Last year was a significant milestone for Nepal and the United States as we celebrated the 75th anniversary of diplomatic relations between our two nations. During this time, our partnership flourished, with Nepal undertaking numerous development projects, including the endorsement of the $500 million Millennium Challenge Corporation (MCC) project by the Nepali parliament. Beyond the MCC agreement, the US government has increased support to Nepal in various areas, from climate change and strengthening democratic institutions to the health and education sectors. To delve deeper into the wide range of Nepal-US relations, Kosh Raj Koirala, the editor of Republica daily, and Guna Raj Luitel, the editor-in-chief of Nagarik daily, recently sat down with US Ambassador to Nepal, Dean R. Thomson, to learn more about the US government's priorities, the implementation of the MCC compact agreement, the position of the US government on Nepal’s transitional justice and the impact of the ongoing Russia-Ukraine conflict, and other issues of bilateral relations. Excerpts:
How do you assess the current state of our bilateral relation?
I think the current state of the US-Nepal bilateral relationship is strong. We have a lot of great initiatives underway. Nepal went through another national election a few months back. There has been some coalition political wrangling in the meantime. But now it looks like the government is settling in and we look forward to continuing to pursue the myriad lines of partnership that we have. We have talked about some of them before, but just to quickly recap, USAID, we have a 659 million compact over the next five years that's going to work in lots of the traditional areas like agriculture, education, nutrition, but also in some new and growing areas like economic growth, supporting entrepreneurship and mitigating climate change. So, we are very excited about what's happening there.
The Millennium Challenge Corporation compact is well underway. We will hopefully be able to break ground this summer and start moving forward on the projects. As I have mentioned in the past, they should provide around 10,000 direct jobs and several thousand ancillary jobs just in the course of completing the compact projects. We have got almost 300 million dollars in contracts let out right now, seeking bids. So, we are moving smartly in that direction.
The Peace Corps will be resuming this summer with about 30 new volunteers coming in, and we hope to build that back up to its full strength over the next year and a half or so. They will be focused primarily on food security and English language training, though they are also going to be looking at using some former Peace Corps volunteers to help in areas such as IT and economic development as well. So, we are very excited.
And then, a slightly newer area that's been very successful is our development finance corporation working here with the private sector, particularly the banking sector, infusing the financial industry with about 200 million US dollars that are focused primarily on support for small and medium size enterprises, which are the backbone of employment. And, you know, one of the key things I would say in the relationship that we're really aiming to do is help Nepal manage that transition to middle income country status, build its economy, create a very welcoming business and investment climate with an eye towards allowing more young Nepalis to focus on staying at home and building their future here in Nepal for the 21st century. So, on the economic and, and sort of development front, this is a very exciting time.
I think also on support for democratic institutions, we have remained a steadfast partner on that front. We were very pleased that the government has participated in President Biden's Summit for Democracy efforts, and has made some very robust pledges. And, it's a great opportunity for us to work together, not just bilaterally, but with all the participants, all the summit participant countries in really showing that democracy can deliver. We recognize our citizens have expectations. They want to see their governments function, they want to see their governments work well for them, and we need to make sure we're doing everything we can to strengthen governments to be able to do that. So I think that's going to be very exciting.
And then finally on the people to people and cultural front, we have a lot happening. We are so pleased to continue to be able to use things like our ambassadors fund cultural preservation to help restore cultural sites around Nepal. We have done projects in Kathmandu Durbar Square, Patan Durbar Square and up in Mustang. You know, we've had some terrific success there. Nepal is actually the leading recipient of funding from the ambassador’s fund currently. And then on the people to people front, we have just got a terrific array of continuing exchange programs ranging from the prestigious Fulbright Commission program that has Nepali and American Scholars going back and forth to our international visit and leadership visitor leadership programs. We have had hundreds of Nepalis participate in those over the years. And, when you sort of look at that group of people, the 4,000 Peace Corps volunteers in the United States, the 12,000 Nepali students who study in the United States, many tourists from the US that come here, we are seeing just a wonderful exchange of people to people experiences that build relationships in a positive way. So, I think the relationship is very strong.
This explains that we have a robust relationship already. What do you think are other areas where we can engage in mutually-beneficial cooperation – something that has not been utilized yet?
Well, I think an up and coming area for sure is going to have to be on mitigating the effects of climate change and doing everything we can to protect the environment and make sure that our children and grandchildren are going to have a stable, productive environment to grow up in. And so, that is an area where we have a regional environmental officer here stationed with us at the embassy, who looks at ways we can work together. You all may have seen, on a very much people to people front, we did a bicycle rally for Earth Day this weekend where we planted trees and encouraged people to think about alternate forms of transportation. So, I think that is one area that is going to be really important.
I think healthcare is going to be another area, obviously, as we come out of COVID-19 and we have to look at building resilience in our societies and be ready for, fingers crossed not too soon, but someday another possible pandemic or a serious infectious disease scenario. We want to make sure that we are all as prepared as we possibly can on that front. I think that is another one. And then I really hope that a lot of our economic growth and entrepreneurship and investment development, even though I have outlined a lot of it, is still in its nascent stages. I would really like to see that grow even more. And as a result of those programs, I would like to see Nepal develop a more and more competitive economic framework in the country so that when investors are looking for a place to go, Nepal is on their list. They are thinking this is an inviting place. They have the skills they need; they have the resources they put in place, a rules-based system; they protect their intellectual property. Whatever it is, we would like Nepal to be on the forefront of doing that.
Beauties, build the thick skin
When we talk about the cooperation between the two countries, we usually talk about what the US can do to Nepal. Are there any expectations of the US from Nepal too?
Absolutely. We are very appreciative of Nepal's support for an international rules-based order through the UN system and many of our other multilateral fronts. I think Nepal, through its UN Peacekeeping Operations around the world, helps to ensure a more stable planet for everybody. And, we look for an ability to continue a partnership there. So, I think there are a lot of areas. And then frankly, just going back to some of our people to work, there are IT companies from the US setting up operations here in Nepal that handle development of artificial intelligence projects or do cyber security efforts. So we are seeing in a transnational world this ability for countries to work together on protecting our citizens and protecting our interests. And, Nepal and the US are very much, I think, synced up on that and looking for ways to expand them.
A section of experts in Nepal argues that Nepal is only valued for its geostrategic significance by the major regional and global powers. Does that apply to the US as well?
Look, the US and Nepal have had a relationship for over 75 years now, and we are looking to build a foundation for the next hundred, 150 years and beyond. In that period of time, geostrategic and geopolitical interests have shifted and changed, and yet the relationship has been constant through it all. So, I think we try very hard to look at Nepal and our relationship with Nepal in its own right. Certainly, we have good relations with India. We have an ongoing need to try to build good relations with China. The region is a dynamic and interesting region where we have lots of interests as well. But we look at Nepal for Nepal's sake and we want to make sure that what we do, and as a result of our partnership, Nepal is stronger in terms of its sovereignty, its territorial integrity, its protection of its democratic values for its people and then it is able to exercise its interests and look at developing its path to prosperity in a positive way that benefits all the problems. That is in our interest, at least as we look at it. And, we hope that it will be done, while also having good relations with its neighbors. We don't believe it's in anyone's interest for Nepal not to have a good relationship with China or India or Bhutan or Bangladesh or anyone in the region. It's very much in everybody's interest for that to be the case.
We believe there is plenty of space for both the US and China to grow and develop and serve the interests of their people and the world. And so we want to continue to find ways to do that positively. So, we are not in any way, shape or form looking to turn that into a zero sum game.
I would really encourage people to look at Secretary Blinken's speech of May 26th of last year, or Secretary of Treasury Yellen's speech last week, looking at this question of US-China relations, because in fact, yes, there's a competition there, there's challenges there, no question about it. But you know, we believe there is plenty of space for both the US and China to grow and develop and serve the interests of their people and the world. And so we want to continue to find ways to do that positively. So, we are not in any way, shape or form looking to turn that into a zero sum game. I think Nepal is going to have good relations with China. I think it is going to have good relations with India, and I certainly hope it is going to continue to have good relations with the United States.
So, that is where I and everybody at the embassy are going to focus our efforts on - building up the Nepal-US side of these things. So, it is as strong as possible, that it is vibrant and that it works for the people of Nepal and the people of the United States. I expect our colleagues from other embassies are going to do the same and hopefully Nepal benefits by goodwill from everyone.
Despite the decades-long partnership between Nepal and the US, there still seems to be some suspicion and controversy surrounding major partnerships such as MCC. What do you think is behind this situation even as people in Nepal generally have favourable opinion of the US?
Well, let's talk about the US for just a second. We are very fortunate. We have been very blessed. We have a vibrant economy. We have a welcoming society. We have a history of effectively integrating immigrant communities and helping people achieve all that they can be from an individual rights standpoint, an individual development standpoint. And that is attractive. We understand that. At the same time, we would love to see those types of benefits and opportunities exercised by people wherever they are in the world. And so, a lot of what we do on the development front, on the partnership front with Nepal, is aimed at creating an economic reality here, a political reality here that allows Nepalis to realize their goals and dreams here in Nepal where they can be at home with family, with friends, with the wonderful culture, the natural beauty that their homeland provides.
Do you see the role of misinformation and disinformation behind these kinds of suspicions and controversies time and again?
I mean some of it for sure. I imagine you will always find people who want to paint things in the worst possible light for their own parochial interests, whatever they may be. I would say what I am seeing recently is more of a healthy debate. I think there should be a healthy debate when a country comes in and says, ‘Hey, we want to help you with X, Y, or Z. That should be done as transparently as possible. That should be something people can look at.’ And so we are very proud of the fact that if you want to know what an aid program is, or what the MCC compact says, you can go right to the website, you can pull it up. You can see exactly everything in black and white. And, so we are going to continue to build things out that way. If someone shares information that is incorrect, we are going to do everything we can to correct the record. We do not believe long information should stand, but we also recognize there is a burden on us to do so in a way that is transparent and verifiable. You shouldn't believe what I say just because I say it. I should say something that you can actually check and ensure it is true. So we will always endeavor to do that.
We are very proud of the fact that if you want to know what an aid program is, or what the MCC compact says, you can go right to the website, you can pull it up. You can see exactly everything in black and white.
In the past, it was said the US only sees Nepal through the Indian lens. But lately this seems to be changing. With the increased bilateral interactions, a section of people allege that the US has shown an unusually high interest in Nepal. What is your take on this?
I would actually characterize it as very natural. I mean, as we look at more US tourists coming to Nepal, I mean, I just saw the statistics, I think we are the third largest number of climbers, you know, seeking to summit Everest. This year, Nepal is becoming, you know, as we come out of COVID-19, there's this pent-up desire to travel, to get out, to see the world again on the part of many people. Americans are part of that. And Nepal is always one of those locations that is on people's bucket lists to do, to see the beauty, to visit and experience the culture. So I think when you take that reality and you overlay it with this, per capita wise, very large number of foreign students, these expanding people to people ties that we've had, and just a growing interest in this region for its economic vibrancy, and the fact that Nepal is at the early stages of development, its economic strength on that front, I think it's quite natural that we would see an increased set of interests, both from our own perspective as well as from a principles-based desire to help Nepal and achieve all it can achieve.
You mentioned that the problems seen in the implementation of MCC related projects are being resolved. Are you happy with the cooperation extended by the government agencies and other stakeholders?
Very happy. You know the Millennium Challenge, MCA-Nepal, the Nepal government entity that is the partner for MCC. And this project has been doing incredibly good work to prepare the ground and get ready for project implementation starting this summer. So, I would say on a government to government level, we have excellent cooperation. You mentioned challenges. Any projects that these sides are going to have challenges associated with them and we purposefully place a very high standard on things like labor aspects of it, social aspects, and environmental protections, all of those things. Of course, we want to make sure that those are all done correctly and in conjunction and consultation with the communities that are affected. But at the end of the day, let's really remember what these projects are. It’s a sort of a big massive transmission line project that helps to complete the electrical grid in the country, providing more clean electricity for people in Nepal to use and perhaps also to build an export capacity so that Nepal can earn income from the energy it can sell abroad, and to help develop new road technologies that can be used in expanding the connectivity and road infrastructure throughout the country. So, at the end of the day, they are big high impact projects that are aimed at long-term economic development and securing that development. So, if it were easy, it would have been done a long time ago. We are going to work very closely with Nepal and its government to make sure we carry it out on time and within our budget.
You have been watching Nepal's transitional justice process closely. How do you see the overall progress in this regard? How do you see the overall human rights situation in Nepal?
In terms of overall human rights situation in Nepal, we have been encouraged by some recent developments; pledges that have been fulfilled through some of the democratic efforts, new legislations protecting rape victims, protecting acid attack victims, court rulings in favour of same sex couples, and LGBTQI rights in the country. So, we will continue to support and try to be helpful in carrying out developments like that as Nepal really seeks to ensure the rights of all of its citizens in the country.
The transitional justice process has to be Nepali-led; it has to be victim-centric and it has to be something that addresses the need and meets the high standards that are required to bring peace and settle a long term conflict in a way that is good for the nation as a whole.
On transitional justice, you are absolutely right. We are very keen to see it brought to a good positive conclusion for the good of the nation. We are not by any means the only partner. I would say the entire international community is very interested and seeking to be supportive of what happens there. I think it is important to note, though, that from our perspective, it has to be Nepali-led; it has to be victim-centric and it has to be something that addresses the need and meets the high standards that are required to bring peace and settle a long term conflict in a way that is good for the nation as a whole. And, that is incredibly challenging work. And so my hat is really off to all the entities that have been working on it, have struggled with it for so many years and are now trying to bring it to fruition. I hope it will be passed soon and something that will then go a long way to making the victims' whole and settling this for the long term so that Nepal can enjoy long-term peace and prosperity as a result.
How has the COVID-19 pandemic affected the activities of the Nepal-US Trade and Investment Framework Agreement. What is the potential for future progress?
Well, I think there's a lot of potential, as you all know. Just to talk about the impact of COVID-19 for a second, I think it is the same impact COVID-19 has had on everything else, you know, sort of slowed down in-person meetings and people are now trying to catch up and see what's next. The US has provided some preferential trade access for Nepali goods in the US. I know that we're going to be looking, hopefully to schedule another TIFA round of talks very soon. And that our US trade representative's office is very keen to continue to talk to Nepal about things that we can do together to make a more welcoming climate and to increase trade between our two countries. I would note this is an area where the USAID's competitiveness initiative is very important as it tries to work with Nepali companies to develop the types of products that are in demand in the United States and eligible to use some of the tariff relief options that are out there. So, I think COVID-19 had a pausing effect for a long time. It did on a lot of fronts, but I think we are well beyond that now and we are pretty excited to get started again.
The US has been providing trade facilitation to 77 tariff lines through the Nepal Trade Preference Program (NTPP), which is set to expire by 2025. Will the program be extended beyond that date?
Well, one of the challenges with these types of trade issues is that they are all set in legislation. So, it becomes a matter of a US law in order to put them forward again. I think this will be a topic for discussion at our trade investment framework talks when they come up. And, I think, it is something that we would like to look at. At the same time, I would note that of those 77 lines, Nepal is only taking advantage of a small number. And so, we may also want to look at ways we can expand Nepal's ability to use those other lines over time if it were to be expanded. But first and foremost, I think we need to get to the next round of TIFA talks, see where we're at, understand as Nepal gets ready to graduate to middle-income country status, what its needs are going to be and then how we can work together on developing what's in its best interest.
As of July 2020, the US was one of the top 10 foreign direct investors in Nepal. What are the prospects for increasing US investment in Nepal in the near future?
No, I think first and foremost, it's really important that we recognize that whatever investment is coming through MCC or USAID or other things like that, we would love to see that eventually dwarfed by private investment. We think that is where Nepal's future really lies, and I think the prospects are very good. I think there are a few areas where Nepal could become more competitive and think about its competitiveness in the region. I think some of its tax policies could be looked at to try to simplify them and provide settlements for tax cases that are ongoing. I think developing some type of single window that helps an investor come in and get the various permits and right authorities that are needed to do business would be very helpful. I also think looking at lowering the minimum investment levels, particularly as they exist under the Foreign Investment and Transfer Technology Act would be very helpful. I understand Nepal is looking for bigger investments. They want big investment and they want it to be high quality. But especially in certain sectors, you may not need a big dollar amount at the start to have a very high quality investment and get something started that provides employment opportunities in Nepal. So, I am pretty bullish on the opportunities and where we are headed. But I do think there are some areas where we would like to continue working with the government to make it easier for investors and make Nepal a more attractive investment location.
The ongoing Russia-Ukraine war has challenged the very foundation of the rule-based international order. How do you see the prospect of a rule-based international order and how will that affect our bilateral relations in the coming days?
Well, first of all I want to say how much we appreciate Nepal standing for the rules-based international order and the importance of adhering to and abiding by the UN charter. We view the war in Ukraine as an absolute abrogation of Russia's commitments on those fronts and many others within the European context as well. So, Nepal has stood quite strong in supporting the UN, supporting UN institutions and the importance of abiding by the UN charter. And, we think that is the right side to be on in this particular case. From a US perspective, we think there is every reason to be optimistic about maintaining a rules-based international order. As I mentioned previously, we believe there is plenty of opportunity in the world for all of the powers that are seeking to pursue their interests, to do that in a positive way. I would just urge that countries look at what were the opportunities that they had to develop and how were they fostered? And in many cases it was through the World Bank, the World Trade Organization and the IMF. All of these institutions and international opportunities that presented themselves. So on those fronts, I think we're going to continue to work to protect and strengthen international institutions and a rules-based order. We hope others will continue to join us.
It has already been six months since you arrived in Nepal. What are your initial impressions about Nepal and your friendly advice for its further progress?
My initial impressions are that it is a beautiful country with wonderful people and that it is a terrific partner for the United States and for all the other countries of the region as well. My advice is that Nepal is on a good trajectory and that it should continue to develop its people and its human capital in a positive way and build opportunities here at home.
I am very pleased that Nepalis have been able to travel the world and get experiences and all that. But I really want to see more opportunities developed here. And, so we are going to be partners. I know many other countries are going to be partners in doing that. I hope we can work together to create a really solid economic framework, business and investment climate and appreciation for what it means to be a vibrant part of the global international economy.
