US says will review ties with Nepal if it failed to ratify MCC pact by Feb 28 deadline

The US has urged Nepal to ratify the proposed grant assistance from America under the Millennium Challenge Corporation by February 28, saying if Kathmandu did not accept the USD 500 million programme, Washington would review its ties with the Himalayan nation and consider China's interests are behind its failure.

Nepal's political parties are sharply divided over the issue of whether to accept the US grant assistance under the Millennium Challenge Corporation (MCC) agreement, which is under consideration in the House of Representatives. Nepal and the United States signed the MCC agreement in 2017.

US Assistant Secretary of State Donald Lu raised the issue on Thursday during his separate telephonic conversation with Prime Minister Sher Bahadur Deuba, CPN-Maoist Centre chief Pushpakamal Dahal ''Prachanda'' and main Opposition CPN-UML chairman K P Sharma Oli.

According to sources with the ruling Nepali Congress party, Lu warned that "if Nepali political leadership failed to endorse the MCC compact grant within the stipulated deadline of February 28, the US would be forced to review its ties with Nepal''.

He further warned that ''it would consider China's interest behind Nepal's failure to ratify the compact.'' Nepal and the US signed the USD 500 million US grant assistance which is meant for building Nepal's infrastructure such as electric transmission lines and improvement of national highways.

Although the ruling Nepali Congress has decided to endorse the MCC through Parliament, other ruling alliance members including CPN-Maoist Centre led by Prachanda and CPN-Unified Socialist led by Madhav Kumar Nepal have expressed their reservation.

Prachanda and Nepal, both former prime ministers, have sought more time, saying that they are not in a position to endorse the compact without amendment to some of its clauses.

Main opposition CPN-UML has said that it is waiting for the ruling alliance to make its move before the party could make its decision public.

Nepali Congress spokesperson Dr Prakash Sharan Mahat has said that the MCC should be endorsed by Parliament as it is in the interest of the country.

''The US grant assistance was prepared in line with the demands of developing countries like Nepal,'' he said.

Mahat has made it clear that the MCC is not a part of the Indo-Pacific strategy of the US government or any type of military related links, and that it would be operated under Nepal's law as it has been offered as per the wishes of the Nepali people.

He criticised political parties for opposing it.

Nepal's Leftist political parties have been opposing the pact, saying it was not in national interest and that it was meant for countering China.

Further, there are reports that China is behind spreading misleading rumours against the MCC pact.

If the US reviews its ties with Nepal following Nepal's failure to endorse the MCC pact, it would adversely affect Nepal's economic sector.

''The US has been the largest bilateral donor of Nepal for decades… if it decides to review ties with Nepal, its direct impact will be in our economic sector,'' The Kathmandu Post newspaper said in a report.

''Nepal could lose bilateral and multilateral aid as well as foreign direct investment if it fails to ratify MCC,'' the daily quoted finance ministry sources as saying.

Nepal Prime Minister Deuba in December underlined the need to ratify the proposed grant assistance from the US under the MCC by forging consensus among all political parties, asserting that the USD 500 million programme is not against the national interest.

Nepal was the first country in South Asia to qualify for the programme after it met 16 out of the 20 policy indicators.

The Millennium Challenge Corporation is a bilateral United States foreign aid agency established by the US Congress in 2004. It is an independent agency separate from the State Department and USAID.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)