Nepal–USA Relations and MCC Compact

Category

Nepal–USA Relations

Details

Overview

Nepal and the United States of America officially established diplomatic relations on April 25, 1947. The US is the second country with which Nepal established diplomatic ties, following the United Kingdom.

Key Areas of Cooperation

Development Aid: USAID supports Nepal's development goals in health, education, economic growth, democracy, and disaster risk reduction.
Peace Corps: Active in Nepal since 1962, volunteers help in agriculture, education, and health sectors.
Disaster Response: Significant US support during the 2015 earthquake and the COVID-19 pandemic.

MCC (Millennium Challenge Corporation) Compact

The Grant: A USD 500 million grant from the US government, paired with a commitment of USD 197 million (originally USD 130 million) from the Government of Nepal.
Timeline: Signed in September 2017 and ratified by Nepal's Parliament on February 27, 2022, accompanied by a 12-point "interpretive declaration" to clarify sovereignty concerns.
Focus Projects: The Electricity Transmission Project (construction of a 400 kV transmission line and substations) and the Road Maintenance Project.
Controversy: Protests and political debates centered on concerns that the compact had military implications or was part of the US Indo-Pacific Strategy. The interpretive declaration explicitly stated that Nepal would not join any military alliance.