Nepal House sits in crucial MCC vote

ONEs Nepal’s parliament finally convenes on Wednesday to try to ratify a controversial and long-delayed US infrastructure project, parties opposed to the $500 million program are determined to block it.

Nonetheless, Prime Minister Sher Bahadur Deuba said Tuesday at a party parliamentary session of his Nepalese Congress that the Millennium Challenge Corporation (MCC) would be presented when the lower house meets.

Deuba also spoke to Speaker Sapkota about the pact on Tuesday. Sapkota, an ally of center-Maoist Pushpa Kamal Dahal, has repeatedly postponed parliamentary sessions, ostensibly to prevent discussions on the subsidy from progressing in the House of Representatives.

The dispute over the MCC within the five-party alliance recently threatened to dissolve the fragile five-party governing coalition. Prime Minister Deuba’s NC, whose coalition government struck the agreement to modernize Nepal’s power grid and highways in Washington DC in 2017, has pushed for ratification of the project.

However, Madhav Kumar Nepal and its breakaway NCP (Unified Socialists) and Pushpa Kamal Dahal, whose Maoist center was part of Deuba’s coalition when he signed the accord in 2017, were vehemently opposed to the project.

Last week, details emerged about a letter Dahal co-signed with Deuba in September 2021, asking MCC for more time to reach consensus on the project within the current coalition.

Deuba’s predecessor, KP Sharma Oli, had supported the project during his tenure. However, the UML has not made its position on the MCC public after the UML became an opposition party. Mahanta Thakur’s Loktantrik Samajwadi party, which recently split from the JSP, has supported the project.

The Prime Minister expressed optimism that the pact presented on Wednesday would be ratified by Parliament. This comes on the heels of the NC, MC and Unified Socialists filing an impeachment motion against Chief Justice Cholendra Shumsher Rana’s deputies on Sunday.

Rana’s ouster is unlikely, however, as the coalition cannot secure the required two-thirds majority in the House of Representatives. But he’s automatically suspended, and that’s being used as a bargaining chip to mollify communist members of the coalition into getting the MCC ratified.

Removing Judge Rana from office would increase the chances of House Speaker Sapkota escaping a war crimes indictment unharmed and would guarantee 14 United Socialist MPs retain their seats. Former Prime Minister KP Oli of the UML had blocked House proceedings after Speaker Sapkota refused to expel them.

It remains to be seen whether Parliament will approve the project at its session on Wednesday. The US has set February 28 as the final ratification deadline. Several left-wing fringe parties called for street protests on Wednesday and tight security is expected in Kathmandu.

Whether or not the MCC is approved by Parliament, its impact will be felt not only in Nepal’s domestic politics ahead of the elections, but also in the country’s bilateral relations, particularly with the United States and China.

In late 2021, senior MCC officials, including MCC Vice President Fatema Z Sumar, came to Nepal to meet with Nepal’s top leadership following a written response to concerns from the Nepal Ministry of Finance regarding the grant.

US Deputy Secretary of State Donald Lu reportedly called Deuba, Dahal and Oli separately last Thursday to remind them of the implications for bilateral ties if ratification is not timely.

In May 2017, Nepal signed a framework agreement with China on its Belt Road Initiative (BRI) infrastructure development strategy. At the time, the Americans stated that Chinese investment in Nepal should not only serve China’s interests, and pointed out that Nepal could fall victim to China’s “debt trap diplomacy.”

For the past year, Beijing has been actively lobbying against the MCC. Controversy over the project was one of the factors that led to the split between the Communist Party of Nepal and the UML last year.

Nepal is increasingly caught in a geopolitical tug of war between the US and China. However, experts say Nepal needs both the MCC and the BRI and its foreign policy strategy should reflect this delicate geopolitical balance. They say that continuing one project should not deprive Nepal of the other.

“It is in Nepal’s best interest to implement both the American MCC and the Chinese BRI projects based on our national needs,” says diplomatic affairs expert Geja Sharma Wagle.

Nepal has historically had to walk a diplomatic tightrope to balance ties with China, India and the US, and to maintain individual ties with global and regional powers through wars, crises and border disputes.

But geopolitics is so polarized, and Nepal’s recalcitrant rulers so prone to acting as proxies for outside powers, that the country seems unable to maintain that balance.

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