The government, parties and civil society need to convince and clarify to the people that there are no negative clauses in the MCC deal that go against Nepal's interest and sovereignty. As the MCC Board is taking a final decision on it, we must be able to table this pact in the House
Recently, the question of whether to accept the grant provided by the Millennium Challenge Corporation, USA (MCC) has emerged as a delicate issue.
It is unfortunate that even highly academic individuals and some senior political leaders have been disseminating misguided and distorted facts about the MCC Agreement based on their political interest and whim. In fact, this agreement is a public document and is open to all to read. All false information and distorted facts seem to be disseminated to create a negative impression of the MCC.
Instead of taking a stand for or against the MCC, the people should know what is actually stipulated in the agreement. However, they are being kept in the dark. MCC grant is an interest-free grant, which Nepal needs neither to pay back any interest or the principal. It is one the largest grants that Nepal has ever received from any government or agency in its history. As MCC is an international agreement signed on equal basis, there are certain terms and conditions in the agreement that are common and universal in nature.
This grant is only for the enhancement of road connectivity/ electricity transmission line project. There is no reason to oppose it.
Some intellectuals and politicians even tend to spread distorted and unfounded facts about MCC on the following four grounds: a) This agreement allows the presence of US troops in Nepal, thereby creating a situation like in Afghanistan; b) it undermines the sovereignty/integrity of Nepal; c) the USA wants to fulfil its vested interest by requiring this agreement to be approved by the parliament; and d) it requires Nepal to obtain prior consent from India to implement the project.
This grant is not imposed by the US. Rather Nepal applied for this grant for infrastructure development. In order to qualify for the grant, one needs to meet certain criteria set by the MCC. Fortunately, Nepal was one of the few countries, which qualified and was selected for this grant.
Accordingly, Nepal and the USA had signed this grant agreement in 2017.
As a lawyer and student of commercial and international law, I have thoroughly reviewed the word and language stipulated in the agreement and found it to be in the best interest of Nepal and wouldn't undermine Nepal's sovereignty and integrity for the following reasons: First, Article 2.7 of this agreement never allows the presence of American troops or security forces in Nepal. This clause clearly puts limitations on the use of the MCC fund for developing road connectivity and electricity transmission line project and does not permit the use of the fund for supporting or assisting any military, police or security activities.
Article 5.1 further stipulates that if the MCC fund is found used or utilised for assisting military and police activities in Nepal, the U.S. government has the right to terminate this agreement.
Second, this agreement neither minimizes nor undermines the sovereignty or integrity of Nepal, rather it keeps both countries on an equal footing. According to Article 6, any dispute arising under this agreement will be settled by applying the principle of international law. Thus, no application of either Nepali law or U.S. law has been agreed. Under Article 5, if Nepal finds that the implementation of the agreement is not in the national interest, it can terminate this agreement at any time, without any cause, by giving 30 days' notice and without having to pay any compensation to the USA.
The US may terminate this agreement under certain conditions.
Third, a few intellectuals or academicians are of the view that commercial or investment agreements like the MCC need not be approved by the parliament.
However, there are two reasons why the U.S. government wanted to incorporate the House approval clause in the agreement.
First it will give 275 parliamentarians an opportunity to scrutinise whether this agreement is in the best interest of the country. Second, Nepal has already lost its international standing and credibility by cancelling the Budhi Gandaki hydro project agreement with China, which was signed by the preceding government and cancelled by the succeeding government.
This action has diminished our credibility.
Thus, inclusion of the House approval clause looks logical and natural.
Fourth, there is misunderstanding that India's consent is required for execution of the MCC agreement.
This view is also baseless. Annex V of the agreement clearly states that the Nepal Government needs to show to the USA that Nepal and India have already consented to a plan that is in place to develop the cross-border transmission line between Butwal and Gorakhpur. Thus Annex 5 shows that India's consent is not needed for implementation of this agreement.
The spirit and language of the MCC agreement is very clear and does not tend to violate the sovereignty, integrity and independence of Nepal. One needs to interpret the spirit of the agreement based on what is written in there, not on the basis of personal whim or partisan interest.
Opposition to this agreement seems based on personal likes or dislikes or party interest only. Clauses of the MCC agreement are much softer and smoother than those included in the agreement Nepal had signed with India, China, the World Bank and the Asian Development Bank. If we reject the MCC agreement, Nepal will never be in a position to receive any loan or grant from multilateral and bilateral agencies with clauses similar to those of the MCC agreement.
The government, parties and civil society need to convince and clarify to the people that there are no negative clauses in the MCC agreement that go against Nepal's interest and sovereignty. As the MCC Board is reportedly taking a final decision on it, we must be able to table this agreement for ratification in the parliament before it does so. Otherwise, Nepal will lose over Rs 60 billion in grant money, which will be a great setback for Nepal.
Pandit is a senior advocate
A version of this article appears in the print on December 15, 2021, of The Himalayan Times.