Legend has it that the real reason Nepal stayed an independent nation state while all around us were colonised was that our powerful neighbours took one look at the terrain and people here and concluded that the country was ungovernable.
In the three decades after 1990, Nepal’s elected leaders have shown even fewer smarts than past feudal dynasties. The biggest let-down has been in the last two years, after the unified Nepal Communist Party swept the country’s first three-tier federal elections. The strongest government in Nepal’s democratic history is showing itself to be more feckless than those fragile do-nothing coalitions.
Perhaps the latest example of shooting ourselves in the feet has been the wrangling within the NCP over the US Millennium Challenge Corporation (MCC). If there was one vivid example of how not to look a gift horse in the mouth, this is it.
The awkwardly-named MCC was launched by President George W Bush in 2004 after the 9/11 attacks to reorient American aid towards the kind of infrastructure projects that USAID or the World Bank would not touch. At first, with an ongoing war Nepal was deemed ineligible for the MCC.
But by 2012, with progress in health and education and economic, political and press freedom, as well as prospects for the rule of law, Nepal qualified for membership. A threshold program in Kathmandu went about shortlisting investments in infrastructure that could jumpstart development.
Nepali planners, working with their American counterparts, singled out transmission lines and highways as main economic bottlenecks. But they worried that Nepal did not have a governance track record, transparency or policy continuity to guarantee that the MCC’s $500 million could be effectively spent in five years.
Finally in 2017, the Nepal government committed $130 million as counterpart funds, and the Hetauda-Damauli-Butwal 400kVA transmission line, as well as rehabilitation of 305km of highways from Itahari-Kakarvitta and Pokhara-Butwal, were selected for the MCC.
These were not chosen arbitrarily — serious homework was done to find catalytic projects that could transform economic growth through quick returns on investment. This was a departure from the way planning is normally done in Nepal: ad hoc, whimsical, wasteful. The MCC also made provisions to ensure transparency and minimise the kind of delays in large infrastructure projects that Nepal has become notorious for.
Any other government worth its salt, and one that knows what is good for its people, would have jumped at a deal like this. But not Nepal under the NCP. Members of the party’s central committee have objected that the MCC is part of the US Indo-Pacific Strategy, objecting to a clause that would require Indian go-ahead on the transmission line, and at provisions for independent outside auditing.
It is true that there is rarely a free lunch in official development assistance — even a grant is somehow tied to the strategic interest of the donor. But the MCC predates both China’s Belt and Road Initiative (BRI) and the Indo-Pacific Strategy. Yes, there is a new cold war between Beijing and Washington, the two compete globally for political, economic and military domination, and both superpowers have strategic concerns in Nepal.
But it would be in Nepal’s own strategic interest to take maximum advantage and get both the BRI and the MCC to contribute to Nepal’s infrastructure development. Instead, some sections of the NCP are doing their best to wreck both initiatives so Nepal is left with neither.
The reason the MCC needs to be cleared with Delhi is because Nepal’s planners decided to upgrade the transmission line to 400kVA so it can also export electricity to India through Gorakhpur. And having Parliament ratify the compact would ensure political continuity and commitment.
Last week in this newspaper we projected an optimistic scenario of what Nepal may look like by 2030. Infrastructure-led development is necessary because jobs will be created during construction, and improved connectivity will have downstream benefits into the future.
However, there are good, bad and ugly infrastructure projects. The ‘excavator roads’ that maul our mountains are not just ugly, they are an environmental disaster. Pokhara’s new international airport is too costly for its capacity, but at least it is being built and may help diversify tourism while decongesting Kathmandu.
The proposed airport in Nijgad is an example of ill-advised megalomania. In fact, it is not an airport project but a timber concession. Yes, it is a game changer but only in the sense that it will wreck both our economy and environment.
Decisions on large, expensive projects must be taken by technocrats and planners who know what they are doing, not by ignorant, populist politicians with edifice complexes who want to commit colossal blunders like Nijgad and sabotage a worthy initiative like the MCC.