Nepal :The coalition government of Nepal, led by the Nepali Congress party, has finally ratified the Millennium Challenge Corporation’s (MCC’s). Nepal compact a US$500 million infrastructure and economic development grant from the US government. This marks the end of a chaotic five-year-long saga over the compact’s parliamentary ratification, which saw leaders turn agreement into a political football.

Anti-US forces — including communists, royalists and pro-Chinese commentators — have united to wage a rhetorical war against the MCC grant. Their deliberate social media disinformation campaigns are disrupting the developmental function of the state and eroding Nepal’s democracy.

For years, Nepal has relied on US developmental aid — for instance US assistance was critical to rebuilding Nepal after the devastating 2015 earthquake. The Nepal–US bilateral relationship played a role in Nepal’s decision to guide the MCC grant to a definitive conclusion. But with countless visits by US officials since 2012 failing to strike any breakthrough, the ‘take it or break it’ deadline set by the United States for 28 February ultimately made the difference.

Why did it take this long to mobilise parliamentary action in Nepal?

Chinese Communist Party (CCP) leaders have exhibited deep interest in the MCC grant. US diplomat Donald Lu warned that Nepal’s failure to ratify the grant would be seen as Chinese influence stating that the United States would ‘review’ Nepal–US ties.

China has engaged in a war of words with the United States accusing the United States of pursuing ‘coercive diplomacy’ in Nepal and asserting that the MCC has become a ‘Pandora’s box’, not a ‘gift’. China made significant efforts to convince leaders not to accept the grant. In the hours leading up to parliamentary ratification, CCP Foreign Department figures were busy holding virtual meetings  with senior Nepal Communist Party leaders, expressing their ‘security concerns’.

Chinese interest and pressure from different interests groups aside, the MCC grant was also victim to inter- party and intra party feuds .Until the final moment, Nepal’s political parties were fractured in their stance, juggling their options with the upcoming elections in mind. While Nepali Congress leader and Prime Minister Sher Bahadur Deuba  was determined  to ratify the grant, his coalition partners were still opposed.

Nepal’s communist parties feared that siding with Deuba would compromise their chances in the elections. While leaders hoped that the MCC grant would fail, they weighed up the consequences — if ratified before the coming election, the grant’s legacy and blame would be shared. Communist Party of Nepal (Maoist Centre) spokesperson Pushpa Kamal Dahal has relied on double speak to balance the opposing pressures from his party cadres to reject the grant and the external constraints to accept it.

During a visit to Kathmandu on 25–27 March, Chinese Foreign Minister Wang Yi proposed greater cooperation through on projects related to China’s Belt and Road Initiative while avoiding mention of the MCC. Nepal also engages in projects funded by the China-led Asian Infrastructure Investment Bank and Chinas International Development Agency. India has chosen to remain silent — as an important US partner and a hostile neighbour of China, it is unable to express any of its reservations publicly.

The MCC grant now amounts to US$630 million as the Nepali government has agreed to invest US$130 million on top of the US grant of US$500 million. The development plans are in line with Nepal’s policy of modernising electricity and transport infrastructure in the mountainous nation. But it remains to be seen if the project will move forward as expected and yield anticipated results.