Narayan Upadhyay

With the House of Representatives endorsing the Millennium Challenge Corporation (MCC) Nepal Compact with a majority voice vote, the conundrum surrounding the US grant has now been laid to rest. The approval has ended months of uncertainties and has now allowed the donor country to go ahead with implementing projects under the American grant, amounting to $500 million.
The three ruling coalition parties – CPN- Maoist Centre, CPN - Unified-Socialist and Janata Samajbadi Party - that kept opposing the MCC agreement until the penultimate hours agreed to go ahead with its ratification by thrashing out a face-saving 'interpretive declaration', which was endorsed by the cabinet and parliament.

Interpretive declaration
After perceiving their stance might damage the current ruling alliance and allow 'regressive and reactionary forces' to rear their ugly heads, the three parties took the painful decision of ratifying the grant. Earlier, they had raised serious concerns about the 'controversial provisions' of the compact and cited that they would not ratify it in its current form. However, following mounting pressure from the donor country, the US, the Prime Minister and other quarters, the leaders of three alliance parties came up with a formula - the '12-point interpretive declaration' that paved the way for MCC ratification. 

The declaration that formed the basis for the MCC acceptance clarifies several points of the compact from the Nepali perspective. As per this, the Nepali side regards the MCC compact as a pure development project grant and is not associated with any military strategy or security alliance. It further clarifies that the constitution of Nepal, a sovereign state, prevails over the compact and its associated provisions. Nepal will not have to comply with future US laws or policies other than the compact's implementation aspect. The declaration states that Nepali laws will govern the Millennium Challenge Account (MCA) and the office of the Auditor-General is the final agency to audit the financial transactions made under the MCA. 

The declaration allayed the fears of those who opposed the ratification, citing all controversial points in the compact, which, according to them, have infringed upon the sovereignty of an independent nation. Despite the House's endorsement and attachment of the interpretive declaration in the compact's ratification, it is not yet clear whether the US side would accept it wholeheartedly. Leaders and lawyers involved in the declaration's preparation, however, stated the compact's implementation would go ahead only if the US side accepted the declaration that carries the Nepali side's understanding of the compact's points. 

Getting the US grant approved in parliament proved to be a difficult proposition even for the key member of the ruling alliance - the Prime Minister. In receiving crucial support from his alliance members, PM Sher Bahadur Deuba burned the midnight oil, but his efforts went in vain until he was involved in 'serious' dialogue with the main opposition chair. Sensing any UML-Congress alliance would be counterproductive, the three parties gave up their rigid stance. 

The determination of the Prime Minister to get the compact endorsed by parliament at any cost, as consensus among the alliance members remained elusive, did wonders for getting House’s consent to the grant. After PM Deuba showed his readiness to 'break the ruling alliance', the three parties consented to ratify it to save the ruling alliance from breaking under the weight of the MCC. Earlier, calls for the compact's approval from fellow leaders, the business community, bureaucrats and many others earlier fell on the deaf ears of the three coalition leaders. 

Had they not responded to the call of the Prime Minister in the penultimate hours, rebel lawmakers who later formed CPN-Unified-Socialist and the Speaker could have lost their membership and chair. The scrapping of membership of rebel lawmakers and punishment of the Speaker were the preconditions the main opposition chair had set for providing his party's support for the compact's endorsement.   

Though the opposing coalition members drew dissension for "melting under pressure and giving up their resolute stance, they will reap several benefits through the new consensus on the compact. Besides keeping the ruling alliance intact, they may go to the polls having an electoral alliance in their collective efforts to defeat the UML, the party that stopped short of breaking the alliance. Had the UML chair not presented difficult preconditions to the Prime Minister when the latter sought his support for the House affirmation, the PM and his party could have allied by breaking the five-party alliance. 

Successful conclusion
The HoR's consent has taken the MCC compact towards a successful conclusion. But since the past governments signed the compact agreement in September 2017 and then registered it in parliament in 2019, the issue concerning the grant's authorisation took several topsy-turvy turns testing the commitments made by several of our political parties. In the past, key political parties and their leaders, whenever they came to power, had expressed that they would work for the early passage of the MCC pact from the House. However, once out of power, they showed their dislike for it citing 'controversial points.' They did it out of fear they would lose voters if they supported the approval. 

Many believe that the House ratification of the US grant would encourage Western donors and development partners to continue with their support of resource-strapped Nepal in the days ahead. Our nation's health, education and infrastructure sectors depend on aid, grants and soft loans from the US, Europe, Japan, Australia and many other nations. Any failure to ratify the US-sponsored MCC grant within the deadline could have sent undesirable messages to these nations. Our failure to accept grants for building and expanding power transmission lines and road networks could have angered donor and development partners, prodding them to stop releasing aid and grants in the future.

(Upadhyay is Managing Editor of The Rising Nepal. nara.upadhyay@gmail.com)