Prime Minister Sher Bahadur Deuba seems bent on tabling the $500-million American grant agreement in the form of the under Millennium Challenge Corporation (MCC) compact in the current session of Parliament. He is requesting his coalition partners to allow him to do so. This is exactly what Americans have been saying to Nepal’s major parties: take it or leave it but decide on the compact right away.

Even as other members of the ruling coalition have rather ambiguous positions on the compact, PM Deuba’s position is clear enough: the compact is in national interest and must thus be ratified. As the compact begins to shake the roots of the current coalition, PM Deuba has offered a middle path to his partners CPN (Maoist Center) and CPN (Unified Socialist) to prevent a possible split in the coalition.

Deuba has reportedly told them that he would not ask coalition partners to vote either in favor of or against the compact. He only wants to be able to table it in parliament. But if tabled, the two parties will be in a tricky position of having to potentially vote against a parliamentary bill brought by its coalition partner.

Senior NC ministers are in regular consultations to convince coalition partners. On February 1, senior minister Gyanendra Bahadur Karki held a long conversation with CPN (Maoist Center) Chairman Dahal and on February 2, Home Minister Balkrishna Khand held talks with CPN (Unified Socialist) Chairman Madhav Kumar Nepal. Similarly, Deuba, Dahal, and Nepal have been meeting on a regular basis to find a common position.

In a meeting with Dahal and Nepal on February 2, PM Deuba said that he wants to endorse the MCC without breaking the five-party coalition. Discussions are underway to pass the MCC. The PM has sought a list of points that we want to amend, the coalition will remain intact, says Nepal.

Jagannath Khatiwada, the spokesperson of CPN (Unified Socialist), says PM Deuba is unlikely to push the compact at the cost of unraveling the ruling coalition. Deuba rather wants to table it and show the Americans that he did what he could, says Khatiwada.

CPN (Maoist Center) Chairman Pushpa Kamal Dahal is under pressure to take a position on the compact. On the one hand, Dahal, dispatching a letter, has assured the Americans that the compact would be endorsed by forging consensus. On the other hand, he has trained his cadres that the compact in its current form is unacceptable. The latter is also the formal position of the Maoist party.

According to leaders, Dahal would prefer to discuss the compact only after elections, with the society bitterly divided on it. But the Americans have repeatedly conveyed that they cannot wait till elections and the compact must be endorsed from the current parliament session.

In this context, Dahal is consulting party colleagues to find a face-saver. He has shared with his close aides that the party could choose not to impose whip in the voting process, allowing lawmakers to use their conscience. Similarly, Dahal has told party colleagues that Deuba has agreed to endorse a parliamentary resolution motion stating that the compact is not a part of the Indo-Pacific Strategy and Nepal will as such not join any military alliance.

Says NC leader Pushpa Bhushal, this option has been considered in the political circles for a long time. “The first order of business is to table the MCC bill in the full House. Only after that will the resolution motion and other issues be discussed,” says Bhushal.

This, Dahal believes, could provide another face-saver. Another coalition partner CPN (Unified Socialist) led by Madhav Kumar Nepal agrees. Of late, Nepal has not spoken publicly about the compact but senior leader Jhala Nath Khanal has been insistent that it can be endorsed only after amendments. Khanal also claims to have received some new documents, which will take some time to study. But the office of MCC in Nepal has clarified that there are no such documents that remain to be studied.

At the same time, Speaker Agni Sapkota has hardened his position on the compact. To table the MCC bill in full House, Sapkota has set three conditions, according to a member of his secretariat: consensus among parties, addressing of public issues over the compact, and lifting of UML’s parliament obstruction as the compact cannot be endorsed otherwise. So, without an agreement among Deuba, Nepal, and Dahal, the speaker is unlikely to cooperate.

But the ball is still largely in Deuba’s court. If he is determined to endorse the compact irrespective of its consequences on the coalition, an entirely new political scenario could emerge. First, if the speaker refuses to budge from his position, PM Deuba has to remove the speaker and for that he needs the support of UML, which means a breakdown of the ruling coalition. 

UML may help Deuba remove the speaker but it is uncertain if it will continue to support Deuba as PM. Says CPN (Unified Socialist)’s Khatiwada, UML, in this scenario, may ask for government leadership. Moreover, if Deuba dissolves the parliament, the Supreme Court is likely to restore it. At the same time, Deuba is cautious that a split in the coalition could bring the communist parties together, which will make it difficult for NC to emerge as the largest electoral force.

So there are chances of Deuba convincing Americans that he did what he could, and thus the ruling coalition will also continue.

There are growing concerns inside the Nepali Congress about the electoral consequences of Deuba’s stand in the compact’s favor. Whether the compact moves ahead or not, communist parties are sure to make it a major election plank, much to the detriment of Congress.

As the UML is to take a position on the compact, members of the ruling coalition fear that the party could, in the lead up to elections, heap all the blame for the compact’s endorsement on the ruling coalition.

Leaders of the Maoist Center and CPN (Unified Socialist) are trying to convince NC leaders that it would be prudent to take a final call on the compact only after elections.

As the compact continues to create friction among coalition partners, UML is keenly watching. It has been saying that the ruling coalition has a comfortable majority to endorse the compact, and as such there is no question of its support.

The coming week is going to be crucial, as the prime minister wants to table the MCC bill in Parliament on February 9. Nepali Congress leaders say, in the worst-case scenario, the parliament could be dissolved, again to the benefit of the UML.