The Millennium Challenge Corporation (MCC), a U.S. development program founded in 2004, has sparked heated controversy in Nepal for years. With an investment volume of 500 million U.S. dollars, the MCC project aims to expand power transmission lines and road infrastructure. Nepal, with its enormous hydropower potential, hopes this will make electricity exports to India easier and eventually boost state revenues.
Yet the project’s implementation has been accompanied by geopolitical tensions. Critics see MCC not merely as an infrastructure initiative, but above all as a strategic tool for Washington to bind Nepal more closely to the United States—in direct competition with China, which itself has been investing heavily in the region.
Since 2017, Nepal has been an official participant in China’s Belt and Road Initiative (BRI), which envisions infrastructure projects between Tibet and Kathmandu as well as energy and transport development. However, the implementation of these BRI plans has stalled, partly due to unclear financing and partly due to fears of a potential debt trap. Still, BRI remains an important means for China to consolidate its influence in the Himalayas.
Nepal’s simultaneous participation in both the U.S.-backed MCC and China’s BRI makes the country a geopolitical hotspot. While Washington insists that MCC is purely a development program without military dimensions, many Nepalis fear being squeezed between the competing interests of the U.S., China, and India. The intense street protests during the parliamentary debate over ratification in February 2022 dramatically highlighted these concerns.
The most recent wave of fierce protests was followed by the resignation of the prime minister, while soldiers secured the streets of Kathmandu.
In the end, MCC was ratified with an interpretative declaration emphasizing Nepal’s national sovereignty. Yet skepticism persists—not least because both BRI and MCC represent, for many citizens, not only infrastructure but also dependency on global powers. Whether Nepal’s parallel participation in both initiatives will strengthen its economy or make it more politically vulnerable remains to be seen in the years ahead.
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