Millennium Challenge Account Nepal (MCA-Nepal) is an intervention of the Government of Nepal that was recognized by a cabinet-level executive ordinance pursuant to the Development Board Act 2013 BS (1956 AD) to serve in the Millennium Office Challenge Nepal (MOCN)) in coordination with the Millennium Challenge Corporation (MCC), USA MCA-Nepal is led by a board of directors chaired by the Secretary of the Treasury and its day to day is directed by its executive director.
The board is made up of joint secretaries of Nepal’s ministries, representatives of the private sector and civil society, the executive director of MCA-Nepal, and the managing director of the Nepal Electricity Authority (NEA).
What is the main controversy of MCC in Nepal and what are the main reasons behind it?
Finance Minister Yubaraj Khatiwada registered the compact with the federal parliament for sanction last July. However, it was never presented to the house for approval.
Although the dispute recently emerged, part of the Communist Party of Nepal, including its main whip Dev Gurung, urged former spokesman Krishna Bahadur Mahara not to prioritize the ratification pact.
However, Oli and his ministers say the compact will be ratified by Parliament’s ongoing winter session. In an interview with the Kantipur newspaper, the sister publication of the Swiss Post, on October 19, Oli blames Mahara accused him of delaying the ratification process.
There was not much controversy over the pact until David J Ranz, deputy secretary for South Asia at the US State Department, during his visit to Nepal last May, said the MTC was a vital part of the Indus strategy -Peaceful.
Governing leaders within the ruling party have asked the government to clarify whether the CCM is part of the United States’ strategy. Regarding the statements of US officials, politicians have said that Secretary of State Pradeep Ghazali lied to him when he said on December 26 that the agreement was not part of the IPS.
The ruling party’s Standing Committee meeting last month, after criticism from its members, could not decide on ratification.
MCC’s treaty with Nepal marks a new chapter in the partnership between the United States and Nepal.
MCC’s Nepal Compact is designed to increase electricity availability and reduce transportation costs in Nepal. These investments will help the government of Nepal provide better key services to its people, facilitate the flow of goods across the country, and open new opportunities for private investment.
Strengthening the reliability of key infrastructure will put the country’s economy on a stronger growth trajectory, improve stability, support regional security, and reduce poverty.
Although MCC is touted as an effective aid program in the form of compacts or emerging programs in many countries, it has become controversial in Nepal.
The foundations for the implementation of US aid in the country began in 2012 and after the country declared several satisfactory political indicators satisfactory, from civil liberties to minor corruption, which is considered eligibility criteria. And an MCC contract was signed in 2017 when the Deuba-led government was in power.
According to MCC policy, the pact must be ratified by the country’s parliament. When parliament was to be approved by parliament, a controversy arose in this regard.
It should be noted that there was no debate when the country signed the pact in 2017 and at that time it seemed that the pact could easily be approved by Parliament. In fact, the controversy was resolved by some US officials linking the MTC to the US Indo-Pacific strategy.
The United States does not easily provide aid to any country under the MCC. To do this, the political indicators anchored in the CCM must be met. If a country is doing well on these indicators, it can sign an MCC contract.
Conversely, if a country performs poorly but has the potential to improve indicators for the foreseeable future, it will be implemented with a threshold program that includes a lower grant under a compact.
After selecting a country, priority development sectors for economic development and poverty reduction should be identified and corresponding MCC proposals developed. With respect to Nepal, the country has defined two priorities: power transmission lines and road infrastructure.
According to MCC policies, the country has already created the Millennium Account, Nepal (MCA, Nepal) under the Ministry of Finance. The MCA, Nepal, is responsible for the administration and implementation of projects within the MCC.
MCC projects have a budget of $ 630 million, of which the country will receive $ 500 million under the MCC. The grant is the largest the country will receive from the United States.
Leaders of various political parties, civil society organizations, and the general public currently fall into two camps that support or reject the MCC grant. Some critics wonder why parliamentary ratification is required to implement the CCM.
According to the MCC, ratification of an MCC pact by the parliament of a host country is required to implement MCC projects without any problem. This provision applies to all recipient countries. The impact of the MCC was registered with the country’s Parliamentary Secretariat in July 2019.
7 Reasons Why MCC Is Controversial Issue In Nepal
The country’s General Office of Financial Controller can audit MCC’s project accounts against the opinions of some critics who claim that only United States accounting firms are authorized to do so. In fact, the MCC contract contains a provision that allows the government to review MCC projects.
The MCC grant relates to the construction of a 400 kV high-voltage line to divert electricity from one part to the rest of the world. The document distributed by the project and the agreement essentially refer to the construction of transmission lines and road projects.
However, the $ 630 million projects with a $ 500 million grant from the United States of America under MCC-Nepal was a major issue of nationalism for the ruling leaders of the Communist Party of Nepal (NCP).
Under the six conditions, the leaders of the NPC expressed objections to a clause related to the ratification of the agreement by the House of Representatives. A few months ago, NPC President Madhav Kumar Nepal classified some of the unity clauses during the House meeting as offensive.
Due to objections of ruling communist party leaders and other fringe communists, the agreement has been pending in a committee of House of Representatives for the last five months. Suddenly, the communist leaders have found the MCC is part of the Indo-Pacific Strategy and expressed their reservation. Although foreign minister Pradeep Gyawali and Finance Minister Dr. Yubaraj Khatiwada have clarified that MCC had nothing to do with Indo-Pacific Strategy.
Thriving in anti-India slogans and protests, it is very difficult for communists of the old generation to digest the words Indo or India. Chanting the word itself is a sign of nationalism for them. They regard these words to describe hegemony and expansionism.
Even without reading the whole document of the MCC agreement, some members even declared that MCC is synonymous with Indo-Pacific Strategy. “As MCC is a broader part of Indo-Pacific Strategy, Nepal needs to be careful about this before ratifying it,” said the former home minister and senior leader of NCP Bhim Rawal. Many others echoed Rawal.
Some critics also question the MCC pact from several other perspectives. They claim that the MCC contract states that in the event of a dispute, its provisions take precedence over the county’s legal requirements. MCC provisions are intended to ensure that projects are not hampered by a change in state law. Countries that have received MCC grants also comply with these provisions.
MCC projects are suspected of being processed only by US companies. In fact, MCC projects are fairly and transparently assigned to local and global companies through global tenders to ensure that projects are completed by accredited, experienced, and qualified companies.
That India’s approval is necessary for the implementation of the MCC, as some critics suspect, is completely wrong. Indian approval is only required for the cross-border transmission line involving the Nepalese and Indian territories, particularly the Butwal-Gorakhpur transmission line. The construction of this transmission line will facilitate the import and export of electricity to and from India.
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