Dean R Thompson, the United States nominee for ambassador to Nepal, said on Wednesday that Nepali parliamentarians ratified the Millennium Challenge Corporation compact despite a ‘disinformation campaign’ by China.

In his opening statement before the Foreign Relations Committee of the Senate on Wednesday, Thompson said: “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.”

This is probably for the first time any American official has pointedly criticised China, Nepal’s northern neighbour, with regards to controversy surrounding the $500 million American grant in the run up to its ratification by Nepali Parliament in February.

Nepal signed the MCC compact with the US in September 2017.

“This project will build electricity transmission lines to connect Nepal’s clean, abundant hydropower with South Asia’s energy grid,” said Thompson, according to a statement by the Foreign Relations Committee of the Senate.“It will also build high-quality roads in Nepal. These projects will increase the prosperity of both of our countries.”

Five years after the signing, the MCC compact became a politically divisive issue in Nepal, with critics as well as a section of communist parties raising questions over the need for its parliamentary ratification and saying that some of its provisions would undermine Nepal’s sovereignty.

The Sher Bahadur Deuba government, backed by two commuist forces—CPN (Maoist Centre) and CPN (Unified Socialist)—however, managed to ratify it from the House by attaching an interpretive declaration.

Just as the MCC compact was becoming a divisive subject in Nepal, it became a geopolitical issue after China jumped into the fray. Beijing officials made two back-to-back statements, warning the US against “coercive diplomacy” and questioning how a gift can come with a deadline.

The Chinese were referring to the February deadline set for the MCC compact’s ratification and US Assistant Secretary Donald Lu’s separate telephone conversations with Nepal’s top leaders in which he conveyed that Washington could review its ties with Nepal if the compact was not ratified. The US embassy in Kathmandu, however, maintained that it was Nepal’s sovereign decision whether to ratify the compact or not.

The US also said that it did not set the deadline and rather Prime Minister Deuba and Maoist chair Pushpa Kamal Dahal had done so, referring to a letter the duo had dispatched to the MCC headquarters in September last year.

Before the Senate, Thompson also spoke of an oft-repeated phrase used to describe Nepal.

“We are at an important juncture in our relationship with Nepal. Nepal has been referred to as a ‘yam between two stones,’ those stones being China and India,” he said. “While those countries do have important relationships with Nepal, we also share Nepal’s interest in strengthening its sovereignty and its partnership with the United States.”

Thompson was nominated as the US ambassador to Nepal by President Joe Biden in March.

He will be appointed once he gets through the hearing from the Senate’s committee. He currently serves as the State Department’s Principal Deputy Assistant Secretary for South and Central Asian Affairs, and was the acting Assistant Secretary from 2020 to 2021.

“From my time as Principal Deputy Assistant Secretary in the South and Central Asian Affairs Bureau, as a US diplomat in Bangladesh, Sri Lanka, and India, and a leader in the Department’s crisis management apparatus, I feel well prepared to serve in this capacity, if confirmed,” said Thompson.

In his statement, he said if he gets confirmed for the position, he will push for the rights of all Nepali citizens and residents.

“This includes the Dalits, marginalised communities, and refugee communities, including Tibetan refugees,” he said. “I will encourage the Government of Nepal to implement policies that promote meaningful inclusion, economic opportunity, and humanitarian support.”

For China, Tibetan refugees in Nepal are a security concern, while the US historically has expressed its interest in Tibetan refugees living in Nepal, mostly in Kathmandu, the capital.

Nepal is home to around 20,000 Tibetan refugees. The government stopped issuing identity cards to Tibetan refugees in 1995 and this has, Tibetan refugee leaders say, caused difficulties for them while doing businesses or pursuing higher education.

In May, Uzra Zeya, an under secretary for civilian security, democracy, and human rights of the US government as well as a special coordinator for Tibetan issues for the Biden administration, had visited some Tibetan refugee camps in Kathmandu and held talks with refugee leaders.

Since the passage of the MCC in February, a host of American officials have descended on Kathmandu in an indication of its renewed interest in Nepal. Officials, however, say the visits are part of the 75th anniversary of Nepal-US relations.

The Chinese too seem to have their increased interest in Nepal, and there have been two high-level visits from the north since the MCC compact was ratified. In March, Foreign Minister Wang Yi travelled to Kathmandu. On Wednesday, Liu Jianchao, the head of the International Liaison Department of the Central Committee of the Communist Party of China, concluded his four-day Nepal visit.

During their meetings with Nepali politicians, including the prime minister, there was one message, according to people familiar with the meetings, that Nepal must consider China’s security sensitivities.

If confirmed, Thompson will succeed Randy Berry in Kathmandu, who has been nominated by Biden as his ambassador for Namibia. Berry had presented his letter of credence to President Bidya Devi Bhandari on October 25, 2018.

Thompson also said facilitating Nepal’s economic growth and strengthening the trade ties between the two countries will be his priority.

“The USAID just signed a $659 million agreement with Nepal to contribute to Nepal’s development over the next five years. This is a new chapter in the United States Government’s long-standing development relationship with Nepal and reflects the evolution of our partnership,” he said. “Post-earthquake reconstruction is winding down, the transition to federalism is well underway, and through successful programming the United States has helped lay the foundations to support Nepal’s goal of graduating to middle-income country status.”

The ambassador nominee also spoke about Nepal’s support for Ukraine after the Russian invasion at different United Nations platforms.

“Nepal’s support for Ukraine resolutions at the UN General Assembly and the UN Human Rights Council demonstrates its dedication to the international rules-based order and the premise of territorial integrity. Nepal is a committed bilateral partner and a committed partner on the world stage.”

Nepal had voted in favour of Ukraine’s call at the UN Human Rights Council for an urgent debate on the situation in Ukraine and to condemn Russia’s military operation and a UN resolution on the Ukraine crisis at the UN General Assembly.

“Nepal’s progress on the commitments it made during President Biden’s Summit for Democracy demonstrates how important Nepal’s young democracy is to its people, and the importance it places on its relationship to the United States,” said Thompson.

He also highlighted Nepali politics before the Senate, saying it is “messy” at times.

“Like other democracies, Nepal’s politics can be contentious and messy at times, but supporting Nepal’s democracy is in our interest and will remain a priority of mine if confirmed as ambassador,” he said. “I will also work to help Nepal strengthen its democratic institutions. Nepal has come a long way since its civil war only 16 years ago.”