Exaggerated concernsThere is no such thing as a free lunch, but the positives of the MCC Compact cannot be underplayed and ignored.
The past month hasn’t been kind to KP Oli. Among the many things the prime minister has been lambasted for, the worst ones were probably failing to ramp up preparedness during a strict nationwide lockdown, essentially leaving many Nepalis abroad in dire conditions while allowing Covid-19 to still spread domestically and using the cover of a pandemic to attempt a bold, thuggish and anti-democratic political move. Oli admitted at least some of his failings during a three-hour session in Parliament on May 19, although he also attempted to make excuses and deflect blame. Yet, with all his failures and half-truths, the one thing Oli got right in his responses to questions in the Lower House on Tuesday was that the Millenium Challenge Corporation Compact must be presented before Parliament. Moreover, he clearly is in favour of implementing the Compact, even though it was not his government that signed the agreement.
For many months now, the question of ratifying the MCC Compact has been delayed. In fact, after many delays, it was expected to pass during Parliament’s legislative session in late 2019. However, after some vocal opposition from ruling party lawmakers, the government was unable to bring the Compact forward for endorsement. Now, as the Budget session goes forward, Nepal cannot afford to continue delaying this important pact. There are bigger issues to handle, such as the government’s other policies and programmes for the upcoming year and the much-needed responses to the economic shock the pandemic is sure to bring. Ruling party leaders must not waste any more time during this crucial period to unnecessarily draw out the implementation of this important agreement.
The problems with the MCC Compact have been frequently discussed. But as with any other programme that affects a country, unbiased analysis of the negatives, positives and alternatives is imperative. The fund in question is the largest single contribution ever offered to Nepal, adding up to $500 million. Unlike most other forms of foreign assistance, it is purely grant-based. And, in contrast to many strategic government-to-government deals, the Millenium Challenge Corporation only funds low-income countries that have passed crucial independent indicators. Moreover, the projects Nepal and MCC agreed upon were designed after consultations with civil society and the private sector.
There is also no doubt that the projects designated under the MCC will have positive outcomes overall. At present, Nepal’s highest-capacity cross-border transmission line is charged at 220kV. After the projects in question are completed, Nepal will have transmission lines that can be charged at 400kV. To achieve sustainable growth, benefit from Nepal’s electricity potential, and to increase energy consumption while reducing the country’s reliance on imported fuel, such high-capacity transmission lines are necessary.
In fact, the Oli-government has already decided to start work on the Lapsiphedi-Ratmate-Hetauda and Lapsiphedi-Ratmate-Damauli-Butwal transmission projects, with or without the MCC grant. Forgetting the long term gains of such projects, which will surely give the country a much-needed boost, this will also create jobs and additional investment in the short term—something Nepal sorely needs to accommodate the increasing number of unemployed during the global pandemic-induced economic crisis. It would be foolish for Nepal to undertake the project on money it doesn’t have while ignoring such a large grant.
Seen in a vacuum, the MCC belonging to the US’s Indo-Pacific Strategy may induce some apprehension. Yet, at a time when China and India have moved forward at strengthening bilateral ties at the expense of Nepal’s claims over Lipu Lekh, the Compact’s detractors have to understand that there are absolutely no free lunches—no matter where they come from. Even as China’s Belt and Road Initiative backed Nepal-Tibet railway seems to be far away from practical consideration, the Compact’s projects are ready to be implemented. The time for debate is over; Nepal must move forward towards development.