Ending weeks of confusion, the Nepal government has finally tabled the Millennium Challenge Corporation (MCC)-Nepal compact - a US government aid program under which Kathmandu will receive $500 million for infrastructure development - in parliament amid a huge protest as the deadline, 28 February, to ratify the compact loomed large.

Following protests, parliament was adjourned till Thursday. There is no clarity if the government will be able to ratify the bill in the face of political opposition.

The coalition government led by Prime Minister Sher Bahadur Deuba clinched a last-minute consensus on Sunday morning to table the MCC compact, prompting protests by the main opposition party, CPN-UML, as well as by two parties of the ruling coalition, both inside and outside parliament.

“[The] decision to accept development assistance is taken in terms of our national interest and priority. The sovereign parliament of Nepal alone decides what development assistance is needed in the best interest of Nepal and Nepali people,” Nepal’s foreign ministry said in a statement on Sunday.

The tabling of what has now become a controversial aid program came weeks after senior US officials warned Nepal’s ruling elites that failure to ratify the agreement will have implications for future bilateral cooperations and assistance—a message China criticized calling it “coercive diplomacy” full of “selfish agenda.” [Read More]

Earlier, the CPN-MC, led by former prime minister Pushpa Kamal Dahal, the largest party in the ruling coalition, had threatened to quit the government if the MCC was tabled in parliament. However, despite continued opposition to the MCC, the CPN-MC hasn’t yet walked out of the ruling alliance.

On Sunday, the party’s youth wing, however, took to the streets of capital Kathmandu protesting the agreement they say will undermine the country’s sovereignty and independence.

Since its signing in 2017, the $500 million aid program was embroiled in what seems like a well-orchestrated disinformation campaign with the involvement of both external and domestic players. 

Last year, Nepal intelligence agencies had reportedly alluded to the role of Chinese intelligence agencies in the disinformation campaign. The US State Department believes that the disinformation campaign has been “actively fomented or encouraged or funded or facilitated” by China, said The Hindustan Times.