What lies behind the politicization of MCC?

What seems like a collective political opposition to MCC is baffling as most intellectuals and scholars have argued that it is in Nepal's interest.

Ashim Neupane and Nishan Khatiwada

  • Read Time 3 min.

Kathmandu: When the Ministry of Finance, on behalf of the government of Nepal, wrote to the Millennium Challenge Corporation office in Washington DC on September 3 raising questions on the ‘controversial’ clauses of the Nepal Compact, it felt like the government was doing that in a good faith with the intention of paving the way for parliamentary ratification of the $500 million US grant assistance.

“I really felt they were up to something. Why would they write to the MCC office if they did not want to ratify the Compact?”, a public intellectual watching the debate told Nepal Live Today, requesting not to be named.

Then the MCC wrote back to the Nepal government on September 8 offering clarifications on most of the questions explaining that MCC is not a part of the Indo-Pacific Strategy, that it has no military component in it and Nepal’s constitution prevails over the Compact.

“Then I felt they will ratify the Compact anyway,” added that intellectual. “After the response from the MCC, which is the US government entity, Nepal government was morally bound to push the Compact,” he said. “Now either it has to say it is not satisfied with the MCC’s response or it should get the Compact forward for implementation.”

As things stand, MCC has seen no progress at all. The MCC Vice-President Fatema Z Sumar visited Nepal and held consultations with top leaders of all the political parties.  Except for the ruling Nepali Congress, every other political party—from CPN-UML to Maoist Center to JSPN to CPN (Unified Socialist)—either pressed for political consensus on MCC or gave a dicey response.

Coalition parties themselves stood sharply divided.

“But this was not meant to be. As a matter of fact, four political parties of the coalition government had reached a gentlemen’s agreement to pass the MCC. Actually, this was the point of consensus,” a government insider told Nepal Live Today

But the coalition government did not include the MCC pact in its Common Minimum Program. Except for the Nepali Congress, none of the parties in the coalition have spoken in favor of granting parliamentary ratification to the $ 500 million American grant project. In 2017, when Nepal signed the USD 500 million deal for building the longest electricity transmission line and repairing over 100 km of strategic roads, the coalition of Nepali Congress and CPN (Maoist Center) was leading the government.

At that time, all the major political parties claimed that Nepal was able to sign a mega-deal with the United States because of their effort. Every political party wanted to take the credit.  UML chief K P Sharma Oli, while he was the PM, long advocated for parliamentary ratification of MCC.

Now Oli himself has taken a U-turn on MCC.

What seems like a collective political opposition, without Nepali Congress in it, to MCC is baffling as most intellectuals and scholars have argued that it is in Nepal’s interest.

Political analyst Geja Sharma Wagle says that MCC is in Nepal’s interest, priority, and necessity and Nepal should ratify the pact as the MCC has sent clarifications to the questions sent by the Nepal government. “Unnecessary politicization of the matter should not fail the project. Not only the MCC but other projects with other friendly countries must also be led forward. Otherwise, it will erode the trust of friendly countries toward Nepal if the aid projects remain unimplemented for years,” he said.

Surprisingly, even Nepali Congress, which had led the government when the pact was signed in 2017, is not supporting the pact openly. “Even when the government was formed two months ago, there was an agreement between the coalition partners to pass the MCC. The Nepali Congress fears a reputational crisis. The Deuba-led government does not want to get into controversy at this time even though the pact is a must for the development of Nepal,” said a Nepali Congress leader, further adding that exclusion of the pact from the Common Minimum Program indicates there is a big disagreement among coalition partners over the MCC pact.

In 2017, KP Oli strongly supported the MCC compact to garner votes in the elections. Analysts say CPN-UML wants to use MCC as a political weapon to break the alliance of four parties leading the government. The deal was signed when Maoist Center was in the coalition government led by Nepali Congress. During the insurgency period, the Maoists labeled the United States as an ‘expansionist force.’ Pushpa Kamal Dahal is also saying that the MCC is being used to break the ruling alliance. 

One reason for what seems like a convoluted, dishonest rigmarole on MCC, says an analyst, is

that every political party fears being branded as anti-nationalist for disinformation, and misinformation about the MCC is so rampant. “They don’t care how the rejection of MCC will harm Nepal’s development prospects. All they care for is politics and political benefits,” said the analyst.