Over the past few weeks, the US has been consistently pressing Nepal’s major political parties for parliamentary ratification of the Millennium Challenge Corporation (MCC) compact, under which Nepal is entitled to $500 million in grant. The effect of such pressure is starting to show.
The dispute over compact has sowed discord in the ruling coalition while the main opposition, CPN-UML, is also under pressure to reveal its official position. Speaker Agni Sapkota, meanwhile, has been postponing House meetings over UML’s parliament obstruction threats, hanging the compact’s fate in balance.
The US wants a final decision on the MCC Nepal compact before the March meeting of the MCC Board of Directors, to be chaired by Secretary of State Antony J. Blinken. Sources say the US is likely to turn on the heat on the Nepali leaders until the compact is approved.
Despite pressures from Prime Minister Sher Bahadur Deuba and the US, two coalition partners—CPN (Maoist Center) and CPN (Unified Socialist)—have not budged from their anti-compact positions. They want to change some of its provisions even though they have not specified them.
With the two major partners in the coalition vacillating on compact ratification, PM Deuba of Nepali Congress, which is in favor of the US grant, has reached out to the main opposition, UML, asking for its support.
NC Leaders close to Deuba say the prime minister is even willing to break the coalition if the UML lends its support for the compact’s ratification. Ever since the UML was ousted from power last July, the party has been saying that the ruling coalition should first have a uniform view on the compact. The party says it currently has no position on it.
Rajan Bhattarai, head of UML Foreign Affairs Department, says despite some reservations the party had tried to push the compact when it was in power.
“But we are not in power now and our position on the matter does not mean much. Right now, there is no point in saying yes or no to the compact,” says Bhattarai.
But Speaker Sapkota has blamed the UML for disrupting the House and blocking the MCC bill from getting tabled, which Bhattarai denies.
Leaders close to PM Deuba say that if the UML lifts House obstruction and makes its position clear on the compact, NC will put pressure on Sapkota to table the bill in Parliament.
Additionally, Congress leaders believe that if the UML comes out openly in the compact’s favor, the Maoists and CPN (Unified Socialist) are likely to follow suit. They say the latter two do not want to be portrayed as standing in the way of compact ratification.
Though the UML is unlikely to go against the compact in the voting process, there is still a chance of resistance. Some UML leaders are against the party leadership issuing a whip on the compact. Given that the issue has deeply polarized Nepali public, they believe individual lawmakers should be allowed to use their conscience when voting on the compact.
PM Deuba seems to be in a fix. He is not getting the support of his own coalition partners but he cannot rely on the opposition either.
“The prime minister is determined to endorse the compact, irrespective of its implications for the coalition. That’s why he has been reaching out to the main opposition,” says Nain Singh Mahar, a Congress central working committee member.
The US is also doing its part to woo the UML. On February 8, US Ambassador to Nepal Randy W. Berry called on UML Chairman KP Sharma Oli at the latter’s residence in Balkot, Bhaktapur. In the meeting, the US envoy sought UML’s help in the compact’s endorsement.
Political parties are also under pressure to decide the compact’s fate after a joint letter submitted by PM Deuba and Maoist Center Chairman Pushpa Kamal Dahal to the MCC was leaked. In the letter, the duo had committed to ratifying the compact by February-end.
The US has said that it will not wait for Nepali parties to endorse the compact.
After the letter signed by Deuba and Dahal became public on February 6, the heads of three major parties had gathered in Baluwatar, where the main opposition leader, Oli, urged the ruling parties to come up with a clear position.
Meanwhile, the announcement of local elections on May 13 has also complicated ratification. Parties now see the compact through the prism of elections. Not only in the Maoist and Unified Socialist, there are also voices in the NC that it would be wise to deal with the compact after the elections.
Coalition partners Maoist Center and Unified Socialist have already proposed putting the issue on hold until after the elections. Many political leaders believe a final decision on the compact now could impact their local poll prospects.
At the same time, there is also concern about possible consequences on Nepal’s economy if the US decides to withdraw the compact.
Government Spokesperson Gyanendra Bahadur Karki said in a recent interview that withdrawal of the compact could have repercussions on the country’s economic development. A former Nepali ambassador to the US also declined to rule out an adverse impact on the Nepali economy if the MCC falls through.
Political parties are well aware of this. They are also worried about risking Nepal-US diplomatic ties.
PM Deuba is of the view that if the MCC bill is tabled in Parliament, it will give a message that Nepal has moved a step ahead towards its ratification. Some NC leaders suspect that the US could wait if the bill is tabled in the Parliament.
But a member of the Speaker’s secretariat says there has been no headway on tabling the bill as the UML continues to obstruct the House.
“If there is an all-party consensus, the Speaker is ready for an alternative. But right now, he firmly believes the political environment for tabling the bill has not been created,” the secretariat member says on condition of anonymity.
Amid uncertainty over the compact, politicians are busy in intra-party parleys to discuss possible way outs. The Maoist party has called its central committee meeting for February 10, with the compact among key agendas. To support compact endorsement, the party will have to change its official policy.
Several influential leaders of the Maoist party have taken a hardline position on the compact, which has put Dahal in a difficult position.
Similarly, NC and UML are also holding intra-party parleys. Except for NC, other parties are in a moral crisis due to the public posturing of their leaders against the compact.
On the one hand, they do not want to project themselves as anti-MCC, and on the other, they want to take the credit for any possible changes in the compact.