Have Nepal-US ties undergone a sea-change following the February 27 parliamentary endorsement of the $500m MCC Nepal Compact? It certainly appears so.

Since the compact’s ratification, there have been important visits and bilateral exchanges between the two sides.

In addition to money under the compact, the US has announced a $659 million grant to Nepal under the United States Agency for International Development (USAID) for the next five years. Hot on its heels, an American Congressional delegation led by Senator Kirsten Gillibrand also visited Kathmandu on April 22-24.

Just days prior to this visit, US Deputy Assistant Secretary for South and Central Asian Affairs Kelly Keiderling had also jetted to Nepal and held talks on a range of issues with various sections of Nepali society. Earlier, she had come to Nepal just before the compact’s endorsement.

In Washington DC, newly appointed Nepali Ambassador to the US Sridhar Khatri has been holding high-level meetings with senior US officials. On March 29, he met Assistant Secretary of State, Bureau of South and Central Asian Affairs, Donald Lu, as well as Keiderling.

The recent flurry of talks and visits indicate that the otherwise tepid high-level engagement is finally getting some life.   

Anil Sigdel, founder of Washington DC-based think tank Nepal Matters for America, sees the visits as a follow-up to the recently passed compact as well as part of the American effort to drum up support against Russia. 

A statement issued by the US Embassy in Kathmandu on the Congressional delegation’s visit states: “Nepal has joined the majority of countries in condemning Russia’s brutal invasion of Ukraine.”

Sigdel says the key US interest right now is “to ensure that Nepal aligns with US policy against Russia’s invasion of Ukraine”.

“It also wants to guarantee that Nepal does not slide towards China’s or India’s policy vis-à-vis Ukraine,” Sigdel says.

Both Beijing and New Delhi have so far refused to condemn the Russian invasion.

Another purpose of the American visits is to create a climate for smooth implementation of the projects under the compact. Though Nepal’s parliament has approved it, there are some outstanding concerns, mainly concerning security.

The US grant was ratified amid protests in both the chambers of parliament and out in the streets. These protests were fomented by communist forces, including those in the incumbent coalition.

Some fringe communist parties are still against the compact. The US fears for the security of cross-border transmission lines and highway improvement projects to be developed with the grant.

Government officials say the American side wants to create a favorable environment for project-implementation by engaging all sections of Nepali society.

It will take a year to formally start the implementation phase, and the US wants to ensure all hurdles are cleared by that time.   

Sigdel says resistance to the compact could still dissuade its Nepali stakeholders—and the US is aware of it.

“It all depends on how Nepal-US negotiations and engagements move forward in the coming days,” he says.

The high-level visits from the US officials also coincide with the 75th anniversary of Nepal-US bilateral ties. To mark the occasion, the two countries are planning to hold a series of activities including exchange of high-level visits.

Sources at the Ministry of Foreign Affairs say there are chances of high-level visits from Nepal to the US after the May 13 local elections.

Prof Jaya Raj Acharya, a former Nepali ambassador to the US, reminds that America is one of Nepal’s oldest allies.  

“Celebrating the 75th anniversary is important. You must remember that Nepal and the US established diplomatic relations even before India was independent,” he says. Bilateral relations between Nepal and the US were established on 25 April 1947. The US was only the second country, after the UK, to do so.

Anna Richey-Allen, spokesperson at the US Embassy in Kathmandu, says in these 75 years—and through the decades of changes in both the countries—the United States and Nepal have stood with one another. 

“The recent visits by senior diplomatic leaders, high-ranking US senators, and other important officials are a reflection of this,” she tells ApEx.

Democracy-promotion has long been a key foreign priority of the US government. In recent years, the US has given more emphasis to the agenda of democracy in talks with Nepali leaders and officials, which is also reflected in bilateral documents.

Following the meeting of the US Congressional delegation with Prime Minister Sher Bahadur Deuba on April 23, the Ministry of Foreign Affairs said in a statement that the two sides had exchanged views “on institutionalizing democracy and cooperation in climate change”.

Last December, PM Deuba had also participated in the Summit for Democracy hosted by US President Joe Biden.

Sigdel says Nepal has emerged as the most liberal democratic country in South Asia, attracting the attention of the US and its western partners.

He argues that Biden’s policy is “to strengthen a club of democracy vis-à-vis China and Russia”, and the US views Nepal as a bona fide partner in this quest.

Especially in South Asia, because of the Chinese outreach and democratic decline including in India, “Nepal’s record makes it an important member of the global democratic club,” says Sigdel.

The US Embassy spokesperson says partnership with Nepal focuses on supporting its democratic values, good governance, and economic prosperity. 

“Now more than ever, we will need to tackle difficult issues like addressing the climate crisis and protecting democracy in the face of rising authoritarianism,” she says.

The $500m grant under the MCC and an additional $659m from the USAID are also seen as proof of the US at long last prioritizing Nepal.

Acharya, the former Nepali ambassador to the US, however, says America’s Nepal policy is constant, reality-based and not necessarily influenced by specific events.

The US started providing assistance to Nepal from 1951 and the amount of assistance has been increasing over the past seven decades.

“After the restoration of multiparty democracy in 1990, there was general expectation that American aid would substantially go up, but that did not happen—yet the old momentum was given continuity as well,” says Acharya.

Another reason behind growing American engagement in Nepal, he adds, is China’s rise.

“The Americans have increased their activities in the South China Sea and Taiwan, and they may want to increase their activities here,” he says. “It is crucial we make them understand our sensitivities.”