Maoists backpedal on MCC letter

Pushpa Kamal Dahal usually gets favourable coverage in Nepal’s mainstream media. Which is why he must have been shocked when he woke up on Monday morning to banner headlines ridiculing what is seen as his duplicity in the US-supported MCC project.

He must have had an inkling of it after Nepal’s cybersphere exploded after the leak over the weekend of the letter he co-signed with Prime Minister Sher Bahadur Deuba on 29 September 2021 asking the MCC for some more time to build a consensus in his coalition for the project.

Publicly, Dahal has been a vocal opponent of the project, calling for amendments to clauses he deems to be an affront to Nepal’s sovereignty.  

Even sites that have been sympathetic to the Maoists were compelled to expose what they saw as his kow-towing to the Americans. Some posted photo-shopped images of Dahal with two tongues, while cartoonists had a field-day.

It is not clear who leaked the letter, but Dahal has broadly hinted that he suspects it came from the prime minister’s office. Deuba himself called a tripartite meeting with Dahal and K P Oli of the main opposition UML on Sunday to sort things out.

Deuba, who has been fully backing the $500 million MCC (Millennium Challenge Corporation) project, seems now to have Dahal exactly where he wants him. Dahal used K P Oli’s support for the MCC to mastermind his ouster as prime minister in a party mutiny last year.

But Oli is now playing coy, and himself using the MCC as a battering ram to try to break the ruling coalition ahead of elections to three levels of government this year. He has come out strongly against Dahal’s conduct.

There are already hints of friction within the coalition. Madhav Kumar Nepal of the CPN (Unified Socialists) who broke away from Oli’s UML and now a staunch Dahal ally, was not invited to the Baluwatar meeting on Sunday.

The UML’s Shankar Pokhrel said Dahal tried to defend himself at the meeting with the prime minister and Oli, saying he never signed the letter. Others in the Maoist party had been posting in social media saying the signature in the letter is forged.

Dahal’s daughter Ganga Dahal tweeted a statement from the Maoist party that staunchly defended Dahal: ‘The letter was a diplomatic exercise to protect the national interest, and it has been bent out of context. We are clear that this project cannot go ahead without amendments.’

However, the MCC's top officials have ruled out any more amendments, and have laid out a final deadline of 28 February for the project to be ratified by Nepal’s Parliament as required by the contract. This is the reason Prime Minister Deuba is also in a hurry to cobble together the numbers in the House for ratification before then'.

Deuba, however, faces a hurdle because House Speaker Agni Sapkota is a staunch Dahal confidante and has used the UML’s obstruction of Parliament as an excuse to postpone house sittings. Parliament was supposed to have a session on 30 December, but Sapkota put it off by ten days.

The reason Deuba needs Oli in the picture is for him to remove his six-month long obstruction of Parliament over Sapkota not disallowing dissident members of the Nepal faction from the House. But it is clear Oli wants his pound of flesh.

Deuba’s Nepali Congress by itself does not have the numbers in the House to pass the MCC, and will need either the Maoist Centre and the Unified Socialists, or the UML to pass it. If Dahal and Nepal refuse to go along, and the UML backs the NC, then the coalition is as good as collapsed.

It is clear that Dahal cannot now backtrack from his opposition to the MCC even though his party was in a coalition government in 2017 with Prime Minister Deuba during a previous tenure when the MCC was signed.

Nepal was selected for the MCC’s ‘threshold program’ when former Maoist ideologue Baburam Bhattarai was prime minister in 2014. Bhattarai is now with the Janata Samajbadi Party (JSP) and is publicly in support of the MCC.

In a scathing tweet against his former comrade-in-arms on Sunday after Dahal’s signature in the letter became public, Bhattarai noted: ‘Anti-national inside, and nationalist outside ... Nepal will never develop as long as politics is not free of such absurd two-tongued characters.’

There is a geopolitical dimension also to the MCC. The project to upgrade Nepal’s electricity transmission lines does not just threaten to split Nepal’s governing coalition, but Nepal’s politicians are also under pressure from the Americans to back the MCC and the Chinese who have intensified their lobbying with the political leadership.

China’s Ambassador to Nepal Hou Yanqi has been actively meeting coalition leaders in recent months to lobby against the MCC, including with the UML’s K P Oli. The head of the International Department of the Communist Party of China (CPC) Song Tao also held a one hour Zoom talk with Dahal of the Maoists Centre last week.

Chinese official media as well as posts on the Weibo platform have been openly attacking American interference in Nepali politics to push the project through. China sees the MCC as being America’s response to its own Belt Road Initiative (BRI), and as Sino-US relations worsen, Nepal and the MCC have been caught in the middle.

With elections approaching, the MCC has also become a factor in Nepal’s domestic politics as well. Deuba finally convinced Dahal and Nepal last month to lift their opposition to holding local elections in May after assuring them that the governing alliance would be intact. But the coalition is not expected to survive if the MCC is put to a vote in the House.

The Americans are putting up a $500 million grant for the project to upgrade transmission lines and highways in Nepal five years after ratification, while Nepal has committed $130 million.

One component of the MCC will upgrade Nepal’s electricity network with a 400kVA transmission line that can also increase export power surplus to India. Nepal’s generation capacity is expected to rise four-fold to 5,000MW by 2025.

Another component of the project is to improve highways in Central Nepal to boost economic growth.