KATHMANDU: Nepal police fired rubber bullets and tear gas on Sunday as hundreds protested against a $500-million US grant going before parliament that has become a bone of contention between China and the United States.

Nepal signed the Millennium Challenge Corporation (MCC) pact in 2017 to fund infrastructure projects but its ratification has been in limbo because of divisions within political parties, including the ruling coalition.

Several people were injured in the latest day of angry demonstrations outside parliament as the government put the bill before lawmakers ahead of a deadline of February 28 to pass it.

“Although they agreed to present the agreement in the parliament, it’s still not clear whether all coalition partners will cast their vote in favour... Our efforts will continue to convince them,” Prakash Sharan Mahat, spokesperson for the ruling Nepalese Congress party said.

There is major opposition from Prime Minister Sher Bahadur Deuba’s coalition partners including Maoist politicians — seen as traditionally close to China — who say it undermines Nepal’s sovereignty.

Government officials said the grant would not have to be repaid and had no conditions attached, but opponents claimed the agreement would undermine Nepal’s laws and sovereignty as lawmakers would have insufficient oversight of the board directing the infrastructure project.

Despite loud protests, the Minister for Communication and Information Technology Gyanendra Bahadur Karki put forward the agreement in parliament and said the projects would benefit 24 million of Nepal’s 30 million population.

“The grant will be an important tool for the socio-economic development of the country,” Karki said in the parliament.

The US Embassy in Nepal described the $500 million MCC grant as “a gift from the American people and a partnership between our nations that will bring jobs and infrastructure to Nepal and improve the lives of Nepalese”.

“This project was requested by the Nepalese government and the Nepalese people and designed to transparently reduce poverty and grow the economy of Nepal,” the embassy said in a statement.

“Whether Nepalese leaders ratify MCC is a decision for Nepal to make, as a sovereign democratic nation, and Nepal’s decision alone,” it added.

Published in Dawn, February 21st, 2022