MCC Debate and Political Uncertainties


The coalition government of Nepal, formed in July 2021, is sharply divided over parliamentary ratification of $500 million dollar Millennium Challenge Corporation Compact (MCC). The $500 million US government project to upgrade Nepal’s infrastructure threatens to split the coalition government.

Prime Minister Sher Bahadur Deuba, the main opposition CPN-UML and Janata Samajbadi Party (JSP) support the deal, while the coalition partners, the CPN-Maoist Centre and CPN-Unified Socialist oppose the compact.

Despite opposition, Prime Minister Sher Bahadur Deuba appears to be determined to endorse the deal through parliament. The coalition leaders Pushpa Kamal Dahal Prachanda of the Maoist Centre and Madhav Kumar Nepal, both former Prime Ministers, have demanded that the Compact should not be endorsed in its current format, arguing that some provisions of the deal directly undermine the sovereignty of the country and its non-aligned foreign policy.

As Madhav Nepal and Pushpa Kamal Dahal are raising their ante against the Compact ratification, Deuba is now seeking support from the opposition CPN-UML party led by KP Sharma Oli, since the NC and JSP alone do not have the numbers to ratify it. Oli has hinted at the support if he breaks the coalition and supports the removal of Speaker of the parliament, Agni Prasad Sapkota.

The Maoist Centre and CPN-US had been trying to delay the election dates but Prime Minister Sher Bahadur Deuba recently held a meeting with the officials of the country’s Election Commission and proposed to conduct the local level elections on May 18 in a single phase. This is also causing strain in the coalition.

Deuba is clear on MCC and is determined to pass through the parliament but he also doesn’t want to lose the coalition as he fears the left alliance may grow. Keeping the ruling coalition intact could be a strategy for Deuba as it would cut off the possibilities of any left alliance in the near future and it would be better for Congress if the communist parties are kept apart. But if the coalition is broken, he is also making sure the UML is there to rescue.


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