'The Constitution of Nepal prevails over the MCC Nepal Compact, has no military alliance'

The Millennium Challenge Corporation (MCC) headquarters has clarified that Nepal's constitution is always above the MCC. "The Constitution of Nepal prevails over the MCC Nepal Compact," reads the clarification sent to the government today through US Embassy in Kathmandu.

Likewise, the MCC also clarified that the MCC Nepal Compact is not an agreement under the Indo-Pacific Strategy. "MCC compacts are agreements between MCC and the partner government," it reads, adding that the strong relationship between the US and Nepal long pre-dates the Indo-Pacific Strategy. "The MCC Nepal Compact is not an agreement under the Indo-Pacific Strategy, nor is it a part of any military strategy of the United States. There is no connection between the MCC Nepal Compact and any military alliance or defense strategy."

In response to a letter from the Finance Ministry, the MCC also vowed to remain committed to having open and transparent dialogue with the people of Nepal and sees this exchange as a positive step toward ratification of the MCC Nepal Compact.

"The grant programme will benefit nearly 23 million people by providing more reliable electricity and lowering the cost of transportation and energy," the reply signed by MCC vice president Fatema Sumar reads. "Recognising the immense value of the MCC Nepal Compact grant signed by the government of Nepal and MCC in 2017, MCC’s promise to help the people of Nepal has never wavered."

The response addressed to Finance Minister Janardhan Sharma also reads that it is dedicated to reducing poverty and fostering economic growth for all Nepalis. On Friday, Finance Ministry had sent a letter to MCC headquarters seeking clarification about some points in the agreement.

The MCC, according to the clarification, was established in 2004 with a singular focus on poverty reduction through economic growth in countries that are committed to democratic values such as rule of law, investing in their people, and economic freedom.

According to the response, all projects funded by the MCC Nepal Compact were selected by Nepal, in consultation with Nepal’s private sector and civil society, as projects that are important for Nepal’s own economic growth. The response today comes on the eve of the scheduled 4-day visit by vice president of the Department of Compact Operations Fatema Z Sumar. She is scheduled to visit Nepal tomorrow. Nepal is receiving $500 million in grants -- for cross border transmission line and road upgradation -- but it has become controversial with Nepali political parties sharply divided over its proposed parliamentary ratification.

Some political parties want the MCC to be implemented without ratifying it. But the response reads that MCC compacts with all MCC partner countries are international agreements governed by the principles of international law, thus seeking ratification from parliament. "Based on MCC’s experience in other countries, a compact’s status as an international agreement is critical to ensuring the implementation can proceed without delay, which is particularly important given the limited five-year implementation period of a compact,” the response reads, adding, "in practical terms, the status of an international agreement means that the implementation of compact projects will proceed in accordance with laws of Nepal except in rare instances where local law conflicts with a specific provision of the compact."

In such a case, compact projects will be implemented according to the mutually agreed upon terms of the compact and the Constitution of Nepal, it adds.

Though, in its 13-page response, the MCC has furnished clarifications to all the 11 concerns raised by the Finance Ministry, including whether the MCC agreement is above Nepal’s constitution and whether it undermines Nepal’s sovereignty, the political parties may not yet convinced.

Nepal signed the MCC in 2017. But four years down the line, the MCC is yet to be ratified by the Parliament, a prerequisite for its implementation. The incumbent Prime Minister Sher Bahadur Deuba led government had signed the MCC agreement and he is now planning to ratify it in the Parliament. But the coalition partners -- the Communist Party of Nepal (Maoist Centre) and the CPN (Unified Socialist) -- are opposed to it. They are demanding some amendment before ratifying from the parliament.