Politics of smokescreen: How the MCC debacle exposes a crisis of credibility in Nepali politics

The debate on the MCC grant shows a collective failure of Nepal’s political leaders. The dishonest rigmarole has exposed the dubious character of politicians, politicians' mistrust in our own institutions, and priority on petty interests over development.

Nishan Khatiwada

  • Read Time 7 min.

Kathmandu: In the past two days, the duplicity and deception of political actors on the Millennium Challenge Corporation’s grant have been completely exposed. 

A letter jointly signed by Prime Minister Sher Bahadur Deuba and CPN (Maoist Center) chair Pushpa Kamal Dahal to the MCC headquarters on September 29 2021 has laid bare the double standards of the political parties. The letter written to the US government agency shows that the duo had not only promised to get the Compact ratified through parliament but also suggested a tentative deadline—that they would get it done by February 28.

[Related: No more dishonest rigmarole on the MCC grant: Let parliament decide its fate]

While the ruling Nepali Congress may be given some benefit of doubt as the party has been consistently saying that the $500 million grant assistance that MCC’s Nepal Compact offers should be accepted without much ado for Nepal’s infrastructure development projects, it is also responsible for contributing to the unnecessary rigmarole on the US grant for road maintenance and transmission line construction projects.

Two other major communist parties—CPN-UML and CPN (Maoist Center)—have either flip-flopped or lied to the people about their position on the Compact that is awaiting parliamentary ratification in Nepal since it was registered in parliament in July 2019.

Congress failed to inform

As the party whose government had signed the Compact in 2017, Nepali Congress should have clarified the matter to the public early on before the misinformation about the MCC became widespread. Sher Bahadur Deuba was the Prime Minister, and Gyanendra Bahadur Karki the finance minister of Nepal when the Compact was signed in September 2017.  Actually, Karki had signed the Compact on behalf of the government of Nepal.

Deuba MCC

Karki remained tight-lipped about the Compact for a long time, even as misinformation and disinformation about it was spreading widely on social media, and some news media. Even after he became the minister in the incumbent government, Karki was not seen making any efforts to debunk the misconceptions and false information about the Compact.

While the expected role of the Nepali Congress was in informing the people about what the Compact was really about,  many of its leaders chose to stay silent.

UML’s volte-face 

The CPN-UML, which is the main opposition party now, had used the MCC grant as a tool to rally support for the communist alliance during the federal parliament elections in 2017.  While he was the PM, KP Sharma Oli had vocally advocated  for the Compact ratification. Oli had not only lent support to the Compact but also repeatedly reminded the House of the urgency of its ratification.  After he was ousted from power in July 2021,  the UML chose the position of neutrality by passing the buck to the ruling parties. Oli and UML leaders showed clear indifference, even while Nepali Congress was consistently seeking its support for parliamentary ratification.

[Related: Revealed: In the letter to MCC, PM Deuba and Prachanda had categorically promised to ratify Nepal Compact immediately]

It should be noted that the Ministry of Law, which was headed by UML leader Bhanu Bhakta Dhakal, had made a recommendation for parliamentary ratification of the Compact, a provision which was apparently not in the Compact. Many critics have pointed out that the Compact could have been endorsed from the cabinet if the Law Ministry had not recommended its parliamentary ratification.

Likewise, Bhim Rawal, who is now a fierce opponent of Compact ratification,  was also in the government as Nepal was seeking the MCC grant.

CPN-UML seems to be in a ‘wait and watch’ mode at the moment and, as such, has not made any official comment on the letters recently made public. But observers say that UML should take responsibility for the MCC debacle. “Should they not be answerable? They were the strong advocates of tabling the MCC Compact in the parliament while they were in the government. How can they remain silent now?” said Indra Adhikari, a political analyst. “This is shameful.”

Duplicity of Maoist Center

The role of the CPN (Maoist Center) appeared to be dubious and guided by double standards, all along.  On the one hand, the Maoist supremo promised to spare no efforts for Compact’s ratification with the MCC office. On the other hand,  he allowed his party leaders and cadres to run an anti-MCC narrative under his own watch. Leaders  like Dev Gurung spreaded the false narrative that once Nepal gives a go ahead to the Compact, America would bring the boots on the ground of Nepali soil. The Ministry of Finance, which is headed by Maoist leader Janardan Sharma, wrote a letter to the MCC headquarters seeking clarifications on some of the disputed issues on September 3. The MCC responded to the letter offering clarifications that the MCC compact is not part of the Indo-Pacific Strategy and there is no military component attached to the aid project.

[Related: MCC’s response to PM Deuba and Prachanda: ‘Continuing with the compact is Nepal’s sovereign choice’]

Maoist Center, instead of deliberating on the content of the letter, kept repeating its old rhetoric and spreading the same false narrative.   

Prachanda, Barshaman Pun, Narayan Kaji Shrestha and Krishna Bahadur Mahara, who have been vehemently opposing Compact ratification without amendment, were involved in the MCC process directly or indirectly. “This is sheer duplicity on their part,” said Adhikari. “They all want to create issues in the name of national interests and they want to use it for party politics.”

Petty interests of CPN (Unified Socialist)

Like Maoist Center, CPN (Unified Socialist) did not only use it as a tool as a nationalist card for the election, they also became complicit in making the foreign assistance coming from the US controversial, contributing to making foreign aid controversial in the days to come. For example, instead of discussing the apparent benefits of the Compact they began to discuss irrelevant issues. Madhav Nepal, for example, recently remarked that the US should first ensure that MCC is not against Nepal’s neighboring countries.

Crisis of credibility, question of ethics 

The MCC office from Washington has given an ultimatum to Prachanda and Deuba. In its letter addressed to PM Deuba and Prachanda, the MCC has requested to get the Compact ratified by February 28, “the timeline indicated” by Deuba and Prachanda, clearly indicating that failure to do so could result in MCC Board of Directors discontinuing “Nepal’s eligibility to receive the $500 million compact from the United States.”

[Related: Commentary | What does the Maoist Center want in MCC’s Nepal Compact?]

For sure, CPN (Maoist Center), along with Nepali Congress and CPN-UML, are now morally obliged to get the Compact ratified. However, this smokescreen they created around MCC Compact these many years has also exposed multiple flaws, particularly of the Maoist Center.

One expects that the debate around the Compact would unleash substantive discourse on Nepal’s foreign aid priorities, policies and its transparency. But regrettably, such weighty issues have been lost somewhere in the din of misconceptions and misinformation.

First, they never discussed the substance of the Compact. They spun lies and spread those lies to the people. They could have discussed the conditions for which Nepal should seek foreign aid and the long-term benefits the foreign aid could bring to Nepal.

Morals are something the political parties care least about, laments Adhikari. “When political parties are bereft of morals, they will not take the question of morality or morality crisis seriously. If they did, they would not make the Compact so controversial,” she said, adding it will create a crisis in internal politics as well as Nepal’s foreign relations. “Our leaders have lost their credibility.” 

Disowning the deal

Nepal’s top-level bureaucrats, diplomats and political leaders had lobbied to secure the MCC grant. They were the ones who negotiated for the grants on behalf of Nepal. 

That the politicians are trying to disown the Compact in the name of “national interests” means that they have no trust in state mechanisms that were involved in the negotiation and finalization process of the Compact. It could also send a misleading message that our own politicians, bureaucrats and diplomats can fall for an ‘anti-Nepal’ deal.

“Who will dare to initiate negotiation for foreign aid in the future if this narrative is established?” Sishir Kumar Dhungana, former Finance Secretary, told Nepal Live Today. Decisions about this type of big grant are not taken overnight. “In the case of MCC Compact, a series of negotiations were made in different stages and the political parties were involved,” Dhungana argues politicization of the development projects will not do good for Nepal. “When development projects are politicized and portrayed as being against the nation, it will have a long term ramification,” Dhungana said. “The bureaucrats will face a dilemma as to whether to advise the political actors in the government to approve certain aids from foreign countries and bilateral and multilateral donors.”

[Related: What will Nepali Congress do about the MCC Compact?]

According to him, politicians may change their tune over time but bureaucrats cannot lie. Political leaders make such issues a political agenda but the bureaucrats cannot do so because they advise the government in good faith, he added. “In the long run this will not only tarnish the reputation of the political leaders but also invite reluctance from the bureaucrats in initiation, negotiation and finalization of any projects to be funded by any foreign grants.”

Analyst Adhikari concurs. “There are many such past instances,” she said. “Parties make certain commitments while they are in the government but change their positions soon after they are out of the government. This is what has happened with the MCC Compact as well.”

Political parties have politicized MCC for the sake of sustaining power and for political benefits. Adhikari shared the chronology of the events. “While Prachanda was in power, there was an understanding to move ahead for the process as Nepal had fulfilled the criteria set by MCC,” Adhikari said.

“Then while Deuba was the PM, the agreement was signed and when Oli was PM the Compact  was registered in parliament for ratification.”

According to her, signing the Compact while in government and opposing it later on or not supporting it will have a consequence on Nepal’s diplomatic relations with foreign countries. “This fatal tendency must be done away with once and for all,” she said. “It can’t continue forever.”

[Related: Interview | ‘Neither incumbent Speaker Agni Sapkota nor his predecessor Krishna Bahadur Mahara was in favor of tabling MCC Compact for ratification’: Rajan Bhattarai, CPN-UML leader]

One expects that the debate around the Compact would unleash substantive discourse on Nepal’s foreign aid priorities, policies and its transparency. But regrettably, such weighty issues have been lost somewhere in the din of misconceptions and misinformation.

Adhikari believes “the ugly politics” around the MCC has exposed the politicians, their duplicity and hypocrisy. “Now foreign countries won’t believe in what our political leaders say,” Adhikari said. “But it appears that they were doubtful of our leaders’ credibility all along. Which is why they wanted parliamentary ratification of the Compact and a written commitment about the ratification.”

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