The United States’ Millennium Challenge Corporation’s (MCC) Nepal Compact has become a hotly contested issue, entailing diplomatic, economic and geopolitical implications. Basically, there are two schools of thought with regard to viewing the MCC, the US-funded bilateral project which is different from other development undertaking assisted by the agencies such USAID and The World Bank. One group of people considers that the MCC is so far the biggest US grant that helps to boost the economic and infrastructure development of the country. Given that $500 million MCC grant will be spent on building the cross-country transmission lines and improving the condition of roads, the project is highly beneficial to Nepal.

On the other hand, critics of MCC argue that it is a part of Indo-Pacific Strategy (IPS) aimed at containing China through the presence of US military in the Himalayan nation. This sceptical attitude is heavily reflected in the mainstream and social media. The naysayers have been further agitated after several visiting high level US officials told the media that MCC is a tool of fulfilling the IPS in the region. Although the MCC document does not mention the military goal of the grant, the opinions of US officials have raised eyebrows of many. This is the reason why the ruling Nepal Communist Party (NCP) is divided over the MCC, with a bunch of top leaders getting suspicious of its motive. The NCP’s failure to forge consensus on the MCC has delayed its ratification from the parliament. The domestic criticism of hefty foreign grant has generated various speculations having negative repercussions on the nation’s international image.

Against the backdrop of roaring debate for and against the MCC, the Kathmandu-based US Embassy has issued a 10-point clarification, stating that the MCC Nepal Compact has no military component. The embassy’s press release noted that every Nepali government and every Nepali political party, when in power, since 2012 had been in favour of the MCC. It reads: “Nepal does not need to join or sign up for anything in order to participate in the MCC founded as a new model of international development based on true partnership.” The fear of critics must have been assuaged by the embassy’s statement that “in fact, US law prohibits the inclusion of military components in any MCC compact.” A lot of development aid provided by the Western nations comes with strings attached but so far as the MCC grant is concerned, it has “no strings attached, no interest rates and no hidden clauses.”

Another important point is that the grant will be spent as per priorities of Nepal and its tenders are open, transparent and available to everyone, according to the embassy. There is a provision of the ratification of the MCC by the parliament so as to ensure transparency and broad consensus for the unhindered implementation of the project. MCC model requires Nepal to hire Nepalis to lead the implementation of the projects. This clause is apparently intended to respect the autonomy and sovereignty of the country. It is imperative to go through the full text of the MCC before passing a judgement on it. Upon gaining stability and democratic order, Nepal is in desperate need of inclusive economic growth and the MCC is likely to support this national aspiration of the people. This view is shared by a larger section of people as well as major political parties.