The Millennium Challenge Corporation (MCC) has been a trending topic in Nepal for a few months. MCC is an American independent and bilateral foreign aid agency that provides financial aid to economically backward countries of the world. Countries like Armenia, Benin, Burkina Faso, Cape Verde, El Salvador, Georgia, Ghana, Honduras, Indonesia, Jordan, Lesotho, Madagascar, Malawi, Mali, Moldova, Mongolia, Morocco, Mozambique, Namibia, Nicaragua, Philippines, Senegal, Sri Lanka, Vanuatu are already a part of this corporation. 

In September 2017, MCC signed a compact with the Government of Nepal intending to increase the availability and reliability of electricity, improve the quality of the road network and facilitate power trade between Nepal and India. It was sent for parliamentary ratification in July 2019 for its implementation. The political parties in the parliament strongly retreated this compact, arguing that it would not serve Nepal’s interest.

The main reason for this dispute was that the US government had full control of this contract and they could terminate it whenever they wanted. Also, as mentioned in the compact, the compact rule will prevail all other laws of Nepal including the Constitution. However, according to the Constitution of Nepal, no law can be superior to the Constitution.

On the other hand, the Government of Nepal can’t interact with this project although it had invested 20% of its revenue. The required human manpower and products will be managed and imported by MCC which leaves a vulnerability using which the USA can import their military forces and weapons to Nepal without the permission of the government.

Another strong reason for the dispute is the Indo-Pacific Strategy. It is the US strategy to encircle and weaken China by expanding its military forces in the Indo Pacific region. Although PM KP Oli clarified that there is no link between MCC and Indo-Pacific strategy, many politicians are blaming it to be part of the Indo-Pacific strategy.

In my personal view, I don’t think it is just an aid as the US government cannot be so humble to donate $500 billion for free. Moreover, Nepal isn’t in the worst condition for seeking such aids that ultimately predominates its Constitution.