Political Briefing | The US failure on MCC compact

The Americans have not helped their cause on the MCC compact with Nepal. First, at the start of 2019, it was then US Acting Assistant Secretary of State for South and Central Asian Affairs Alice Wells linking the MCC with the Indo-Pacific Strategy (IPS), with its central goal of containing China’s rise and preserving American economic and military supremacy in the Asia-Pacific. (The IPS document declassified by the Trump administration at the end of its term admits as much.) A few months later, David Ranz, US Acting Deputy Assistant Secretary of State for South and Central Asian Affairs, came to Nepal and confirmed that the MCC and the IPS were inextricably linked.

Strangely, the American Ambassador to Nepal, Randy Berry, speaking via a YouTube video after Ranz’s Nepal visit, admitted that the MCC compact embodies “the values and principles we broadly refer to under the [Indo Pacific] strategy”. He said even the USAID’s post-quake help and the provision of Nepali students going to study in the US were inspired by the same set of values and principles. Basically, he was admitting that all current and future American help to Nepal would come under the IPS (or one of its variants). Yet the MCC continues to insist that its compact with Nepal is not a part of the strategy. What are we missing here?  

No sovereign country gives foreign aid or invests in another country without strategic considerations. The BRI is intended to fulfill Beijing’s strategic goals that are closely tied to the continued growth of the Chinese economy. The same holds for Indian or Japanese or Danish aid to Nepal. Why have the Americans been so hesitant to openly admit that the MCC has retrospectively been made a part of the IPS but, even so, it is still in Nepal’s favor?

Nepali communist parties have always been rabid anti-Americans since their inception in the late 1940s. Even in the 1950s, they used to denounce ‘American imperialism’ and decry US-Nepal cooperation. They are doing the same now, partly because as communists they have this fealty towards the northern neighbor. China, too, has been active in fanning the anti-MCC flames in Nepal. And the Americans seem to have taken the Chinese bait—hook, line and sinker.

I believe the MCC is a part of the IPS, as indicated by many senior US officials, including the current US envoy to Nepal. Yet I am still in favor of the compact’s parliamentary endorsement as it is in Nepal’s interest. This is not because the compact’s unraveling could deter other international investors, although that is a possibility. My bigger worry is that limiting Nepal’s external engagement to India and China could pose a grave risk to Nepal’s sovereignty and independence. 

Nepal needs a strong US presence to forestall the possibility of the country’s fate being decided by (or between) its two giant neighbors. Were it not for the presence of outside actors like the US, EU, and Japan, Nepal, perhaps, would by now have been absorbed by India or China, as Leo E Rose so perceptively warned all those years ago.

For the Americans, the biggest and also the more obvious lesson from the MCC debacle should be to avoid conflicting messaging on its important foreign policy initiatives. In this age of disinformation, your opponents will not resist tweaking your words to fix their context. For Nepal, its rulers should never forget that the country has been able to maintain its independence only via the most delicate balancing between multiple international actors. Even a little disturbance in this equilibrium could imperil its existence.