Nepal signed deal in 2017 to fund infrastructure projects but its ratification was in limbo due to political divisions.
Nepal’s parliament has approved a contentious $500m US grant, despite street protests and opposition from the Communist parties.
Nepal signed the US government’s Millennium Challenge Corporation (MCC) pact in 2017 to fund infrastructure projects but its ratification had been in limbo because of divisions within political parties, including the ruling coalition.
Major opposition came from Prime Minister Sher Bahadur Deuba’s coalition partners including Maoist politicians – seen as traditionally close to China – who said it undermined Nepal’s sovereignty.
Compared with previous days, a smaller group of opponents of the pact clashed outside parliament on Sunday afternoon as police used tear gas and water cannons to disperse the crowd, which was cleared from the streets before the vote.
As part of a compromise, Sunday’s vote came with an “interpretive declaration” stipulating that Nepal will not become part of any strategic, military, or security alliance “including the Indo-Pacific Strategy” of the US.
Finance minister Janardan Sharma, also a Maoist politician, said that the declaration adequately addressed concerns regarding the pact.
“The government has now declared that the MCC Compact is purely an economic project. Now, there should be no suspicion on this program,” Sharma said.