MCC deal debate raises a bigger question: To take or not to take grants

us MCC deal-1

Of late, there are not many issues in our society that have managed to draw the ire of the greater public as loudly as the MCC deal.

For a country whose foreign aid constitutes roughly 23 per cent of the national budget, the reluctance about this particular form of aid seems quite peculiar along with the name-calling that follows. The ones supporting the grant are described as traitors whereas the ones against it are labelled deluded. However, such a superficial black and white dichotomy only serves to cage the discussion in the realm of emotions instead of moving it towards the domain of rationality.

It would be fair to claim that no one doubts the magnitude of the potential bilateral grant promised in the MCC deal, so reiterating the figure to convince someone is a pointless and pseudo-intellectual endeavour. And, it goes without saying that for any undeveloped or developing country, the receiving of the grant will undoubtedly have a positive impact on the economy.

But, the first point of contention arises between those who are solely driven by rational economic cost-benefit analysis and those who try to incorporate idealism into their decision-making process. The former camp prioritises numerical projections while the latter holds tight ideas like pride, self-respect and integrity as handed over by our history and culture to express reluctance to aid in any form.

Both extremes, however, find themselves distant from ground reality. Instead, the ongoing debate over the five-year-old MCC deal raises a bigger question about the country’s future: to take or not to take grants.

Nepal’s peculiarity

MCC deal - nepal us mcc grant agreement
File: Nepal’s Minister for Finance Gyanendra Bahadur Karki and MCC Acting CEO Jonathan Nash sign agreement in the Treaty Room of the US Department of State, Washington, on Thursday, September 14, 2017.

Nepal is an ancient country, one that finds mentions in ancient scriptures. The prevailing beliefs around which our country took shape, therefore, are starkly different from those of younger countries that inserted themselves into the world map in recent centuries. For instance, the nations formed after the 18th century rode on specific waves of the intellectual movement like the enlightenment and the ideas like modernisation. For them, prioritising the rational over the traditional is not surprising.

Nepal, on the other hand, never underwent a process of state formation with demands similar to many of the post-enlightenment countries. Even though we ended up with the abolishment of the monarchy and the establishment of a secular country, the adoption of such doctrines was a last-minute ‘rabbit out of the hat’ type endeavour worthy of reflection. We still are, to a great extent, a highly traditional society and as such the metaphysical is an integral part of our national existence.

But, that being said, what is also not distant from current ground reality is the role of foreign aid as promised in the MCC deal and influence as feared with the deal.

Problems of the present

It is very true that through our initiative and with our own resources, we can create products, services and also infrastructure befitting our needs. But, the bottom line is we are still going to need the funds such as the one committed by the MCC deal. If we are to completely reject foreign aid, we will only have our people to finance projects.

Now, people can voluntarily invest in such projects. But, in terms of infrastructure, there is no proper precedent. On top of that, given the dismal state of past government-led initiatives, the people might not want to chip in, to begin with. Or, the easiest and likely way forward, the government can indirectly collect the amount in the name of tax. We are already paying a rate of taxation that constitutes a big chunk of individual expenditure. The tax on vehicles and petroleum products, for instance, is absurd as it is with the given level of infrastructure development. How much more can we burden the people with?

What we then have is a combination of a) a society that is still more inclined towards the metaphysical, traditional and romantic norms and b) an economy that could use the help of foreign assistance that comes with some terms and conditions such as the MCC deal. Although it might be tempting to say one could do without the other, it is not quite simple.

In order for an economy to function properly, people need to adhere to rules and regulations, and conformity and deference are some traits instilled and preserved by means of culture and tradition. There are of course those who argue that the ability to distinguish between good and bad comes inherent, but such a position would not be sufficiently supported by historical examples. After all, acceptable behaviours have greatly varied across centuries.

Reconciliation is the need

Protesters clash with riot police during a protest against the Millennium Challenge Corporation (MCC) agreement that Nepal signed with the United States, in Kathmandu, Nepal on December 14, 2021. The agreement signed in 2017 has not yet come into effect in Nepal due to protests from different groups. Photo: Aryan Dhimal
Protesters clash with riot police during a protest against the Millennium Challenge Corporation (MCC) agreement that Nepal signed with the United States, in Kathmandu, Nepal on December 14, 2021. The agreement signed in 2017 has not yet come into effect in Nepal due to protests from different groups. Photo: Aryan Dhimal

Completely undermining the orthodox way of life, at this stage, for the sake of a strict rational outlook of the world might pose a great risk in a place like ours, especially when the rational outlook of a corrupt and destitute society will only encourage people to follow the direction of anarchy. What is needed is therefore a reconciliation between the two extremes.

And, there is something we can start with: the MCC deal. What the opponents of the grant essentially want is the only thing we as a poor country can flaunt: self-respect and integrity. The opponents say the MCC deal undermines that.

But let’s leave their blatant hypocrisy aside and focus on us. To voluntarily sign the MCC deal with a clause that states the compact will prevail over the domestic laws might not be an act of treason, but it is an act of stupidity that undermines the sovereignty, especially when there are other compacts out there, for instance, that of El Salvador and Namibia, where the same clause is worded differently. It is very important to know that the realm of international law is a lot murkier than what our “experts” think and America’s past itself is littered with international law violations that went unpunished.

And, if we go on signing documents allowing the uncertain to trample over the certain, we invite confusion. Only the cunning benefit from such a state. If our domestic institutions and our domestic legal framework are strong, even with the MCC deal, there is little need to worry about creative scenarios like ‘invasions’. If any country brings in warships without our consent, we can always send them back.

But, no, merely signing the MCC deal will not allow them the right to stay because sovereignty is an issue addressed by the UN Charter and no international agreement can prevail over it.

React to this post

Pandey is a Macquarie University economics graduate, currently doing a master's in sociology at Tribhuvan University.

More From the Author


New Old Popular