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Millennium Challenge Corporation: Will it benefit Nepal and South Asia?
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- Millennium Challenge Corporation: Will it benefit Nepal and South Asia?
Kathmandu
Organized by
Nepal China Friendship Forum
6th May, Thursday
6th May, Thursday
Background
Foreign assistance plays a critical role in a country or region's overall economic development.
However, foreign aid distribution and management of it in the recipient country is an extremely
sensitive topic in terms of utilization of it. There are more cases of failure in terms of optimal
mobilization of foreign aid to meet the needs of people and achieve targeted economic growth.
Currently, one of the strategic interventions by the USA known as Millennium Challenge Corporation (MCC) has gained the attention of many people in South Asia. Millennium Challenge Corporation Initiated by US Congress in 2004, The Millennium Challenge Corporation (MCC) is an international assistance agency helping to lead the charge against world poverty which provides time limited incentives to support economic growth, poverty reduction and reinforce institutional strength. MCC establishes its alliance with developing nations that are oriented towards capitalizing on its citizens, dedicated to maintaining effective government and ensuring economic liberty to its people. MCC has invested over $13 billion in compact and threshold programs that fund country-led initiatives all over the world. The USA has been trying to steer MCC as an instrument to cement its Indo-Pacific Strategy (IPS). MCC in Nepal The MCC Compact with Nepal was a US$ 630 million initiative, with the US contributing $500 as a grant and the Nepal government contributing $130. Nearly 80% of the project's beneficiaries, or 23 million people, are projected to benefit. The MCC is firmed up with the plan of $500 million investment in Nepal that will boost regional energy connectivity and open up new business potentials in South Asia. The MCC compact mostly focuses on power and transportation problems since they have been projected as two of Nepal's most critical structural bottlenecks for economic development. If the House of Representatives of Nepal ratifies the MCC Compact then Nepal will have a cushion of required financial support to develop strategically important transmission lines including a cross-border one with India. With the required transmission lines in place, the ample amount of electricity will help to bring in other investments. Furthermore, the compact would also emphasize road maintenance to promote the flow of goods and people. This comprises a fund equivalent to maintain up-to 300 kilometers of roads, as well as incentives for the government more money for regular maintenance which will directly benefit residents as they will have more choices for bringing their product to the market.
Currently, one of the strategic interventions by the USA known as Millennium Challenge Corporation (MCC) has gained the attention of many people in South Asia. Millennium Challenge Corporation Initiated by US Congress in 2004, The Millennium Challenge Corporation (MCC) is an international assistance agency helping to lead the charge against world poverty which provides time limited incentives to support economic growth, poverty reduction and reinforce institutional strength. MCC establishes its alliance with developing nations that are oriented towards capitalizing on its citizens, dedicated to maintaining effective government and ensuring economic liberty to its people. MCC has invested over $13 billion in compact and threshold programs that fund country-led initiatives all over the world. The USA has been trying to steer MCC as an instrument to cement its Indo-Pacific Strategy (IPS). MCC in Nepal The MCC Compact with Nepal was a US$ 630 million initiative, with the US contributing $500 as a grant and the Nepal government contributing $130. Nearly 80% of the project's beneficiaries, or 23 million people, are projected to benefit. The MCC is firmed up with the plan of $500 million investment in Nepal that will boost regional energy connectivity and open up new business potentials in South Asia. The MCC compact mostly focuses on power and transportation problems since they have been projected as two of Nepal's most critical structural bottlenecks for economic development. If the House of Representatives of Nepal ratifies the MCC Compact then Nepal will have a cushion of required financial support to develop strategically important transmission lines including a cross-border one with India. With the required transmission lines in place, the ample amount of electricity will help to bring in other investments. Furthermore, the compact would also emphasize road maintenance to promote the flow of goods and people. This comprises a fund equivalent to maintain up-to 300 kilometers of roads, as well as incentives for the government more money for regular maintenance which will directly benefit residents as they will have more choices for bringing their product to the market.
MCC in South Asia
The MCC Compact with Sri Lanka was a $480 million initiative which focused on poverty reduction through economic growth. The MCC proposed to upgrade transportation infrastructure in the Colombo metro region and improve land management through mapping, valuation, and
improvements to the country's land registry. “The compact would address the country's core
economic problems transportation infrastructure and land administration which would help an
approximate 11 million Sri Lankans by decreasing traffic congestion in Colombo, enhancing
public transportation and highways, and promoting long-standing Sri Lankan Government
programs to protect land records and enhance land rights for Sri Lankan citizens.
But the Sri Lankan Government voted out the MCC compact on the grounds that it would jeopardize Sri Lanka's national security and independence. According to the "Alliance for Economic Democracy in 2019, “Having signed the MCC will trap Sri Lanka in a costly diplomatic dispute between the United States and China, jeopardizing our sovereignty.”
One important potential benefit is that the money is an outright grant and does not have to be repaid to the MCC. MCC needs collaborator countries to take the lead in developing and executing development projects based on the local priorities. Construction of approximately 300 kilometers of high voltage power lines which is the second high-voltage cross border transmission line in Nepal collaborating with India is one of the main highlights of the project. It will also encourage greater regional integration, coordination, and prosperity in South Asia.
For countries in South Asia MCC tend to promote connectivity and infrastructure growth initiatives. China's BRI has already started to invest in smaller South Asian countries like Nepal, Sri Lanka and Maldives while MCC is also targeting these same countries for infrastructure and networking initiatives. Small South Asian nations are having trouble mapping their own path of national growth while trying to struggle keeping their sovereignty uncompromised. Nepal should commit to a non-alignment foreign policy before making any headway towards any kind of foreign assistance to protect national interests by focusing on transparency and reliability. It is prudent for South Asian nations to accept foreign aid be it grant or loan but only in key areas, to promote productivity, the environment, social coordination, employment, and long-term development.
One important potential benefit is that the money is an outright grant and does not have to be repaid to the MCC. MCC needs collaborator countries to take the lead in developing and executing development projects based on the local priorities. Construction of approximately 300 kilometers of high voltage power lines which is the second high-voltage cross border transmission line in Nepal collaborating with India is one of the main highlights of the project. It will also encourage greater regional integration, coordination, and prosperity in South Asia.
For countries in South Asia MCC tend to promote connectivity and infrastructure growth initiatives. China's BRI has already started to invest in smaller South Asian countries like Nepal, Sri Lanka and Maldives while MCC is also targeting these same countries for infrastructure and networking initiatives. Small South Asian nations are having trouble mapping their own path of national growth while trying to struggle keeping their sovereignty uncompromised. Nepal should commit to a non-alignment foreign policy before making any headway towards any kind of foreign assistance to protect national interests by focusing on transparency and reliability. It is prudent for South Asian nations to accept foreign aid be it grant or loan but only in key areas, to promote productivity, the environment, social coordination, employment, and long-term development.