THE MCC CONUNDRUM 

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THE MCC CONUNDRUM 

The ruling Nepal Communist Party is finding it tough to settle the MCC issue; so will newly elected Speaker Sapkota


--BY Vishwash Thapa

The internal feuds within the Nepal Communist Party show no signs of fading away. For months after the merger of then CPN-UML and UCPN (Maoist), the party had a tough time settling the portfolio management. Once the dispute was resolved, it took over a month for the leadership to find a unanimous candidate for Speaker. The House of Representatives was taken hostage for a month as Prime Minister KP Sharma Oli, who is also a co-chair of the party, and Pushpa Kamal Dahal, an executive chair of the party, wanted their own candidate for the position.

After weeks of negotiations, the party picked Agni Prasad Sapkota for the Speaker’s position. With the Speaker of the Lower House in place, finding a common position in the United States’ Millennium Challenge Corporation’s Nepal Compact is a huge upcoming challenge for the ruling party.

Though the controversy over the MCC compact has only surfaced recently, a section of the ruling party has been standing firmly against it ever since it was registered in parliament. Minister for Finance Yubaraj Khatiwada, in July last year, had registered the compact at the parliament secretariat for ratification. However, it was never tabled in the House of Representatives for approval. Leaders including former Speaker Krishna Bahadur Mahara were not positive towards the compact.

Dev Gurung, the NCP chief whip, among others had been pushing Mahara not to prioritise the compact in the House business. The government, which has strongly stood for the ratification of the compact now, too was not seen advocating for it. With no pressure from the government, Mahara backed the leaders mostly from the Maoist faction within the party who didn’t give space to the compact in the parliament. Now joining the dissenting group is Bhim Rawal, from then UML faction.

The party leaders have said the MCC is a part of the Indo Pacific Strategy (IPS), which has a military and security motive at its core. The dispute over the compact grew after David J Ranz, assistant secretary for South Asia at the US State Department, during his visit to Nepal in May last year, said the MCC was a part of the Indo-Pacific Strategy. Other officials of the US government including those from its Embassy in Kathmandu too, have reiterated that the MCC is a crucial part of the IPS. Alice Wells, assistant Secretary of State and Carl Rogers from the Embassy have said the MCC is an integral part of the strategy.

The leaders opposing the MCC have given reference to the statement by Wells and Ranz to support their argument that it would be against the interests of the country if parliament endorses the compact. Oli and his team in the cabinet, who said the MCC is not the part of the IPS, are finding it hard to prove their statements true after the US officials declared that it was part of the strategy. A report by the US State Department published in November says the MCC is a part of the IPS and some USD 2.3 billion has been granted to Indo-Pacific nations since 2004. Answering the concerns of the National Assembly members, Minister for Foreign Affairs Pradeep Gyawali on December 26 claimed that the compact was not a part of the IPS. The dissenting leaders say Gyawali has lied. “It is a shame that our ministers are still trying to create an illusion while the US officials have clearly said it is part of the IPS,” said Rawal.

The MCC was one of the crucial agendas during the NCP’s standing committee meeting held in the last week of December. Despite the heated discussion, the committee could not reach an agreement on whether to accept the compact in its present form. The Oli faction could push for an agreement as Madhav Kumar Nepal, former prime minister, along with Rawal, Gurung, Raghuji Pant, among others firmly stood against it.

They had reservations over a provision in the compact, which says it would prevail over domestic law in case they conflicted with each other. Section 7.1 of the compact states upon entry into force the compact would prevail over the domestic laws of Nepal. Though the compact nowhere says it needs to be ratified by parliament, the very provision makes it mandatory for the parliamentary endorsement, as it is the only authority that can decide on the laws.

Nepal’s government had approached the USD 500 million grant first. Nepal became the first country in the South Asian region to receive the grant after it met 16 out of the 20 indicators determined by the US government. Baikuntha Aryal, then join-secretary, and Jonathan Nash, acting chief executive officer of the MCC, had in September 2017 signed the agreement.

The main opposition Nepali Congress, under whose leadership the agreement was signed, has been saying the compact must not be dragged into the controversy and must be approved without delay. The party leaders including president Sher Bahadur Deuba has been blaming the NCP leaders for politicising the issue. “The MCC is the largest ever grant Nepal has received. We must support it to reap the maximum benefits from it,” said Nepali Congress leader Minendra Rijal.

The compact is worth USD 630 million including USD 130 million contributed by the Nepal government, which will be used in electric transmission lines and road improvement projects. The five-year project aims at setting up a 400KV transmission line running 400 kms on the Lapsiphedi-Galchhi-Damauli-Sunawal power corridor. Setting up three substations en route to infrastructures which will connect to the cross-border transmission line with India, too, is part of the project. Around 20 percent of the money under the compact will be for the maintenance of around 300 kms of roads on the East-West Highway.

With the escalating controversy and the demand to revise some of the provisions before the parliamentary endorsement, the government and US Embassy in Kathmandu have changed their tone. The government has now started saying that the MCC has nothing to do with the military component of the IPS. Trying to woo the lawmakers of the National Assembly, Gyawali on Jan 20 said, “The MCC is only an economic pact which has no military motive.” 

His statement comes three days after the US Embassy in Nepal tried clear the air on the ongoing dispute. “The MCC does not include any military components,” it said in the clarification. The incumbent government is making every effort to get the compact ratified from the ongoing winter session of parliament as the MCC Account Nepal has been pressurising the government for it. Now, with Sapkota becoming Speaker, he will have to prioritise the compact in the House as soon as he takes charge of the Lower House. However, the dissenting voices within the NCP haven’t been pacified. It is evident that the compact will ignite a heated discussion within the ruling party and in parliament, once the compact is tabled. While the party will have a tough time convincing its leaders, the job isn’t easier for Sapkota either. He is sure to face challenges not just from the opposition but from within the ruling party as well. 

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