As the political leadership in Nepal hems and haws over the pending parliamentary ratification of the Millennium Challenge Corporation Nepal Compact, a senior US State Department official has called for an early decision—and hinted that further delay could force Washington to divert the grant assistance to some other countries.

In an interaction with a section of Nepali journalists ahead of wrapping up his three-day Nepal visit, US Assistant Secretary of State Donald Lu said on Friday that it is up to Nepal to accept or reject the Millennium Challenge Corporation (MCC) grant while he urged the Nepali leadership to pursue a “democratic and consultative approach” to endorse the $500 million grant from Parliament.

“If Nepal does not take the grant, we will spend the money in some other country. And, it’s okay with us if Nepal does not endorse it,” said Lu. “[Whatever is the decision] it is the sovereign decision of Nepal. We have urged you to find out what you want to do with the MCC.”

He also hinted that the MCC is an independent institution and takes decisions independently, hence it would not wait for Nepal too long in case of continued delay in its ratification.

The sharp, strong and direct message from the senior US diplomat comes ahead of a meeting of the MCC Board that is going to discuss and review the progress made on the Nepal Compact Nepal in mid-December.

The MCC Board meeting is crucial because it could even terminate the contract with Nepal for failing to ratify the compact for more than two years.

The MCC Board meeting usually takes place every three months and the next meeting slated for mid-December is expected to discuss the status of MCC in Nepal.

Nepal and the US signed the $500 million grant assistance in 2017 to execute two infrastructure projects related to transmission lines and roads upgrade. The agreement was registered in Parliament in 2019. But it has been stuck for over two years, with political parties sharply divided over its parliamentary ratification.

Lu’s visit to Kathmandu comes a little over two months after Fatema Sumar, vice president of the Department of Compact Operations at the Millennium Challenge Corporation, made a trip in September and met with the top leadership in Nepal from across the political spectrum—Prime Minister Sher Bahadur Deuba; his predecessor KP Sharma Oli; Pushpa Kamal Dahal, chair of the Communist Party of Nepal (Maoist Centre) and government coalition partner; and Madhav Kumar Nepal, chair of the CPN (Unified Socialist), a breakaway faction of Oli’ CPN-UML.

Sumar also met with Baburam Bhattarai and Upendra Yadav, leaders of the Janata Samajbadi Party, also a coalition partner in the Deuba government.

During her meetings, Sumar also had pressed for early ratification of the MCC.

Lu, who arrived in Kathmandu on Wednesday, held talks with a host of leaders, including Prime Minister Deuba. He also met with Oli, Dahal, Foreign Minister Narayan Khadka and Home Minister Bal Krishna Khand.

Lu also dismissed reports that there is a deadline for the ratification.

“There is no specific deadline for its endorsement but we want the government, political parties and Parliament to discuss and debate the MCC as other democracies do,” said Lu. “We, however, are confident that Nepali political parties, government and parliament will endorse it.”

According to Lu, the United States does not set any deadline for the adoption of MCC grants.

“We have communicated [to the Nepali leadership] that they should take a consultative and democratic approach to reach a conclusion on the grant so that voices of all concerned can be accommodated,” said Lu.

The US official said that Washington is all for good relations with Nepal and wants to deepen its cooperation with Nepal in various fields.

“The United States wants to engage with Nepal since Nepal’s economic development, independence and sovereignty are important to us,” he said while stressing the need for Nepal to maintain good relations with India, China, Bangladesh, Pakistan and others.

The MCC has become a hotly debated topic in Nepal. While some political parties have raised concerns about some of the points in the agreement saying they undermine Nepal’s sovereignty, social media platforms and YouTube are awash with comments and opinions against the American grant.

While talking to journalists, the visiting US official appeared to be aware of different views on the MCC and expressed his concerns about ‘disinformation’ that has spread in Nepal. He, however, stopped short of saying anything in particular.

“The United States is concerned that there has been a lot of disinformation about the MCC in Nepal,” said Lu. “It’s quite surprising that disinformation has been rife about the grant.”

Lu said that the US government is providing the MCC grant assistance to a small number of countries that are democracies and open economies.

“And as per the request from the Nepal government, we decided to provide the grant assistance [to Nepal],” he said. “This is a great project where Nepal will be able to generate $143 million annually after its implementation. That will be a great opportunity for Nepal. I love to see Nepal using this grant. But when it comes to its endorsement, it is not our decision. It is the decision of the government of Nepal and Nepal’s Parliament.”

After the MCC became a controversial issue, the Ministry of Finance in the first week of September had written to the MCC headquarters, seeking answers to some of the concerns. The MCC headquarters had then responded that the agreement was not above Nepal’s constitution and that it is not part of the Indo-Pacific Strategy. The response came just ahead of Sumar’s visit to Nepal. Parties that are opposing the MCC’s endorsement in its current form have said some of the clauses must be amended.

Recently, Prime Minister Deuba said that he and Dahal, his coalition partner, have sent a letter to the MCC headquarters assuring the parliamentary ratification of the grant from Parliament. Dahal, however, was quick to counter the prime minister, saying that a letter has been sent but asking for more time, as some clauses need to be amended.

A US diplomat, however, told the Post that amendments to the MCC agreement are a rarity and not possible at all.

“We have been hearing from some quarters that Nepali parties will not endorse the MCC unless there are amendments,” said the diplomat who did not wish to be named. “We have not received what their reservations are. We have repeatedly sought to know what amendments they are looking for. But we have not heard any specific answer.”