Nepal’s Gamble on U.S. Aid Backfires as Trump Freezes Foreign Funds – China Smiles in the Background

Nepal, a strategically located Himalayan nation between China and India, had a tough choice to make in its quest for infrastructure development. While Beijing had been offering major investments under its ambitious Belt and Road Initiative (BRI), Washington stepped in with an irresistible deal—$500 million in grants under the Millennium Challenge Corporation (MCC) to boost Nepal’s electricity grid and roadways.

For Nepal, this was an enormous sum. In a country where the average annual income hovers around $1,400, securing half a billion dollars in grants was nothing short of a jackpot. But accepting it was never easy.

A Five-Year Political Battlefield

From the moment the MCC grant was proposed, Nepal was thrown into a fierce political storm. The deal divided Nepal’s political elite, with critics branding it a trap that could erode the country's sovereignty. China, wary of growing U.S. influence in its backyard, was displeased, and Beijing’s allies in Nepal did everything possible to block the agreement.

Despite intense protests, Nepal ratified the MCC in 2022, committing an additional $200 million from its own funds to kickstart the projects. Pro-U.S. politicians celebrated it as a game-changer for Nepal’s development, claiming that choosing Washington over Beijing ensured economic independence.

America’s Betrayal? Nepal Left Hanging

Now, in a shocking turn of events, Nepal’s faith in the U.S. has been shaken to its core. With the Trump administration slashing foreign aid, the entire MCC project has been thrown into uncertainty. For leaders who fought tooth and nail against anti-American narratives, this feels like a bitter betrayal.

“This is quite shocking,” said Rajendra Bajgain, a lawmaker from Nepal’s ruling Nepali Congress party. “We defended America’s commitment, but now we are left with nothing. This only strengthens our neighbors—especially China—who will now say, ‘See? This is how America treats its allies.’”

The situation has given Beijing an unexpected advantage. While there are no official reports of China directly approaching Nepal with counteroffers, the void left by the U.S. could push Kathmandu closer to Beijing. With Washington backing out, India—another key player in Nepal’s geopolitical landscape—may also struggle to counter China’s growing influence in the region.

Did Nepal Make the Wrong Bet?

The unfolding drama raises critical questions: Did Nepal make a miscalculation by siding with the U.S.? Was the MCC deal worth the political chaos it created? Or will China swoop in, offering Kathmandu an alternative that cements its dominance in South Asia?

For now, Nepal waits in uncertainty, watching how Washington’s next moves—or lack thereof—reshape the country’s fragile geopolitical balance.

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