<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221110141148/636d01db9c7e80680e0a364djpeg.jpg" alt="" width="1500" height="1000"/><figcaption></figcaption></figure>“Countries knock at our doors all the time for capital, as it is getting harder and harder to obtain development funds. We are holding $500 million for Nepal. We cannot wait forever. When will it be the right time for Nepal?”Fatema Z Sumar, Vice President of Compact Operations at the Millennium Challenge Corporation (MCC) appeared mystified about why a country like Nepal that needs all the help it can get to develop its infrastructure, should be so hesitant about the grant her government is offering.Sumar was on the final day of her <a href="https://www.nepalitimes.com/latest/mcc-row-rocks-nepals-ruling-coalition/" data-saferedirecturl="https://www.google.com/url?q=https://www.nepalitimes.com/latest/mcc-row-rocks-nepals-ruling-coalition/&amp;source=gmail&amp;ust=1631579093888000&amp;usg=AFQjCNHAfb7xioCyDtl5OJ53aqyeI5-LuA">four-day visit to Nepal</a> on Sunday, speaking at an engagement with opinion makers. There was a litany of questions from across the table, and Sumar sounded like someone who is getting somewhat jaded answering the same questions over and over again in Kathmandu.“No, the MCC is not part of the <a href="https://www.nepalitimes.com/editorial/between-two-oceans/" data-saferedirecturl="https://www.google.com/url?q=https://www.nepalitimes.com/editorial/between-two-oceans/&amp;source=gmail&amp;ust=1631579093888000&amp;usg=AFQjCNFfIGiI1YhN4TBrqt-_uVwcnhLEPg">Indo-Pacific Strategy</a> and there is no US Army involvement.”“This is a treaty between two countries and has gone through the Obama, the Trump and now the Biden administrations.”“In order to make this a treaty, the Nepal government wanted to ratify it through Parliament. So, we are waiting for that.”Sumar was a former assistant secretary for South and Central Asia at the US State Department before joining the MCC. Her family is Malaysian Indian, so she understands the region well, but she was hearing in Nepal some of the same political rhetoric that led to the Sri Lankans cancelling the MCC last year for being ‘against the national interest’.MCC makes three types of grants: compacts, threshold programs and concurrent compacts for regional investment. Nepal’s grant is a five-year compact agreement with the MCC that allows an eligible country to fund specific programs targeted at reducing poverty and stimulating economic growth.The concept of the MCC is to make US development assistance ‘smarter’, and to study a country’s bottlenecks so that catalytic investment can allow it to take an economic leap. A panel of Nepali and American experts concluded in 2017 that increasing hydropower transmission capacity and upgrading highways would be most cost-effective, at a time when the country was suffering 12-hour daily power cuts.When a country applies for a grant from the MCC, the board examines its performance based on 20 policy indicators, and selects based on policy performance. The MCC says its grants are given to country-driven and country-led investments and infrastructure priorities for achieving sustainable economic growth and poverty reduction, and Nepal qualified.<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221110141148/636d01df9c7e80680e0a364ejpeg.jpg" alt="" width="1500" height="998"><figcaption>MCC vice president Fatema Sumar (third from left) with Prime Minister Deuba on Saturday at Baluwatar. Photo: PMO</figcaption></figure>So far MCC has approved $13.7 billion in compacts and $631 million in threshold programs worldwide. After Sri Lanka pulled out, Nepal is the only South Asian country on the list of <a href="https://www.nepalitimes.com/editorial/a-millennium-challenge/" data-saferedirecturl="https://www.google.com/url?q=https://www.nepalitimes.com/editorial/a-millennium-challenge/&amp;source=gmail&amp;ust=1631579093888000&amp;usg=AFQjCNHcCgQFuOb2-re-ZURkglqZhwDvTg">MCC-approved compacts</a>.“The $500 million we are holding for Nepal is money not given to other countries which need to get out of poverty,” said Sumar’s colleague Jonathan A Brooks at the interaction. Although Brown said he had no idea where the confusion about the MCC having a military component comes from, a <a href="https://www.nepalitimes.com/editorial/knowing-whats-good-for-nepal/" data-saferedirecturl="https://www.google.com/url?q=https://www.nepalitimes.com/editorial/knowing-whats-good-for-nepal/&amp;source=gmail&amp;ust=1631579093888000&amp;usg=AFQjCNHV-jTWUQwTz4eLLTh_R5gdfjVGwQ">comment by US Under Secretary of State David J Ranz</a> in 2019 that the MCC was indeed a part of the US <a href="https://www.nepalitimes.com/editorial/between-two-oceans/" data-saferedirecturl="https://www.google.com/url?q=https://www.nepalitimes.com/editorial/between-two-oceans/&amp;source=gmail&amp;ust=1631579093888000&amp;usg=AFQjCNFfIGiI1YhN4TBrqt-_uVwcnhLEPg">Indo-Pacific Strategy</a> did a lot of self-inflicted damage.Sumar and Brooks fielded <a href="https://www.nepalitimes.com/latest/post-truth-politics-in-nepal/" data-saferedirecturl="https://www.google.com/url?q=https://www.nepalitimes.com/latest/post-truth-politics-in-nepal/&amp;source=gmail&amp;ust=1631579093888000&amp;usg=AFQjCNEL3a5V092kNi8iXts-zWiYBTZWOA">other questions</a> that had become familiar to them during their stay in Kathmandu with answers like: the agreement with Nepal prohibits army involvement, security issues are totally for Nepal government to oversee, the compact has no provisions that contradict Nepal’s laws, the project is not above Nepal’s Constitution, and international law would apply to resolve any disputes.A major chunk of the $500 million MCC grant will go to build the Kathmandu-Hetauda-Butwal 400KV transmission line to distribute 3,000MW which will come on stream in the next three years from new <a href="https://www.nepalitimes.com/opinion/decentralising-hydropower/" data-saferedirecturl="https://www.google.com/url?q=https://www.nepalitimes.com/opinion/decentralising-hydropower/&amp;source=gmail&amp;ust=1631579093888000&amp;usg=AFQjCNGKA68VJytSmPpVqeXiamgpi0kCgQ">hydropower plants</a>. The line will also connect to a high-capacity electricity corridor to Gorakhpur so Nepal can <a href="https://www.nepalitimes.com/latest/mcc-row-damages-nepals-credibility/" data-saferedirecturl="https://www.google.com/url?q=https://www.nepalitimes.com/latest/mcc-row-damages-nepals-credibility/&amp;source=gmail&amp;ust=1631579093888000&amp;usg=AFQjCNEoVnLVfqbE4et0DScH8cbve0ffag">sell surplus monsoon electricity</a> to India in future.This week, the Nepal Electricity Authority (NEA) signed an agreement with the state-run Power Grid Corporation of India (POWERGRID) for the Butwal-Gorakhpur cross border transmission line extension in anticipation of the MCC project being completed.Sumar has seen several changes in government after she started coming to Nepal for the MCC. Prime Minister Sher Bahadur Deuba and his predecessor K P Oli were both in favour of the MCC, but other Communist partners in the ruling coalition are against it.As a descendant of an immigrant family herself, Sumar says she understands that poverty is not insurmountable, and can be prevented with the right government investment at the right time. She calls herself a “development diplomat”, and feels that economic growth built on better infrastructure would also bring Nepal stability.“The MCC will create many thousands of jobs for Nepalis at a time when the pandemic is creating losses of jobs and livelihoods,” she says, adding that when President John F Kennedy launched a major global drive to help developing countries in the early 1960s, Nepal was one of the first countries to receive the support.The criteria Nepal fulfilled to receive the MCC grant was its democratic polity, guarantees of basic freedoms, and protection of human rights. Sumar underlined the fact that the MCC would also help Nepal put renewable energy infrastructure in place that could be an example for a world coming to terms with climate change.The MCC project has become a victim of <a href="https://www.nepalitimes.com/editorial/knowing-whats-good-for-nepal/" data-saferedirecturl="https://www.google.com/url?q=https://www.nepalitimes.com/editorial/knowing-whats-good-for-nepal/&amp;source=gmail&amp;ust=1631579093888000&amp;usg=AFQjCNHV-jTWUQwTz4eLLTh_R5gdfjVGwQ">extreme political polarisation</a> as opponents to K P Oli used the MCC to unseat him, and now it threatens to split the ruling coalition. The anti-MCC rhetoric had been so effective in convincing the cadre and public that it is anti-national, that even supporters in Deuba’s Nepali Congress, Oli’s UML and other public figures and intellectuals are afraid to speak in favour.Social media is full of posts that say Nepal will become ‘another Afghanistan’ if Parliament ratifies the MCC. But now that Sumar and her MCC team has left, the ball is back in the court of the political class in Kathmandu to ensure that <a href="https://www.nepalitimes.com/here-now/power-politics-delays-mcc-in-nepal/" data-saferedirecturl="https://www.google.com/url?q=https://www.nepalitimes.com/here-now/power-politics-delays-mcc-in-nepal/&amp;source=gmail&amp;ust=1631579093888000&amp;usg=AFQjCNHlQppZeGXNXQbC5_D2GZNFz2URgw">Nepal has the capacity</a> to distribute the electricity it generates in future.

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MCC ball in Nepal’s court

<figure><img width="1286" height="1500" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221110141148/636d015a9c7e80680e0a3624jpeg.jpg" alt=""/><figcaption>Vice president of US Mellennium Challenge Corporation (MCC) Fatema Z Sumar arrives in Kathmandu on Thursday.</figcaption></figure>Fatema Z Sumar, vice president of the US Millennium Challenge Corporation (MCC), parachuted into Kathmandu on Thursday amidst a <a href="https://www.nepalitimes.com/latest/mcc-damned-if-we-do-damned-if-we-dont/" target="_blank" rel="noopener noreferrer">firestorm of protest</a> against the project that threatens to divide Nepal’s coalition government.Together with her deputy Jonathan Brooks, Sumar over the next four days will be meeting Nepal’s top politicians who are for and against the <a href="https://www.nepalitimes.com/editorial/a-millennium-challenge/" target="_blank" rel="noopener noreferrer">$500 million grant project</a> designed to upgrade Nepal’s electricity grid and highways. The visit follows Sumar’s written response to concerns raised by Nepal’s Finance Ministry on 3 September regarding the grant. The main objective of the MCC is a 315km transmission line between Hetauda-Damauli-Butwal, important for the distribution of the 3,000MW of electricity that will be added to Nepal’s national grid in the next three years. <a href="https://www.nepalitimes.com/from-the-nepali-press/why-there-is-no-foreign-investment-in-nepal/" target="_blank" rel="noopener noreferrer">Why there is no foreign investment in Nepal</a> , Nepali Times <img width="512" height="461" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221110141148/636d015d9c7e80680e0a3625jpeg.jpg" alt="">The discourse surrounding the MCC has been influenced by geopolitical rivalries between India and China on the one hand and between the US and China on the other, with Nepal’s political parties <a href="https://www.nepalitimes.com/editorial/knowing-whats-good-for-nepal/" target="_blank" rel="noopener noreferrer">weaponising the project</a> to undermine each other.Indeed, support for the MCC by K P Oli was one of the issues raised by the five-party alliance that led to his ouster in July, after which <a href="https://www.nepalitimes.com/latest/deuba-5/" target="_blank" rel="noopener noreferrer">Deuba took over as prime minister</a>.Two months later, <a href="https://www.nepalitimes.com/latest/what-is-delaying-nepal-cabinet-expansion/" target="_blank" rel="noopener noreferrer">Deuba is yet to complete government formation</a>,  and support and opposition to the MCC is now threatening to undermine his governing alliance. The MCC is such a political hot potato that it was not even listed in the coalition’s common minimum program last month despite Prime Minister Deuba being for it.However, critics including his main coalition partner Pushpa Kamal Dahal of the Maoists and Madhav Kumar Nepal of the Communist Party of Nepal (United Socialist) view the project as part of America’s Indo-Pacific Strategy, and superseding Nepal’s Constitution.Sumar’s letter attempted to assuage both of these concerns, saying that the MCC is neither a part of America’s Indo-Pacific Strategy, nor is it not above Nepal’s Constitution. However, the response added that the points previously agreed upon would not be subject to amendments, which did little to quell the growing protest, including street demonstrations. The delegation led by Vice President Samar met with opposition leader K P Sharma Oli on Thursday afternoon to discuss the project, and is also set to meet with Prime Minister Sher Bahadur Deuba, Finance Minister Janardan Sharma and Energy Minister Pampha Bhusal (both Maoists). <figure><img width="1800" height="1200" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221110141148/636d01609c7e80680e0a3626jpeg.jpg" alt=""><figcaption>The delegation led by Sumar met with opposition leader K P Sharma Oli on Thursday afternoon. </figcaption></figure>The MCC compact has clauses requiring that it be ratified by Nepal’s Parliament, and that the project be completed five years after the work officially commences. Nepal had committed to ratifying the MCC in Parliament by September 2019, but the <a href="https://www.nepalitimes.com/editorial/just-do-it/" target="_blank" rel="noopener noreferrer">process has been deadlocked</a> by the feud in the ruling Communist Party of Nepal while Oli was prime minister.Lok Raj Baral, Nepal’s former ambassador to India, says that there has been unnecessary over-politicisation of the issue that has harmed Nepal’s international credibility."The opposition to the MCC seems to have been led by those in power who were also trying to stop the Arun III hydropower project," says Baral. “That the opinions of individual leaders dominate the discourse over official party decisions speaks to the selfishness of Nepal’s political leadership.”Former Prime Minister Oli backed the MCC after he took over from Deuba in 2017, but his main party rival Pushpa Kamal Dahal and dissidents from his own UML used provisions in the MCC that they saw as being anti-national <a href="https://www.nepalitimes.com/banner/own-goal/" target="_blank" rel="noopener noreferrer">against Oli</a>.  <figure><img width="1800" height="1121" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221110141148/636d01639c7e80680e0a3627jpeg.jpg" alt=""><figcaption></figcaption></figure>Now, with Deuba being Prime Minister once again, the debate surrounding the MCC is likely to put a strain on his ruling coalition, made up of Dahal’s Maoist Centre and Madhav Kumar Nepal’s breakaway CPN (United Socialist) which are opposed to the project.On the other hand, the Nepali Congress and another coalition partner Janata Samajbadi Party (JSP)  seem open to ratifying the agreement in Parliament, but they do not have enough numbers in the House for it to be successful. Deuba has been sending feelers to the opposition UML to see if it will back the ratification in Parliament. For his part, Pushpa Kamal Dahal has been saying that the MCC is a conspiracy to break the ruling alliance. However, experts see Dahal’s position on the MCC as being inconsistent and opportunistic. He went along with the project, and then <a href="https://www.nepalitimes.com/here-now/power-politics-delays-mcc-in-nepal/" target="_blank" rel="noopener noreferrer">weaponised it during his power struggle </a>with Oli."It should not come as a surprise to anyone if the ruling coalition collapses because of the MCC,” says political analyst Punaranjan Acharya, who adds that it is not Prime Minister’s Deuba’s intention to go against the agreement, but  that of the “so-called” communist parties in Deuba’s alliance. "The prime minister has tried to be transparent regarding the matter,” says Acharya. “The problem is with the double-dealing leaders of the coalition partners.”Former speaker Krishna Bahadur Mahara, who resigned from his position in 2019 following allegations of rape, said last year in a statement that he had been falsely accused for opposing the MCC. His successor Agni Prasad Sapkota has also blocked the MCC Compact for discussion on the House floor.Rastriya Janamorcha Party Chairman Chitra Bahadur KC, who is a member of Deuba’s coalition, says that the MCC will not be allowed to reach Parliament, and will not be ratified in the event it is presented before the House. “We continue to oppose the MCC, which is not even included in the coalition’s Common Minimum Program,” says KC.Constitutional expert Bipin Adhikari says it would be ironic if the MCC is not allowed to be presented before the people’s representatives in the House because of the political self-interest of the Speaker and other powerful political leaders.Other analysts insist that the political process surrounding the MCC should be moved forward in a way that the project is ratified in the House without breaking the coalition and without the party whip being applied.Read also: <a href="https://www.nepalitimes.com/latest/using-the-delay-in-mcc-to-dissect-it/">Putting the MCC in context</a>, Jeevan R Sharma and David Seddon

MCC row rocks Nepal’s ruling coalition

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MCC ball in Nepal’s court

MCC row rocks Nepal’s ruling coalition