The United States has reportedly conveyed to senior Nepali political leaders that Washington will be forced to review its ties with Kathmandu if the latter fails to ratify the Millennium Challenge Corporation (MCC) deal under which Nepal will get a $500 million grant to improve its road and transmission infrastructure. The MCC is an independent US foreign-policy aid agency.
Donald Lu, US Assistant Secretary of State, had reportedly made three separate calls to Nepali Prime Minister Sher Bahadur Deuba, his ally Pushpa Kamal Dahal Prachanda, and opposition leader KP Sharma Oli to convey a tough message, almost five years after Kathmandu signed an agreement with the MCC, reported The Kathmandu Post.

Signed in 2017, the successive governments in Nepal have failed to ratify the agreement, which would help improve the country’s roads and electricity transmission infrastructure. Now, the MCC has given 28 February as the deadline for Nepal to rectify the deal, failing to which the US will take a call on rescinding the deal. 

Fatema Z Sumar, vice president under the Department of Compact Operations at MCC, also conveyed a similar message earlier this week.

“MCC is now asking that the prime minister and the chairman continue to honor their commitment to work together to ratify the compact by the timeline indicated in their letter—which is no later than February 28,” she said [Read More]
 

The grant under MCC is the highest Nepal has ever been offered bilaterally in its history. 

The agreement ran into trouble soon after the signing as a section of 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.

Prime Minister Deuba, who is running a coalition government along with several parties, is struggling to form a consensus on the issue. Dahal, the chairman of the CPN-MC, the largest party in the ruling coalition, remains firmly against the pact, at least publicly.

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.

Significantly, the US has been one of the top development partners of Nepal, helping Kathmandu with bilateral and multilateral grants. The damage in the ties could also impact the country’s funding by various multilateral agencies where the US controls voting rights.

Furthermore, Nepal's failure to ratify the bill would 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 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)