Nepalese parliament. Photo: Wikipedia

Chinese Foreign Minister Wang Yi’s rather less than diplomatic exchange with his Nepalese counterpart Narayan Khadga, referring to America’s $500 million grant as “external influence” and “coercive diplomacy,” illustrates what a fine line the Himalayan state has to walk in its foreign relations.  

Officially, if ponderously, titled the Millennium Challenge Corporation Nepal Compact (MCC-Nepal), it was signed in 2017 but has only just been approved by the Nepalese legislature. 

The compact’s stated objectives are to upgrade Nepal’s infrastructure and envisages the development of a 300-kilometer electrical transmission line and boosting economic growth through improvements in highway connectivity.

Nepal’s government is a coalition that includes communist-party iterations with strong connections to the Communist Party of China (CPC), which, in this absurdly polarized world, is constitutionally opposed to anything that could create favorable opinion of the US.

In a rare example of good sense prevailing over factionalism, the component parts of the Nepalese coalition government agreed on an “interpretative declaration” that made definitively clear that the MCC-Nepal is just a development grant and not part of any strategic, military or security alliance, including the US Indo-Pacific Strategy.

Nonetheless, the benefits of the grant have been delayed for more than five years because of objections by sister affiliates of Nepalese communist parties, which culminated in violent protests in February. 

Of course, consistent with its policy of non-interference in the internal affairs of other countries, it is inconceivable that the CPC had anything to do with such protests.  

The inability of unsophisticated people to recognize the economic benefits, especially to the poorer cohorts of society, of such a development grant is irrational, albeit understandable.

Knee-jerk reactions to basic political labeling along the lines of America = bad, China = good avoids any actual analysis. But it must be recognized that the same lowest common intelligence denominator operates the other way around. Just think of the Donald Trump–inspired storming of the US Congress building.

The citizens of a country as economically stunted as Nepal are in urgent need of whatever assistance they can get to lift them out of their dependent status and get them on the road to financial self-sufficiency.

Nor is this a pipe dream.

If only there is a stable administration that can husband the country’s natural resources, free of the systemic corruption and incompetence that have been the hallmark of successive governments, the Nepalese could enjoy sustained development and equitable growth.

As is all too often the case, legislators ignore history. Many valuable lessons can be derived from the playbook of King Mahendra Bir Bikram Shah.

During the Cold War years, several nations joined in a loose coalition of non-aligned states, among which Nepal figured strongly.

Under the king’s guidance, the great powers were played off, one against the other. India built a road over the Himalayas from its border to Kathmandu, so China built a road from Tibet to Kathmandu. The Americans built a ropeway from the southern border into the capital, so the Russians built a tobacco factory, and so on and so on. 

Whatever faults King Mahendra may have had, he knew how to play the international aid game, always shielding his country behind the veil of non-alignment.

Perhaps I am being over-critical, perhaps not, but since Mahendra’s death, Nepalese prime ministers have lacked the talent to negotiate skillfully at the international table.

Prime Minister Sher Bahadur Deuba, with the rare benefit of being an alumnus of the London School of Economics, has shown a measure of statesmanlike qualities in steering MCC-Nepal through the murky swamp of tribal politics.

The leaders of Nepal’s CPC-affiliated political parties need to educate their followers to appreciate and endorse foreign-aid projects that do not bind the country to any form of alignment save those that will prosper economic development and progress.

China’s Belt and Road Initiative is making very substantial contributions to the restoration of temples and historical buildings in Nepal that were devastated in the 2015 earthquake. Provided that these contributions are as altruistic as one would hope for with regard to work of such spiritual and sociological imperatives, they should not excite antagonism toward Beijing.

Before the Covid-19 pandemic struck, Nepal was struggling for economic breath as it reeled from the after-effects of the earthquakes and worldwide economic crises. 

Covid filled the country’s lungs with a viral infection for which it had virtually no defense and for which the economically advanced nations gave almost nothing with which to combat it.

That the politically disparate component parts of the coalition government managed to reach an accommodation that enabled MCC-Nepal to receive legislative approval marks a potential turning point in the country’s stumbling path toward stable government.

That common-sense accord, singular against the historical track record, now needs to inform the thinking behind whatever foreign assistance appears on the horizon.

The interpretive declaration on MCC-Nepal reflects a proud insistence on the inviolability of the country’s sovereignty.

Foreign Minister Wang Yi should, perhaps, have read, marked and inwardly digested its terms rather than couching his message in such strident terms. 

Neville Sarony QC is a noted Hong Kong lawyer with more than 50 years at the Bar.