The prospect of swift implementation of $500 million US grant to be provided to Nepal under the Millennium Challenge Corporation (MCC) has hit a snag after a task force, formed by the ruling Nepal Communist Party (NCP), recommended the government should not accept it in its current form. The other day the three-member panel, led by former prime minister and senior NCP leader Jhalanath Khanal, presented its report to the chair due - Prime Minister KP Sharma Oli and Pushpa Kamal Dahal Prachanda – suggesting that some provisions of MCC Nepal Pact must be amended before it is endorsed by the parliament. The committee is yet to make public the report but Khanal told this daily that the grant deal reached between the US and Nepal undermined national sovereignty. He insisted that the MCC is linked to the US-led Indo-Pacific Strategy aimed at containing the rise of China. The NCP Secretariat meeting is expected to pore over and discuss it before the lawmakers vote on it.

MCC Nepal Pact which both the nations signed in September 2017 is purely a development deal focusing on the investment in two strategic areas, namely building transmission lines and upgrading roads. It is not just the US-funded project. Nepal will chip in $130 million for the full-fledged enforcement of the MCC grant which will be spent on constructing a 400KV transmission line running 400 kilometres on the Lapsiphedi-Galchhi-Damauli-Sunawal power corridor. Likewise, the joint funds will be used to build three substations connecting to the cross-border transmission line with India in Rupandehi in west Terai, and maintain about 300-km of roads on the East-West Highway. Nepal government is committed to implement the MCC to reduce poverty and enhance the economic growth.

However, the economic potential of the MCC has been overshadowed by its geopolitical inkling owing to the controversial remarks of senior US officials, who visited Nepal in the recent past. This was the reason why the NCP panel sought the modification of the MCC accord. US Acting Deputy Assistant Secretary for South Asia David J Ranz during his visit to Nepal in May last year, raised hackles of many within the ruling party and outside it. He said that the MCC compact programme was one of the most important initiatives being implemented in Nepal under the US Indo-Pacific Strategy. However, the US embassy here has denied the allegations that MCC has anything to do with the military objectives. It is yet to see how the NCP-led government take the report. Given that US embassy has ruled out the possibility of amending the provisions of MCC Nepal Compact, both sides must demonstrate greater understanding to sort out the deadlock.

Upon attaining the political stability and order, Nepal is poised to secure high economic growth to realise its lofty motto of Prosperous Nepal, Happy Nepali. For this, foreign aid and grants are essential to build basic infrastructures, set up industries, commercialise agriculture and promote foreign trade, among others. At the same time, Nepal that boasts of its independence and sovereignty for centuries can’t compromise its right to self-determination as spelt out in constitution. Therefore, it is imperative for the government to balance between national sovereignty and economic aspirations. It requires diplomatic dexterity, expertise and confidence.