An American grant that has been a divisive force in Nepal is becoming such a charged-up issue that there are concerns if it could even have an impact on the current coalition government of five parties led by the Nepali Congress.

At an all-party meeting called by Prime Minister Sher Bahadur Deuba on Sunday, which was skipped by the main opposition CPN-UML, a majority of partners had but one position—the Millennium Challenge Corporation-Nepal Compact should not be endorsed from Parliament unless there is a consensus among all.

Deuba appears to be firm on his position to table the Millennium Challenge Corporation (MCC), under which Nepal will receive $500 million in grant from the United States, in the ongoing session of Parliament.

His coalition partners—the Communist Party of Nepal (Maoist Centre), CPN (Unified Socialist), Janata Samajbadi Party and Rastriya Janamorcha—however, are opposed to it.

The coalition partners have been saying some clauses of the agreement undermine Nepal’s sovereignty and that it cannot be endorsed in its current form.

Many within the ruling coalition suspect if the prime minister is bent on bulldozing the grant through Parliament and they warn that it could have ramifications.

Some leaders present at Sunday’s meeting said Deuba presented him in such a way that he could push the MCC even at the cost of the coalition.

“Deuba appeared to be in a position that he would table the MCC,” said a leader present at the meeting. “The way the prime minister spoke at today’s meeting to endorse it, it gives rise to doubts if he is even ready to break the existing coalition.”

Tabling the MCC-Nepal Compact in the House is on Deuba’s agenda, as he is clearly in favour of accepting the US grant.

Signed in September 2017, the MCC agreement was registered in Parliament in July 2019. But since it has become a highly controversial issue in Nepal, it remains stuck in the House.

“We have decided to hold yet another discussion with the parties, as they expressed their suspicions,” Gyanendra Bahadur Karki, minister for information and communication technology and government spokesperson, told reporters after the meeting at Baluwatar.

During the meeting, Pushpa Kamal Dahal and Narayan Kaji Shrestha of the Maoist Centre; Madhav Nepal, Jhala Nath Khanal and Beduram Bhusal of the CPN (Unified Socialist); Upendra Yadav and Baburam Bhattarai of the Janata Samajbadi Party; Mahantha Thakur of the Loktantrik Samajbadi Party; Manoj Bhatta of Rastriya Janamorcha; Bishnu Bahadur Tamang of the Rastriya Prajatantra Party; and Prem Suwal of Nepal Majdoor Kisan Party were present.

From the ruling Nepali Congress, party vice president Purna Bahadur Khadka, General Secretary Gagan Thapa and senior leader Ram Sharan Mahat were present, besides Prime Minister Deuba.

Deuba called the all-party meeting on Sunday days after he was reelected president of the Congress party.

Since Deuba was the prime minister when the MCC was signed in September 2017, he is bent on getting the compact through Parliament. When the MCC was signed, the then government led by Deuba was backed by Dahal’s Maoist Centre.

But the Maoist Centre lately has stood against the MCC. So has the CPN (Unified Socialist) led by Madhav Kumar Nepal. Both Dahal and Nepal are communist leaders who once were part of the Nepal Communist Party (NCP) that was formed in May 2018 after a merger between the UML and the Maoist Centre.

The NCP was invalidated in March this year by the Supreme Court, whose order reinstated the UML and the Maoist Centre to their pre-merger states. Madhav Nepal formed his party in August this year after splitting from the UML.

The UML, which was open to endorsing the MCC from Parliament as long as its chair KP Sharma Oli was in power until mid-July, now has changed its stance.

It has said it has no position on the US grant right now as it is in the opposition.

Before Sunday’s meeting, according to party insiders, the Maoist Centre told the prime minister that the government should “wait for some time” before tabling the MCC in Parliament.

“Our stance has not changed ever since the then Nepal Communist Party made its stance clear by forming a task force,” said Ramesh Malla, chief personal secretary to Pushpa Kamal Dahal, the chair of the Maoist Centre. “The government may hold discussions with the main opposition as well before calling yet another all-party meeting.”

After the MCC became a hotly debated issue, the then NCP had formed a task force to study the US grant. The task force, led by Jhala Nath Khanal, had presented a report to the party leadership, saying there were some issues and that revisions were needed to some clauses before it could be passed from Parliament.

With the main opposition refusing to attend Sunday’s all-party meeting, it turned out to be a dud.

The UML said it did not attend the meeting because there was no point in being there as “it was just a formality”.

With such divergent views over the MCC, concerns have grown if the ruling alliance could break over the American grant.

Chitra Bahadur KC, chair of the Rastriya Janamorcha, has publicly said that his party will pull out of the ruling coalition if the government attempts to move the MCC forward in Parliament.

“The MCC is not going to get through the House. If elections were not on the cards, it could have been passed by the ruling Congress,” KC told the Post. “The Congress just wants to show that it has been trying to push the MCC.

During the meeting of the coalition partners, except Baburam Bhattarai, federal council chair of the Janata Samajbadi Party, and Mahantha Thakur, chair of the Loktantrik Samajbadi Party, all other parties including Rastriya Prajatantra Party said that the MCC should not be endorsed in its present form.

Though Janata Samajbadi Party chair Yadav has been publicly saying the MCC cannot be endorsed in its existing form, he did not speak during the meeting, according to the leaders present.

A leader who attended the meeting said that Deuba and Dahal have reached a tentative agreement to take a decision on the MCC only after the Maoist Centre’s upcoming national conference, which is scheduled to take place in Kathmandu on December 26-28.

Analysts say the American grant, which has become such a divisive issue in Nepal, is now threatening the ruling alliance.

“I don't think Deuba will dare to move the MCC ahead. There are two consequences. Tabling the MCC could break the coalition. If tabled, it could fail in the House as well,” said Lokraj Baral, a professor of political science at the Tribhuvan University.

The debate on the US grant is taking place in Nepal hot on the heels of a meeting of the MCC Board of Directors in Washington on December 14.

“MCC Board of Directors received an update and discussed the progress to date of the $500 million Nepal Compact,” the MCC headquarters said in a statement on Saturday. “The Board of Directors made note of the commitment by the government of Nepal to seek to ratify the compact in the near term.”

According to Baral, Deuba at this point of time can do nothing but communicate to the Americans that he has been trying his best to move the MCC forward.

If the UML, which has 97 seats in Parliament, extends support to Deuba, the MCC could be easily moved forward. But the party has changed its stance ever since it was sent to the other side of the aisle in Parliament.

“Our official stance now is that the MCC cannot be endorsed in its existing form,” said Bishal Bhattarai, chief whip of the UML. “Despite their meetings, the coalition partners have failed to come up with a common stance. That’s their problem. We are clear on our position.”

Hari Roka, a political commentator, said the possibility of the ruling alliance getting apart cannot be ruled out given their own stances and views on the MCC.

“The presence of Ram Sharan Mahat and Gagan Thapa, who are pressing for the MCC’s endorsement, in today’s all-party meeting shows the extent of pressure the prime minister is facing,” said Roka. “A simple majority can endorse the MCC, and the Congress and the UML have that. But given the controversy surrounding it, they too are afraid that they could rally behind it, as it may have an impact on their poll prospects.”