Rivalry between US and China in Nepal delays MCC

For quite some time, the Millennium Challenge Corporation (MCC), which the US Embassy in Nepal points out to be a part of Indo-Pacific Strategy (IPS), has become a challenging issue in Nepal. It is a matter of serious concern, particularly for the ruling Nepal Communist Party (NCP) leaders, who are heavily divided on this issue. As a result, the process of ratification of the MCC is getting delayed. One of the major factors that has led to this situation is due to the rivalry between the US and China in Nepal. The MCC was established in 2002 by the US Congress to enable the developing countries to use its fund for the development of infrastructure facilities and poverty alleviation. In view of its benefits, 50 countries in different sub-continents of the world accepted it. While the MCC is a bilateral foreign aid agency of the US, the IPS is a strategic document of the US Department of Defence. Under the MCC, Washington provides grants to those countries which qualify a set criteria. Significantly enough, the MCC and the IPS are very much linked to each other. It was at the initiative of the government of Nepal that an agreement was signed with the MCC for the improvement of roads and energy infrastructures for which the US agreed to provide this country grants worth $500 million. At a time the MCC compact was signed on September 14, 2017, the Nepali Congress (NC) government was in power and the then Maoist party (which later on merged with the Communist Party of Nepal (Unified Marxist-Leninist) and became Nepal Communist Party) was part of the coalition government. If the Nepalese parliament ratifies the MCC, which is one of the strings attached to it, the set projects will be implemented in crucial sectors for the period of five years beginning from 2020. To facilitate the process of implementation of the MCC, even the office of Millennium Challenge Account-Nepal (MCA- N) was established in the Ministry of Finance in Nepal. Nepal government also allocated $130 million for the compact projects, which include the construction of 400-kv transmission line from Nanglebhare of Kathmandu to Butwal and for the maintenance of 305-km road. A lot of hue and cry has been made by certain political leaders in Nepal as if the IPS was a US military alliance and also that the ratification of the MCC by the parliament meant joining the US-led military alliance. They argued that the MCC aimed at giving counter to China, particularly to its Belt and Road Initiative (BRI). It was also advocated that there was no ground for the government of Nepal to ratify the MCC as it has already signed BRI with China in 2017. Senior leaders of ruling NCP in the past not only disapproved IPS but also made a commitment with Chinese President Xi Jinping during his visit to Nepal that, the country would not allow MCC to get ratified through the parliament. It was repeated time and again that the MCC would be ratified only after it was confirmed that it was separate from the IPS. The MCC was also criticised for one of its provisions that give the upper hand to the US in the matter of auditing the expenses to be made during the project implementation period. Nepal government does not have that authority despite the fact that it would also provide a grant worth $130 million in compact projects. Another provision of MCC that invited criticism was due to the rights that the US enjoys to terminate the project. Besides, there is also a provision whereby Indian consent is prerequisite for the implementation of the projects. All such strings laid down in the MCC grants give a feeling as if Nepal’s sovereign rights would be eroded with its ratification. It is, however, not confirmed if Nepal would be a part of the US military alliance by merely ratifying the MCC and also that it stands against any third country. Pros and cons of the MCC could have been discussed before the country accepted it. Most of the skepticisms against the MCC appears to be more for domestic consumption rather than realistic. Nepal needs to exhibit its intelligence, talents and courage to judge if the MCC is really in the interest of the nation or not. If there was any doubt about it, why was it that Nepal signed an agreement with the MCC? Implementation of MCC, later on, could also pave the way to Nepal to benefit from US research programmes in all such high-tech areas as genetic engineering, automation, biotech, lasers, space technology and intelligent robotics. All such countries that today boast of their development such as Japan, South Korea or China are all due to their closeness with the US as this country provided vast market to all of them. Now, it is up to the government of Nepal to choose if it would ratify the MCC in order to deliver critical services to the people and open door for new vistas of opportunities to the private sector for investment through the MCC compact or sour its relations with the US by discarding its ratification.  Never before Nepal received such a huge amount of grants from any bilateral or multilateral agencies for the implementation of projects that could prove game-changer for this country. So, there is a general perception of the common mass of the Nepalese population is that this opportunity should not be lost. Despite certain hassles, the government of Nepal seems to be in favour of ratifying the MCC irrespective of the fact that it is linked to IPS. So expectations are that the MCC will be ratified by the Nepalese parliament. But, this would be at the cost of creating further cracks in relations between the two factions of the ruling NCP members – those who care for the MCC/IPS and the others against it. --------------------------------

• Neighbourhood
• Great Power Dynamics
• Neighbourhood
• BRI
• IPS
• MCC
• Nepal

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