The United States cannot keep the $500 million grant assistance under the Millenium Challenge Corporation on hold indefinitely, a top MCC official has said.

In an email interview with the Post and its sister paper Kantipur, Mahmoud Bah, acting chief executive officer at the MCC, said that accepting the $500 million dollar grant from MCC and the American people “is Nepal’s choice and only Nepal’s choice.”

The American grant, signed between the governments of Nepal and the United States in September 2017, has become a major divisive force in Nepal. The MCC-Nepal Compact has been in Parliament since July 2019 awaiting approval.

The grant is to be used for building electricity transmission lines and improving road projects. While Prime Minister Sher Bahadur Deuba’s party, the Nepali Congress, appears keen on endorsing the grant through Parliament, his coalition partners, particularly the Communist Party of Nepal (Maoist Centre) and the CPN (Unified Socialist) are against passing it “in its existing form”. The main opposition CPN-UML, which was ready for MCC’s parliamentary approval when it was in power, has changed its tune and maintains that it has not made any position on the US grant.

In 2017 also, when the grant was signed, Deuba was leading the government backed by the Maoist Centre.

“Since 2017, MCC has remained committed to helping the people of Nepal while waiting for Parliament to fulfil the Nepali government’s requirement for international agreements—parliamentary ratification,” said Bah. “Every major political party in Nepal, and successive governments since 2012, have sought the MCC compact. Additionally, each of these governments, and its political leaders, have supported the ratification of the MCC-Nepal Compact in its original form.”

MCC emerged as a politically divisive force when the Nepal Communist Party (NCP), formed after the merger between the UML and the Maoist Centre), was in power. Amid a raging infighting in the party, Pushpa Kamal Dahal, then co-chair of the party, weaponised the American grant against the other chair KP Sharma Oli. Some of the UML leaders, including Bhim Rawal and Jhala Nath Khanal, too stood against the grant’s parliamentary approval.

The NCP, however, was invalidated by the Supreme Court on March 7 last year. Dahal got his old party, the Maoist Centre, back. A group within the UML split in August last year to form the CPN (Unified Socialist).

When the Deuba government was formed on July 13 last year, there were expectations it would move the MCC in Parliament for its endorsement. In September last year, the Finance Ministry even wrote to the MCC headquarters detailing the concerns surrounding the MCC in Nepal. The MCC headquarters provided pointwise clarification just ahead of the visit of one of the senior officials, Fatema Z Sumar, to Kathmandu. She held meetings with Nepali leaders from across the political spectrum.

The American grant, however, continues to remain stuck in Parliament.

Bah said the US assistance has been the target of a sophisticated and malicious misinformation and disinformation campaign to discredit MCC and the government of Nepal in order to prevent the MCC-Nepal Compact from progressing and helping improve the lives of  millions of Nepalis. 

“You will notice that each time the government of Nepal seems poised to move forward towards ratifying the MCC compact, there is a sudden increase in false and misleading statements about MCC, especially on social media and YouTube,” said Bah. “It is even more disheartening when some of Nepal’s political leaders have perpetuated these misleading statements, which only hurts the people of Nepal.”

The MCC-Nepal agreement has become one of the most  politically debated topics in Nepal. Why is the United States providing $500 in grant to Nepal?

To help build a brighter future for the people of Nepal. Since Nepal requested consideration and MCC selected Nepal as eligible for a smaller threshold grant in 2011, the government of Nepal has demonstrated its commitment to democratic governance, investing in its people, and economic freedom. It is this commitment that led MCC’s Board of Directors, chaired by the Secretary of State, to select Nepal as eligible for a larger compact grant in December 2014. 

The government of Nepal then led the development of this compact programme, teaming with MCC’s technical experts to conduct joint analysis and create a  programme that would benefit the people of Nepal. A cornerstone of MCC’s grant programmes around the world is a partner country’s ownership of the development and construction processes. The government of Nepal has been in the driver’s seat from the very beginning. It has led in all phases of the compact’s development process—approving every aspect of the MCC-Nepal Compact. 

In September 2017, the governments of Nepal and the United States formally signed the $500 million-dollar MCC-Nepal Compact agreement—a partnership that will help Nepal’s economy grow, advance stability, create jobs, support regional security, and reduce poverty for nearly 23 million Nepalis. Through 300km of new, high-voltage power lines and the upgrade and improved maintenance of Nepal’s roads, this compact will increase the availability and reliability of electricity and make travel and transportation in Nepal less costly, safer, and more sustainable. More efficient clean energy transmission and improved road infrastructure will also support Nepal’s own needs to address climate change and the ambitious, admirable commitments the government made in Glasgow. Because of its strong belief in the value of its partnership with MCC, the Government of Nepal committed an additional $130 million dollars for the compact’s projects—the largest up-front contribution by a partner country in MCC’s history.  

Since 2017, MCC has remained committed to helping the people of Nepal while waiting for Parliament to fulfil the Nepali government’s requirement for international agreements—parliamentary ratification. Every major political party in Nepal, and successive governments since 2012, have sought the MCC compact. Additionally, each of these governments, and its political leaders, have supported the ratification of the MCC-Nepal Compact in its original form.   

 What correspondence has MCC received from the government of Nepal? Has the Nepal government committed to ratifying the  compact within a certain timeframe? 

On September 3, 2021, MCC received a letter from the government of Nepal requesting clarification on several debated topics related to the compact. On behalf of the US government, MCC responded to this letter on September 8, 2021 to ensure that Nepal’s political leaders and the people of Nepal better understood the MCC-Nepal Compact, our agency, and how our partnership is designed to help reduce poverty and foster economic growth in Nepal. 

On September 29, 2021 MCC received a letter co-signed by Prime Minister Sher Bahadur Deuba and former prime minister Pushpa Kamal Dahal [Communist Party of Nepal (Maoist Centre) chair], expressing their support for the MCC-Nepal Compact, as well as their commitment to secure the support needed for parliamentary ratification by a specific time. 

Since signing the compact in September 2017, MCC and the government of Nepal have been eager to start the construction phase of the compact. However, MCC cannot begin the compact’s construction phase until the parliament ratifies the agreement, per the requirements of Nepali law, nor can we keep $500 million dollars in grant assistance on hold indefinitely. This message was conveyed by the US government directly to the Nepali government, and in their September 29, 2021 letter to the MCC Board of Directors, Prime Minister Deuba and former prime minister Dahal agreed there is a sense of urgency and set an internal deadline for the Government of Nepal to move forward on the compact. I am grateful for their collective commitment to the MCC-Nepal Compact and to the people of Nepal.  

What was the decision of the recent meeting of the MCC Board of Directors in relation to Nepal Compact?

During its December 2021 meeting, MCC’s Board of Directors discussed the status of the Nepal Compact and reiterated its support for the MCC-Nepal partnership to enhance economic prosperity and reduce poverty for the people of Nepal. The Board also discussed the longstanding delays that have persisted across multiple Nepali governments in ratifying the compact, noting the need for the Nepal government to act swiftly if it still desires the $500 million dollar grant.  

US officials claim there has been intentional spread of misinformation about MCC in Nepal. Why do you think it is happening?

It is true, MCC has been the target of a sophisticated and malicious misinformation and disinformation campaign to discredit our agency and the Government of Nepal in order to prevent the MCC-Nepal Compact from progressing and helping improve the lives of millions of Nepalis. You will notice that each time the government of Nepal seems poised to move forward towards ratifying the MCC compact, there is a sudden increase in false and misleading statements about MCC, especially on social media and YouTube. It is even more disheartening when some of Nepal’s political leaders have perpetuated these misleading statements, which only hurts the people of Nepal.  

Thankfully, many Nepalis are learning more about the actual programme as documented in the grant agreement and the truth about MCC. They have started voicing their support for the brighter future this programme will bring. They know the intentional politicisation and misinformation aimed at derailing the progress of this compact jeopardises valuable  resources that are needed to lift up the people in Nepal. More concerning is the influence of outside actors against the interest of the Nepali people who are seeing the daily burden and challenges created by the  lack of reliable electricity and high cost of transportation. It is important that the people of Nepal know these malicious attempts to derail this compact have not deterred MCC and the United States from helping our Nepali friends. Nepal is a sovereign country, so it is the people of Nepal, and only the people of Nepal, should decide, not outside actors. 

There have been even protests with charges like MCC is linked to  a security strategy. How do you respond? 

I have proudly worked at MCC in countries around the world for more than a decade, and I can assure you MCC  has no relationship to the US military or any military activity. In fact, the agency is prohibited by US law from funding any kind of military assistance or training. Each of Nepal’s political party leaders has acknowledged to me that they know this to be true, and that they know MCC has one goal  with this compact—to  reduce poverty and  improve the economic outlook for  the people of Nepal. But don’t just take my word for it. Please examine the record and history of MCC compacts around the world, including countries that have pursued second compacts.   

MCC is part of a holistic US government approach to diplomacy, foreign affairs, and international development. MCC compacts are always focused on  two things: reducing  poverty and fostering economic growth. More importantly, MCC grants are designed and implemented by partner countries, meaning the MCC-Nepal Compact will be implemented by the Government of Nepal; not MCC. I urge you to please read the compact and understand the program ME and make  your independent assessment of the benefit of the programme for the people of Nepal. MCC is a development agency with a strong reputation for transparency and accountability around the world. 

What will happen if parliament fails to ratify the compact?  

I want to be clear, accepting a $500 million  dollar grant from MCC and the American people  is Nepal’s choice and only Nepal’s choice. No other country should decide for Nepal. But these grant funds cannot remain on hold indefinitely.  The Nepal government must act swiftly and ratify the compact so we can  start with the construction phase of the programmes. Ultimately, MCC’s Board of Directors will decide what happens if delays continue.  

Some high-level American officials have said the US-Nepal relations will not be affected if Nepal is unable to ratify the compact, but they "will be concerned”. What does that mean?

For me, I am worried about how these ratification delays have impacted the  millions of Nepali people who just want more reliable electricity for their families, especially during a global pandemic. There is no other form of development grant assistance available at this scale that will positively impact nearly every person in Nepal like the MCC-Nepal Compact. 

Based on the conversations I have had with many of Nepal’s leaders and the letter from Prime Minister Deuba, I believe right now, in January 2022, there is a path forward to ratify this compact. Additionally, Nepal’s business and civic leaders have been vocal about the importance of this compact to help ensure Nepal realises its own economic goals and aspirations. Once the grant programme is ratified, MCC and the Government of Nepal can begin the process to  improve roads, expanding energy access, and build the infrastructure needed for Nepal to generate additional resources through trade and energy exports. For more than 70 years, the United States and Nepal have built a friendship based on our shared values, including respect for individual freedoms and the sovereignty of all nations. This friendship will continue regardless of the MCC-Nepal Compact.  

The compact document does not mention ratification. However, this has been put forth as a condition. Is ratification an international requirement or a requirement set by Nepal? Can you clarify?

In Nepal, as in all other MCC partner countries, a grant from MCC has the status of an international agreement. This is a critical part of MCC’s dedication to transparency in all our grant programmes. Nepal’s Ministry of Law, Justice, and Parliamentary Affairs found the compact would require parliamentary ratification in order to obtain the status of an international agreement.  

The MCC-Nepal Compact is not unique. The Government of Nepal has ratified many other international agreements. Furthermore, the government committed to this requirement when signing the compact in 2017 as one of the actions it must take to begin the construction phase of the compact. Many other MCC partner country governments have ratified compact agreements. This includes Mongolia, Morocco, Senegal, Moldova, Tanzania, and Ghana to name a few.  

Is MCC willing to wait until Nepal’s elections?  

Elections are critical for any country, and I understand they are particularly important to the people of Nepal. Unfortunately, continued delays in ratification have put MCC in a position where we can no longer wait. The time has come for the government to take action and decide if it would like to continue its partnership with MCC. We all know that the longer construction projects are delayed, the more expensive they become, and the longer Nepali communities must wait for reliable power and improved road conditions. But  I am encouraged by the commitments made by Prime Minister Deuba and former prime minister Dahal. MCC is eager to begin helping the people of Nepal. The only thing preventing projects from moving forward is parliamentary ratification.   

Do you have any particular message for the people of Nepal on MCC’s behalf?  

For close to 75 years, the United States and Nepal have built a bond that extends halfway around the world and into our homes as family and friends. The MCC-Nepal Compact is a continuation of this friendship. Since our partnership began to take shape in 2012, MCC has remained committed to the people of Nepal, and we have remained committed to our agreement with the Nepali government since signing our compact in 2017. We can advance economic growth for all of Nepal. The only thing preventing this is delayed ratification. With Parliament’s help, MCC and the government of Nepal can begin to improve the transportation sector, creating business opportunities, and building a modern electrical system that will increase access to energy while protecting the climate. If the people of Nepal want to begin building this future for their families, I encourage them to let their government representatives know—now is the time to ratify the MCC-Nepal Compact. The United States will always remain committed to the people of Nepal.