USAID’s financial activities in Nepal reveal strategic funding aimed at political influence and governance.
New Delhi: USAID’s financial activities in Nepal, as evidenced by data from internal documents shared with The Sunday Guardian, reveal a significant and strategic use of funds that extends beyond traditional development assistance into the realm of political influence.
According to internal communications seen by this newspaper, in the last few years, USAID committed $402.7 million to Nepal, alongside an additional $500 million from the Millennium Challenge Corporation (MCC) Compact Program, bringing total U.S. assistance to over $900 million.
In May 2022, USAID signed a $402.7 million agreement with Nepal, of which $158 million had been disbursed by February of this year, leaving $244.7 million yet to be used.
An analysis of the data indicates that USAID prioritised funding for programmes classified under “democracy” and “governance,” with substantial allocations to projects such as “Democratic Processes” ($8 million) and the “Democracy Resource Center Nepal (DRCN)” ($500,000).
According to reports, the “Democratic Processes” project is implemented by key USAID partners such as the National Democratic Institute (NDI) and the International Foundation for Electoral Systems (IFES). These organisations are known for their involvement in election-related activities and have been accused of funding youth politicians, allegedly leading to regime change in Bangladesh and attempting the same in Cambodia, as reported by The Sunday Guardian earlier.
As per the internal documents, ‘Project 4150,’ titled “Democratic Processes,” had a total commitment of $8,000,000, with $5,028,238 disbursed as of February 2025, reflecting a financial progress of 62.85%. The agreement date for this project was March 2023, with a planned completion date of March 2028.
Similarly, ‘Project 4177,’ known as the “Democracy Resource Center Nepal (DRCN),” received a total commitment of $500,000, all of which has been disbursed, achieving 100% financial progress. The agreement date for this project was July 2023, and its expected completion is in July 2026.
The full disbursement of funds to DRCN, which has been described as a “propaganda organ” by its critics, suggests a strategic effort to shape Nepal’s political landscape.
The DRCN is an organisation that conducts research, analysis, and monitoring of democratic and electoral processes in Nepal. It focuses on issues such as elections, governance, political participation, and policymaking. DRCN claims to provide data-driven insights and reports to inform policymakers, civil society, and the public about democratic developments in the country. It is often involved in election observation, parliamentary monitoring, and political analysis, working alongside both national and international partners.
However, according to observers, this funding by USAID is viewed as a form of bribery for politicians and corruption aimed at advancing U.S. interests, such as the approval of the MCC treaty in 2022.
Significantly, the $500 million MCC Compact, signed in September 2017, has been relatively slow in its implementation, with only $43.1 million (8.63%) disbursed so far. Initially planned as a five-year initiative, its implementation was extended due to political and bureaucratic challenges.
The MCC refers to Nepal’s agreement with the Millennium Challenge Corporation (MCC), a U.S. foreign aid initiative that provides grants for infrastructure and economic development projects in partner countries. It was signed between Nepal and the U.S. in September 2017 but was ratified by Nepal’s Parliament only in February 2022 after significant political debate and public protests.
As per the internal communications, the “Civil Society and Media” initiative, with a total commitment of $37 million, has already received over $20 million (54.34% of its budget). While officially aimed at strengthening civil society and media organisations, its high disbursement rate was allegedly used to shape public opinion and influence Nepal’s political landscape, observers noted.
USAID also allocated funds to the “Adolescent Reproductive Health (ARH)” project, with a total commitment of $35 million, of which over $18 million (51.93%) had already been disbursed. While the project is primarily focused on health, its targeting of vulnerable populations has political implications, potentially serving as a means to build support among these groups, according to the allegations.
Among the documents accessed by The Sunday Guardian, detailing USAID’s financial activities and strategic priorities in Nepal, are two letters from Karen Welch, Acting Mission Director of USAID/Nepal.
The first letter, dated May 24, 2023, was addressed to Shreekrishna Nepal, a senior official at Nepal’s Ministry of Finance. It discusses USAID’s shift to an on-budget/off-treasury funding model and provides a list of 58 USAID-funded activities for Nepal’s fiscal year 2023/24. The total estimated budget for these projects is $134.5 million (about 16.8 billion Nepalese Rupees), covering key areas such as agriculture, health, education, democratic processes, and public financial management. Notable projects include “Democratic Processes” ($8 million), “Civil Society and Media” ($37 million), and “Adolescent Reproductive Health” (ARH) ($35 million). The letter clarifies that these budget figures are estimates and depend on U.S. congressional funding. It also requests the Ministry of Finance to include these activities in Nepal’s Red Book, the government’s official record of foreign aid.
The second letter, dated April 16, 2024, was addressed to Dr Krishna Hari Pushkar, Nepal’s Finance Secretary. It highlights difficulties faced by USAID’s local sub-partners, particularly regarding NGO registration and monitoring fees imposed by Nepal’s Social Welfare Council (SWC). USAID argues that, based on a bilateral Development Objective Agreement (DOAG) signed on May 5, 2022, its projects should be exempt from such fees. The letter also includes an updated list of over 100 local sub-partners involved in USAID-funded projects.
Some major allocations include “Democratic Processes” ($8 million, with 62.85% already disbursed), “Democracy Resource Center Nepal” (DRCN) ($500,000, fully disbursed), and “Civil Society and Media” ($37 million, with 54.34% disbursed).
The letter also highlights USAID’s collaboration with international organisations such as the National Democratic Institute (NDI) and the International Foundation for Electoral Systems (IFES). These groups have been linked to Nepal’s election-related activities and are accused of financially supporting politicians to influence political outcomes, including the approval of the MCC treaty in 2022.
Emails sent to Welch on her official email address, which The Sunday Guardian confirmed was operational and in use, did not elicit a response by the time the story went to press.
Earlier this week, U.S. Secretary of State Marco Rubio announced that the ‘purging’ of USAID, which began after Donald Trump took over as president on January 20, 2017, has been completed. Rubio announced that more than 82% of USAID programmes had been eliminated as part of a six-week review ordered by Trump, thereby drastically reducing the agency’s role in global development and consolidating the remaining 18% of programmes under the State Department. Rubio’s social media post on Monday said that the review of USAID was now “officially ending,” with approximately 5,200 of USAID’s 6,200 programmes eliminated.