Nepal's Ex-PM Adviser: Accepting US' MCC Grant 'Crucial', Kathmandu Won’t Do Anything to Upset China

© AP Photo / Niranjan ShresthaA Nepalese man holds Chinese and Nepalese flags as he waits to welcome Chinese president Xi Jinping in Kathmandu, Nepal, Saturday, Oct 12, 2019.
A Nepalese man holds Chinese and Nepalese flags as he waits to welcome Chinese president Xi Jinping in Kathmandu, Nepal, Saturday, Oct 12, 2019.  - Sputnik International, 1920, 23.12.2021
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The US government-backed aid agency, the Millennium Challenge Corporation (MCC) signed a $500 million grant assistance compact in 2017 with Nepal. According to the MCC, the grant will help to maintain “road quality, increase the availability and reliability of electricity, and facilitate cross-border electricity trade between Nepal and India”.
The Nepalese government headed by Prime Minister Sher Bahadur Deuba is facing stiff resistance from its federal coalition partners - the Communist Party of Nepal (Maoist Centre), CPN (Unified Socialist), Janata Samajbadi Party and Rastriya Janamorcha - over parliamentary ratification of the MCC-Nepal Compact.
Although Deuba, who came to power only in July this year, has assured the US that he would get the pact ratified in Parliament in the ongoing winter sitting, other Nepalese political parties have reportedly asked for certain clauses in the original 2017-era contract document to be amended before they agree to back the document. Meanwhile, Nepal’s main opposition party - the Unified Party of Nepal (Unified Marxist Leninist), chaired by former Prime Minister Khadga Prasad Sharma Oli - has objected to the pact, even though the party backed the deal while it was in power.
The US, for its part, in September gave an ultimatum to Nepal to ratify the pact in the ongoing parliamentary sitting, failing which it would find a new recipient for the grant.
During a trip to Nepal in September, Donald Wu, assistant secretary for South and Central Asian Affairs at the US State Department, met the Nepalese leadership as well as opposition leaders to garner support for the parliamentary ratification of the agreement.
Wu assured Nepal's political parties during his visit that the MCC wasn’t against any nation in particular, as he tried to assuage fears that accepting the American grant was tantamount to Kathmandu being part of a US-led Indo-Pacific Strategy, aimed to check China’s growing influence in the Asia-Pacific region.
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Despite assurances from the US, the ratification remains a tricky subject in Nepal. At an all-party meeting convened by PM Deuba this week, the Nepalese leader asked all the political parties to be honest about their reservations concerning the MCC-Nepal agreement.
Sputnik spoke to Ambassador Dinesh Bhattarai, Nepal’s former Permanent Representative to the United Nations (UN) and a foreign policy adviser to previous Nepalese prime ministers, on the subject.
Sputnik: Do you believe ratification of the MCC-Nepal pact will compromise Kathmandu’s sovereignty?
Dinesh Bhattarai: On 3 September, Nepal's finance ministry wrote to the MCC with similar concerns about the package. The letter mainly talked about the terms of the assistance. In response to the government letter, the MCC made it clear that there is no question of compromising Nepal’s sovereignty should the government accept the funds.

In my experience, no political party which is in power would do anything which would compromise national sovereignty or pit us against any of our neighbours — be it China or India.

Sputnik: There have been concerns in Nepal that accepting the American funds could upset Kathmandu’s ties with China, which has emerged as its largest trade partner over the past decade or so. Do you share these concerns?
Dinesh Bhattarai: It is rumoured quite widely in Nepal that the MCC pact is aimed against China. However, as I see it, the MCC is just about development cooperation between two sovereign nations.
Let me point out that the process for selecting the MCC partner nation is a very competitive one. Secondly, the whole concept of development assistance is in line with Nepal’s federal policies. Moreover, the implementation of the projects developed using the MCC grant is entirely in Nepal’s hands.
Nepal won’t do anything which is against the sensitivities of our neighbours. The notion that Nepal would do anything to upset China is baseless.
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Sputnik: How much does Nepal need this $500 million development assistance?
Dinesh Bhattarai: This assistance package is for the development of Nepal. We face a chronic shortage of funds, so the package is crucial.
I would like to highlight that the MCC project in Nepal is aimed at fulfilling two objectives.

The first one is the construction of cross-border electricity transmission lines. Secondly, it aims to finance the construction of roads as part of the broader plan to improve the country’s infrastructure. I would like to point out that we are going to have surplus power in a few years’ time.

Until we construct cross-border transmission lines, we won’t be able to export that surplus power and realise the economic potential of our country.

There will be an open tender for construction of these cross-border transmission lines and any company — be it Chinese, Indian or any other for that matter — could come and compete in that open tender. Let us not forget that the MCC developmental assistance comes in the form of a grant and not a loan.

Everything will be transparent, according to the terms of the MCC and as assured to the Nepalese government by the US.
Sputnik: The MCC-Nepal pact was signed back in 2017. Why has its ratification by Parliament taken so long, despite successive prime ministers backing the implementation of the pact?
Dinesh Bhattarai: It is purely because of domestic politics. The ratification process has been made unnecessarily complicated and controversial by the political parties. We have seen how a party has a different position when it is in power and how the stance changes once it sits in opposition (for example, former Prime Minister KP Sharma Oli who backed the pact will he was in power until July this year).
However, this political opportunism raises doubts about Nepal’s credibility as a partner country on the global platform.

I sincerely believe that we must give a final answer to the donor country at the earliest opportunity on whether Nepal wants the grant or whether it intends to reject it. There is no point in dragging one's feet on the issue any longer.

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