With the US-China conflict intensifying since President Xi Jinping began challenging US hegemony in the Asia-Pacific region, the US has muscled its way into Nepal in a bid to nullify China’s growing influence there. Both China and the US are using economic engagement as a subterfuge to penetrate and influence the system in Nepal. And both are hoping to add a military or a security dimension to the relationship as early as possible.

With India throwing in its lot with the US in the Indo-Pacific arena, the challenge to China is that much greater and the pressure on Nepal is that much more now.  Nepal is caught in a cleft stick between US and China. While the US is a global power with a new-found interest in beefing-up its defenses in every part of Asia allegedly threatened by China, including Nepal, and with China breathing down Nepal’s neck across the northern border, the Nepalese wonder if their “strategic location” is a boon or a bane.      

US-China Rivalry

Given its geographical proximity to Nepal, China was naturally the first to make major economic inroads into Nepal. Beijing put in US$188 million in FDI in Nepal in fiscal year 2020–21, more than any other country. China and Nepal had signed a transit transport agreement in 2016. This gave Nepal an outlet other than the ones on the Nepal-India border, which could be closed to Nepal’s detriment if it falls foul of India. In May 2017, Nepal formally became part of China’s Belt and Road Initiative (BRI), ruffling feathers in Washington which sees the BRI as a pre-eminent threat to the Free World. In July 2017, Fatema Z. Sumar, Regional Deputy Vice President for the US Millennium Challenge Corporation (MCC) compact visited Nepal and urged that it accept the MCC’s US$ 500 million for projects in the power and road sector.

But the Nepalese were against the MCC because some of its provisions violated Nepal’s sovereignty. Clause 7.1 said that MCC’s rulers “will prevail over the domestic laws of Nepal”. Sec.6.8 provided immunity for MCC staff in “all courts and tribunals in Nepal”. Above all, the MCC was part of the anti-China Indo-Pacific Strategy. A US State Department document titled: “A Free and Open Pacific: Advancing a Shared Vision” recognised the MCC as the economic pillars of the Indo-Pacific Strategy. 

Nepalese governments feared antagonizing China, and kept postponing the ratification of the MCC. Eventually, Nepal and the US entered into a compromise and parliament ratified the MCC on 27 February  2022. It was agreed that Nepal will not be part of US Indo-Pacific Strategy or any strategic, military or security alliance of the US, Nepal’s Finance  Minister, Janardan Sharma said. Further, the MCC Compact will not be above Nepal’s constitution and laws. The audit of the MCC projects would be done by the Nepalese Comptroller and Auditor General.

State Partnership Program

Emboldened by the success in getting Nepal to yield, albeit after giving concessions, the US revived the State Partnership Program (SPP) pending since 2015. The SPP had disaster mitigation overtones but had unmistakable defense and geostrategic undertones.

According to official US information, the “State Partnership Program (SPP) is an exchange program between an American State’s National Guard and a partner foreign country. The US National Guard domestically supports US first responders in dealing with natural disasters, such as earthquakes, floods, and wildfires. In the event of natural and other disasters, ranging from hurricanes to earthquakes, floods, and fires, the United States seeks to share the best practices and capabilities of our National Guards — our first-line responders. SPP can be an effective means of facilitating this type of cooperation.”

Nepalese critics said that while disaster mitigation was fine, the rub lay elsewhere: The SPP is administered by the National Guard Bureau, guided by State Department foreign policy goals, and executed by the state Adjutants General in support of the Department of Defense policy goals.

“Through SPP, the National Guard conducts military-to-military engagements in support of defence security goals but also leverages whole-of-society relationships and capabilities to facilitate broader interagency and corollary engagements spanning military, government, economic and social spheres,” a US government website says.

In other words, the SPP is a multi-purpose vehicle to advance wide-ranging US political and strategic objectives under the overall cloak of humanitarian engagement.

Accompanying the push for SPP, there were high profile US visits which touched off speculation about America’s strategic goals vis-à-vis its rival China. Uzra Zeya, Under Secretary of State for civilian security, democracy, and human rights, and US Special Coordinator for Tibetan Issues, visited in May and talked to Tibetan refugees. She took up the refugees’ undocumented status since 1995 and urged documentation. To encourage Nepal towards this end, Zeya offered a developmental sop of over US$ 600 million. But her demand was not accepted by Nepal because China wants Nepal to send the refugees back to Tibet. Like Zeya, US Ambassador, Randy Berry, met Tibetan refugees. Furthermore, the Commander of US Army Pacific, Gen. Charles A. Flynn, visited Nepal and urged acceptance of the SPP.

A worried Chinese Ambassador, Hou Yanqi, called on Nepal’s Home Minister and inquired about Nepal’s continued adherence to the “One China” policy in the light of US attempts to prop up Taiwan with the support of Asian countries.

The Nepalese were worried about the militarization of their county by outside powers in the guise of aiding development and disaster management. The last thing they wanted was to turn their country into a theatre of conflict or war between China and the US over Tibet or any other issue.

This made Nepalese Home Minister Bal Krishna Khand to categorically state that the government would not join the SPP as it “strongly believes that Nepal’s territory should not be allowed to be used against any friendly nation.” Nepal is not connected with the SPP, he stressed.

By P.K. Balachandran