After a rollercoaster of political manoeuvring, the House of Representatives on Sunday ratified the Millennium Challenge Corporation (MCC) Compact, a $500 million American grant package to develop Nepal’s energy and transport infrastructure. Two significant constituents in the five-party governing alliance, the CPN (Maoist Centre) and CPN (United Socialist), agreed to vote in favour of the Compact only after a face-saving measure of attaching an "interpretative declaration" was agreed upon late Saturday evening.

Although it is unquestionably a significant achievement for the Compact to get through the parliamentary process, this has exposed a number of political and geopolitical vulnerabilities that Nepal has never experienced before. First, the debate seemed to temporarily sway national opinion to untoward ends due to the "nationalistic demagogy" orchestrated mainly by the communist forces of the country. But, ultimately, rationality prevailed among them. Second, the Chinese strategy to "utilise" the Nepali communist "brethren" to curtail all forms of American engagements in Nepal was tangibly felt. Third, the fleeting and utilitarian approaches of the democratic world in dealing with Nepal went through a fresh litmus test. It only underlined the imperative of consolidating democracy and governance to avoid similar eventualities in the future. And fourth, Nepal’s traditional foreign policy regime warranted a thorough shake-up to present a unified national voice on such issues and deal with the new strategic ambition of emerging superpowers like China in the immediate neighbourhood of Nepal.

Astute dealmaker

Politically, it is a significant gain for Prime Minister Sher Bahadur Deuba, who turned out to be a very astute dealmaker by bringing Maoist Chairman Pushpa Kamal Dahal and United Socialist President Madhav Kumar Nepal into the fold. He saved the fragile governing coalition from the brink of falling apart. In the instance of the collapse of the coalition, KP Oli, president of the main opposition party CPN-UML, had reportedly assured Prime Minister Deuba of "rescuing" the MCC deal, which compelled the Maoists and Socialists to capitulate.

But the uneasy political scenes marred the process till the point of voting. When leaders of both the Maoist and United Socialist parties were voting in favour of the MCC, their cadres were violently protesting in the vicinity of the Parliament building. Both Dahal and Nepal knew that the 12-point interpretive declaration read out in Parliament putatively to salvage the Compact, in essence, does not constitute even an addendum to the pact, and thus, is only a political stunt. But they needed it to calm down their own cadres, whom they had instigated to protest against the deal for so long, particularly since it was tabled in Parliament last September.

Diplomatically, the ratification of the MCC is under the long shadow of a nagging question of why this grant of a substantial size relative to the Nepali economy, in the first place, had to face such stiff resistance. One of the critical reasons is that China, like never before in history, chose to directly meddle in Nepal’s decision-making process to strategically push the United States to the sidelines in the regional geopolitical sphere.

After alleging that the US had adopted "coercive diplomacy" on Nepal to urge it to adopt the MCC, the tone of Chinese Foreign Ministry spokesperson Hua Chunying at last Wednesday's press briefing in Beijing was undiplomatic and straight away challenging, to say the least. “How could an ultimatum send a ‘gift’? How could people accept such a ‘gift’? Is it a ‘gift or Pandora’s box?’ Is it afraid that just as the old Nepali saying goes, it looks delicious, but it’s actually a meat tough to chew,” she asked.

To Chinese advantage, the Beijing establishment has found cosy bedfellows in the CPN (Maoist) and the CPN (Socialist), among other nondescript communist outfits of Nepal. It is important to note that almost all the political parties protesting against the MCC were primarily leftists. The extent of Chinese engagement was intensive. Song Tao, Minister of the International Liaison Department of the Central Committee of the Communist Party of China, held virtual meetings last week with UML President KP Oli and CPN (Socialist) President Madhav Kumar Nepal. Earlier, high-level Chinese officials had held similar meetings with Maoist Chairman Pushpa Kamal Dahal. These are perhaps only a few among the many meetings Nepali leaders often hold clandestinely with Chinese bigwigs, which come to public notice only when the highly-regulated Chinese state-owned media discloses them.

The anti-MCC narratives created and the people involved in them also clearly indicate the extent of Chinese penetration into Nepali decision-making. The former chief secretary of the government of Nepal and former Nepali ambassador to Beijing, Lila Mani Paudyal, publicly declared that the US government would have the power to even change Nepal’s finance secretary if the MCC got ratified. He was later forced to come out with a statement apologising for his allegation that those who defended the MCC were paid, agents. The protest leader was hyperbolic in hypothesising how American forces would land after the MCC is implemented and how womenfolk would be unsafe in their hands. Interestingly, the former prime ministers, who had helped to further process and implement the Compact during their tenure, led the communist parties that now opposed the MCC.

The democratic partners of Nepal, mainly neighbouring India and the US, are no less responsible for creating space for China. They often looked at Nepal through their strategic interests instead of institutionalising democracy. CP Thakur, who once served in a leadership position in the Indian intelligence agency, Research and Analysis Wing, has written in his book R&AW and Civil Intelligence: A Factful Analysis (2018: page 9): “Armed insurrections were sponsored and abetted by RAW. In fact, under the garb of the so-called democratisation measures, the Maoists were actively encouraged to collect arms from resorting to open rebellion against the legitimate Nepali governments. The contrived rebellions provided India with an opportunity to intervene militarily in Nepal, ostensibly to control the insurrections which were masterminded by the RAW itself.” The irony is that the same Maoists once India thought to have "utilised" are now seen dancing to a Chinese tune.

Foreign policy

The Maoists, in particular, now feel that they are being ignored by the democratic world even after having joined mainstream politics based on adult franchise. Then the Chinese Communist Party became the only obvious wall to lean on. These policies of disengagement and only calculative strategic utilisation of the democratic countries have not helped consolidate Nepal’s hard-earned democracy. A weaker and often fledgling democracy means a larger playground for a more aggressive authoritarian communist ideology, particularly in Nepal’s current scenario.

Regarding the conduct of foreign policy, the irrationality surrounding the MCC debate is a fundamental cause for concern for Nepal in evolving a consensual foreign policy regime that puts national interest above severely polarised interest. Will Nepal move forward with an independent foreign policy if Chinese meddling in Nepali politics continues, and possibly, intensifies? Will Nepal’s democracy survive if China persistently forces Nepal to isolate herself from the rest of the democratic world practically? These are difficult questions that remain unanswered even though the MCC has been ratified.