Wednesday, September 22, 2021

MCC response: Reading between the lines

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On 8 September, exactly a day ahead of her visit to Kathmandu, Millennium Challenge Corporation (MCC) VP Fatema Sumar dispatched her responses to the clarification letter issued by the Finance Minister, dated 3 September.

The Ministry of Finance, working on behalf of the Government of Nepal, has raised a number of questions related to MCC before its parliamentary ratification. As public criticisms and controversies surround MCC along with increased political fluidity, the Ministry has sought clarifications from MCC. Eyebrows were raised over the manner (clumsy, undiplomatic, and repetitive) in which questions were posed to MCC. Should the Ministry of Finance or the Ministry of Foreign Affairs have raised these questions?

Broadly, there are a total of 27 questions divided into eleven set of questions. Questions 1-10 included fundamental questions related to MCC concept and purpose, Nepal’s selection, need for parliamentary ratification, international agreement, and relation with Indo-pacific Strategy. Question 11 contained 17 sub-questions related to specific clauses of the compact like tax exemption, immunity to staff members, intellectual property right, audit, termination of the contract, repayment, provisions after the termination of the contract, ownership of the land etc. Many of these questions overlap with the questions asked in Q1-10.

For larger audience access to the document, MCC has done a commendable job by translating its 13 page long response letter in Nepali language as well. However, for a bilingual, I recommend reading the English version as it is far more comfortable than reading the translated version. However, the interesting part is to read the meaning and messages between the lines. This is applicable both to the questions and the answers thereof.

First, a reader will be surprised to read short responses relative to long questions being asked by the Ministry. Normally, we are used to reading short questions eliciting long responses. Here we have an opposite situation – long questions accompanied by short or even very short answers. This has been done possibly to avoid political controversies. Anybody reading the questions 7-9 related to IPS and MCC could clearly grasp this situation – long questions with short answers.

Second, reading the document gives an impression of respondent being clearly irritated by some questions, including repetitive questions being asked. Particularly, questions 7-9 must have irritated the respondent. This can also be reflected from the appearing of repetitive response statements like “The Constitution of Nepal always prevails over the MCC Nepal compact” or “The signed MCC Nepal Compact cannot be amended at this time”. Short responses to long questions also factor here, including responses like further information to this question has already made in previous question(s). May be this has been done to avoid repetition.  

Third, if long descriptive questions must have irritated the respondent then there are also responses which are clearly deflective, that is, they are not commensurate with the questions being asked. One example could be, as also pointed out in other media, the respondent is not specific in answering the question whether MCC is part of IPS? It only asserts that MCC Nepal Compact is not part of IPS.

Some responses are not convincing at all. For example, the question on why tax exemption is required for MCC, the response speaks of “full utilization of $500 million fund”.  

Fourth, questions directly mentioning China as “revisionist power”, Russia as “revitalized malign actor”, North Korea as “rogue state” (Q11i) or MCC Nepal as a counterweight to China’s BRI (Q11l) are definitely undiplomatic and the respondent has carefully avoided their reference.

In summary, the Q&A type or the FAQ type document seeking to clarify misconceptions and misunderstandings surrounding MCC Nepal Compact may help to inform the public and quell controversies. After reading the content and tone of the document, one will feel more sceptical about MCC in Nepal. The US may divert its funds from Nepal to other countries (Tunisia). It is appropriate time for Nepal to do self-assessment, a kind of cost benefit analysis on whether accepting MCC as it is (MCC has clearly stated it cannot be amended) is beneficial to Nepal or not. Obviously, this has to take into account nearly 10 years of preparations gone into signing of this five year agreement, possible international standing vis-à-vis termination of the contract.

This scribe is doubtful that even if Nepal ratifies the document, it will ever be able to stick to five year implementation of the contract and mobilize counterpart funding of US$130 million. Time is perennially available in Nepal and we are used to glacial pace of working while Americans are serious with their deadlines.

This scribe is doubtful that even if Nepal ratifies the document, it will ever be able to stick to five year implementation of the contract and mobilize counterpart funding of US$130 million. Time is perennially available in Nepal and we are used to glacial pace of working while Americans are serious with their deadlines. We have to put 26 paisa to get Re 1 funding. I see this to be another bottleneck.

Failing to complete the projects in time means we have to return the money and this includes interest payments. Given our bureaucratic ways of doing things and our politicians making mess of everything, cold sweat runs out my head. As one Nepali online news portal has identified, among four possible options, I would say, delaying MCC by another 15 months till new parliament and new government takes up MCC responsibility is the most viable option at the moment.

The ball is at the court of MCC. The other three options included: (a) ratification by Nepali Congress and CPN (UML), (b) implementation of MCC without ratification and (c) ratification after necessary amendment. The first option will split the political alliance, the second option will generate more controversy and the third one is already denied by MCC. The fourth option will be to delay it by 15 more months.     

Published on 10 September 2021 

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