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  • Congress Tells MCC to Get Back to Basics

    omnibus-billBuried in the 1,582-page, trillion-dollar “omnibus” budget bill for fiscal year 2014 is some very tough language that in essence orders the Millennium Challenge Corporation (MCC) to focus on corruption and demand that aid-receiving countries be held accountable for the outcomes of their economic policies.

    The report reminds us that judicial systems, organized crime, and corruption (public and private) are significant obstacles to strong democratic institutions and market-led economic growth. Congress specifically prohibits MCC from assisting some countries (e.g., Tunisia) that do not meet its requirements and criticizes the Obama Administration for weakening MCC criteria.

    A recent example: the 2013 approval of a second, five-year, $277 million compact with El Salvador despite evidence that under the ruling FMLN party it has become poorer, less democratic, and less free. That decision was only partially offset by the MCC action late last year not to re-select Benin and Sierra Leone because of corruption.

    Traditional foreign aid has tended to promote statist approaches to development that concentrate control of the market, create economic distortions and new opportunities for corruption, and promote dependence on the government. MCC was set up in 2003 to break that dependency mind-set and move away from the traditional, failed foreign aid model.

    Congress is right—MCC should refocus on core principles: Recipients must meet minimum standards on rule of law and corruption indicators and agree to adopt better policies so that they achieve sustainable economic growth on their own. Countries should not be forever dependent on welfare from the West. Indeed, perhaps countries should get just one “compact” “to wean them off all U.S. aid.”

    As Ben Leo of the Center for Global Development notes, only MCC focuses on assistance that developing countries actually want: jobs/income and infrastructure. MCC has been the driving force to align U.S. assistance with those priorities.

    Yet under the Obama Administration, the MCC has funded projects that stray far afield of the core MCC mandate of anti-corruption and rule of law, including projects promoting “energy-efficient and lower-emissions household appliances” and wind farms in Mongolia; $332.5 million for a “Green Prosperity Project” to reduce greenhouse gases in Indonesia; and a $140 million MCC “investment” in Georgia for science, technology, engineering, and math education.

    These programs, whatever their overall merits, resemble the traditional U.S. Agency for International Development (USAID) programs that MCC was designed to avoid.

    The U.S. Senate is set to confirm Dana Hyde to be the fourthchief executive officer in the decade-old MCC. Let’s hope that Hyde and the Obama Administration hear this latest message from Congress so the MCC becomes again the driving force for positive change. If MCC continues to morph into a sort of mini-USAID, Congress will inevitably question the need to keep funding it.

    Posted in International [slideshow_deploy]

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