Fri Feb 21 19:34:12 UTC 2025: ## US Freezes $500 Million Nepal Aid, Raising Geopolitical Concerns

**Kathmandu, Nepal –** A $500 million US aid package for Nepal, the Millennium Challenge Corporation (MCC) Compact, has been frozen following a 90-day executive order by US President Donald Trump. The freeze, announced a month after Trump’s return to office, halts funding for crucial infrastructure projects including electricity transmission lines and road upgrades. The MCC, signed in 2017, was intended to bolster Nepal’s electricity infrastructure and improve its road network.

Analysts warn the freeze has significant implications, not only for Nepal’s development but also for its geopolitical standing between India and China. While China and India are potential alternatives, experts like Sanjay Upadhya argue neither has the capacity or readiness to fill the gap immediately, given the complexities and timeline involved in such large-scale projects. Upadhya highlights the potential for costly contractual issues and delays in Nepal’s infrastructure development plans.

The freeze comes three years after a contentious parliamentary ratification process, where opposition stemmed from concerns about increased US influence. The decision has eroded trust in the US, Nepal’s largest bilateral aid provider since 1951, according to strategic analyst Binoj Basnyat. However, Basnyat also suggests the freeze presents an opportunity for Nepal to reassess its aid policy.

The implications extend beyond infrastructure. The freeze affects a broader USAID aid package, impacting various sectors like health, education, and agriculture. This situation has geopolitical ramifications, with China potentially capitalizing on the situation to further its narrative of US unreliability. The freeze is viewed by some as undermining US efforts to counter China’s Belt and Road Initiative in South Asia, potentially increasing China’s influence in Nepal and creating further tension with India.

Nepal now faces the challenge of navigating this complex situation, requiring a reassessment of its foreign policy to balance its relationships with its powerful neighbours and secure its future development. Experts emphasize the need for Nepal to establish a more independent and robust foreign policy strategy.

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