February Analysis: Domestic Politics and Governance


This month, the parliament ratified the MCC Compact along with an interpretive declaration. Controversy over the MCC overshadowed the impeachment motion against Chief Justice Cholendra Shumsher Rana and the split in the Loktantrik Samajbadi Party in the face of upcoming elections.

Timeline of Major Events

February 7Election Commission announces local government elections for May 13
February 13The Nepali Congress, Maoist Center, and CPN (Unified Socialist) filed an impeachment motion against Chief Justice Cholendra Shumsher Rana with signatures from 98 lawmakers.
February 14Main opposition CPN UML collects signatures on six different blank papers from its lawmakers, threatens counter impeachment on other justices
February 16Maoist Center threatened to withdraw support from the government if concerns about the MCC were not addressed.
Feburary 18Election Commission calls for registration of political parties for May 13 local government elections
February 20MCC Compact tabled in the parliament
February 22Loktantrik Samajbadi Party’s (LSP) executive committee member Brikhesh Chandra Lal, leader Bijay Kumar Singh, and more than 100 supporters stated that they have withdrawn support for the LSP.
February 27The MCC compact is ratified by the parliament along with an “interpretative declaration”

MCC ratification in Parliament with “interpretive declaration”

After intense debate, the parliament approved the USD 500 million worth grant under Millennium Challenge Corporation-Nepal Compact on February 27 with an attached “interpretive declaration” that sought to clarify some of the contested clauses. The ratification was made possible after two partners of the ruling coalition, once vehement critics of the compact, agreed to vote in favor. The Compact, signed in September 2015, had been lingering in the parliament since July 2019.

Leaders of the Communist Party of Nepal (Maoist Center) led by Pushpa Kamal Dahal Prachanda and the CPN (Unified Socialist) party led by Madhav Kumar Nepal were some of the fiercest and vocal critics of the MCC compact. From early in the month, Prachanda and Nepal’s primary strategy was to protect the ruling coalition despite their opposition to the MCC. Because of this, the two leaders opposed the idea of discussing the MCC in the parliament. After Deuba issued a deadline to his coalition partners to make a decision on February 26, both the leaders prioritized saving the ruling coalition over obstruction of the MCC.

US Ambassador to Nepal Randy Berry paying a courtesy call on Prime Minister Sher Bahadur Deuba. Photo: RSS

The self-imposed deadline of February 28 played a major role in forcing political parties to take a decision about the MCC Compact. Information about the self-imposed deadline was revealed when the letter written by Prachanda and PM Deuba to the MCC became public. In the letter, Prachanda and PM Deuba had asked for “four-five months” time to create an environment for the agreement’s ratification. Another major factor that forced a decision was the perceived US pressure. After US Assistant Secretary of State Donald Lu’s conversation with political leaders, politicians were worried about the possibility of the US government reviewing bilateral relations, creating pressure on parties to decide in favor of MCC.

The MCC episode and the politics surrounding its ratification highlight several trends and implications for Nepali politics and international relations. One, being a part of the government has significant implications for electoral results and political parties are willing to sacrifice their values and ideals in the face of electoral reality. This fact shows the need for further electoral and political reforms to lessen the misuse of state’s power and resources for electoral benefits. Two, Deuba has achieved a political victory in managing to push through the MCC Compact and build credibility among western countries. However, the relationship between the Nepali Congress and China is likely to continue to falter. Three, Prachanda is likely to face considerable challenges in balancing trusted relationships with western powers as well as China. After the ratification of the MCC, Prachanda cast his move to support MCC as borne out of political compulsion—in order to protect the constitution and the ruling coalition. Four, during the debate over MCC, moves were afoot about rebuilding a leftist coalition by bringing together the three splintered groups led by Prachanda, Madhav Kumar Nepal and K P Oli. The effort is likely to continue in the future.

But, most importantly, the MCC episode highlights the role of other hidden factors including foreign powers, the motives and driving factors behind propaganda and disinformation, and the nature of Nepali public psyche, which can be easily manipulated by malafide actors.

Impeachment motion against Chief Justice Cholendra Shumsher Rana

The Nepali Congress, Maoist Center, and CPN (Unified Socialist) filed an impeachment motion against Chief Justice Cholendra Shumsher Rana on February 13; 98 lawmakers signed the motion. Chief Justice Rana was suspended and the senior most justice, Deepak Kumar Karki, took over reins as the acting Chief Justice. The move has pitted the CPN UML against the ruling coalition. However, discussions on the impeachment motion have been held up due to excessive focus on MCC Compact.

UML collecting its lawmakers’ signatures on six different blank papers roused speculations that it could file impeachment motions against the other justices as a response to the ruling alliance’s motion against Rana. These lawmakers were on the Constitutional Bench led by Rana which impeached KP Oli as Prime Minister and appointed Sher Bahadur Deuba.

The UML believes that the veiled intention of impeachment of Rana is to sabotage the upcoming local level elections scheduled for May 13. CPN (Unified Socialist) and Maoist Center have been against holding local level elections in May, and are advocating for parliamentary elections in April-May.

The allegations against Cholendra Shumshere Rana range from corruption and misgovernance of the judiciary to seeking a share in the functioning of the executive. UML’s counter impeachment moves are primarily driven by a motive for revenge, but could end up affecting the impartiality and functioning of the Supreme Court. In particular, the four justices under threat from UML have given relatively clean and important verdicts.

Loktantrik Samajbadi Party splinters

OnFebruary 22, Loktantrik Samajbadi Party’s (LSP) executive committee member Brikhesh Chandra Lal, leader Bijay Kumar Singh, and more than 100 supporters stated that they had withdrawn support for the LSP and decided to join the earlier Terai Madhesh Loktantrik Party.

The split, among others, was a result of disagreements between Chairman Manahtha Thakur and other leaders of the Loktantrik Samajbadi Party. Members of the LSP had been expressing discontent with the “unilateral” and “authoritarian” working style of Chairman Mahantha Thakur.

Madhes-based parties have a history of mergers and splits. They had managed to gather together under the umbrella of Janata Samjabadi Party (JSP) in April 2020, which was led by co-chairs Upendra Yadav and Mahantha Thakur. The JSP split on July 26, 2021 after the two leaders clashed over whether to join the then government led by PM Oli. Thakur formed a separate party, Loktantrik Samajbadi Party after the Election Commission recognized Yadav as the legitimate heir of the JSP.

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