China suffers big jolt in Nepal, Donald Trump's one decision spoils Xi Jinping's plan as...

India.com

3 days ago

New Delhi: The Trump administration has decided to continue the Nepal Millennium Challenge Compact (MCC), putting an end to months of speculation. The Trump administration's decision is being seen as a major setback for China, which is looking to expand its Belt Road Initiative (BRI) to Nepal. The MCC is a package of development projects in Nepal, which the US launched to counter China's BRI. However, after Donald Trump became president, the newly formed Department of Government Efficiency (DOGE) decided to shut down the MCC as part of a cut in foreign funding. Why did the US decide to continue MCC?
After directing US aid agencies to wind up their work, the State Department began reviewing foreign aid projects and programmes of various agencies, including MCC and USAID. The Kathmandu Post reported in its post that the US government's foreign aid review recommended the continuation of the Millennium Challenge Corporation Nepal Compact. A representative of the US Embassy told the Kathmandu Post that the Nepal government has been informed about this decision. What did Nepal say on US' decision on MCC?
Since January, Nepal was confused about how the government would manage the funds if the Trump administration completely withdrew from MCC. The Kathmandu Post quoted a senior Finance Ministry official as saying that this new decision of the USA has brought relief. Although the US side had assured us that the projects would not be affected, we were still looking for alternative resources for projects under MCC. How much money has gone to MCC?
Nepal and MCC signed an agreement in September 2017 for energy and road projects, under which the US would provide assistance of $500 million. Nepal would give $150 million from its side, which was increased to $197 million. In this way, the total investment in the project under MCC has reached $697 million. MCC had decided to put in $50 million to cover the funding shortfall, which could take the amount to over $740 million. How is MCC America's answer to China's BRI?
MCC is considered to be the answer to China's Belt and Road Initiative. Nepal is also a part of China's BRI project. In June this year, the MCC headquarters said that it is effectively countering the BRI. In a resolution presented in the US Congress, MCC said, 'for more than two decades, MCC has invested in partner countries to create new opportunities for American investment, trade and employment, opening up valuable opportunities for American businesses. It has also effectively countered the growing influence of the Belt and Road Initiative (BRI)'.