Nepal’s Parliament started deliberations on the Millennium Challenge Corporation-Nepal Compact on Sunday after two key coalition partners in the Sher Bahadur Deuba government agreed to ratify the American grant agreement with an “interpretative declaration” attached.

Amid the main opposition CPN-UML’s obstructions, Speaker Agni Sapkota allowed lawmakers to start theoretical discussions on the compact.

Earlier on Sunday, the Communist Party of Nepal (Maoist Centre) and the CPN (Unified Socialist) decided to vote in favor of the grant agreement with the “interpretative declaration.”

The interpretative declaration will seek to clarify the provisions that the parties opposing the MCC compact have been saying are against the interest of the country. The declaration will be presented together as a supplementary proposal to the MCC compact in the House to be enforced together with the American grant agreement, according to leaders and legal experts involved in drafting of the declaration document.

The declaration will interpret that the MCC compact won’t be part of any military strategy of the United States government under the Indo-Pacific Strategy.

It will also specify that Nepal’s constitution would be above the MCC. Similarly, it will also have specific clarification that Nepal’s Office of the Auditor General will be the final agency to audit financial transactions made under the Millennium Challenge Account-Nepal.

It also has the provision that Nepal can terminate the MCC compact within 30 days if it finds it against the interest of the country. Ensuring that the ownership of the intellectual property produced during the MCC implementation belongs to Nepal is also another provision on it.

“The interpretative declaration has 14 points including the preamble,” a leader involved in its drafting told the Post on the condition of anonymity. “It will be endorsed together with the MCC compact.”

The interpretative declaration has basically included all those points that the Financial Ministry in September had sent to the MCC headquarters, which then had provided point-wise clarifications, including that the compact is not above the constitution of Nepal.

After the Maoist Centre agreed to compact ratification with the interpretative declaration, a meeting of the ruling coalition had decided to ratify the compact.

A late night meeting of some leaders of the Nepal Congress, Maoist Centre and CPN (Unified Socialist) on Saturday had worked on a draft of the “interpretative declaration”, which would mean the parties would attach their concerns regarding the compact.

The Maoist Centre and the Unified Socialist, two key partners in the current Sher Bahadur Deuba coalition government, were opposed to ratification of the compact without amendments to some of the provisions. Deuba then had started exploring options including seeking the main opposition CPN-UML’s support to ratify the compact. This, however, would have led to breakdown of the coalition, something the Maoist Centre and Unified Socialist desperately wanted to avoid.

Signed in September 2015, the MCC compact which is meant for building electricity transmission lines and improving roads in Nepal, was registered in Parliament in July 2019. However, the grant agreement had run into controversy with some political parties saying its implementation undermined Nepal’s sovereignty.

Under pressure from the United States following continued delays, the government on February 20 tabled the compact in Parliament even as the communist coalition partners opposed it.