The Millennium Challenge Corporation’s Nepal Compact will be ratified through Parliament despite reservations from some of the ruling party leaders, according to both government officials and senior leaders within the Nepal Communist Party (NCP).

As the KP Sharma Oli administration readies to ratify the US programme, some members of the ruling party continue to express deep reservations, arguing the grant is part of a larger strategy to counter the country’s northern neighbour.

The leaders, who have been seen as critical of the government, say they are concerned over the corporation’s ties to the Indo-Pacific Strategy and the potential geopolitical fallout of being part of a strategy, which they widely believe is targeted at countering China.

The ongoing Standing Committee meeting of the ruling party on Wednesday saw a heated debate over whether the Millennium Challenge Corporation, or MCC, was part of the US Indo-Pacific Strategy. Senior leaders, including Bhim Rawal, Dev Gurung, and Minister for Tourism and Civil Aviation Yogesh Bhattarai, have urged the government to modify the compact and not approve it via Parliament if the MCC is the part of the Indo-Pacific Strategy.

“We have never said that we should not take US assistance or that we have to damage our relations with the US,” Rawal said, according to a copy of the statement seen by the Post. “But our constitution does not allow us to join in any military alliance.”

Rawal has insisted that Nepal needs to first ensure that the MCC is not part of the Indo-Pacific Strategy and make necessary amendments to the compact signed with the MCC before accepting any assistance. The MCC, which is a bilateral foreign aid agency of the United States, will provide $500 million in grants to Nepal in support of certain predetermined infrastructure projects once the compact is ratified by Parliament.

On Wednesday, responding to the Standing Committee’s concerns, Foreign Minister Pradeep Gyawali categorically stated that the MCC was not a part of the Indo-Pacific Strategy since the corporation was formed before the advent of the strategy.

“The MCC was announced by US President [George W] Bush in 2002 and since 2008, Nepal has taken initiatives to become a part of it. We finally became eligible in 2011 and we signed an agreement in 2016,” said Gyawali. “The US forwarded the concept of the Indo-Pacific Strategy in 2017.”

However, two senior US officials who visited Nepal last year have clearly stated that the MCC is very much a part of the Indo-Pacific Strategy.

During his Nepal visit in May, Acting Deputy Assistant Secretary of State for South Asia David J Ranz said the MCC was one of the most important initiatives being implemented in Nepal under the Indo-Pacific Strategy. When combined with the government’s contribution of $130 million, this will be a truly transformative project for Nepalis, Ranz had said.

Countering Ranz’s statement, on June 2, Gyawali told reporters that the MCC and the Indo-Pacific Strategy were two different approaches and there was no need to link them.

Again, earlier this month, Assistant Secretary of Defense for Indo-Pacific Security Affairs Randy Schriver told reporters in Kathmandu that the MCC is a part of the Indo-Pacific Strategy based on shared values and principles.

According to Narayan Kaji Shrestha, spokesperson for the ruling party, there wouldn’t be much of an issue if the US officials had not countered Gyawali’s assertions, but that such opposition would not stop the MCC.

“The state’s foreign policy and the opinions of some are two different things. The MCC will not be halted just because some people have opposed it,” Shrestha told the Post. “People either oppose it because they know more than they need to or they know nothing.”

Minister for Communication Gokul Baskota announced on Thursday that the MCC will be ratified in the upcoming sessions of Parliament.

The primary opposition Nepali Congress is also in favour of the MCC and has been asking the government to approve the MCC at the very first sessions of the House.

“We negotiated for the MCC for a long time with the US. Several finance ministers were involved in the negotiation process. The projects under the MCC are designed and selected by the US,” said Ram Sharan Mahat, a senior Nepali Congress leader and former finance minister. “Some people want to become close to China so they are opposing it but when it comes to the economic development of the country, there is no need to be worried.”

While Nepali leaders continue to debate over the MCC, the Cabinet of Ministers in Sri Lanka announced on Thursday that the signing of the compact will be temporarily suspended until a committee conducts a study on the controversy. The compact had been approved for signing in October, but before the election of a new government last month.