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MCC Fund May Divert To India or Bhutan, If Fails In Nepal: Sources

‘Indo-China Nexus In Nepal Focused On Obstructing and Revoking MCC’

By Jyoti Dhakal, KATHMANDU:- The Millennium Challenge Corporation (MCC) development project signed between the United States and Nepal in 2017 has hit a new snag, as various facts and analysis suggest that Nepal’s immediate neighbors China and India do not want the American project to be implemented in Nepal – an important buffer state between these two Asian neighbors.

“Of late, there are facts as well as temptations that India is attempting to foil the US-Nepal MCC Project in Nepal, so that the MCC will divert either to India or Bhutan and fund some similar projects in the energy sector,” said some highly placed political sources in the Nepalese capital of Kathmandu.

“Besides India, Nepal’s northern neighbor China is already against the MCC project, as it is an American project – first of all – and China thinks that this project poses tremendous challenges to its ambitious Belt and Road Initiative or the BRI project, to which Nepal is a party,” the sources further said.

Earlier, some facts surfaced in the media stating that the Chinese Embassy in Nepal allegedly sponsored the anti-MCC protests in Nepal, distributing money to journalists to write against the MCC project and arranging free trips for them to various parts of China.

(Secretary of State Michael R. Pompeo meets with Nepali Foreign Minister Pradeep Gyawali at the U.S. Department of State in Washington, D.C., on December 18, 2018. Credit: US State Department Photo)

Meanwhile, issuing a statement on June 29, 2020, the Millennium Challenge Account Nepal (MCA-Nepal) has said that it is still working with the target of implementing the MCC project in Nepal.

“MCA-Nepal is working with all relevant authorities to complete remaining Conditions Precedent (CPs), including parliamentary ratification of the Compact as soon as possible, to Enter into Force and begin implementation,” said the statement.

“We acknowledge the media’s interest on the Compact and would like to express that MCA-Nepal remains committed to the Nepal Compact. We will share additional information as it develops,” added the statement.

Similarly, releasing a statement on the same date, the US Embassy in Nepal has said that the US is aware that the Nepalese Parliament has not yet ratified the MCC Compact.

“Ratification is the next step needed to proceed with the $500M grant, which the two countries signed in September 2017 and which Nepal committed to ratify by September 2019. Delaying ratification is delaying the benefits of more jobs and increased economic growth for nearly 23 million Nepalis,” the statement said.

“Accepting this grant is Nepal’s choice but the availability of the funding is not open-ended. Tangible, near-term steps in Nepal are necessary to ensure the continued viability of the program,” the statement further said.

From left, Nepal’s Minister of Finance Gyanendra Bahadur Karki, acting CEO of Millennium Challenge Corporation Jonathan Nash, and U.S. Deputy Secretary of State John J. Sullivan, address guests before the signing of the Nepal Compact, Thursday, Sept. 14, 2017 in Washington. The five-year, $500 million compact will help strengthen Nepal’s energy sector, improve regional energy connectivity and control transportation costs to encourage growth, private investment and job creation. (Photo by Steve Ruark for MCC)

The Government of Nepal and the MCC have worked together continuously since 2012 under multiple governments, representing all major political parties, to develop the compact program. The compact is expected to build electric transmission infrastructure and perform road maintenance activities and directly benefit 23 million Nepalese – more than 85 percent of its 30 million population.

The projects funded by the compact are priorities identified by Nepal during the nearly three years of project design to benefit the people of Nepal.

MCC has so far successfully partnered with nearly 30 countries worldwide on 37 grant agreements of several hundred million dollars, totaling $13 billion. These grants have helped lift millions of people from poverty by catalyzing investment and economic growth and have supported partner countries’ sovereignty, too.

Every country eligible for a second grant has requested one. MCC’s transparency as a development partner is also recognized globally, and this year MCC was once again ranked as the top bilateral donor in the Aid Transparency Index.

The United States and Nepal share a 73-year partnership working together in many sectors successfully and to the benefit of both countries. The Nepalese-led projects funded by the MCC compact support poverty reduction through economic growth.

One of the major hurdles within the ruling Nepal Communist Party (NCP) is a stiff internal opposition towards the MCC from the party’s hardliner far left groups, who identify themselves as being close to China.

“The day Nepal PM KP Sharma Oli becomes able either to convince or bypass the far left groups of his own party, the MCC project will be then in a decisive phase of implementation in Nepal,” said the sources.

“Amid the ongoing political fluidity, we may see the ruling NCP split into two parties, or a potential sale and purchase of the members of the parliament, or the ill attempts of foiling MCC just like the World Bank funded project of Arun III. But we can still be hopeful that all political forces of Nepal will come together to approve the MCC with a national consensus and disapprove politics on the matters of development and construction,” the sources further said.

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