The Nepal government withdrew its decision to table the MCC the Millennium Challenge Corporation (MCC) agreement for ratification in Parliament on Wednesday after a key coalition partner threatened to quit the ruling alliance. Without ratification by 28 February, Nepal will lose the $500 million grant from the US. 

On Tuesday, the government led by the Nepali Congress’s Prime Minister Sher Bahadur Deuba had announced it will table the MCC compact on Wednesday in parliament. It came after a senior US official last week warned that US-Nepal ties will be affected if Kathmandu failed to ratify the deal it had signed five years ago in 2017. [Read More]

The CPN-MC led by former prime minister Pushpa Kamal Dahal, the largest party in the ruling alliance, threatened to quit the ruling alliance if the government decided to move ahead on the MCC without forming a consensus on the issue. 

“Our decision is clear. We are against its tabling. There should be [a] broader national consensus. If that doesn’t happen, we will pull out of the coalition," Dev Gurung, the chief whip of the CPN-MC, was quoted as saying by The Kathmandu Post. 
  
Less than a year old the Deuba government is struggling to form a consensus on the issue. Dueba on many occasions expressed his resolve to ratify the agreement that would allow Nepal to receive $500 million in grants to improve its transmission and road infrastructure. In the absence of ratification, the MCC headquarter will take a call on rescinding the agreement next month. [Read More] 

In the last few days, Prime Minister Deuba had also held discussions with the CPN-UML, the main opposition party led by former prime KP Sharma Oli.

Two weeks ago, Donald Lu, US Assistant Secretary of State, had made three separate calls to Deuba, his ally Pushpa Kamal Dahal Prachanda, and opposition leader KP Sharma Oli to convey a tough message that any further delay in ratification would impact US-Nepal ties. 

In his call to Nepali leaders, Lu had reportedly also conveyed his displeasure over disinformation and skepticism fueled against the US and the MCC—and, the government’s failure to counter it.

Signed in 2017 during Deuba’s earlier tenure, the MCC deal ran into trouble after China-leaning Left parties protested against it. They claim certain sections of the agreement would drag the country into big-power politics, terming it detrimental to the country’s national interests.

The Deuba government now faces a tough dilemma: whether to save the US-Nepal ties or his coalition government whose biggest partner is firmly against the MCC. The US has been one of the top development partners of Nepal, helping Kathmandu with bilateral and multilateral grants. 

Nepal's failure to ratify the bill would likely dent its image as a country to take independent foreign policy decisions —an impression that would also hurt future aid and grants.

Last year a couple local report alleged that Nepali intelligence agencies had concluded the role of Chinese intelligence agencies behind the negative publicity of the MCC in Nepal, and also suspected the role of some top Nepali political leaders.

(SAM)