Tag: Nepal

The United States contests the Chinese Belt and Road with a private corporation / by Vijay Prashad

Joe Biden at the G7 Summit.

At the G7 Summit in Germany, on June 26, 2022, US President Joe Biden made a pledge to raise $200 billion within the United States for global infrastructure spending. It was made clear that this new G7 project—the Partnership for Global Infrastructure and Investment (PGII)—was intended to counter the Chinese Belt and Road Initiative (BRI). Given Biden’s failure to pass the Build Back Better bill (with its scope being almost halved from $3.5 trillion to $2.2 trillion), it is unlikely that he will get the US Congress to go along with this new endeavor.

The PGII is not the first attempt by the US to match the Chinese infrastructure investment globally, which initially took place bilaterally, and then after 2013 happened through the Belt and Road Initiative (BRI). In 2004, as the US war on Iraq unfolded, the United States government set up a body called the Millennium Challenge Corporation (MCC), which it called an “independent US foreign assistance agency.” Before that, most US government development lending was done through the United States Agency for International Development (USAID), which was set up in 1961 as part of then-President John F. Kennedy administration’s charm campaign against the Soviet Union and against the Bandung spirit of non-alignment in the newly assertive Third World.

Former US President George W. Bush said that USAID was too bureaucratic, and so the MCC would be a project that would include both the US government and the private sector. The word “corporation” in the title is deliberate. Each of the heads of the MCC, from Paul Applegarth to Alice P. Albright, has belonged to the private sector (the current head, Albright is the daughter of former US Secretary of State Madeleine Albright).

The word “challenge” in MCC refers to the fact that the grants are only approved if the countries can show that they meet 20 “policy performance indicators,” ranging from civil liberties to inflation rates. These indicators ensure that the countries seeking the grants adhere to the conventional neoliberal framework. There are also great inconsistencies among these indicators: for instance, the countries must have a high immunization rate (monitored by the World Health Organization), but at the same time they must follow the International Monetary Fund’s requirements for a tight fiscal policy. This essentially means that the public health spending of a candidate country should be kept low, resulting in the required number of public health workers not being available for the immunization programs.

The US Congress provided $650 million to the MCC for its first year in 2004, as a US government official told me; in 2022, the amount sought was more than $900 million. In 2007, when Bush met with Nambaryn Enkhbayar, the former president of Mongolia, to sign an MCC grant, he said that the Millennium Challenge Account—which is administered by MCC—“is an important part of our foreign policy. It’s an opportunity for the United States and our taxpayers to help countries that fight corruption, that support market-based economies, and that invest in the health and education of their people.” Clearly, the MCC is an instrument of US foreign policy, but its aim seems to be not so much to tackle the Sustainable Development Goals of the United Nations (on hunger, health and education), as Bush said, but to ensure extension of the reach of US influence and to inculcate the habits and structures of US-led globalization (“market-based economies”).

In 2009, then-US President Barack Obama developed a “pivot to Asia,” a new foreign policy orientation that had the US establishment focus more attention on East and South Asia. As part of this pivot, in 2011, former US Secretary of State Hillary Clinton gave an important speech in Chennai, India, where she spoke about the creation of a New Silk Road Initiative. Clinton argued that the United States government, under Obama’s “pivot to Asia,” policy was going to develop an economic agenda that ran from the Central Asian countries to the south of India, and would thereby help integrate the Central Asian republics into a US project and break the ties the region had formed with Russia and China. The impetus for the New Silk Road was to find a way to use this development as an instrument to undermine the Taliban insurgency in Afghanistan. This US project floundered due to lack of congressional funding and due to its sheer impossibility, since Afghanistan—which was the heart of this road project—could not be persuaded to submit to US interests.

Two years later, in 2013, the Chinese government inaugurated the Silk Road Economic Belt project, which is now known as the Belt and Road Initiative (BRI). Rather than go from North to South, the BRI went from East to West, linking China to Central Asia and then outward to South Asia, West Asia, Europe and Africa. The aim of this project was to bring together the Eurasian Economic Community (established in 2000) and the Shanghai Cooperation Organization (set up in 2001) to work on this new, and bigger project. Roughly $4 trillion has been invested since 2013 in a range of projects by the BRI and its associated funding mechanisms (including the Asian Infrastructure Investment Bank and the Silk Road Fund). The investments were paid for by grants from Chinese institutions and through debt incurred by the projects at rates that are competitive with those of Western infrastructure lending programs.

The US government’s “Indo-Pacific Strategy Report” (2019) notes that China uses “economic inducements and penalties” to “persuade other states to comply with its agenda.” The report provides no evidence, and indeed, scholars who have looked into these matters do not see any such evidence. US Admiral Philip S. Davidson, who previously commanded the US Indo-Pacific Command, told the US Congress that China is “leveraging its economic instrument of power” in Asia. The MCC, and other instruments, including a new International Development Finance Corporation, were hastily set up to give America an edge over China in a US-driven contest over the creation of infrastructure investment globally. There is no doubt that the MCC is part of the broad Indo-Pacific strategy of the United States to undermine Chinese influence in Asia.

Only a handful of countries have thus far received MCC grants— starting with Honduras and Madagascar. These are often not very large grants, although for a country the size of Malawi or Jordan, these can have a considerable impact. No large countries have been drawn into the MCC compact, which suggests that the United States wants to give these grants to mainly smaller countries, to strengthen their ties with the United States. Nepal’s accession to the MCC must be seen in this broader context. Although the discovery of uranium in Nepal’s Upper Mustang region in 2014 seems to play an important role in the pressure campaign on that country.

In May 2017, Nepal’s government signed a BRI framework agreement, which included an ambitious plan to build a railway link between China and Nepal through the Himalayas; this rail link would allow Nepal to lessen its reliance on Indian land routes for trade purposes. Various projects began to be discussed and feasibility studies were commissioned under the BRI plan. These projects, more details for which emerged in 2019, were the extension of an electricity transmission line and the creation of a technical university in Nepal, and of course, construction of a vast network of roads and rail, which included the trans-Himalayan railway from Keyrung to Kathmandu.

Read more: Nepal approves US’ Millennium Challenge Corporation grant amid protests. What’s next?

During this time, the United States entered the picture with a full-scale effort to disparage the BRI funding in Nepal and to promote the use of MCC money there instead. In September 2017, the government of Nepal signed an agreement with the United States called the Nepal Compact. This agreement—worth $500 million—is for an electricity transmission project and for a road maintenance project. At this point, Nepal had access to both BRI and MCC funds and neither of the parties seemed to mind that fact. This provided an opportunity for Nepal to use both these resources to develop much-needed infrastructure, or as former Prime Minister Madhav Kumar Nepal told me in 2020, his country could get new loans from the Asian Development Bank.

After both deals had been signed, a political dispute broke out within Nepal, which resulted in the split of the Communist Party of Nepal and the fall of the left government. One major issue on the table was the MCC and its role in the overall Indo-Pacific strategy of the United States, which seems to be targeted against China.

Vijay Prashad is an Indian historian, editor and journalist. He is a writing fellow and chief correspondent at Globetrotter. He is an editor of LeftWord Books and the director of Tricontinental: Institute for Social Research. He is a senior non-resident fellow at Chongyang Institute for Financial Studies, Renmin University of China. He has written more than 20 books, including The Darker Nations and The Poorer Nations. His latest books are Struggle Makes Us Human: Learning from Movements for Socialism and (with Noam Chomsky) The Withdrawal: Iraq, Libya, Afghanistan, and the Fragility of US Power.

This article was produced by Globetrotter.

Nepal accepts U.S. aid despite protests, Chinese objections / by W.T. Whitney, Jr.

Police moved in to disperse protesters who are against the U.S. infrastructure grant. AP

Nepal’s Parliament on February 27 ratified an aid package provided through the Millennium Challenge Corporation (MCC), an “independent agency” located in the United States. The $500 million to be dispensed, plus $130 million from Nepal, will pay for roadway improvements and transmission lines conveying hydro-generated electricity to India and to domestic users.

Nepal’s acceptance process was long and tortuous due to the country’s layered, fractured, and unwieldy political system. China’s government opposed the MMC funding.

Massive protests unfolded outside the parliament building in Kathmandu prior to parliamentary approval. Joining the demonstrators were those representing student and peasant groups and sections of Nepal’s two Communist Parties. They were protesting the government’s alleged disrespect for Nepal’s sovereignty.

The U.S. Congress passed legislation creating the MCC in January 2004. The intention was that of providing economic aid to low and middle-income countries via “threshold programs” and “compacts” lasting five years. The MMC website highlights “cost-effective projects, a lean staff, an evidence-based approach …[and] a good investment for the American people.”

The aid is tailored to reducing investment risk and promoting “growth …[and] economic freedom.” MMC officials look for “good economic policies in recipient countries, such as free markets and low corruption.”

After first awarding a threshold grant, the MMC in 2014 offered Nepal a compact. The agreement signed in 2017 represented the largest foreign assistance grant ever received by Nepal, and the first MMC compact with a South Asia nation.

The MMC has offered 83 compacts and threshold programs to 51 countries in Africa, Asia, Eastern Europe, Latin America, and the Pacific. Some MMC agreements have ended abruptly – with Madagascar in 2009, Tanzania in 2016, and Sri Lanka in 2020. The MMC complained of election irregularities in the first two situations, while Sri Lanka objected to violations of sovereignty.

The almost six-year hiatus between the agreement being signed and Nepal’s ratification of the compact stems from governance problems in Nepal. Two factors contribute. One is institutional immaturity, the result of decades of political turmoil prior to 2015 when Nepal’s present Constitution took effect. The other is parliamentary dysfunction associated with wrangling over disparate caste, ethnic, and regional interests.

A constitutional monarchy, in place between 1990 and 2006, had succeeded decades of absolutist minority rule. A 10-year-old armed Maoist insurgency ended in 2006, coincident with the king’s departure. From then until 2015, strife over the dissolution of the Maoists’ army, regional demands, and the shape of a new constitution weakened the Maoist political party as it tried to exercise political power. All the while, it was contending with internal schisms, another Communist party, and Nepal’s Congress Party.

Following the institution of the new Constitution in 2015 and the general elections two years later, the Communist Party of Nepal–Unified Marxist-Leninist (CPN-UML) and the Communist Party of Nepal–Maoist Centre were positioned to jointly form a government. They did so, and, having united in May 2018, they established the Nepal Communist Party.

The Supreme Court nullified the unification. Afterwards, the CPN-UML headed a shaky government amid continuing factionalism. It exited in early 2021 after a no-confidence vote. The Supreme Court named Congress Party head Sher Bahadur Deuba as prime minister, and he remains.

The picture is of a government that is precarious and rudderless. In particular, according to The Statesman news service in New Delhi, “With the leadership of the executive practically non-functional … the onus of making the system work lay upon Parliament. Sadly, the legislature has become almost dysfunctional.” Adding to the chaos is the matter of corruption.

Reports the Kathmandu Post: “Nepal’s position on the latest Corruption Perception Index remained unchanged at 117th out of 180 countries … Nepal’s score also remained unchanged at 33 …[and a] score below 50 is considered as having a relatively higher level of corruption.”

Once more The Statesman: “The biggest “achievement” of Parliament is that it had succeeded in ratifying the Millennium Challenge Corporation … Compact in the face of considerable resistance from the constituent political parties in government itself.”

It would be miraculous, so it seems, if mechanisms of accountability are in place as to where and to whom the money goes, and if the 28% of rural Nepalese who were poor in 2019 find that, with the money, their lives improve. Only through wishful thinking might one expect China to rest easy with Nepal’s half-billion-dollar bonanza. Perhaps that’s the U.S. purpose: to provoke and to intrude.

Chinese Foreign Minister Wang Yi will visit Nepal on March 25 to deal with Nepal’s ratification of the MMC compact. According to a Chinese official quoted by India’s ANI news: “Implementation of the BRI projects in Nepal is important for Beijing … But this time Beijing is more worried about the security challenges emanating from the compact’s approval.”

Nepal’s government in 2017 had signed an agreement with China’s Belt and Road Initiative (BRI) for a railway project linking Kathmandu to Central Asia.

“We tried hard to stop the MCC compact’s parliamentary approval,” declared another Chinese official, who remarked also that, “[Nepalese] leaders who had earlier assured us of the compact’s failure started shaking under US pressure.”

W.T. Whitney Jr. is a political journalist whose focus is on Latin America, health care, and anti-racism. A Cuba solidarity activist, he formerly worked as a pediatrician, lives in rural Maine. W.T. Whitney Jr. es un periodista político cuyo enfoque está en América Latina, la atención médica y el antirracismo. Activista solidario con Cuba, anteriormente trabajó como pediatra, vive en la zona rural de Maine.

People’s World, March 23, 2022, https://www.peoplesworld.org/article/nepal-accepts-u-s-aid-despite-protests-chinese-objections/