The visit of MCC vice president Fatema Z Sumar and deputy vice president Jonathan Brooks in the second week of September triggered the ongoing years old debate over the MCC grant to Nepal to a new level. On the eve of top officials visit to Nepal, MCC sent back the replies to 11 major questions along with other supplementary questions, Nepal’s finance minister had forwarded regarding the key controversies about MCC in Nepal. The reply from the US side clarified that MCC is not the part of Indo-Pacific strategy and MCC Nepal Compact is not related to any military alliance or defense strategy in any sense. It also further stated the Compact agreement doesn’t prevail over the constitution of Nepal and Nepal has sole ownership over all the intellectual property generated during the MCC implementation. However, it was straight forward stated that the compact cannot be amended at this time. Recently, newly appointed Foreign Minister of Nepal, Narayan Khadka confirmed the government is not in line to amend the compact’s provisions.
Politicization of MCC
The political parties and public remain widely divided over the MCC grant and on the provision of parliamentary ratification of the agreement, which would provide it with the status of a treaty. Back in 2017, NC President Sher Bahadur Deuba was prime minister when the MCC compact was signed. After 4 years, Deuba is again leading the cabinet and is under moral obligation and pressure to get it ratified from the house.
Meanwhile, the CPN (Maoist Centre) and CPN (US) stands against certain MCC provisions and are against passing the compact in its current form. The main opponent CPN-UML which when leading the cabinet earlier was all set to ratify the compact from parliament, now appears to oppose it. This has raised the question, whether CPN-UML chairman’s KP Oli’s changing stand while in and out of government is his patriotic stake or political propaganda. Further, the hard-liner monarchist RPP led by Kamal Thapa has a positive stance in MCC’s regard. To add, this rampant polarization on MCC has stretched not only among the party cadres but to the grassroots.
Geopolitical Debates Surrounding MCC
Those who align on the side of MCC being against Nepal’s national interest and potential threat to Nepal’s sovereignty consider it as a part of Indo-Pacific Strategy (IPS). With the US’s visible interest and strategic shift to the Indo-pacific region through IPS, announced last June, it leaves room to presume MCC as a strategic tool to counter China’s growing influence in Nepal through BRI. It is to be noted both the MCC and BRI agreements were signed in 2017. Though China’s official stand is neutral and is stated it is Nepal’s own decision either to accept MCC or not, China’s discontent on MCC is clearly visible on China’s side. It is also reported that the anti-MCC protests being organized in Nepal are backed up by pro-China organizations and individuals. On the other hand, India as an extended party to the MCC compact, has already green signaled the compact.
Nepal’s Credibility at Stake
Nepal initiated the preliminary procedures for the MCC grant way ahead in 2011. MCC agreement was finally signed in 2017. Within this timeframe, all the major parties have led the governments and were part of MCC grant procedures, some of which now seems to be against the MCC compact. Politicizing the grant for much needed hydroelectricity infrastructure for the short-term gain, not only ruins Nepal’s relationship with the US but also conveys to the international community ‘we do not know what is good for us’. MCC vice president in her last visit clearly indicated if Nepal declines the grant, the amount will be transferred to another country. It would be a diplomatic shame to reject the grant that Nepal itself applied for the self-prioritized projects and in the scenario where the US congress has already adopted the MCC compact for Nepal. Added, this would also dilute Nepal’s credibility in the international development community.
Given the economic backdrop due to the COVID crisis, the MCC grant if ratified by the parliament and as the project takes off the ground, it would inject $100 million per year into the shattered economy, which would pave to be a steppingstone in the economic recovery process. Furthermore, in the midst of Nepal’s aim to upgrade to the middle-income county (MIC) by 2030, Nepal needs to maintain positive ties with the US which is one of the biggest development partners for Nepal. It is also high time for Nepal to maintain trustworthiness among the donor community by building national consensus on the MCC compact and halting the politicization of the MCC for short term political gains.