China-inspired Nepal parties continue to protest against US-backed MCC grant

Rattled by the Millennium Challenge Corporation (MCC) compact, a United States (US)-backed $500-million grant project approved for Nepal, some of Nepal’s Communist parties inspired by China continued their protest, revealed a report by the European Foundation for South Asian Studies (EFSAS).

The unfortunate, avoidable, and artificially created controversy over the MCC grant has, as per local media reports, been stoked and fanned by a concerted Chinese propaganda campaign revolving around an imaginary breach of Nepalese sovereignty. Not only is China uncomfortable with the continuing influence that the US has in Nepal, it is equally as much the nature of the US offering – a grant aimed at benefitting the people of Nepal and which does not need to be paid back – that has irked and worried the Dragon. After all, the debt trap model that China has proposed to Nepal under its Belt and Road Initiative (BRI) makes China appear exploitative and greedy when seen alongside what the US is offering.

Nepal and the United States had in 2017 signed the MCC Nepal Compact that was meant for infrastructure development in Nepal. The MCC says it is an “innovative and independent” US foreign assistance agency that is helping lead the fight against global poverty. It was created by the US Congress in January 2004 with the aim of providing time-limited grants promoting economic growth, reducing poverty, and strengthening institutions. The compact aims to create jobs in the market and promote growth through infrastructure.

Meanwhile, some of Nepal’s several Communist political parties have increasingly begun giving the impression that they have little option but to act as instruments of the Chinese State and promote Chinese interests in Nepal even while, paradoxically, their implausible claim is that their country’s sovereignty is being threatened by a relatively modest MCC grant.

As per the agreement, the funds will be spent on setting up a 400KV transmission line running 400 kilometers on the Lapsiphedi-Galchhi-Damauli-Sunawal power corridor. Three substations will also be built that will connect to the Nepal-India cross-border transmission line with India in Rupandehi. The remaining amount will be used to maintain roads along the East-West Highway. The projects will use Nepali human resources to undertake the project. If Nepal’s House of Representatives passes the compact, it will be the largest grant Nepal has ever received. Nepal will also have to pledge $130 million for the projects that will be carried out through the MCC grant.

The EFSAS report stated that in view of these disturbances, Nepal’s Prime Minister Sher Bahadur Deuba, whose party the Nepali Congress (NC) is in favour of ratifying the MCC, and one of his major coalition partners, Chairman Pushpa Kamal Dahal ‘Prachanda’ of the Nepal Communist Party – Maoist Centre (NCP-MC), which is opposed to the ratification, met on the afternoon of 16 February and decided not to present the MCC grant agreement in the House of Representatives as scheduled. Earlier in the day, a meeting of the parliamentary party of the NCP-MC decided to vote against the government’s proposal if the MCC compact was tabled without amendments. Maoist Centre Chief Whip Dev Gurung warned that the ruling alliance would break automatically if parliament passed the MCC project without the consent of the ruling coalition. The NC apparently stepped back from tabling the agreement due to such threats from the Maoist Center and another Communist coalition partner, the Nepal Communist Party – Unified Socialists (NCP-US), of bringing down the government. It is widely accepted in Nepal that both these Communist factions are aligned to and influenced by China. Moreover, the Speaker of the House of Representatives, Maoist Center leader Agni Sapkota, who is known to be close to Beijing, has actively been blocking the ratification process for the past several months.

After the decision to defer tabling of the agreement, NC leader and Minister of Law, Justice, and Parliamentary Affairs Dilendra Prasad Badu informed that efforts were being made to forge agreement to table the MCC in the House, and that the House would convene today to further discussions the matter. “We aim to find common ground for taking the proposal to the Parliament for deliberations. The political parties have realized that they need more time to reach agreement on the matter”, he said.

From the US point of view, the inordinate delay in ratifying the MCC compact is surprising not only because the grant was requested for by Nepal in the first place, but also because the specific transmission lines and roads under the compact were proposed by Nepal in keeping with its own development master-plans.

However, most Nepali economists believe that accepting the grant will benefit the people of Nepal. 

China’s actions aimed at preventing the people of impoverished Nepal from receiving much needed assistance is as appalling as the discreditable attempts by powerful Nepali political leaders to promote the interests of a foreign power over the needs of their own country folk.