Time is so powerful. Just a few months ago, USAID was spending millions of dollars to combat the growing spread of misinformation and disinformation across the globe. Now, it has become a victim of disinformation, not only in Nepal but across the world. US President Donald J Trump and Elon Musk have emerged as key figures spreading such misinformation.
The support provided by USAID over the past seven decades comes from American taxpayers, as often highlighted in banners stating “From the American People”. Therefore, the Trump administration’s decision to investigate corruption, misuse and irregularities in spending is imperative. However, some statements made by Trump and Musk have fostered a perception, particularly in the Global South, that accepting American support equates to committing treason.
In Nepal’s context, Trump’s statement that allocating money for Nepal’s fiscal federalism is “a fraud”, combined with Musk’s branding of USAID as “a criminal organization”, has cast all US support to Nepal in a negative light. Organizations and individuals working with USAID are being trolled on social media, overshadowing the significant contributions USAID has made in Nepal over seven decades in improving quality of life, establishing a robust health system, modernizing agriculture and increasing access to education, among others.
Nepal’s conservative forces, who have long claimed that the political changes in 2008 were part of a “foreign agenda”, have now found a new narrative to attack republicanism, secularism, federalism and inclusion. They argue that political parties acted on behalf of the US to implement these agendas. Social media, which has become more influential than traditional media in terms of reach and impact, is being used to propagate the idea that USAID support was used as an instrument to remove the monarchy, establish federalism and secularism and even promote religious conversion.
This has created a false impression among ordinary people that USAID came to Nepal only recently. Many are unaware—or pretend to be unaware—that the monarchy itself laid the groundwork for USAID’s footprint in Nepal in the late 1950s. During the Cold War, the US sought to prevent the influence of the Communist Party of China and the rise of communist movements in Nepal. King Mahendra, on his part, sought to legitimize his Panchayat regime through development initiatives. Thus, for two primary reasons—to counter Chinese influence and to legitimize his rule—King Mahendra embraced the US support which was channeled through USAID.
Development cooperation between Nepal and the US dates back to 1951, when the US supported Nepal through its Point Four Program. On 23 Jan 1951, the two countries signed their first bilateral aid agreement. Key priorities of US assistance during the 1950s included building roads, establishing telephone exchanges, eliminating malaria from the Tarai region and enabling agricultural development. In 1959, the US supported the development of a telecommunications system that provided Kathmandu with 1,000 telephone lines and the country’s first automatic exchange. The first US-supported road in Nepal was the 87-kilometer link between Bharatpur and Hetauda, part of the Rapti Development Program. Similarly, the construction of the Hetauda-Kathmandu ropeway began in 1959.
In the 1960s, when King Mahendra was consolidating the Panchayat system, there was a huge surge in US aid to Nepal. US President Dwight Eisenhower’s unexpected pledge of $15m to King Mahendra in April 1960 marked a turning point in US involvement in Nepal’s development. USAID pursued programs in agriculture, health, education and industrial development. After King Mahendra dissolved parliament and banned political parties in 1960, US aid was directed toward the successful implementation of his Panchayat system. The US supported the construction of administrative structures across the country, viewing the Panchayat system as a potential vehicle for mobilizing Nepal’s human resources and fostering economic, social and democratic political development.
“The most important role in strengthening the Panchayat system in Nepal was played by US economic aid. On the ideological front—in propagating the democratic values of the system—the role of US Peace Corps volunteers and embassy officials was noteworthy,” writes SD Muni in his book “Nepal’s Foreign Policy”.
On his part, King Mahendra sought both economic and technical support to sustain his rule. During the Panchayat regime, King Mahendra’s key agendas, including land reform, were backed by the US. After the political changes in 1990, USAID programs reflected broader US support for democratic governance and free markets. In the 1990s, the US emphasized the need for sound economic policies: competitive markets operating with minimal government regulations. This shows the priority of support changes with regime change.
Following years of political instability, Nepal drafted a new constitution in 2015, laying the foundation for stability and development. After the constitution’s promulgation, US assistance to Nepal has focused on consolidating gains in peace and security, furthering democratic transition, supporting the delivery of essential social services, scaling up proven health interventions, reducing extreme poverty, and addressing food insecurity and climate change challenges.
The Trump administration has said that it is reviewing all USAID spending. The administration has already cut millions from the budget allocated to Nepal. It remains uncertain how US support to Nepal will evolve in the future and how Nepal will negotiate with Washington. There is no doubt that Nepal should have reduced its dependence on foreign aid decades ago; instead, this dependence continues to grow. At this critical juncture, Nepal desperately needs foreign assistance, particularly in health, education and agriculture sectors.
That said, not all USAID activities in Nepal have been beneficial; they have also had negative effects on society, including in politics and culture. Like Trump’s efforts in the US, Nepal should not hesitate to review how USAID funds have been spent. Politicians and government officials have reservations about USAID’s spending in Nepal but often refrain from speaking publicly about it. Former Finance Minister Prakash Saran Mahat recently said that the US government channels assistance to Nepal primarily through INGOs and their chosen NGOs, leaving the Nepali government with little control over how USAID resources are spent. This is a serious issue that warrants greater scrutiny.
For a long time, there have been debates about the spending of NGOs and INGOs and their negative repercussions on Nepali society. These concerns are genuine, and government agencies should closely monitor such activities. However, rejecting all foreign assistance at this time would be detrimental to the country’s economy. It is high time the government reviewed past spending, and identified areas where the US support is needed, and determined where it is not.
The government should begin preparations after broader consultations to present its position to the new US administration. One year from now, after Nepal graduates from the Least Developed Country (LDC) category, it will face numerous challenges. Even after graduation, Nepal will need continued support from major countries, including the US. Therefore, instead of exploiting the current controversy for political or vested interests, Nepal must address the situation with maturity. It is also a positive step if Trump initiates the process of investigation on how money allocated to USAID has been spent everywhere.
