Deuba backtracks on MCC compact tabling after Maoist warning to quit government: Police, protesters clash in Baneshwar

The prime minister makes a turnabout despite saying a day before he had spoken with Speaker on moving the US grant in Parliament. 

Kathmandu Post, February 16, 2022 , Kathmandu : The government has backtracked on its Tuesday’s announcement to table the Millennium Challenge Corporation-Nepal Compact in Parliament.

Prime Minister Sher Bahadur Deuba agreed not to table the MCC compact after the Communist Party of Nepal (Maoist Centre) threatened to quit the government if it is tabled without amendments.

This makes Prime Minister Deuba do a volte-face as he had publicly said on Tuesday that he had even spoken with Speaker Agni Sapkota for the tabling of the $500 million US grant agreement at Wednesday’s House meeting.

“Prime Minister Deuba and Maoist chair Dahal reached an understanding not to table MCC in the House and decided to call a meeting of top leaders of the ruling party at 3pm on Thursday,” said a member from Dahal’s secretariat.

The government decision not to table the MCC compact followed an agreement between Deuba and Maoist chair Pushpa Kamal Dahal during a meeting on Wednesday morning.

After attending a meeting of the Parliamentary Party, which decided to stand against the MCC compact tabling, Dahal had reached Baluwatar to hold talks with Deuba.

“The MCC compact will not be tabled today. The meeting between the prime minister and Maoist chair reached an agreement to this effect. The meeting of the ruling alliance called for Thursday will take a decision on the matter,” Pushpa Bhusal, the Nepali Congress whip and a member of the Business Advisory CommitteeCommittee, told the Post. “The next House meeting could be held on Friday.”

The Maoist Parliamentary Party also decided to pull out of the coalition if the government moved ahead with its plan to table the compact without amendments to some of its provisions. Following the decision of the two leaders, the Business Advisory Committee (BAC) also decided not to table the MCC compact Wednesday.

The meeting was sharply divided over whether to include the MCC compact as an agenda for Wednesday’s House meeting.

While the representatives from the Nepali Congress demanded that it must be tabled at Wednesday's meeting, those from the Communist Party of Nepal (Maoist Centre) and CPN (Unified Socialist) stood against it. The main opposition UML, which has decided to continue House obstructions, had boycotted the meeting.

“There was a division among representatives from different parties,” Rekha Sharma, a lawmaker from the Maoist Centre in the Business Advisory Committee, told the Post. “With a deal between the two top leaders, there was an agreement not to table the compact today. The Speaker also said there has to be a consensus among the parties before its tabling.” 

Ref; Whats in MCC:

Millennium Challenge Corporation (MCC)

The Millennium Challenge Corporation (MCC) is an innovative and independent U.S. foreign aid agency that is helping developing countries to fight against poverty through economic development. It is created by the U.S. Congress in January 2004 with strong bipartisan support, MCC is changing the conversation on how best to deliver smart U.S. foreign assistance by focusing on good policies, country ownership, and results. MCC forms partnerships with some of the world’s poorest countries, but only those committed to good governance, economic freedom and investments in their citizens.

MCC provides funds to well-performing countries with large-scale grants to fund country-led solutions for reducing poverty through sustainable economic growth.  MCC grants complement other U.S. and international development programs. There are two primary types of MCC grants: compacts and threshold programs.

Compacts are large, five-year grants for countries that pass MCC’s eligibility criteria.

Threshold Programs are smaller grants awarded to countries that come close to passing these criteria and are firmly committed to improving their policy performance.

MCC has approved over $10 billion in compact and threshold programs worldwide in 2017 that support country-determined projects in such sectors as:

agriculture and irrigation,

transportation (roads, bridges, ports),

water supply and sanitation,

access to health,

finance and enterprise development,

anticorruption initiatives,

land rights and access,

access to education.

The objectives of implementation of compacts and threshold programs are promoting growth opportunities, opening markets, raising the standard of living, and creating a more prosperous future for some of the world’s poorest people.

As of September 2017, MCC has formed partnership in 46 countries around the world including Nepal. Nepal is the only country in South Asia that MCC provided fund. Sri Lanka is in the pipeline after Nepal.

Partnership between The Millennium Challenge Corporation (MCC) and Nepal

Recognizing Nepal’s strong commitment to democracy, economic freedom and good governance, MCC has selected Nepal for its support. MCC and Nepal conducted a diagnostic study in Nepal in 2013-2014. MCC concluded that energy and transport sector are two major binding constraints for higher economic growth in Nepal and thus, these two areas of its focus to support in Nepal.

Based on the diagnostic study, overall political and development potentials, and bilateral relations, MCC formerly selected Nepal directly for the Compact program in December 2014, not going through the threshold program.  MCC opened its Nepal office in April 2015 and a Country Director was assigned in Oct 2015 to reinforce the activities in Nepal.

MCC conducted feasibility studies to identify the projects in 2016-2017 and it submitted projects to the MCC Board on November 2016. The Nepal and MCC delegation concluded program negotiations in Washington DC in June 2017. MCC Board of Directors approved Nepal Compact Program which includes USD 500 million grants in August 2017.

The Compact signing is done on September 14, 2017 in Washington DC between Nepal and MCC at the State Department’s Treaty Room.  Finance Minister Mr. Gyanendra Bahadur Karki and MCC Acting CEO Mr. Jonathan Nash singed the Compact agreement.

MCC supports goes to construct about 300km 400 KV transmission lines from Lapsiphedi – Galchhi- Damauli – Sunawal corridor along with 3 substations and maintenance of about 300 km Roads in various alignment of Mechi, Koshi, Sagarmatha, Tribhuvan Rajpath and East west highway.

MCC will provides grant of USD 500 million and Nepal bears USD 130 million for this $630 million project where USD 500 million goes to Energy sector and $130 million goes to Roads sector.