Story of the Week: Nepal’s Fierce MCC Debate
The Diplomat
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What Happened: In 2017, Nepal and the U.S. signed an agreement under the Millennium Compact Challenge that would see Washington provide a grant of $500 million, mainly for electricity infrastructure. But five years later, the grant has become a political hot button issue in Nepal, in no small part due to the eagerness of U.S. officials to situate the MCC project within the broader Indo-Pacific Strategy. Wrapped up in concerns about China-U.S. competition and Nepali sovereignty, the MCC grant became a wedge issue used by warring factions in Nepal’s domestic political wrangling.
Our Focus: The MCC agreement has been most fiercely opposed by factions of Nepal’s communist parties, who have long favored China and been suspicious of U.S. intentions. But that narrative is only part of the problem. “You can never overlook the anti-imperial bent of Nepali communists,” Khadga KC, professor at the Department of International Relations and Diplomacy at Tribhuvan University in Kathmandu, told The Diplomat. “But I believe something else is also at play behind the political opposition to the compact”: Nepal’s unstable internal political dynamics. Every party in Nepal has, during their time at the helm, supported the MCC. Once out of power, however, parties – or even individual leaders – find political benefits in loudly opposing the MCC on the grounds of defending Nepal’s sovereignty.?
What Comes Next: The MCC issue has become so toxic that Nepal’s major political parties, given a choice, would steer clear of it. Going into elections slated for 2022 and 2023, no leader wants to be projected as “selling their country to the Americans.” Even if the grant is eventually approved, the messy political drama has tarnished the MCC’s – and, by extension, the United States’ – reputation in Nepal. Ironically, the gift of $500 million, which the U.S. likely envisioned as a boost for its image, has backfired spectacularly.?
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