Nepal: Dilemma over Millennium Challenge Corporation
Sohini Nayak
The Millennium Challenge Corporation (MCC) is a bilateral United States foreign aid agency which was established by the US Congress in 2004. They provide assistance programmes to countries (low income and middle income) which are specifically trying to move towards economic advancement through the reduction of poverty, aiming growth. Since its inception, the MCC has approved 37 compacts worth USD 13 billion for around 29 countries, as of 2019.
At present, the small landlocked Himalayan country of Nepal has been offered the MCC Nepal compact by the United States of America that has sparked quite a controversy and dilemma in the country as to whether the aid would be fruitful in the long run. This comes across with the consequent and lingering thought of any compromises that might have to be made with regard to the country’s non-aligned position in the region at large, from a more geo-strategic perspective. Nepal was, in fact, one of the first few countries that qualified for the compact by meeting 16 out of 20 policy indicators required.
Understanding inconvenience
Nepal’s ruling party -- the Nepal Communist Party (NCP) -- has been sharply divided on this issue of the MCC. It must be mentioned here that the offer to be a party to this bilateral negotiation primarily came at the time when Nepal’s government was being headed by the Nepali Congress (NC). As a result, the opposition now has been quite in favour of the aid to maintain its standpoint of affirmation towards it that could not be a reality during the previous governance tenure.
It was back in 2017 that then Joint-Secretary Baikuntha Aryal and the Acting Chief Executive Officer of the MCC had signed an agreement in the presence of former Finance Minister Gyanendra Bahadur Karki and US Deputy Secretary of State John J Sullivan in Washington. It was decided that an aid of USD 500 million would be provided to Nepal of which USD 130 million would be especially dedicated for the improvement of connectivity and the energy sector in the country.
Ratification of this compact is still pending despite a peacefully concluded Standing Committee meeting which could not bring about a solution. One of the primary reasons why the issue is being scrutinized is linked to USA and Nepal’s previous misunderstanding regarding the USA Indo-Pacific engagement, of which Nepal never wanted to be an integral part, despite special mention in the official US document.
The MCC has been allegedly being promoted as a part of the Indo-Pacific Strategic Report of the USA, as mentioned by David J. Ranz, assistant Secretary for South Asia at the US State Department. Since this strategy covers both the military and the economic aspects of participation, this should be considered to be the latter part of it. Though economic alliance does not necessarily denote military alliance, the scepticism prevails.
We can never deny the sensitive position that Nepal holds in South Asia as a country standing between India and China, always recognized as a buffer. In this scenario, it has always maintained non-participation in any form of alliance. If Nepal becomes an active participant in the Indo-pacific, within a strategic nexus led by the US, it would inadvertently send a wrong signal to both India and China regarding its ambitions, which the country at this moment cannot afford. Moreover, the compact also states that it would prevail over Nepal’s existing laws in case of conflicts that have furthermore created a sense of negativity towards it despite the aid it provides. However, as a fact of matter, the Prime Minister of Nepal, K. P Sharma Oli has been quite keen to sign the compact and get it ratified by the Parliament in the ongoing session itself which is reflective of Nepal becoming a part of the MCC for sure in the long run. Foreign Minister Pradeep Kumar Gyawali has even negated the Indo-pacific confusion despite what officers have come and said.
Directly linked
Nepal must realise that signing the MCC is also directly related to the bilateral relationship that it shares with USA along with the history of aid provision from it. It has been clearly mentioned in the USAID documents that USA is committed to help Nepal achieve its middle-income status by 2030. As Nepal has a more or less slow growing economy along with a history of earthquake (2015) and a decade long insurgency that ended in 2006, US can prove to be a partner leading the country towards self- reliance.
From disaster risk reduction to reconstruction, food security, management of natural resources, healthcare and making connectivity opportunities more viable, it is important for Nepal to not let go off the opportunity. However, Nepal must be very clear that this association is majorly from the economic forefront and has nothing to do with any traditional security association that might jeopardize its relationship with its immediate neighbours.
As the country has to survive within this particular region with the usage of aid and facilities from its surrounding as well, the better idea would be to help create a balance between the extended and immediate neighborhood. Also, Nepal must have one foot forward towards the Indo-Pacific region as well because that is the most dynamic theme in International relations today. The only point to be considered is the idea of being slow and steady that can only come from financial stability and better connectivity.
Myanmar: Strengthening relations with China
Sreeparna Banerjee
This year marks the 70
th anniversary since the People’s Republic of China and Myanmar established formal diplomatic relations. The Chinese President’s visit in the coming week is seen as an attempt to further cement their bilateral relations. It also envisages pushing ahead the China-Myanmar Economic Corridor scheme as well as other projects under the Belt and Road Initiative. This endeavor is moreover significant since it marks Xi Jinping, the Chinese president’s first visit to the Southeast Asian country in 19 years and the first as China’s leader.
In this regard, one of the most anticipated developments is the inking of Kyaukphyu port, a China-backed scheme under Beijing’s Belt and Road Initiative (BRI). A consortium led by CITIC, comprised of four other Chinese firms and Thailand’s Charoen Pokphand Group, aims to develop the deep-sea port as part of a special economic zone (SEZ) in the restive state. Thus, under the present context the significance of this port needs to be revisited.
Kyuakpyu
The Kyaukpyu port is a key part of China’s ambitious Belt and Road initiative, aimed at expanding trade links across the world. Building a deep-sea port at Kyaukpyu makes considerable economic and strategic sense for China in its drive to develop its inland provinces. Shipping goods from Europe, the Middle East, Africa, and India to Kyaukpyu and then overland to Yunnan could save thousands of miles.
It would be far more efficient than sailing all the way through the Strait of Malacca and the South China Sea to ports along China’s southern and eastern coasts, and then traveling overland to China’s western provinces. In December 2017, State Counselor Aung San Suu Kyi and President Xi Jinping agreed during a meeting in Beijing to establish a new China-Myanmar Economic Corridor (CMEC) connecting Kyaukpyu and Kunming.
The basic design of CMEC is an upside-down “Y” shape that connects China’s Yunnan Province with Mandalay in central Myanmar, and then stretches southeast down to Yangon and southwest to Myanmar’s Rakhine State. Mandalay, Myanmar’s second-largest city and the traditional hub for trade with southern China, would serve as a waypoint along this new economic corridor. Ultimately it seems Chinese planners envision the Kyaukpyu to Kunming oil and gas pipelines as just the first step in a new trade route that could change the economics of China’s hinterland.
While the establishment of a deep-sea port at Kyaukpyu makes sense for China, its benefits for Myanmar will depend in large part on the success of the accompanying SEZ. Without successful industrial projects in the SEZ, Kyaukpyu could become little more than a way station for goods headed to Yunnan. The former government of Myanmar under Thein Sein promoted three large SEZ projects to boost the country’s economy. Of these, the Japanese-led Thilawa SEZ just outside Yangon is the only one already up and running. Another, the joint Thai-Japanese Dawei project along the southern coast, has faced constant financial troubles but continues to move forward slowly. That puts Kyaukpyu third in a three-way race, and it is unclear whether the zone, with its late start and distance from Myanmar’s commercial and economic heart of Yangon, will be able to lure sufficient investment.
Strengthening relations
Bilateral relations have warmed since the days when the former President, U Thein Sein halted Myitsone dam. China stood as a rock beside Myanmar as the State Counselor, Daw Aung San Suu Kyi faces a barricade of criticisms from the international community, including those in Europe and America, for her handling of the ongoing humanitarian crisis regarding Rohingyas.
In addition, China is by far the biggest source of cumulative FDI commitments in Myanmar, while Beijing is seen by Nay Pyi Taw as a key stakeholder in the peace process since major projects under CMEC run through the conflict ridden areas.
Myanmar may move even closer to China’s orbit in future as the international backlash against the State Counsellor’s defence against accusations of genocide at the International Court of Justice last month. Incidentally, Western Union in the beginning of January became the latest foreign firm to cut ties with Myanmar military companies.
Concerns
A more realistic, and worrying, possibility is that China could gain a dangerous level of economic leverage over Myanmar due to the accumulation of too much Chinese-funded debt. Chinese loans and large-scale investments have proven highly controversial in other regional states, such as the Maldives or Sri Lanka where Beijing has been accused of using them to leverage the recipient nation into making political and economic concessions against its national interest. Such fears are not unfounded. The Myanmar government’s 30 percent stake in the Kyaukpyu port amounts to $2.2 billion. If it takes a 50 percent stake in the SEZ, that would bring its total responsibility for the projects to $3.5 billion, or about 5 percent of GDP.
Concerns about Chinese economic leverage are not new to Myanmar, and help explain the continued local opposition to Kyaukpyu. One of the driving factors behind Myanmar’s decision to move toward civilian government in 2010–2011 was a worry about overreliance on China amid continued Japanese and Western sanctions.
On a positive note, for the time being, China remains a major but not overwhelming economic presence in the country. It cannot be denied that China has a major footprint in Myanmar, both in trade and investment, but so does other partners like Japan as well as India that provide Myanmar with a significant degree of maneuverability. That is not likely to change in the short term, though the potential debt burden from Kyaukpyu bears watching. Whether the project also boosts Myanmar’s economic growth will depend on the success of the accompanying SEZ, and the terms under which it takes shape.
Country Reports
Afghanistan
US soldiers killed
As stated by the Resolute Support of NATO in Afghanistan, two soldiers from USA have been killed in the Kandahar province, while others have been left injured. Their vehicle was struck by an IED explosive. In the year 2019, 20 soldiers from USA have been killed. It is high time NATO takes serious action and implementation of better support in the region.
Bangladesh
Doubt over EVM
Opposition Bangladesh Nationalist Party (BNP) Secretary-General Mirza Fakhrul Islam Alamgir has observed that Electronic Voting Machine (EVM) are voter’s friendly. Fakhrul has been critical of the election commission decision of using EVMs in the election of Dhaka City Corporation to be held later in the month. Further BNP leader alleged that the decision to use EVMs in the upcoming election is part of a conspiracy to snatch people’s voting rights. Fakhrul was addressing a press conference at party Chairperson Khaleda Zia’s Gulshan office in Dhaka. Chief Election Commissioner (CEC) KM Nurul Huda claimed that the allegations concerning the EVMs are baseless.
Exploring new makers
Prime Minister Sheikh Hasina has urged the garment manufacturers to explore new markets and diversify to keep pace with the changing demands of the global markets. Garment makers should be aware of the latest trends in the fashion industry, Prime Minister emphasised. Prime Minister made the remarks at a function in capital Dhaka this week. The country is a global leader in manufacturing. The readymade garment that dominants export items of Bangladesh.
Border talks with Myanmar
Officials of Border Guards Bangladesh (BGB) and Myanmar Police Force (MPF) was held in Dhaka this week. During the meeting, the two countries agreed to cooperate in fighting transnational crimes like human trafficking and illegal drugs. Myanmar and Bangladesh agreed to fight terrorism also.
Bhutan
BHEL seeks more time
The Indian public limited Bharat Heavy Electricals Limited (BHEL) has sought time till 31st January to fix issues with four turbines of Mangdecchu hydropower project. The 720 MW Mangdecchu power plant built with 70:30 percent loan to grant ratio from India developed problems in November 2019. Minister for Economic Affairs, Loknath Sharma hoped that the company would be able to meet the revised deadline.
Fast-tracking industrial parks
Prime Minister, Dr. Lotay Tshering has instructed the officials of the department of industry to speed up setting up of industrial estates in the country. More than 150 applications to set up industries have been kept pending because of incomplete infrastructure at the industrial estates, non-issuance of clearances for various agencies, and bureaucratic hurdles. Although some of the works are underway, the establishment of industrial parks has been moving at a ‘snail’s pace’.
Gold-smuggling charge
The Office of the Attorney General (OAG) charged three Indian businessmen for smuggling 1.49kgs of gold worth Nu 5.065 million (M) into the country from Thailand to Paro dzongkhag court on January 6. Of the three suspects, were charged for gold smuggling, violating Bhutan Penal Code’s section 279. The offence of smuggling shall be a value-based sentencing. The gold racket was busted after the Revenue and Customs officers apprehended the three men at the airport terminal in Paro International Airport around 2.46pm on 8 November 2019.
India
Goons create ruckus in JNU
The nation boils in anger as encroachment of goons invoke violence at one of the premiere universities of the country. Masked men and women armed with sticks and rods unleashed violence at JNU on Sunday, 5th January 2020, and attacked students, teachers and vandalized public property. Phrases of 'GoliMaaro', 'Bharat Mata Ki Jai' were chanted. With specific teachers and students being attacked leading to the fact that it was a planned attack because of the connivance between the police, JNU security, and the mob. While it is questionable who executed the attack, the JNU students believe that the attack was orchestrated by the ABVP goons who have been associated with such activities previously. Nationwide anger and protests have been taken up in solidarity with the students of JNU. Students in Mumbai, Jaipur, Bangalore, and Calcutta have demanded action against the attackers.
Diplomats visit J&K
A two-day visit of 16 foreign envoys and senior diplomats to the Union Territory of Jammu- Kashmir on the 9th and 10th January was scheduled by Government. This second time that diplomats have been given access to the former state since the dilution of Article 370 in August 2019, which revoked the state's special status and was downsized to two union territories. Envoys of the European Union countries who were invited, however, did not accept the invitation as they asked for more freedom to travel and meet people "unescorted" drawing an unfavorable parallel to a visit by a group of European Parliament Members (MEPs) in October 2019. The Government might organize a separate tour for the EU in the subsequent time.
PM stays off Assam?
In the background of the ongoing protests against the Citizen Amendment Act (CAA) in Assam and other north-eastern states, Prime Minister NarendraModidid not participate in the opening ceremony of the third edition of the Khelo India Youth Games (KIYG) on 10th January, 2019. However, Assam's finance minister and Avinash Joshi, CEO of the Khelo India Youth Games, chose to keep it open-ended, saying that the PM never confirmed his participation, so the question of cancellation should not arise. This will be the second event that the PM has chosen not to attend in Assam after the India-Japan summit, which was scheduled to be held on 15th December 2019 in Guwahati. The violent protests against Citizen Amendment Act (CAA) in Assam forced the centre to "postpone" the meeting to an undecided date.
Maldives
‘Judicial delay’
Quoting jailed former President Abdulla Yameen, leader of his legal team, Dr Mohamed Jameel Ahmed has tweeted their concern over the High Court delaying a verdict on the former’s bail plea, even one and half months later. Stating that Yameen should be entitled to bail like any other like any other individual under the law, the tweet added that judicial reform was to ensure that judicial reform was to ensure the constitutional rights of every individual and providing justice without any delay. A reconstituted five-judge trial court Bench sentenced Yameen to five years in prison and $ 1 m in fine in a ‘money-laundering case’ after the original single judge hearing the case had claimed political interference on the very morning he was scheduled to pronounce the verdict. Incidentally, Dr Jameel was the first of the three Vice-Presidents under Yameen, who got him impeached after he fled the country fearing imminent arrest while his successor Ahmed Adheeb was jailed and impeached on the charge of attempting a ‘boat-bomb’ to assassinate the then President.
Rush for MDP nomination?
With the country-wide island and atoll council elections scheduled for 4 April, over 1,400 applications have been received for contesting the 980 seats on behalf of the ruling MDP. Party primaries are due on 31 January, MDP leaders said and claimed that there was a huge rush, especially for nominations in capital Male and other population centres like Addu and Fuwahmulah city councils. Considering the number of seats and the applicants and the claims about multiple claimants for the city seats, indications are that there may not be any applicants for certain island-council seats.
‘Economic decline’
The World Bank has reported that the country experienced an economic decline last year due to a delay in the completion of new projects. The first Economic Prospectus released by the World Bank this year stated that while tourism thrived in 2019, the economy as a whole declined. Furthermore, a fall in construction work was identified as a cause. As such, economic development was at 5.2 percent last year, lesser than the estimate, with projections for the current year put at 5.5-5.6 percent.
Myanmar
Kyaukphyu to be signed
Chinese President Xi Jinping during his visit which is due next week is expected to sign two agreements giving Kyaukphyu Special Economic Zone (SEZ) in Rakhine State the green light. According to U Aung Htoo, Deputy Commerce Minister, there are seven agreements under the Framework Agreement for Kyaukphyu where two will be signed. The Framework Agreement for Kyaukphyu SEZ was signed in 2018. Environmental and social impact assessments have been conducted in the area. So far, there have been no further developments on the progress of the SEZ.
Dawai SEZ management
On 9 January, the Dawei SEZ Management Committee stated changes in the contractual arrangements with Italian-Thai Development Company Ltd (ITD) for the development of initial industrial estate in Tanintharyi Region. According to contract amendment, ITD and other investors must compensate and resettle villagers affected by industrial zone project. It must also adhere to international standards on the environment. The Thai government has agreed to provide a loan for the construction of a two-lane highway which will connect Dawei SEZ to the Myanmar-Thailand border, paving the way for further construction to take place.
Nepal
CPN(M) behind blasts?
The CPN (Maoist) party led by Netra Bikram Chand which had previously faced a massive police clampdown has been trying to gain presence yet again. They have been planting explosions in the country to gain strength and attention. Though most of the leaders of this extreme left organization have been arrested, violence is still prevailing. In this circumstance, many of the leaders have joined the Nepal Communist Party (NCP) which again might strike controversy given their background.
Locals now want jobs
The Upper Mailung hydro-electricity project at Uttargaya Rural Municipality-1 has been contained due to protests coming in from the local people. They have also demanded compensation for the land and the anger stemming from the non-employment of the locals in the project. This might affect other projects in the country as well given the protests that may become unanimous in the long run.
Pakistan
Avoiding FATF action
On 7 January, the National Assembly passed an important bill for the exchange of information and criminals with countries to meet a key requirement for the Financial Action Task Force (FATF). The Asia Pacific group of the FATF in October last year had found serious deficiencies in Pakistan's anti-money laundering measures and combating terror financing. Pakistan was placed on the grey list by FATF in June last year and in October 2019, according to FATF, Pakistan only addressed five out of the 27 tasks given to it in controlling funding to terror groups. Pakistan is under grey list till February 2020 with a strong warning of putting the country on blacklist. The bill was signed to comply with the remaining 22 points, however, PML (N) was of the view that by approving the Bill, they would be "surrendering" the country's sovereignty, claiming that after the passage of the Bill, the government would be able to seek information from foreign countries and extradite its citizens on the demand of other countries.
Gen Bajwa gets extension
On 7 January, Pakistan's National assembly passed three bills to extend Army chief General Bajwa's tenure. The PTI government with the support of opposition parties PML-N and PPP introduced three bills- The Pakistan Army (Amendment Bill) 2020, The Pakistan Air Force (Amendment) Bill 2020 and the Pakistan Navy (Amendment) Bill 2020 to extend the retirement age from 60 to 64 years for the three service chiefs. Senator FisalJaved pointed out that the bills had been passed with overwhelming consensus even though the ruling party was not in the majority in the senate. He "hoped that the opposition would continue to play the role of a constructive opposition." Prime Minister Imran Khan's aide Firdous Ashiq Awan mentioned that by passing the bills, political parties had shown "political maturity" and had "strengthened Pakistan and National Interest."
Better ties with Russia
Tensions between Iran and US are rising after American forces killed Iranian commander General Qasem Soleimani in a drone attack. In retaliation Iran launched missile attacks on the United States-led forces in Iraq in the early hours of Wednesday. Under these heightened tensions, Russia and Pakistan agreed to launch joint efforts to restore peace in the region. After talking with foreign minister Sergei Lavrov of Russia, Shah Mahmood Qureshi of Pakistan said tensions could cause a "severe blow" to regional peace and agreed to make joint efforts for stability of the region. He further made it clear that Pakistan will neither be a party to any new conflict in the region nor will its land be used against any regional or neighbouring country".
Sri Lanka
UNP ‘embarrassed’
At a time with the leading UNP Opposition is caught in the mess of its own making in the choice of a new party leader ahead of the parliamentary polls later this year, the police raid on party parliamentarian and erstwhile Deputy Minister, Ranjan Ramanayake, actor and film-maker, has embarrassed the leadership even more – or, so it seems. The Opposition had riled the Government when the police arrested him for alleged possessing a gun with an expired license, and claimed that the raid was aimed at recovering the audio-tapes of Ramanayake’s telephonic conversations with various authorities, starting with then Prime Minister Ranil Wickremesinghe. According to media-leaks, from which the police has since distanced itself without denying the news content, as Minister in the predecessor Government, Ramanayake had also taped his conversations with judges and police officers investigating cases against present-day ruling family of the Rajapaksas when they were then out of power, imploring and purportedly pressuring them to act in a particular way. Against the possibility of a future climb up in the intermediate future after the parliamentary polls, Ramanayake now faces disciplinary action in the 16 January meeting of the party leadership meeting, aimed at ending the impasse at the top. In the meantime, the police investigators have sent the seized audio tapes to the Government Analyst for testing them for genuineness of voice and other technical parameters.
Madrasas to be registered
Prime Minister Mahinda Rajapaksa has ordered the Muslim Religious Affairs Department to register all Muslim religious schools (
madrasas) with the Department. He gave these orders during a progress review meeting of the Buddha Sasana, Religious Affairs and Cultural Affairs Ministry, and instructed the officials of the Muslim Affairs department to re-evaluate the curricula of all
madrasas and prepare an updated curriculum with the assistance of the Education Ministry.
Bibliography
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Bangladesh in 2020: Eight points to consider”,
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Preparing for disasters”, 9 January 2020
India
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Maldives
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What’s in Store for Myanmar in 2020 and Beyond?”, 4 January 2020
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Pakistan
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Trump’s new war cry” Dawn, 08 January 2020
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Silence and submission” Dawn, 10 January 2020
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De-escalation, 10 January 2020
Sri Lanka
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Kelum Bandara,
“I am a political animal: Maithri”,
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“I fought a good fight: Rosy Senanayake”, Daily Mirror Online, 8 January 2020
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Daily Mirror Online, 7 January 2020
Contributors
Afghanistan: Shubhangi Pandey
Bangladesh: Joyeeta Bhattacharjee
Bhutan: Mihir Bhonsale
India: Ambar Kumar Ghosh
Maldives & Sri Lanka: N Sathiya Moorthy
Myanmar: Sreeparna Banerjee
Nepal: Sohini Nayak
Pakistan: Ayjaz Wani
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