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Days after Elon Musk, who is heading the US Department of Government Efficiency, announced a series of expenditures, including $39m allocated for Nepal, US President Donald Trump backed him saying that support to Nepal’s fiscal federalism is a fraud. 

The Elon Musk-led Department of Government Efficiency (DOGE) took to X on Sunday to announce that it has canceled the funding to be received by Nepal among several other nations. Nepal was set to receive $20m for fiscal federalism and $19m for biodiversity conservation. These funds were among several global aid allocations that have now been scrapped, including $40m for gender equality programs and $47m for improving learning outcomes in Asia. US President Donald Trump painted Elon Musk as his enforcer-in-chief Tuesday, hailing the tech billionaire’s zeal in implementing the blizzard of executive orders the president has issued since returning to office. In a joint interview broadcast on Fox News, the two men spent substantial time singing the other’s praises and dismissing concerns that Trump is overstepping his executive powers.

Trump has signed scores of executive directives in the past three weeks, many of which have been challenged in the courts as potentially unconstitutional. Billionaire Musk, who was Trump’s top donor during his 2024 presidential campaign, was tasked with leading the newly-created Department of Government Efficiency (DOGE), with the declared goal of rooting out “waste, fraud and abuse” in federal spending.

“One of the biggest functions of the DOGE team is just making sure that the presidential executive orders are actually carried out,” Musk told Fox News. In the interview, Trump insisted his policies–including a wholesale onslaught on federal institutions–should be implemented without delay and said Musk was instrumental in pushing them forward.

“You write an executive order and you think it’s done, you send it out, it doesn’t get done. It doesn’t get implemented,” Trump said. He added that Musk and the DOGE team have now become an enforcement mechanism within the federal bureaucracy to enact his administration’s agenda without anyone standing in their way—or else risk losing their jobs. And some guy that maybe didn’t want to do it, all of a sudden, he’s signing it,” Trump said.

The Donald Trump administration’s decision to freeze all foreign aid has begun to show its effects in Nepal. US Secretary of State Marco Rubio issued an internal memo to all relevant agencies and diplomatic missions, announcing the suspension of foreign aid with exceptions only for emergency food assistance and military funding for Israel and Egypt.

In Nepal, USAID and its implementing partners have temporarily halted numerous ongoing projects. Pre-scheduled visits from US officials to Nepal have also been canceled. Organizations working with USAID now face an uncertain future, with no clarity on the fate of previously signed projects. Officials indicate that all activities will remain suspended for the next three months, adding to the ambiguity surrounding existing programs.

USAID has been Nepal’s largest donor in sectors such as health, education, agriculture and food security, water and sanitation, energy, environment and humanitarian assistance. Organizations collaborating with USAID were reluctant to comment on the impact of the freeze but acknowledged they were rushing to communicate with stakeholders about the decision.

The memo seen by Agence France-Presse (AFP) explicitly states, “No new funds shall be obligated for new awards or the extension of existing awards until each proposed new award or extension has been reviewed and approved.” This directive effectively pauses US funding for critical initiatives like PEPFAR, an anti-HIV/AIDS program launched under President George W Bush in 2003. PEPFAR, which has saved an estimated 26m lives, primarily in developing countries, is now facing uncertainty. The memo permits exceptions on a case-by-case basis and allows temporary funding for salaries and administrative expenses during this period.

The freeze comes with an 85-day timeline for an internal review of all foreign assistance. Rubio justified the decision by stating that it was necessary for the new administration to ensure foreign aid commitments were not duplicated, were effective and aligned with President Trump’s foreign policy priorities. Rubio, once a proponent of development assistance, noted the need for greater oversight.

The US has long been the largest donor in dollar terms, providing more than $64bn in overseas development assistance in 2023, according to the Organization for Economic Cooperation and Development. However, the Trump administration’s approach marks a significant departure from bipartisan support for foreign aid in Washington.

On his first day in office, Trump signed an executive order suspending foreign assistance for 90 days. Anti-poverty organization Oxfam criticized this move, calling it a drastic shift from a longstanding US consensus on foreign aid. “Humanitarian and development assistance accounts for only around one percent of the federal budget; it saves lives, fights diseases, educates millions of children and reduces poverty,” said Oxfam America President Abby Maxman. She warned that cutting these programs could have severe “life or death consequences.”

Trump’s decision to withdraw from the Paris Climate Accord and the World Health Organization further compounds potential challenges for countries like Nepal, where foreign aid plays a vital role in addressing critical issues.

In May 2022, the Nepal government and USAID signed a five-year assistance agreement worth $658m. The grant aimed to strengthen democratic governance, promote enterprise-driven economic growth, and build resilience in communities most vulnerable to natural disasters and climate change. This partnership highlighted the long-standing collaboration between the US and Nepal in addressing developmental and environmental challenges.

However, the recent freeze has cast doubt on the continuation of such initiatives. USAID operations in neighboring countries like Bangladesh have also come to a halt, citing the executive order. The suspension of foreign assistance underscores the Trump administration’s shifting priorities and its potential repercussions for vulnerable nations like Nepal.

As the freeze unfolds, the implications for Nepal’s development, public health and disaster resilience remain uncertain. The situation demands close monitoring, as delays in funding and project implementation could disrupt critical progress across multiple sectors.

Nepal can transform into a developed nation only if it succeeds politically, diplomatically, and economically, moving from a surviving ‘small state’ to a significant ‘influencing power’ by defying the notion of traditional theories of international relations that ‘bandwagon’, ‘bargain’, or ‘buffer’.

A variety of political shocks and waves have been sparked following Donald Trump’s triumph as the 47th president of the United States, both domestically and internationally. The president-elect vowed supporters that he would make America’s future “bigger”, “bolder”, “richer”, “safer”, and “stronger” during his victory speech. As a longstanding superpower, America has many domestic and international challenges to deal with. Trump’s rationale to preserve American greatness, diplomatic intelligence, and the legacy of American thinking on foreign policy, however, is yet again to be tested.

The interests and policies of the United States have a significant impact on those of numerous nations, both bigger and smaller, including its partners, allies, and adversaries. The greatness of America is largely dependent on how well it handles a variety of international issues, such as the ongoing conflicts in the Middle East and Ukraine, its relations with rising superpower China, the EU, and NATO, as well as how responsibly it handles several transnational issues such as climate crisis, cyber terrorism, maritime security, and nuclear and AI threats, among others.

The “bigness” of Israel—a small state in the Middle East—has been constantly questioned by many nations, perhaps as a result of American vested interest in the region and beyond. In contrast, Nepal’s small state status is high, definitely as a result of the enormous, rising neighbors on both sides. Bigness usually occurs as a relative phenomenon of smallness. The ‘bigness of smallness’ in this context refers to the small state’s geostrategic credibility both within and outside of the region.

Despite the fact that small states are less likely to use their economic or military might to alter the actions of larger states, they can still have a significant impact on global discourse and the development of the international order. It takes more than just military prowess, economic power, or geographic advantage for states to leave a lasting impact. They must take a calculated risk and project a ‘paragon of diplomacy’ in order to gain the trust of larger nations.

Small states in regional integration

Nepal, one of the world’s small powers, has greater significance in regional politics. Nepal’s existing geo-location, positioned between two rising economic giants—China and India—has drawn constant attention and careful scrutiny from the World Powers. This could perhaps be by assessing the soft potentials and natural resources of Nepal or perhaps by thinking that Nepal can become a stable hub to challenge or counter challenge the immediate neighboring powers. Nepal’s location has become more significant in the region than ever before because of the Belt and Road Initiative’s (BRI’s) projection of Nepal as a bridge connecting China and the rest of South Asia.

One example of the bigness of smallness is the role played by Singapore and Vietnam in the US-North Korea summit in 2018 and 2019 respectively, where their bases facilitated the two nuclear-armed rivals host the meeting successfully. Vietnam has proven to be equally trustworthy to the east and west, while Singapore’s history of neutrality, dependability, trustworthiness, and security is one of the factors that led to its selection as the summit location.

Despite its small size, Iceland's location is crucial for transatlantic security. Iceland is perhaps the only nation without an armed forces in the world. The North Atlantic Treaty Organization (NATO) counts Iceland as one of its founding members due to its geostrategic location. The geo-location of Iceland has strengthened the US-Iceland relationship. It is said that Iceland’s geo-strategic position is more important to US security than the security of Iceland itself.  The geo-location of Georgia, Ukraine, Kosovo, and Macedonia is also crucial for collective NATO security, while from the Russian perspective, Ukraine’s possible accession to NATO poses a threat to its national security.

Another instance of small states advancing the interests of larger states is the US’s historical relations with Bangladesh and Sri Lanka. Although things were different in the recent past, Malaysia, Sri Lanka, and the Maldives are thought to serve Chinese interests in the BRI. In the Middle East, Jordan’s stability is again largely under US interest. Tunisia is another small state with geo-strategic importance for regional stability in the Middle East and North Africa. Sweden, Norway, and Denmark have made exemplary efforts in promoting the norms of sustainable development and leadership attempts in the climate crisis within the UN, which shows the examples of Nordic countries acting as environmental champions. Despite their smallness, the Small Island Developing States (SIDS) and the Alliance of Small Island States (AOSIS) are having a significant influence on the international discourse.

The bigger states now have to acknowledge that small states are the primary drivers of economic growth, peace, and security. The role of small states is crucial for economic integration, soft partnerships, connectivity, access, and regional integration.

The bigness of Nepal

Nepal’s geostrategic significance has been steadily increasing in recent years. As evidenced by the history of South Asian politics and recent developments, Nepal’s geostrategic location in the region has gradually changed from a ‘safe zone’ to a ‘buffer zone’, to a ‘competition zone’, and finally a ‘clout of attraction’. Nepal must, therefore, play very smart and cautiously in its political, diplomatic, and economic dealings if it hopes to maintain its growing prominence.

The growing geostrategic rivalry in Nepal between the US, China, India, and the EU shows how important Nepal is to all of these nations. The competition between China and the US, India, or the EU in the areas of trade, energy, investment, diplomacy, and railway connectivity in Nepal demonstrates the country’s geostrategic importance. A new milestone in Nepal-China strategic relations was reached in 2016 when Prime Minister Oli visited China and signed ten agreements in a variety of sectors, granting Nepal access to four Chinese seaports for trade with a third nation. Nepal’s geo-strategic credibility has been assiduously enhanced by China’s confidence in Nepal as the protector of the security and stability of the Tibetan region and a geo-strategic soft partnership in the BRI. Prime Minister Oli should strategically step up in bringing the previous agreements to execution, with the interests of the country at the forefront, as he has received a formal invitation to visit China in the first week of December.

In an effort to counteract China’s increasingly powerful influence in the region and beyond, India is also demonstrating its influence in Nepal through a customized strategy. Nepal’s geostrategic significance increases as India works harder to keep China out of South Asian politics. Because of the delicate and unstable nature of the Tibetan region, the BRI's soft partnership, and China’s security concerns, Nepal would be more strategically significant even if India wanted China to be a part of South Asian integration.

Beyond Nepal’s regional bigness, Prime Minister Oli’s participation in the 79th session of the United Nations General Assembly (UNGA) with the vision of becoming a developed country by 2043, as well as his speeches at Harvard and Columbia University, the two top universities in the world, and the World Economic Forum (WEF) in 2018, marked a new beginning for Nepal to improve its coexistence in the global economy, trade, and diplomacy. Several admirers both domestically and internationally have praised Prime Minister Oli’s valiant attendance at the 79th and 73rd sessions of the UN General Assembly, where he presented the country’s image with a broad foreign policy outlook.

Oli has become Nepal’s first prime minister in office to speak at esteemed universities like Harvard, Columbia, and the World Economic Forum. He nobly reaffirmed the need to use global governance to address the new transnational issues instead of pleading for sympathy and grants. This demonstrates Nepal's aptitude to effectively defend its sovereignty and its equal standing in the global arena as a model of multilateral diplomacy. In recognition of the shifting global political, diplomatic, economic, and globalization landscape, Nepal organized the “2019 Nepal Investment Summit”, which drew in over 700 high-ranking international investors, policymakers, industry experts, speakers, dignitaries, influential figures from the global economy, and high-ranking government representatives from about 40 nations.

The key question, however, is whether the succeeding administrations have been sufficiently strategic to seize and capitalize on those opportunities.

The BRI induced bigness

India’s denial of participation in the Belt and Road Initiative (BRI) might have made Nepal more strategically important to China. Nepal now has to play a geo-strategic role in the region as a participant of the BRI. Trilateral cooperation between China, India, and Nepal would have been possible if India had signed the BRI project. China and India would then trade through Nepal. India and China would have benefited far more from that than from trade with the United States or Europe, which could again heighten Nepal’s bigness.

For China and India’s security, Nepal’s geostrategic location is more crucial than Nepal itself. India and China are geographically close to Nepal, so Nepal’s security—or lack thereof—will have an impact on their security. India’s constant concerns about security and China’s pursuit of economic dominance can only be resolved by a strategy known as ‘Broad Regional Integration’, or the new BRI, in which Nepal can serve as an integrating link.

Nepal is thought to be the link between China and South Asia in the BRI after signing the prospect. In 2019, President Xi visited Nepal. He might be open to making a second trip to Nepal. Nepalese delegates are being invited by Beijing and Delhi in succession. Nepal is regularly visited by leaders and officials from China and India. Prime Minister Modi has already made four trips to Nepal during his previous terms as India has retracted its diplomatic path to the country. In his third term as India’s prime minister, he is probably going to make his trip to Nepal in the foreseeable future. The fourth BIMSTEC summit was successfully held in Kathmandu. Nepal is viewed as a mediator by all of the regional organizations’ member states, which enhances Nepal’s geostrategic importance. Furthermore, as the latest SAARC chair, all eyes are on Nepal to restart the stalled SAARC process. 

Nepal, however, must take a calculated step forward and demonstrate exceptional diplomacy in order to gain the trust of larger economies. Nepal has never been a supporter of bloc and alliance politics. And it shouldn't. Instead, it should continue to uphold its neutral, reliable, compliant, and lofty ideals. The idea behind economic perspective is to practice economic dynamics in a way that promotes security, connectivity, and peace. Nevertheless, in order to serve the interests of the country and enhance its steadily rising international profile, Nepal must create a thorough ‘Political Intelligence Culture’ and practice ‘Stately Economic Diplomacy’ with a broad vision of building Nepal as a developed nation.

Vision 2043: Building a developed nation 

Prime Minister KP Sharma Oli underscored Nepal’s prospect to achieve developed nation status by 2043 during his speech to the 79th session of the United Nations General Assembly (UNGA). He, however, did not specify how the country would accomplish such an ambitious mission. It might not go as smoothly as anticipated, yet it would neither be impossible to accomplish this mission. The fact that a number of development indicators—such as economic competitiveness, political stability, diplomatic influence, social integrity, quality of life, academic recognition, scientific and technological innovation, tech and data sovereignty, public services, and foreign policy—lag well behind international metrics may make it more difficult. Conversely, it might be achievable if the vision and philosophy were turned into reality with pragmatic policy and action. The country should be passionate enough to adjust and grasp the pace of transformation—both within and outside—and aspire to thrive by cooperating with the international community, especially with development partners, including those in close proximity.

Nepal can be transformed as a developed nation only if it succeeds politically, diplomatically, and economically, moving from a surviving ‘small state’ to a significant ‘influencing power’ by defying the notion of traditional theories of international relations that ‘bandwagon’, ‘bargain’, or ‘buffer’. To put it another way, it has to understand the ‘bigness of smallness’ in reality and promote ‘self-help’ in order to realize the eminence of a developed nation. The country must, in fact, prudently use its ‘soft powers’ and internal values—such as geography, history, natural resources, culture, morale, civilization, and education—as well as foreign policy, technology, modernism, infrastructure, and research and development such that it can smoothly attain the status of a developed nation.

The author is a geo-strategic thinker and techno-geopolitical analyst

Prime Minister KP Sharma Oli’s upcoming visit to China in the first week of December marks a notable departure from the Nepali tradition of newly appointed prime ministers prioritizing India for their first international visit. In his previous terms, Oli adhered to this unspoken convention, but this time, India has not extended an invitation despite his four months in office, signaling what some interpret as a shift in India’s approach to Nepal.

Oli’s visit is generating significant attention both domestically and internationally, largely due to his track record of signing strategic agreements with China during his past tenure. This will be his third official visit to China as Nepal’s prime minister; he previously visited in 2016 and 2018. Notably, during his premiership, Chinese President Xi Jinping also made a landmark visit to Nepal in 2019, the first by a Chinese leader in over two decades.

In 2016, as Nepal was recovering from months-long economic blockade imposed by India, Oli signed a Transit and Transport Agreement with China, granting Nepal access to Chinese ports for essential imports and reducing Nepal’s reliance on India. The agreement also marked a major shift in the age-old Nepal-India relations. This agreement was formalized in 2019, further strengthening bilateral ties between Nepal and China. 

Although high-level exchanges between Nepal and China are not new, Oli’s upcoming visit is under heightened scrutiny.

One of the major focuses of this visit is China’s Belt and Road Initiative (BRI), with which China has long urged Nepal to make concrete progress. Discussions are ongoing about a BRI implementation plan—a topic broached but left unresolved during former Prime Minister Pushpa Kamal Dahal’s visit to Beijing. Nepal is also expected to request debt relief on a Chinese loan for Pokhara International Airport, potentially in exchange for BRI commitments. India and Western countries have expressed implicit concerns, warning Nepal of potential debt risks and corruption associated with the BRI. While Nepal signed the BRI framework in 2017, specific project implementation has stalled due to Nepal’s reservations and external pressures.

Oli’s visit also highlights Nepal’s complex diplomatic balancing act amid growing international interest in its relations with China. India and Western nations are increasingly wary of Chinese influence in South Asia, including in Nepal, and are closely monitoring this visit. Within Nepal’s ruling coalition, there is a disagreement over engagement with China; the Nepali Congress is cautious about progressing with the BRI, whereas Oli’s party, the CPN-UML, advocates for advancement. Oli has sought to maintain coalition harmony by consulting coalition leaders, including Congress President Sher Bahadur Deuba, as they work to finalize the agenda.

A few days earlier, UML and NC held a meeting to discuss Oli’s planned China visit. The two parties agreed that Foreign Minister Arzu Rana Deuba would work on the agenda of the visit after consultations with NC leaders. The meeting between UML and NC indicates that Prime Minister Oli wants to deal with China without upsetting his coalition partner.

Over the past few years, mainly after Xi Jinping’s Nepal visit in 2019, bilateral cooperation between two countries is ever expanding. Along with continuous development partnership, two countries are cooperating in the new areas. Another vivid change in China’s engagement in Nepal is through its Communist Party of China. Over the past few years, CPC has been engaging with Nepal’s major parties, particularly focusing on communist parties. Senior leaders of CPC continuously visit Nepal and China is also inviting Nepal’s political parties from center to local levels. Similarly, China also organizes sessions with leaders of Nepal’s major parties to inform about the decisions taken by CPC and Chinese government.

In the third week of Oct 2024, Chen Gang, Secretary of China’s Qinghai Province, led a delegation visiting Nepal with two major objectives, first organizing an interaction program with Nepal’s political parties and another to meet Nepal’s political parties. The delegation shared the decisions made by the Third Plenary Session of the 20th CPC Central Committee which has taken some important decisions in the areas of opening up after 1978. This is just an example CPC often organizes such programs in Kathmandu and Beijing. In January this year, Sun Haiyan, Vice minister of the international Liaison Department of CPC, conducted a high-level discussion with the leaders of parties represented in Nepal’s Parliament. In the program, she made a remark that some forces are trying to spoil Nepal-China relations so Nepal’s political parties should be cautious of it.

Since President Xi’s visit in 2019, China’s presence in Nepal has expanded beyond government-to-government partnerships, notably through the Chinese Communist Party (CPC) directly engaging with Nepal’s political landscape. Dozens of delegations mainly from three communist parties—CPN-UML, CPN (Maoist Center) and CPN (Unified Center)—have visited China to participate in various programs. Leaders from NC, Rastriya Swatantra Party and other fringe parties have also visited China over the years, but not quite as often as the communist parties.

Senior CPC leaders have also frequently visited Nepal, fostering ties primarily with Nepal’s communist parties and facilitating interactions that include briefings on CPC policies. In October 2024, Chen Gang, the CPC Secretary of China’s Qinghai Province, led a delegation to discuss recent CPC decisions and further bilateral cooperation, underscoring this growing political engagement.

CPC is mainly engaging with Nepal’s communist parties, often advising them to unite and form one powerful communist force. In August this year, when Nepal faced unprecedented floods and landslides, it was the CPC and not the Chinese government that rushed to provide relief to the disaster survivors. The CPC channelized the aid through Nepal’s major political parties. 

There is no doubt that China’s influence in Nepal is increasing at different levels. The rising presence of Chinese NGOs, which were virtually absent a decade ago, is one example. Organizations such as the China Foundation for Rural Development (CFRD) now actively participate in health, education, agriculture, and disaster relief in Nepal, often collaborating with UN agencies on initiatives like the Global Development Initiative (GDI). 

China’s influence in Nepal has grown significantly over the past decade, and Oli’s visit is expected to further deepen this relationship. Should Oli secure agreements with China that align with coalition interests, particularly with Nepali Congress’s consent, Nepal’s relations with India and the broader international community may experience further shifts.