College, Chennai, and is a Research Assistant at the National Institute of Advanced Studies, Bengaluru.

The India-US interim trade framework
February 2026 | CWA # 1956

Lekshmi MK | Lekshmi MK is pursuing post-graduation in the Department of Political Science, Madras Christian College, Chennai, and is a Research Assistant at the National Institute of Advanced Studies, Bengaluru.

End of the New Strategic Arms Reduction Treaty (START)
August 2025 | CWA # 1780

Abhiruchi Chowdhury

Trump tariffs:
June 2025 | CWA # 1694

Aashish Ganeshan

The US:
May 2025 | CWA # 1688

Ayan Datta

Gaza
May 2025 | CWA # 1675

Lekshmi MK

Turkey:
May 2025 | CWA # 1673

Padmashree Anandhan

Ukraine:
May 2025 | CWA # 1667

R Preetha and Brighty Ann Sarah

East Asia:
September 2019 | CWA # 162

Lakshman Chakravarthy N

5G: A Primer
December 2018 | CWA # 71

Mahesh Bhatta | Centre for South Asian Studies, Kathmandu

Nepal
December 2018 | CWA # 70

Nasima Khatoon | Research Associate, ISSSP, NIAS

The Maldives
December 2018 | CWA # 69

Harini Madhusudan | Research Associate, ISSSP, NIAS

India
December 2018 | CWA # 68

Sourina Bej | Research Associate, ISSSP, NIAS

Bangladesh
December 2018 | CWA # 67

Seetha Lakshmi Dinesh Iyer | Research Associate, ISSSP, NIAS

Afghanistan