A A US $ 500 million grant to modernize Nepal’s infrastructure at first glance appears to be delayed due to domestic politics. But the real reason seems to be Beijing’s opposition to the project and its pressure on politicians not to implement the project.
Sources say the Chinese government has shown unusual interest in the Millennium Challenge Corporation (MCC) project as Prime Minister Sher Bahadur Deuba prepares to present it for approval in the winter session of parliament, despite opposition coalition partners.
On December 22, Chinese Ambassador to Nepal Hou Yanqi hastily visited the Balkot residence of former opposition UML Prime Minister KP Oli. Oli and Deuba support the American project, and some see this meeting on the MCC even triggering a breakdown of the government coalition.
On December 13, Vice Minister Chen Zhou of the Communist Party of China (CPC) International Department held a video conference with newly elected UML General Secretary Shankar Pokharel.
Pokharel reportedly assured Zhou that his party would not allow activities that could harm Sino-Nepalese relations. UML’s Bishnu Rijal confirmed that Zhou’s appeal was for MCC, but added ambiguously, âHe must have had questions about development projects being undertaken by China’s neighboring country.
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Zhou had a similar conversation with Madhav Kumar Nepal of the United Socialists who also reportedly reiterated his opposition to anti-Chinese activities in Nepal. Nepal has publicly stated that it will reject MCC if it can affect relations with neighboring countries.
CCP officials also held virtual meetings with Pushpa Kamal Dahal of the Maoist Center, who made no secret of his opposition to the MCC.
A government official, speaking on condition of anonymity, said: âThere is no doubt that China does not want the MCC to go ahead, it has already told top political leaders. . ”
Chairman Agni Prasad Sapkota of the Maoist Center, which is close to Beijing, said the MCC would not advance under his leadership. His predecessor Krishna Bahadur Mahara publicly admitted that he had stopped ratifying the MCC because he was anti-Chinese.
“China has already sent the message that it will not stand idly by if development activities in Nepal undermine its interests here,” former Nepalese Ambassador to Beijing Mahendra Bahadur Pandey said. Nepalese time. âChina has been concerned about the MCC from the very beginning and views it with suspicion. ”
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China’s objection to MCC is most clearly expressed in the editorials. Wang Yiwei, professor of international relations at Renmin University, in an interview with nepalkhabar.com last October called the MCC an âAmerican ployâ.
Diplomatic affairs expert Geja Sharma Wagle said that besides the Americans, Nepal must also balance the interests of its neighbors, India and China. He said, âIt is in the interest of Nepal to implement both the US MCC and Chinese BRI projects according to our national needs.
Many analysts see the MCC as the United States’ response to the Beijing Belt-Road Initiative (BRI) which promotes connectivity and infrastructure to foster Chinese influence and commerce in the region.
In addition to Dahal’s CPN (Maoist Center) and Nepal’s CPN (Unified Socialist), other coalition members Janata Samajwadi Party and Rastriya Janamorcha are also opposed to the US grant. Even the right-wing Hindu party Rastriya Prajatantra recently spoke out against it.
Deuba called an all-party meeting this week to discuss the MCC, but Oli did not show up. Representatives of other parties reiterated their opposition to the pact in its current form. Jhala Nath Khanal of the United Socialists has once again been appointed a member of a committee to further study the MCC deal.
Dahal and Nepal used KP Oli’s support for the MCC against him in a bitter power struggle that not only divided the Communist Party of Nepal, but also the UML. They were so successful in generating public opinion against the MCC, saying it was an American strategy against China, that they are struggling to support it now, especially with an election a year from now. Dahal is also concerned about his general convention of the Maoist Center.
At the height of internal political struggles last year, Chinese Ambassador Hou Yanqi lobbied unsuccessfully for the Nepalese Communists to remain united. Now that KP Oli is in the opposition, he is not so openly pro-MCC, but sees it as a weapon to take revenge on Deuba and Dahal by dividing their coalition – even if it means forging an alliance with the NC.
Nepal signed the MCC deal in Washington in 2017 when Deuba led a similar NC-Maoist coalition. The United States has repeatedly stated that the project is a grant Nepal qualifies for and has no strings attached. MCC Vice President Fatima Sumar and US Deputy Secretary of State Donald Lu recently visited Nepal and reportedly gave Deuba an ultimatum to have parliament ratified by the end of this year.
Experts say MCC is important for expanding Nepal’s power grid in the future with 400 kVA transmission lines which can also enable Nepal to export more excess electricity to India. Nepal will produce 4,500 MW of hydropower over the next three years, and over 12,000 MW by 2030, and much of it is at risk of wasted if it cannot be delivered to load centers.
In monetary terms, Nepal’s power producers could lose at least Rs 142 billion per year. This is why energy experts say Nepal should start working on the transmission lines immediately, even if the MCC does not move forward.
While the bulk of the $ 500 million project is aimed at upgrading transmission lines, it will also improve road connectivity in central Nepal to boost economic growth.
Also read: The cost of not having MCC, Nepali Times