A ruling party taskforce has recommended substantial amendment of MCC accord. Is this possible?
Officially, we are yet to get the taskforce document. Based on media reports of the comments made by leaders, what I can say is that the comments are not substantial. You have to understand that the amendment process is long and difficult. Among other things, it has been said that the MCC compact violates Nepal’s constitution, which is not true. A communique to this effect has already been exchanged. We are not sure if the taskforce got that communique. There are other communiques, too, over other points. Some of the MCC points can be clarified if they are unclear. If there is a need for further clarification, an exchange of letters would be the shortest route.
Do you think the opposition to the MCC is ideological? Many ruling party leaders continue to see the US and all projects under it as ‘imperialist’.
I don’t think so. What I would say is that some people have spoken against it on ideological grounds based on fake news and disinformation about the MCC. There are apparently around 500 websites disseminating fake news about the MCC compact. They say there is the MCC in Iraq and Afghanistan, which is wrong. There is no MCC project in the countries with American troops. The contents of fringe online media and social media show some bias. But mainstream political leaders are mostly in favor of maintaining cordial ties with the US.
How do you tackle the persistent perception that the MCC is part of US military strategy?
There are two issues here. First, as the MCC is time-bound, we do not have time to wait for such perceptions to die down. Once we start building the power transmission lines, towers and sub-stations, people will see our actual work. Seeing is believing. When people see the work, they will know that it is not military. As soon as parliamentary ratification and other conditions are met, we will go for speedy implementation. People will gradually understand what the MCC is all about. Similarly, not everyone can understand the 78-page long MCC compact document that was prepared by lawyers. These are international-standard documents and adhere to international norms. Unfortunately, some people are commenting on it without even reading the document or properly understanding the terms and conditions.
What are the important deadlines related to the MCC compact?
We have to understand that nothing lasts forever. We have fixed 30 June 2020 as the date of the accord’s entry into force. If we fail to meet that deadline, there will be credibility issue. So, June 30 is a critical date. Nepal government has dispatched a letter assuring that the compact will come into force after June 30. Non-compliance means violation of this commitment.
There could be further discussions, but it is beyond my jurisdiction to say what will happen after that date. But at the current rate, we could miss the deadline. The fiscal year of US government ends September-October. If the MCC is not endorsed before that, there will be uncertainty.
Even if the MCC and Nepal government agree on deadline extension, the US Congress can transfer unspent money to other heads. They could also withdraw the unspent budget. So it is a risky path. As it is, we have already lost five months, which in turn has greatly affected the morale of our staff.
Again, given the limited time, is there a chance of substantial changes in the compact?
It would not be difficult to explain some points through letters of clarification. For a substantial change, it should first land at the MCC board that includes the US Secretary of State. It would be difficult to justify the amendment to him because the compact was signed after sufficient discussion between the two sides. So it is better to finalize it through clarification letters.
There are also questions in Nepal about the need for parliamentary ratification of the MCC compact.
The rationale behind parliamentary ratification is to give legal status to the compact. There could be legal obstacles, and problems could arise, for instance while felling trees. Domestic procurement laws could be attracted. But we do not work as per the procurement law of Nepal. We follow MCC procurement guidelines. Therefore, the compact should be given the status of law for smooth project implementation. In case of conflict, the compact is implemented in line with section 7.1 of the agreement. On the interpretation of this provision, legal opinion was sought. Nepal government settled for a parliamentary approval through simple majority after legal consultations.
Many people including senior NCP leaders are of the view that the US should clarify that the MCC is not a part of the Indo-Pacific Strategy.
It is up to the American government to say whether it is part of the IPS. What I have been repeatedly saying that the IPS is not an alliance. It is rather related to US foreign policy that covers areas from Indian Ocean to Pacific Ocean. It is about democracy, development, and defense. It is a policy document. In some policies we could align with the US and we can be partners. We can object to other policies that are not appropriate for us. We have that right. Nepal follows Panchasheel and America has its own policy. We the have power and capacity to pick and choose. So does it matter if it is a part of the IPS? If China says tomorrow that everything that comes from China is under BRI, what would be our position? What will we do if the Indians say something similar?
The country should choose which path to pursue. The compact document has not mentioned anything about the IPS, so I do not understand what type of amendment we seek. Let us just follow what is written in the official documents that we have signed. We have to look at our relation with the US in the past 70 years. We have to take decisions in a rational way.
Sri Lanka recently decided to reject a similar MCC grant. This has also fueled suspicions here.
Nepal and Sri Lanka have distinct political histories. From 2007-2009, Sri Lanka faced an ethnic civil war. Thousands of people were killed. There was international objection over extrajudicial and civilian killings. The UN and western governments took strong positions. They dragged many top Lankan army officials into war crimes. If you have followed recent news out of Sri Lanka, this had a direct bearing on the proposed MCC grant.
The MCC in Sri Lanka is related to road improvement and land management. Land management was aimed at digitalizing data and adopting new methodology. A section of people portrayed it as a data secrecy issue and termed it objectionable. However, the Sri Lankan government has not taken a firm decision that it would not receive the MCC grant. The current government is a transitional one as parliamentary election is due in December. The cases of Sri Lanka and Nepal are entirely different, and the position of Nepali leaders is not akin to those of Sri Lankans.
If there is no parliamentary approval, what could be the implications?
On the part of Nepal, there would be serious damage as the Nepal Electricity Authority has signed several Power Purchase Agreements (PPA) that are contingent on the construction of the Gorakhpur-Butwal transmission line under the MCC compact. The PPAs will be affected if the transmission line is not built. The proposed transmission line under the MCC can carry up to 3,000 MW electricity. The power sector in Nepal will take years to recover if this is not implemented.
Next, the World Bank, JICA, Asian Development Bank and other international organizations visit our office and consult us about the transmission line. They synchronize their transmission lines accordingly. If the compact is not endorsed, it will affect their projects as well. It will give a message that doing projects in Nepal is difficult. It will be a big setback for the country as well as all foreign companies that are investing in Nepal’s hydropower. It would be difficult for us to even convene investment summits.
Nepal and the US have a 70-year history of cooperation. The US was the first country to support Nepal’s bid for UN membership. The MCC compact entails the biggest grant the US has provided to Nepal. It took more than five years to sign the project. I think no country should reject this. It is already signed, the design is ready, the office is already there, and the staff is working. It is not good to create disputes now.
