If Nepal’s politicians do not come to their senses soon, a $500 million US grant for critical infrastructure will be cancelled. This will be a debacle for Nepal’s economy, and an international embarrassment that will tar the country diplomatically for years to come.
The Millennium Challenge Compact (MCC) was initiated by the US government in 2004 as an independent agency to seek innovative ways to end poverty in least developed countries. Nepal was selected as a partner, and planning for the MCC started during the government of Baburam Bhattarai.
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The entire phalanx of NC leadership, as well as NCP leaders so vociferously trying to scrap the agreement today, were involved in the meticulous design of the MCC.
Nepal was suffering up to 18 hours of load-shedding a day, so the MCC team, along with Nepali politicians and bureaucrats decided that transmission lines were urgently needed to evacuate generated electricity to load centres, boost consumption of clean energy to replace imported petroleum, and export any excess to the Indian market.
The Nepal government signed the agreement in 2017. But when it came time to implement the Compact and spend the $500 million, along with another $130 million equivalent put up by the Nepal Government, violent objections suddenly arose from the CPN flank. Some royalist conservatives jumped on the bandwagon.
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Painting Nepal as a victim of American imperialism and geopolitical designs, the anti-MCC campaign has used in-party machinations, ultra-nationalist posturing, and populism against the project. If you would believe it, the Americans are about to steal Nepali intellectual property, give all MCC-related jobs to Americans, and locate missile silos in Nepal aimed at China.
To be sure, US Under Secretary of State David J Ranz last year fuelled the fire by asserting that the MCC was part of the US Indo-Pacific Strategy. That foot-in-the-mouth comment was picked up by critics to prove that the MCC is against China.
The Americans backpedalled furiously, but the damage was done. Truth be told, the Indo-Pacific strategy was announced in 2018 by US Secretary of State Mike Pompeo, much after negotiations on the MCC began in 2012 and the agreement was signed in 2017.
At a time when international development assistance has dried up further because of the pandemic, the MCC promise will inject $100 million a year over five years on crucial energy infrastructure. The timing is perfect to help revive Nepal’s economy with catalytic liquidity as recession accelerates worldwide. The transmission line will also have downstream benefits nationwide for economic growth, equity and social justice.
Own goal, Kunda Dixit
To ensure that Nepal does not get mired in delays such as the Melamchi Project, the MCC agreement has some failsafe measures. Endorsement of the Parliament was not necessary, but the US Congress too has adopted the MCC Compact for Nepal, so there is no loss of sovereignty as alleged.
The economic argument for the project has been overshadowed by heavy anti-MCC populism. So much so that NEA’s top officials and independent power producers who need the transmission lines to sell their electricity have preferred to keep quiet.
Most intriguing is the inability or unwillingness of the media and civil society to pinpoint the actual root of the anti-MCC campaign. It is the weaponisation of the MCC by NCP co-chair Pushpa Kamal Dahal against his main rival, Prime Minister K P Oli.
Dahal, with the assistance of the majority of the CPN secretariat, is engineering the failure of MCC to question Oli’s command over the Parliamentary Party and hence, the right to lead the government.
Then, there is House Speaker Agni Sapkota, who is doing Dahal’s bidding by not presenting the MCC bill for debate – just as his predecessor Krishna Bahadur Mahara did since the bill was presented over a year ago. This delay should have triggered an uproar in Parliament, but ruling party MPs are confused, while the opposition NC leadership (which is for the MCC) does not speak up for fear of being tarred anti-national and ‘in the take’.
The MCC is also important to restore Nepal’s international credibility. For a Parliament to reject an agreement signed in good faith by an earlier government and supported by the current ruling party would send a message to the world that Nepal’s politicians are not trustworthy.
Given the polarised world where Kathmandu is required to balance two belligerent neighbours, India and China, Nepal needs to keep the West supportive of its development agenda and place in the world.
Failure to accept the MCC would not only poison Nepal’s relationship with the US, it would also help alienate the international community for the worst of reasons – not knowing what is good for us.