Even as the recent agreement on framework for Belt and Road cooperation between Nepal and China continues to trigger heated debates in the country, visiting US Assistant Secretary of State for South and Central Asian Affairs Donald Lu has said that the BRI deal should be transparent.

He also stated that before making any comment the US would wait until the text of the new agreement between Kathmandu and Beijing is made public.

Before wrapping up his Nepal visit on Monday evening, Lu sat down with a group of journalists and shared what he had discussed with Nepali leaders and officials, including US priorities in Nepal, the ongoing transitional justice process and climate change.

During Prime Minister KP Oli’s visit to China last week, a new framework for BRI cooperation was signed in order to push forward various projects under the BRI.

After Nepal insisted on grants for expediting the projects under the BRI, at the last moment, the two sides reached an understanding on “aid assistance financing” as the funding method for projects under the framework.

As the term “aid” entails both grants and soft loans, there is an uneasiness in the Nepali Congress and some other parties over whether Nepal has shifted its position on the kind of funding it wants under the BRI.

But the text of the new understanding reached between Kathmandu and Beijing has yet to be made public, which also raised further speculations about its content.

Lu, who arrived in Kathmandu on Sunday as part of his South Asia tour at the end of the Biden administration’s term, held talks with ministers and officials and discussed various aspects of Nepal-US ties, among other things. Lu, a seasoned American diplomat, is likely to serve at the State Department for another one year under the new Trump administration.

During his stay in Kathmandu, Lu was unable to meet Prime Minister Oli as the latter was travelling to his hometown, Jhapa. But he met with Nepali Congress President Sher Bahadur Deuba; Deputy Prime Minister and Minister for Finance Bishnu Poudel; and two advisors to the prime minister, Bishnu Rimal and Yubraj Khatiwada; among others.

He discussed with them the status of ongoing US projects in Nepal including those funded by the Millennium Challenge Nepal Corporation, USAID, seeking possible economic assistance from International Finance Corporation, climate change, and US priorities in Nepal.

In his meeting with senior government officials including Rimal and Khatiwada, he congratulated them on successful negotiations with China on the BRI deal.

Both Rimal and Khatiwada were part of a task force from ruling CPN-UML to review and amend the BRI implementation plan originally proposed by China in early 2020. They played crucial roles during the negotiation process.

In their meeting with Lu, both Rimal and Khatiwada tried to assuage widespread concerns over the new BRI deal, with Khatiwada elaborating on Nepal’s current debt structure and other indicators, sources at the Prime Minister’s Office told the Post.

“The United States is supporting Nepal in many areas, particularly in its economic development, and fostering relations with the goal of making Nepal a strong country that can make independent decisions, free from outside influence,” said Lu while talking to journalists.

“We believe in taking independent decisions as well as maintaining transparency,” he said while responding to questions on how the US sees the recent BRI pact. “We have not seen the text, we have to read it,” he said. He said he would not make further comments on the pact until the details are out, “but it should be transparent.”

When asked about Nepal’s departure from ‘one-China policy’ to ‘one-China principle’ and Nepal’s firm support for the ‘reunification of Taiwan’ and opposition to ‘Taiwan independence’ in the recent joint communique issued by Kathmandu and Beijing at the end the prime minister’s China visit, Lu said he was not aware of these, but commented that there should be mutual respect, as well as respect for sovereignty.

Lu is known as a hawkish diplomat in Nepal, who in 2021 had warned that the US would be forced to rethink its ties with Nepal if Kathmandu failed to ratify the Millennium Challenge Corporation compact. Despite reservations from various sections, the Nepali parliament had ratified the compact.

The US has been helping Nepal in various sectors, said Lu, especially focusing on Nepal’s economic development and advancing bilateral relations.

“We want to see Nepal as a strong country so that it can take its decision without influence from outside,” he added.

Nepal should have good relations with all countries—India, China, Pakistan, Turkey, Japan, Korea—but it should be based on mutual respect, respecting sovereignty and independence, he said.

He hoped that the new Trump administration will keep supporting the climate causes. Trump is known for his climate skepticism and he had infamously pulled the US out of the Paris agreement during his last term as US president. He will again take the oath of office and secrecy on January 20.

Lu expressed his excitement to see the progress in the MCC-funded projects. “We met ruling and opposition party leaders and we found a broader understanding on expediting the MCC [projects] which aims at jobs creation, exporting clean energy to India, and road infrastructure upgrade,” Lu said.

He said he was excited that both ruling and opposition parties have come together to conclude the transitional justice process and on the MCC, and lauded Nepal’s recent achievements in getting itself a sovereign credit rating.

“There are many challenging steps ahead, but it is impressive to see that it was adopted by consensus,” he said on the recent passage of a bill on transitional justice.

Lu said he expects more high-level engagements with Nepal under the new Trump administration stating that Trump gives priority to Asia.

“We had quite interesting and productive discussions on various issues ranging from bilateral cooperation, creating jobs, finding solutions to the climate crisis… talked about the development assistance from the MCC, Development Finance Corporation and recent interaction between prime minister Oli and Elon Musk,” he said.

On Monday, Lu also joined the International Centre for Integrated Mountain Development’s Director General, Dr Pema Gyamtsho, to kick off the ‘Green Alliance for Women’s Economic Security’ project in the Hindu Kush Himalaya region.

The project will establish a regional platform for women entrepreneurs across the Hindu Kush, enabling knowledge exchange, best practice sharing, and tackling key challenges like gender discrimination, market access, and financial barriers, the US Embassy said in a Facebook post.