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A fierce public debate has erupted about the $500 million grant offered by the United States Millennium Challenge Corporation (MCC) to Nepal for construction of power transmission lines and strategic roads.

Every person in Nepal now has a story on the MCC. This is mine.

It begins in 2007. At the time, Nepal had just signed an agreement with an Indian infrastructure investment firm to build four cross-border transmission lines. The electricity crisis (load-shedding) in Nepal was deepening. Cross-border lines would enable Indian electricity imports and provide much needed relief.

Nepal was pursuing these lines with urgency. The first line (Dhalkebar-Muzaffarpur) was to be ready by 2010. Shortly after the agreement was signed, India changed its rules, calling for majority state-ownership in the project. Further complications came when Nepal had to sign an agreement to purchase electricity from India on that line for 25 years. The line finally came into operation in 2016, thus ending Nepal’s load-shedding.

Cross-border transmission lines integrate power markets. Once integrated, Nepal will have to compete against Indian power markets. This would mean, I argued at the Nepal Power Summit in 2007, that cheaper Indian power would displace newly added Nepali hydropower in the long run.

New hydropower may not be able to compete in the Indian power market in a way that allows Nepali hydro plants to secure long-term power purchase agreements. Without this security, new Nepali hydro plants cannot be commercially financed only with short-term trading contracts.  

Nepal’s strategy of using cross-border lines for imports in the short term and exports in the long term was a high-stakes gamble. That gamble is now a bedrock of Nepal’s power sector strategy.

A precondition to the MCC grant was that Nepal sign an agreement with India for the Butwal-Gorakhpur cross-border line. It was an odd condition, I thought, requiring Nepal to sign an agreement with India without Nepal having any real control on building the lines on India’s side of the border.   

For over 10 years, Nepal had been trying to secure an agreement on that line. India hadn’t agreed. But as in love, nothing is impossible in bilateral government relations.

In October 2019, India suddenly dropped its objections without explanation. It agreed to finance the cross-border line on Nepal’s terms, on a government-to- government basis. This meant there would be no consideration for the financial viability of the transmission line; it would simply be built.

India’s decision to reverse course was a dramatic shift, contrary to the spirit of its power market that is pushing for financially viable, commercially-led investments. MCC in Nepal became real at that point.    

A few months later, a fierce debate on the MCC swept across Nepal like an inferno, scorching everything in its path, tearing apart friends from friends, husbands from wives, brothers from sisters, and two key political personalities clearly vying for power.   

The funny thing is that none of this may matter anymore.

Earlier this week, in keeping with the India-Nepal understanding on the Butwal-Gorakhpur line, Nepal Electricity Authority (NEA) and Power Grid Corporation of India (India’s state-owned transmission utility) agreed to move things forward. With or without the MCC, Nepal will be building the cross-border line.

Without a single penny from the MCC, Nepal is rapidly integrating with Indian power markets. When the cross-border line will be built doesn’t matter. Government announcements have already shaped expectations and market fundamentals.   

Only one of two outcomes is now possible.

Possibility 1: Cheaper electricity prices in India will displace new hydro capacity of Nepal. We remain reliant on Indian electricity imports.

Possibility 2: Nepal will generate thousands of megawatts in new hydro and sell all its excess generation to India, earning enormous revenues in the process.

I worry this high-stake gamble is one we have not fully thought through.

In those moments of worry, I return to the reassuring comfort of what the US ambassador to Nepal promised to the people of Nepal in his 3 October 2019 article in Republica.

“The MCC project focuses on constructing lines that will bring Nepal’s power to the consumers who will pay Nepal good money for it.  It is a simple fact of geography and economics that means India.”    

I shudder to think, what if it isn’t “simple” or if it isn’t a “fact.”

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The Buddha’s first utterance after his enlightenment under the Bodhi tree was: “I have gone through countless births in the cycle of existence, seeking the builder of this house. To be born again and again is dukkha (suffering). Now I have seen you, O housebuilder! You shall not build a house again for me.”

In Bhagavad-Gita, Krishna tells Arjuna: “That which is born must die, and that which is dead must be born again. You and I have passed through many-many births. I can remember them all, you cannot.”

Attenuating one’s karma and stopping the endless cycle of rebirths is the central theme of Jainism. For Sikhs, human life is a unique opportunity to break the cycle of death and rebirth.

All major Indian philosophies talk of rebirth. For someone brought up in Western cultures, rebirth may be a topic difficult—or even absurd—to believe or understand. One may squarely say: “Why should I even care if I continue after death or not? I am not a religious person—not the least a follower of Indian religions.”

But rebirth does not have to be about religion. It can just be about ethics. It can be about following a few moral principles. Instead of going so far as having a new physical body, we can look at rebirth as the arising of a new state of mind. We all know our mind changes—or takes a new birth—all the time. We can view rebirth from that angle.

When the Indian traditions talk of rebirth, they do it in relation to karma. The bottom line: If you create healthy karma, it will lead to wholesome rebirth. Healthy karma is about taking actions that generate healthy states of mind. All traditions talk of refraining from actions that lead to misery. They talk of either extinguishing all forces of karma, or at least developing and keeping the helpful ones.

Healthy karma would lead to eradication of mental impurities. Mental impurities are mental residues of physical, verbal, or mental actions. So clearing the impurities will have to do with how we act, speak, and think. To do it in healthy ways, you don’t need a creator or a God or a religion—you can just have an intention to lead a happy life.

If you do morally wholesome acts, it will have wholesome effects on your mind. If you save a life, you will instantly feel love and peace in mind. If you speak the truth, you will never have to worry about guarding your lies. But if you steal money from the bank, you will definitely have sleepless nights. Whether you create nice karma for better physical rebirth or not, ethical action will reward you with peace of mind. 

Rebirth in terms of physical body may be distant. But in terms of mind, it is instant. Our wholesome acts lead to happy rebirths of the mind in real time, all the time.

Just like China has its ‘Socialism with Chinese characteristics’ to govern domestic politics, the country has its own way of doing foreign policy. The rest of the world seems to move by one set of rules, and China by another. Every other major power right now is devoted to battling the Covid-19 crisis. China too has given meticulous attention to the virus. Yet it has also espied the “right time” to expand its footprints abroad.

The country is ultra-active in Covid-battered Nepal as well. Chinese ambassador Hou Yanqi has been doing the rounds of the abodes of top Nepal Communist Party leaders, urging them not to ‘destabilize’ the Oli government. Even though the Chinese are unhappy with the Nepali prime minister’s backing of the MCC compact, they seem to have calculated that Oli is still the man to best secure their interests this side of the Tibetan plateau. Having come to this conclusion, ambassador Hou has thrown diplomatic decorum to the wind in her open lobbying for Oli’s continuity. 

The chief claimant to Oli’s PM throne, Pushpa Kamal Dahal, has understandably refused to meet her. Having spent so much of his political capital in the past few years proving his loyalty to Beijing, he does not want to lose the hard-earn trust. Therefore, only a month and a half ago, he had listened to Hou and let Oli be. But Dahal is in no mood to make such concessions again. But nor can he defy Hou.

Dahal realizes that saying ‘no’ to the Chinese could undo all his efforts to cultivate Beijing. Dahal also understands that as much as New Delhi mistrusts Oli, it does not trust Dahal any more. Dahal was the one who broke the unstated decorum of the Nepali prime minister making New Delhi his first port of call and flew to China instead. The ex-Maoist boss was also the one who tried to sack a sitting Nepal Army chief, despite clear warnings from the south not to engage in such adventurism. 

Above anything else, the recent activism of the Chinese ambassador, her easy access to top leaders, her lack of concern about her conduct, even Dahal’s refusal to see her—all show the enormous power China wields over the NCP. Yet China’s preference for one NCP leader above everyone else is harder to understand. The only way to make sense of it is to assume Oli has told Hou that should other NCP leaders try to take away premiership from him, he would not hesitate to divide the party, China’s most trusted institution in Nepal. In other words, Oli subtly asked her to do the lobbying for his continuity. 

But why blame the Chinese envoy when it is our own leaders who are throwing their doors open for her, any time, any day? And weren’t previous Indian envoys in Nepal—and the bunch of Indian spooks that has now descended in Kathmandu to checkmate Hou—doing the same? Moreover, the misogynistic reporting of sections of the Indian media that shamelessly accused Hou of practicing ‘honey trap’ diplomacy has not gone down well here, and will further dent India’s image.

In the end, we are going about this the wrong way. Were our leaders more mindful of national interests and abided by the diplomatic code of conduct, the question of conduct of foreign envoys and other representatives here could be largely irrelevant.

What started as a health crisis in the form of the Covid-19 pandemic has now unfolded into a global economic and livelihood crisis. While the ubiquitous quarantines and lockdowns may have saved many lives and provided an additional benefit of environmental improvement, their enormous consequences on people’s livelihoods are conspicuous.

For example, a recently conducted Rapid Assessment of Socio-Economic Impact of Covid-19 in Nepal by the Institute for Integrated Development Studies (IIDS) indicates that 28 percent of men and 41 percent of women lost their jobs following the lockdown. Further, the impact is concentrated among the income-based vulnerable population dependent on scarce economic resources. The livelihood crisis, if it persists, is likely to further impact the already vulnerable population and pull people into poverty.

In Nepal, one-fourth of the population lives below the national poverty line (i. e. less than $0.5 a day). Given their finite earnings and scarce resources, how they sustain their lives and grapple with various socio-economic constraints is a pertinent topic of discussion. Typically, income-based vulnerable people are more likely to face food insecurity and have limited access to healthcare facilities. These challenges are potent, especially as they also tend to engage in physically demanding work.

Food insecurity is a long-standing issue in Nepal. According to the Demographic and Health Survey (DHS), as many as 52 percent Nepali households are food insecure, and food insecurity is pronounced among households in the lower wealth quintiles. The 2019 Nobel Prize-winning economists Esther Duflo and Abhijit Banarjee, building on the work of another Nobel Laureate Angus Deaton, say food insecurity among the impoverished population is concerning as they spend a significant amount of their earnings—roughly one-half to three-fourth of their total income—on food.

Following the Covid-19 lockdown in Nepal, a large proportion of the economically vulnerable population has lost jobs and incomes, and therefore become more susceptible to food insecurity. This depreciates the country’s human capital, which in turn threatens to derail economic growth. While the physical toil and economic hardship of the economically vulnerable population garner much public attention, their psychological states under resource scarcity and poverty often go unnoticed.

Behavioral economists Sendhil Mullainathan and Eldar Shafir have found that poor farmers have significantly higher cognitive ability post-crop harvest as compared to pre-harvest, suggesting that economically vulnerable people are psychologically distracted under resource scarcity. Further, scarcity-led psychological distractions could lead them to make adverse economic decisions, such as falling into huge debt traps, aggravating their economic hardship. So, while it is important to understand the economic struggles of the poor, which is likely to exacerbate in the immediate future, it is also vital to recognize the interplay of the socio-economical and psychological factors, especially at a time when the suicide rates are noticeably high.

The government role is crucial in recognizing the challenges and needs of its citizens. However, the current crisis has put a question mark over government responsiveness, as evidenced in its dire preparedness for health emergencies, resource allocation, and mobilization, giving rise to what has now developed into a nationwide public protest.

Thousands of migrant workers have returned to Nepal and more are due. Given that many of the returned migrants will find no immediate jobs, the government is faced with the challenge of overseeing their safe return and accommodation. However, incompetent management thus far has also raised serious concerns over government credibility. Amid these uncertainties, the question of how the government should address the needs of its citizens, especially the economically vulnerable population, becomes a monumental one.

Job security is vital to keep the economy afloat. The government can employ a large number of local workers in large infrastructure projects by adopting safety measures. We also have to scale-up and improve our quarantine and healthcare facilities to accommodate the increasing number of virus-contaminated individuals, possible suspects, and returned migrants. The government can also utilize local workforce in those facilities. While the recently announced budget does not guarantee outright economic protection for the vulnerable population, tax benefits for small and medium-sized enterprises may help in their economic recovery. The government should ensure the smooth running of those enterprises.

The role of provincial and local governments is as crucial in engaging and incentivizing local workforce, with incentivizing agricultural production, which is already underway in several municipalities, the immediate priority. A case in point is the rural municipality of Miklajung of Panchthar, which has announced an incentive of Rs 100,000 for farmers producing over 40 muris of paddy this year. More economic incentives are required at the municipal level to engage the local workforce, increase agricultural production, and ensure food security.

Lastly, it’s about time the government cuts down extravagant spending in all three tiers and focuses on more urgent issues at hand.

Khatiwada is a PhD candidate in economics at the University of New Mexico, USA; Pant is a fresh Juris Doctor Graduate from University of Sydney, Australia