After deciding that Nepal meets criteria for democracy, transparency and governance, a donor government wants to give the country $500 million to improve transmission lines and highways. Governments of major parties all enthusiastically endorsed the deal in the last eight years.
But now the grant from the Millenium Challenge Corporation (MCC) is stuck because it has become a political football in the power struggle between two top ruling party leaders.
Prime Minister K P Oli and former Maoist supremo Pushpa Kamal Dahal are competing for power, influence and succession within the Nepal Communist Party (NCP). Disgruntled former UML leaders like Bhim Rawal say the MCC is a sellout to the United States. Geopolitics is a factor because the MCC is seen as America’s response to China’s Belt and Road Initiative (BRI).
At the NCP Central Committee meeting last week, Dahal praised the BRI but was silent on the MCC, while Oli spent 30 minutes of his two-hour speech defending the grant. He said: “We need transmission lines. If the Americans want to build them for free, what’s the problem? I want to assure comrades that there are no strings attached.”
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Oli’s critics within the party also include former UML colleagues and ex-PMs Madhav Kumar Nepal and Jhalnath Khanal, who have turned against Oli because he sidelined them. Co-chair Dahal is perceived to be actively undermining the MCC from behind the scenes.
“We have a huge resource gap, and we have to trust Parliament to make the right decision, but there are NCP members who have vowed to never let it pass, and other NCP are strongly backing it,” MP Gagan Thapa of the opposition Nepali Congress told a roundtable on the issue organised by Himalmedia on Wednesday.
Indeed, the most vehement criticism of the MCC is not from the opposition NC, but from the Dahal-backed faction within the ruling party itself. Dahal is impatient to replace Oli, and it is looking like he is scoring an own goal for Nepal by using the MCC to undermine the prime minister.
“A taskforce has been formed that will clear this up. It is not a big problem to pass this within this Parliament session,” a confident Oli told a gathering of editors on Tuesday.
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Most former bureaucrats agree that the MCC is a catalytic project to jump-start the economy through grid and highway connectivity. In fact, all major power purchase agreements with private sector developers need the MCC’s planned 400kVA transmission network to evacuate the electricity they generate.
Nepal’s former ambassador to the UN Gyan Chandra Acharya says all foreign aid projects have conditions. “It is in our national interest to improve energy security, so we have to decide where the US strategic policy intersects with our own long-term interests.”
Former finance secretary Rameswar Khanal says the US has used the same legal template for agreements with all 38 other MCC partners, and sums up the reason for the deadlock: “The MCC is victim of an internal party dispute.”