Is the dispute over the MCC compact going to break the ruling alliance? 

Is the fate of the ruling alliance hanging in the balance over the MCC Compact? Is the difference over whether to accept or reject the American grant becoming decisive even in matters of government change in Nepal?

Nishan Khatiwada

  • Read Time 4 min.

Kathmandu: Whether to get Millennium Challenge Corporation’s $500 million Nepal Compact in its current format or through amendments has shaken up the Nepali political landscape so much so that calculations and predictions are being made about the possible collapse of the current alliance between the parties represented in the government over the dispute on MCC’s Nepal Compact.

While Prime Minister Sher Bahadur Deuba has appeared resolute to get the Compact endorsed by parliament, his colleagues in the alliance–mainly Maoist Center’s Pushpa Kamal Dahal and Unified Socialist’s Madhav Kumar Nepal–have demanded that the Compact should not be endorsed in its current format.

Deuba is reportedly ready to break the alliance for the sake of pushing the Compact. His colleagues Dahal and Nepal are reportedly ready to walk away from the alliance if they have to support the Compact ratification.

The Compact has become a source of dissatisfaction among the parties in the government. PM Deuba is seeking to forge a consensus through deliberations amid the alleged pressure from the US side to take the Compact to a logical conclusion. 

Technically, with 61 seats in the House of Representatives, Nepali Congress along with seven other MPs can push the Compact. But Deuba does not seem to be in the mood as yet to disregard the voices of coalition partners in the government. He has been taking pressure upon himself to table the MCC Compact in the parliament without any delay. 

Meanwhile, as Madhav Nepal and Pushpa Kamal Dahal are raising their ante against the Compact ratification, Deuba is reportedly mulling a new alliance with CPN (UML).  UML chief Oli has been non-committal about the Compact but he has not said that it should not be ratified.

So is the fate of the ruling alliance hanging in the balance over the MCC Compact. Is the difference over whether to accept or reject the American grant becoming decisive even in matters of government change in Nepal?

PM Deuba does not appear to be clear-headed about whether he will choose Compact ratification over the continuity of alliance or vice versa. Keeping the ruling coalition intact could be a strategy for Deuba as it would cut off the possibilities of any alliance between the communist parties in the near future. And, with the election at the doorstep, it may be better for Congress if the communist parties are kept apart from each other.

Congress insiders say that this is the main reason Deuba, despite immense pressure from leaders of his own party to ditch the alliance, is putting his efforts to find a common ground for the MCC Compact among the coalition parties. 

UML wishes for a division within the alliance but the coalition leaders have been clearly denying such a possibility, claiming that steps will be taken through consensus.

CPN (Unified Socialist) leader and coordinator of the task force formed to find a common ground for the Compact, Jhalanath Khanal, said that there is no possibility of a break in the ruling alliance because of the MCC compact. “PM has only requested to endorse the MCC. But he has nowhere said that the alliance will be broken if not endorsed,” said Khanal. 

CPN (Unified Socialist) Deputy General Secretary Jagannath Khatiwada agrees that ruling parties are divided regarding the endorsement of the MCC compact. But the parties have not yet said that they are in the mood to break the alliance. “MCC is an international project but our national need is the coalition.  The parties that move forward to break the national alliance in the name of the MCC compact are not the nationalists,” he said.  

While parties in the ruling alliance argue that MCC is an international project and the coalition is the national need, Nepali Congress looks prepared to face risks for getting the American grant endorsed from parliament.

Pushpa Kamal Dahal has been reportedly lobbying for not letting the Compact be tabled in the parliament. Unified Socialist leaders highlight that the ruling coalition is more important and a national need than the Compact.  “Our party is of the view that we cannot protect the national sovereignty if we do politics by taking the international pressure into consideration and by ignoring the national needs. That’s why no party has moved forward in a way of breaking the alliance,” added Khatiwada. 

Give a way out

Meanwhile, Nepali Congress leaders are exerting pressure on Deuba to get the MCC Compact endorsed. Most of them are of the view that the Compact is in the national interests and the coalition must find a common ground to endorse it. If not, say these leaders, Nepali Congress should think of alternatives.  

“There is an internal rift regarding the MCC Compact in the ruling parties, but it will not easily break the alliance. However, if the alliance can’t give a way out regarding the national matter, there is no relevance of the alliance,” said Min Bahadur Biswakarma, a Nepali Congress leader. 

Nepali Congress is clear that the national issues should be solved at any cost by finding a common ground among the parties in the ruling alliance. “That’s why the alliance was formed in the first place, to find a way out in national politics. We will be flexible and discuss the matter within alliance but if consensus is not reached we will sort out the issue in other ways. We will give a way out to the MCC issue with or without the alliance,” he added.