Decoding Donald Lu’s message to Nepali leaders 

The telephone call itself is a strong message to the Nepali political actors that the perennial delay in the Compact ratification has become a source of frustration in Washington.

NL Today

  • Read Time 4 min.

Kathmandu: On Thursday night, a top American official made a telephone call to the top leaders of major political parties in an apparent bid to get the $500 million MCC Nepal Compact ratified by parliament. 

The Compact which was signed between the Millennium Challenge Corporation and the government of Nepal in September, 2017 and registered in Nepal’s parliament in July, 2019 for subsequent tabling and ratification lies in limbo due to the vertical division among the political parties over whether to ratify the Compact in its current format or with amendment on some clauses. 

The MCC, the US government agency, has made it clear that the Compact cannot be amended. 

Donald Lu, the US Assistant Secretary of State, made a separate telephone call to Prime Minister and President of Nepali Congress Sher Bahadur Deuba, Chairman of CPN-UML  KP Oli and Chairman of Maoist Center Pushpa Kamal Dahal ‘Prachanda’.

What actually transpired in conversation between Lu and Nepali leaders is sketchy. But what has been reported, attributing the source close to Prachanda and Oli, suggests Lu ‘warned’ the failure on part of Nepal to get the Compact ratified by parliament by February 28 deadline might result in the United States ‘reviewing’ its relations with Nepal.

On September 29, 2021, PM Deuba and Maoist Chairman had written a letter to the MCC expressing commitment to push the Compact by February 28. American officials are believed to have served the ultimatum of that date based on the letter written by Deuba and Prachanda.

The content of Lu’s conversation with Deuba, Prachanda and Oli has not been made public by the respective leaders. As such, whether the tone was ‘intimidating’ as claimed in some reports, including whether the US official actually warned of reviewing ties between two countries still remains subject to interpretation. At times, messages get lost in translation.  If  Deuba, Prachanda and Oli were given any warning, they need to tell the people, if the message has been wrongly interpreted they also need to convey what Lu actually communicated to them. 

There is a strong voice among the experts that Nepal should not act in a way that leads the global superpower, which is also Nepal’s major development partner and donor, to lose Nepal’s trust. 

Be that as it may, the telephone call itself is a strong message to the Nepali political actors–especially those who are lobbying against MCC Compact’s parliamentary ratification–that the perennial delay in the Compact’s ratification has become a source of frustration in Washington.

Experts are of the view that this will not bode well for the bilateral relations between the US and Nepal that go back to the late 1940s.  “This is the first case where Nepal and the USA are going through mistrust,” said Dinesh Bhattarai, former ambassador and foreign policy expert.  Nepali political actors, especially the communist leaders should not have made the American grant so controversial, he added. “The US is our old friend. Our reputation has been badly damaged and our diplomatic dealings have eroded,” he told Nepal Live Today

Nepal had sought the US grant for transmission lines construction and road maintenance projects and Nepal had negotiated for the grant for years before signing the Compact in 2017. “Now, Nepal seems to be backtracking from its own commitment,” said Bhattarai. In his view, the current imbroglio on MCC Compact will erode Nepal’s credibility internationally.  “This has raised credibility issue with the international community. The situation has developed in such a way that no country or leaders will trust us in the future,” Bhattarai said.

Other experts argue that the root cause of the problem lies in Nepali leaders promising to ratify the Compact and backtracking from that promise. “PM Deuba and Prachanda wrote a joint letter to the MCC assuring parliamentary ratification of the Compact. Backtracking from that promise has exposed Prachanda,” said Gopal Khanal,  a foreign policy analyst.

“It’s a diplomatic disaster, not just a diplomatic error. Such immaturity in a sensitive diplomatic issue will harm Nepal’s international reputation,” he said.

“Whom should the world community believe if the Prime Minister agrees to ratify the Compact by a certain date but fails to do so?” He asked. He, however, believes that Prachanda is more to be blamed for playing a spoilsport in Compact ratification.

There is a strong voice among the experts that Nepal should not act in a way that leads the global superpower, which is also Nepal’s major development partner and donor, to lose Nepal’s trust. 

Dinesh Bhattarai argues that a small country like Nepal always needs a support of a strong and resourceful friendly country like the US. “It is sad that we are heading toward losing their trust,” he said. According to him, Maoist leaders have presented themselves as the masters of doublespeak. “During the days of Maoist conflict, they used to assure no harm to India while provoking the cadres back home to launch a tunnel war against India.” 

According to him, Prime Minister Deuba and other Nepali Congress leaders should be aware of this nature of the Maoist leaders.

According to the experts, Thursday’s call is also a fresh indicator of how Nepal might be caught in the complex geopolitics due to the inability of the political actors to navigate the emerging geopolitical challenges. “The latest developments clearly show that geopolitical maneuvering has increased in Nepal. Leaders should handle this situation with care,” said Dinesh Bhattarai. “But it seems our leaders have failed to realize the geopolitical sensitivity.” He argues that if the leaders are not able to take the MCC issue to a logical conclusion no foreign development partners will trust the current crop of leaders.

In the history of long friendly relations between the US and Nepal, the MCC Compact has appeared as a test case for Nepal. Meanwhile, with the false narrative created mainly by communist forces over the US grant, and the duplicity exhibited by Maoist Center leader Prachanda about the same, there is a rising concern that Nepal could further lose its international image in the days to come.