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Millennium Challenge Compact (MCC) and Political Stability in Nepal

The Millennium Challenge Compact (MCC) is causing friction in the ruling coalition in Nepal led by the Nepali Congress leader Sher Bahadur Deuba. For the record, the five-party coalition government comprises the Nepali Congress, the Communist Party of Nepal (Maoist Centre), the CPN (Unified Socialist), the Janata Samajbadi Party and the Rashtriya Janamorcha.

The CPN Maoist Centre and the CPN (Unified Socialist) are not in favour of ratification of the MCC in the present form.

Prime Minister Deuba has reportedly decided tabling the MCC agreement for ratification in the current session of the parliament. However, the other two main parties of the coalition are not aggregable to the same.

Multiple media reports from Nepal indicate that leaders of the Nepali Congress (NC) were attempting to convince leaders of the Maoist Center and the CPN (Unified Socialist Party) to agree to tabling the resolution for ratification. Prime Minister Deuba has met with Dahal and Nepal on February 2 in an attempt to convince them to agree to the tabling of the MCC agreement, but consensus has not been achieved.

Meanwhile, as these developments come prior to the local elections announced for May 18, there are concerns that the coalition that took office in – last year may split if Deuba insists on tabling the Agreement.

The Prime Minister has already reached out to the main opposition party, the CPN UML leader K P Sharma Oli, who is amenable to the proposal. However, Mr Sharma, the predecessor of Mr Deuba just a few months back may have his axe to grind as he sees a level of betrayal by his former party mates led by Mr M K Nepal who split to form the CPN (Unified Socialist) which brought down his government.

After Dahal and Nepal took a stand that the MCC could not be passed in the status quo, Prime Minister Deuba has asked points that had to be amended.

Importantly Speaker of the House of Representatives Mr Sapkota is also not on board for passage of the MCC agreement and thus has postponed the meeting convened for January 30 without informing the Prime Minister

China is also believed to be playing a role in the resistance offered by Mr Dahal as he has had talks with Song Tao, head of the Chinese Communist Party's International Liaison Department.

Nepali media has been drawing attention to Chinese academics raising the issue of the MCC being an American counter to its own Belt Road Initiative (BRI).

Importantly, CPN (Unified Socialist) Chairman Nepal said that the alliance would not be broken till parliamentary elections and blamed his former party the UML for playing a destructive role by not allowing parliament to convene. "The country has now moved ahead with the politics of alliance. The alliance will not be broken by anyone spreading confusion," Nepal said.

On the other hand, it is believed that Prime Minister Deuba as well as Nepali Congress leaders like Shekhar Koirala and General Secretary Gagan Thapa are not keen on continuing the alliance for polls.

But Maoist Centre and the CPN (Unified Socialist) want a poll alliance with the Congress as these parties do not have the organisational structure and heft to face the polls independently.

There is also a sentiment in the Nepali Congress as Mr Deuba has become the prime minister with the support of the other parties, breaking the coalition will not send the right signals. “The party president is leading a coalition government now,” said Purna Bahadur Khadka, a vice president of Congress. “This is not the right time to bring up the debate whether there should be an alliance for upcoming polls or whether the coalition will break apart. It will depend on how the alliance moves forward on very many issues.”

Apart from the MCC, multiple factors may impact political stability in Nepal such as the formation of a coalition led by NC for the local and later parliamentary elections, stand taken by the main opposition party CPN UML and its wily leader K P Sharma Oli and finally outcome of the parliamentary polls due in the country by the end of the year.

Thus, there are many moments of truth facing Nepali political parties and leaders in the year ahead.

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