There is a saying, “Baseless doubts and suspicions, filled with elements of negativities and hatreds,  targeted on somebody or about something can at the end of the day recoil upon the doubters, thus bringing their own ruins”.

This can be true in the case of those who have been making futile hue and cry doubting and suspecting too much about the raison d’être of the Millennium Challenge Compact-Nepal.

Such unfounded apprehensions on the Compact may not harm them personally. But the country has to pay an enormous price if the compact project were to be torpedoed, as seems the leitmotif of the protesters!

Development issue

The economy of the country is reeling under the worst impact of the coronavirus. The FDI has reportedly been down by 65%.

The government has been forced to impose a duty on imports of essential items as sanitary pads! The rate of unemployment is at an all-time high. And yet, these patriotic sons of Nepal care less about such things! They have been seemingly chasing a shadow, not the substance.

The Millennium Challenge Compact-Nepal, ( Compact) agreed and signed in 2017 between the Nepal Government and the Millennium Challenge Corporation in Washington DC was purely about critical infrastructure development project from the grant of the US government under the Millennium Challenge Corporation fund at the request of and the project selected by, Nepal.

It is out and out a development issue. It is sad that the Compact has fallen victim to reprehensible domestic political intra-party feuds and infected by the insidious virus of geopolitics.

In other words, there have been attempts to lump this development issue unnecessarily with the security and sovereignty of the country, notably by some well-read UML politicians, highbrow intellectuals, fringe party politicians, rumormonger social media and some prejudiced lawyers.

Strangely, when a country like Mongolia surrounded by China on three sides and Russia on one side, could see no security threats to its sovereignty, here in Nepal some prophets of doom see without reason and rationale a grave threat to Nepal’s sovereignty and security from the implementation of the Nepal Compact!

In protesting against the Compact, they seem more occupied with their concerns for the security of someone else’s, while closing eyes on the need to the human security of common people that stand threatened due to poverty, underdevelopment, unequal or anomalous distribution of income and economic opportunities in our own country.

Political mileage

Debates, discussions and constructive criticisms are part of democratic societies.  But such debates and discussions must be healthy, productive and ones that lead to problem-solving, rather than problem-creating. Moreover, such debates have to be time-suited, positive and informed of objectivity.

The debate on the MCA compact Nepal has begun at a time when the compact project should have long gone for implementation.

They have begun only after the Compact has been signed after a long and arduous negotiation! Therefore, it is too late to seek to undo what has already been done! Again it is not time-suited, either.

While the country is desperately in need of investment in critical infrastructure like road, electricity transmission line development, these armchair intellectuals have been engaged to oppose the MCA-Nepal Compact merely to gain personal political mileage!

These prophets of doom clamor that certain articles of the Compact seek to place the Compact above our Constitution, and therefore that it has compromised on our national sovereignty, independence and security!

They warn if the Compact project were implemented without amendment to certain articles Nepal can be a theatre for dangerous geopolitical confrontation between great and competing powers that may severely jeopardize our national sovereignty, independence and security!

Some even go to the extent that implementation of the project, as it is, would mean forsaking the principles and purposes of nonalignment to which Nepal is an adherent!

Of course, Nepal needs to take into consideration the security interests of our immediate neighbors in all practicably possible manner.

However, protection of their security interests cannot and shouldn’t come at the expense of our own vital economic and supreme national interests.

One fails to understand how a development project, not at all aimed against the security interests of our neighbors could be construed as a threat to their security as is being projected by some!

But, it appears quite quixotic that these very intellectuals and politicians have ignored the fact how their own political masters have acted again and again as if they were above the Constitution.

Many a time their political leaders have violated the letter and spirit of the Constitution by dissolving the parliament in total breach of the Constitution? Their protests were merely like a play-act. Soon they went kowtowing to the same political master who, they once protested, had acted above Constitution.

Sponsored, not spontaneous

It is clear the ongoing malicious campaigns and cacophonous voices of misinformation and lies spread across all walks of Nepalese lives against the Compact unmistakably look more sponsored than spontaneous by elements both domestic and external.

The growing protests and malicious campaigns against the Compact and getting at times violent even after the categorical clarification in writing given by the Millennium Challenge Corporation, recently in response to the Governments long questionnaire that the Compact is not above the Constitution of Nepal and that it is not the part of Indo-Pacific Strategies prove loud and clear the domestic and external hands at work to deliberately foment the trouble!

Bone of contention

The anti- compact voice began to swell once it was known the compact required Parliamentary adoption, as per the article seven provision of the Compact.  Section 7.1 of Article 7 of the Compact states, among others,

‘The parties understand that this Compact, upon entry into force, will prevail over the domestic laws of Nepal.”

The government reportedly sought and received the legal opinion of the Ministry of Law, Justice and Parliamentary Affairs in this connection.

The legal opinion tendered reportedly was that for the compact provisions to come to force, it indeed required either a parliamentary adoption by simple majority or enactment of a new law, as per our Treaty Law.

Accordingly, the then government of KP Oli was said to have tabled a bill in the Parliament which, it is widely speculated, the then Speaker of the House under the instruction of his political master never placed for parliamentary debate.

The concern raised in Nepal about the fact that the Nepal Compact seeks to place the Compact above the Constitution of Nepal has been so smartly negotiated and settled to the advantage of Burkina Faso!

Meanwhile, a new speaker came in, who also for the same reason best known to all followed the footsteps of his predecessor!. Thus, the bill has since remained in a state of suspended animation in Parliament!

It is speculated this was primarily the result of the bitter intra-party tussle for power between then PM KP Oli, Comrade Prachanda and others.

Perhaps, this intra-political infighting was an opportunity for external elements to fish in the troubled political waters. In the fight between the two overly ambitious and excessively self-adulating politicians, it is the project so vital for our infrastructure development under MC- Nepal compact that has suffered.

Compacts  of some other countries

This scribe tried to look at the compact texts of other compact countries, just to have an insight into how these countries had dealt with this domestic requirement issue.

I searched and found on the web the texts of compact countries, like the Philippines, Indonesia, Mongolia, Morocco and Burkina Faso, just to name a few.

The country Compact and the Program implementation Agreement these countries have signed with the MCC, I found, though with a slightly different formulation in terms of language, invariably state that the compact will prevail over domestic laws. The text of the Mongolia Compact was quite baffling at least to me!  Section 7.1(a) of Article 7 of the Mongolia Compact states,

“The Agreement will be governed by and construed in accordance with the laws of the State of New York, without giving effect to any conflict of law principles!”

I am still at a loss for words to interpret as to how a country can assign its sovereign rights to the State of another country for dispute settlement!

I stand to be educated by our learned lawyers on the legal implications of that provision. Yet, Mongolia has long completed its first project and is on its way to completing the second one without any hassle!

Strangely, when a country like Mongolia surrounded by China on three sides and Russia on one side, could see no security threats to its sovereignty, here in Nepal some prophets of doom see without reason and rationale a grave threat to Nepal’s sovereignty and security from the implementation of the Nepal Compact!

One wonders, whose interests they are advocating for, in spreading all these lies and creating unfounded apprehensions in the minds of ordinary people!  Apparently, not the interest of the people of Nepal!

We must not, therefore, squander our time in nitpicking about some articles and lose the Compact! If we managed to complete this Compact within the stipulated timeframe, we may well be eligible for a second MCC grant for another development project that we may select.

Another very interesting and seemingly well-negotiated Compact that I came across is the Compact of Burkina Faso.

The concern raised in Nepal about the fact that the Nepal Compact seeks to place the Compact above the Constitution of Nepal has been so smartly negotiated and settled to the advantage of Burkina Faso!

Let me quote here below a portion of the text from the Burkina Faso Compact. Section 7.1(c)) under Article 7 of its Compact states: “No laws of Burkina Faso, other than the Constitution of Burkina Faso, now or hereafter in effect, will take precedence or prevail over the terms of this Compact or the Program of Implementation Agreement.”

If only our negotiators were also as smart to find such a magic formulation over the issue of the supremacy of the Constitution over the Compact, it would have presumably put at rest all the now raging controversies!

End of the US grant assistant era

The Millennium Challenge Corporation in its written reply to our government’s questionnaire seeking certain clarification on the Nepal Compact has already stated that MCC is not part of Indo Pacific Strategies. It is thus not my intention here to dwell on this issue.

IPS, as we all know has three major components, security, economic and governance. I am focusing here only on the economic component of it. In launching its broad strategic policy document, IPS has, among others, mentioned establishing a financing corporation backed and funded by the US Government through what is called, Better Utilization of Investment Leading to Development Act, BUILD ACT.

“On October 5, 2018, the U.S. Senate joined the U.S. House of Representatives in passing the Better Utilization of Investment Leading to Development (or BUILD Act), a bipartisan bill creating a new U.S. development agency, the U.S. International Development Finance Corporation (USIDFC).

According to the report published by the Center for Strategic and International Studies (CSIS), the new U.S. development finance institution (DFI) will help developing countries prosper while advancing U.S. foreign policy goals and enhancing U.S. national security interests.

The BUILD Act creates a full-fledged DFI called the USIDFC. The new USIDFC will seek to “crowd-in” vitally needed private sector investment in low and lower-middle-income countries.

By crowding in private investment, the USIDFC will help support developing countries through the transitory stage from non-market to market economies with an emphasis on U.S. assistance and foreign policy objectives.

The USIDFC is authorized by Congress to make loans or loan guarantees (including in local currency) and acquire equity or financial interests in entities as a minority investor.

It also will provide insurance or reinsurance to private sector entities and qualifying sovereign entities. Moreover, the USIDFC will provide technical assistance, administer special projects, establish enterprise funds, issue obligations, and charge and collect service fees.

Rejecting it would mean closing the door for another possible MCC project. Not only that, but it would also mean losing the trust and credibility of one of our longtime and well-meaning friends and donor countries.

BUILD strengthens the U.S. government’s development finance capacity, offering a better alternative to state-directed investments and advancing our foreign policy goals.”

Similarly, European Union has also increased the fund for its existing private sector investment lending agency called, External Investment Plan(EIP) from Euro 4 billion to now Euro 44billion  to increase private investment in low and lower middle income countries.

Moreover, the DFC states that one of its fundamental objectives is to reduce the need for American grants and Aid and to increase private sector-led investments in the low and lower-middle-income countries.

The creation of the DFC, and augmentation of EIP funds by EU countries, many believe, may signal the gradual end of the grant assistance era.  Nepal must take a serious note of the far-reaching consequences of such a development for our socio-economic economic development.

Conclusion

Who knows, the MCC may be the last US grant assistant initiative on such a big scale, based on a country-led and country-owned development project.

We must not, therefore, squander our time in nitpicking about some articles and lose the Compact! If we managed to complete this Compact within the stipulated timeframe, we may well be eligible for a second MCC grant for another development project that we may select.

The MCC has already said that the signed Compact cannot be amended. So, there seems no point now harping on the amendment question.

The MCC has been patiently waiting for our definitive response. Its Vice President, Fatema Sumer has expressed the hope Nepal would make a rational choice on this issue.

She has put the ball on our court! Now, it is up to us, whether to take or reject the Compact! The Compact has a provision that Nepal can terminate the Compact with a written one-month notice to the MCC.

Rejecting it would mean closing the door for another possible MCC project. Not only that, but it would also mean losing the trust and credibility of one of our longtime and well-meaning friends and donor countries.

The costs and long-term implications of compact rejection for the country may be enormous. It is time for us to think through with a cool mind, wisdom and foresight.

The choice is ours!

(The writer is former Chief of Protocol at the Ministry of Foreign Affairs, Nepal)