Why is a US infrastructure grant behind the protests in Nepal?

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Nepal’s parliament is expected to start debating a deal on a US$500 million grant on Thursday, with a vote that could shatter the governing alliance led by Prime Minister Sher Bahadur Deuba, who took office in July. from last year. The deal has sparked widespread street protests and political parties, including members of the ruling coalition, are split over the grant.

WHAT IS THE GRANT?

The Millennium Challenge Corporation (MCC), a US government aid agency, agreed in 2017 to provide a $500 million grant to fund a 300 km power transmission line and road improvement project in Nepal.

The grant is part of an international agreement and should be governed by the principles of international law. Nepal will contribute an additional $130 million to the project.

Projects funded by the grant will be managed by the Millennium Challenge Account Nepal Development Board (MCA-Nepal), the main government agency responsible for overseeing the projects.

The Chairman and members of the Board of Directors are appointed by the Nepalese government, which must ensure that its decisions are not modified, supplemented, influenced or reversed.

WHAT WILL THE GRANT BE USED FOR?

The money will go towards maintaining the quality of roads across the Himalayan nation and constructing a high voltage power transmission line to improve the availability and reliability of electricity for domestic consumers and facilitate electricity trade with neighboring India.

The transmission line is expected to spur investment for utilizing Nepal’s abundant hydropower potential to generate up to 40,000 megawatts of clean power.

The Nepalese government and the United States say the grant is given without any conditions and the money does not need to be repaid and will bear no interest.

WHY THE OPPOSITION?

Opposition comes mainly from Nepalese communist parties, some of which are in coalition with the ruling Nepalese Centrist Congress. They have long sought closer ties with China.

They say the deal would undermine Nepal’s laws and sovereignty, and that the country will not have sufficient oversight from the board overseeing MCC-funded projects.

Critics view the grant as part of Washington’s Indo-Pacific strategy and claim it may have a military purpose.

Last week, thousands of rock-throwing protesters, mostly from the youth wings of the Communist parties, clashed with riot police who fired tear gas and used water cannons and batons to stop them from marching on the parliament.

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