International relations for many scholars and experts profoundly build on the political thought process of the great power1. Accordingly, the international environment and its outcome perpetually centre on the relationship between the great powers. In this line, scholars like Waltz2 , Fox3 , Handel4 , and Goldmann5 argue that the behaviour of the small powers, amongst other factors, is highly influenced by the nature of the interaction between the great powers. As such, it can not only influence the foreign policy behaviour of the small powers but also promote party polarization. Whenever the tension between the great powers is high, they contest to retain more influence over the small powers and in doing so, the small powers often get stuck in a quagmire of uncertainty. The ongoing trade war between the U.S and China best explains the anomaly of the small powers in the changing world order. The rising insecurity of the United States against China’s growing economic and military modernization has prompted the former to formulate active foreign policy toward the countries in China’s periphery. Accordingly, it has heightened the insecurity of the small powers over securing their political autonomy vis-à-vis the tension between the great powers. Interestingly, the small countries in South Asia once cornered aftermath of the ‘Pivot to Asia’ strategy are6 witnessing active diplomacy under Biden’s administration. Rigorous diplomatic exchanges are accompanied by lucrative bilateral projects to promote economic growth, reduce poverty, and strengthen democratic institutions. Among many bilateral projects, the Millennium Challenge Cooperation (MCC), an innovative and independent United States foreign assistance agency created by the U.S. Congress in 2004, gained profound attention in the region7. After Sri Lanka, Nepal became the second country where MCC ratification sparked controversy8. Various entities, including political leaders, lawmakers, experts, and students, objected to the ratification process. According to the opposition forces, the ambiguous terms and conditions in the MCC compact could jeopardize Nepal’s sovereignty and security interests9. The debate over the MCC-backed $500 million grant project to upgrade Nepal’s electricity transmission lines and highways stretched from the House of Parliament to inciting commotion on the streets of Kathmandu10. As such, it was evident that external geopolitics had imperiled the domestic politics in Nepal. As the ratification deadline approached, a few political leaders argued that the pact would enforce Nepal’s participation in the grand Indo-Pacific strategy and challenge its position as a non-aligned nation11. The Indo-Pacific rhetoric emerged after David J Ranz, the Acting Deputy Assistant Secretary for the Bureau of South Asia at the United States State Department, accepted MCC as a crucial part of the Indo-Pacific Strategy12. According to the White House, the Indo-Pacific strategy is directed at containing China’s navigation in the Indian Ocean Sea Lines of Communication and involves heavy military engagement13. Incautious statement as this undoubtedly positioned Nepal’s foreign policy with its Northern neighbors in jeopardy. Although Nepal’s foreign policy assures that no third country will be permitted to use the land for practising offensive military operations against its neighboring countries, the failure of the government to clarify its position caused political havoc and left room for misinterpretation. Despite having clear policies in place, the opposition pitched the ‘military rhetoric’ to gain the vote of confidence from the public. Without adequate evidence or ground study, the political leaders directed the MCC rhetoric only to facilitate the interest of the political parties and ignore the demand for development. Likewise, it also exposed the government’s dense perplexity regarding the non-alignment policy while negotiating with external powers. On the surface, the development projects have become a tool for labelling the political parties as pro or anti-United States, China, or India. Unfortunately, this gives the external power adequate leverage to maneuver the vulnerable political structure of Nepal. On the other hand, Nepal’s political trajectory often provides fertile ground for the great powers to brazenly spill their bilateral discord away from home. Dean R. Thompson, the nominee for the United States ambassador to Nepal, before the Foreign Relations Committee of the Senate recalled, “In February, Nepal’s parliament ratified the $500 million Millennium Challenge Corporation compact in the face of a torrid PRC (People’s Republic of China) disinformation campaign.”14 Likewise, in response to the comment by Donald Lu15 , Assistant Secretary of State for the Bureau of South and Central Asian Affairs, United States Department of State, the Chinese Foreign Ministry spokesperson inculpated the United States of practising ‘coercive diplomacy’ by leveraging political conditions against MCC ratification16. In this linguistic war, Nepal was only a subject for great powers to vent their discontent towards each other. In the current international structure, acceptance or rejection of a bilateral project by a small power has become a sight to behold. For great powers, it is either directed to expanding their axis of alliance or challenging the rival power. At the same time, it presents opportunity and vulnerability for a small power. However, in the case of Nepal, it has failed to seize this opportunity to maximize its national interest. Instead, convoluted within the party politics, the great power competition has only promoted vulnerability by fracturing the political integrity. Careful observation shows that the political leaders have been trying to reap benefits from the strained relationship between the United States and China to pacify their interests. However, if not cautious, it can weaken Nepal’s bargaining powers since the political leaders insist on politicizing any issue concerning China or the United States. Instead of facilitating the ruling government, the opposition party is always keen on winning the power struggle by manipulating the tension between the great powers. Despite exercising the opportunity, the imprudent leadership has made Nepal a battleground for the great powers. It is plausible to observe the politicization of the development aid to fulfil the interest of the political party in power. Political upheaval like this depicts the true nature of the fragmented Nepali politics and the ease at which it is subject to manipulation.
  1. Jack Donnelly, “Sovereign Inequalities and Hierarchy in Anarchy: American Power and International Society,” European Journal of International Relations 12, no. 2 (June 2006): 141,; Edward Hallett Carr and Michael Cox, The Twenty Years’ Crisis, 1919-1939: An Introduction to the Study of International Relations, reissued with a new introduction and additional material (Basingstoke, Hampshire: Palgrave, 2001).
  2. Kenneth Neal Waltz, Theory of International Politics, Reissued (Long Grove, Ill: Waveland Press, 2010), 72–73.
  3. Annette Baker Fox, The Power of Small States Diplomacy in World War II (University of Chicago Press, 1959), 8,
  4. Michael I. Handel, Weak States in the International System (London, England ; Portland, Or: F. Cass, 1990), 10.
  5. Kjell Goldmann, “Tension Between the Strong and the Power of the Weak: Is the Relation Positive or Negative?,” in Power, Capabilities and Interdependence, ed. Kjell Goldmann and Gunnar Sjöstedt (London: Sage Publications, 1979), 127.
  6. Robert S. Ross, “The Problem With the Pivot: Obama’s New Asia Policy Is Unnecessary and Counterproductive,” Foreign Affairs 91, no. 6 (December 2012): 70–82.
  7. “Millennium Challenge Corporation | Reducing Poverty Through Growth,” Millennium Challenge Corporation, accessed July 24, 2022,
  8. “Public Protest against MCC Deal,” The Morning – Sri Lanka News, November 6, 2019,
  9. “Why the MCC Compact Courted Controversy in Nepal,” accessed July 24, 2022,
  10. Santa Gaha Magar, “Nepal Stuck between Rock and Hard Place,” accessed July 24, 2022,
  11. Tika R Pradhan, “Ruling Party Members Ask Leadership to Seek Clarity on MCC Compact from the US,” The Kathmandu Post, December 22, 2019,
  12. Roshan S Nepal, “‘MCC Important Initiative under Indo-Pacific Strategy’ – The Himalayan Times – Nepal’s No.1 English Daily Newspaper | Nepal News, Latest Politics, Business, World, Sports, Entertainment, Travel, Life Style News,” The Himalayan Times, May 15, 2019, sec. Nepal,
  13. The United States, “Indo-Pacific Strategy” (The White House, September 24, 2021),
  14. “China’s Disinformation Campaign over Nepal’s MCC Ratification Failed: US Envoy Nominee,” Print, July 16, 2022,
  15. Times
  16. Global Times, “China Opposes ‘Coercive Diplomacy’ of US in Pushing MCC Compact in Nepal – Global Times,” February 18, 2022,

Hindu Sanskriti Karki

Hindu Sanskriti Karki 
PhD | International Politics, Fudan University

Hindu is an independent researcher and her area of research are on international security, South Asian geopolitics and Chinese military affairs

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