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November 08, 2005
MCC Announces FY2006 Countries
Posted by Sheila Herrling at 06:43 PM
Today, the MCC Board of Directors selected 23 countries as eligible to apply for FY 2006 assistance. It also announced 13 countries eligible for threshold program funding.
We just put this press release with Steve Radelet's reaction to the announcements out to the newswires: Hope you find it useful. - Sheila
Washington- November 8, 2005 – Foreign aid expert Steven Radelet welcomed new country selections announced today by the Millennium Challenge Corporation (MCC), the Bush administration’s flagship foreign aid program, but questioned the decision to include for the first time two lower-middle income countries.
Radelet, a senior fellow at the Center for Global Development and a former Deputy Assistant Secretary of the U.S. Treasury who served under both Democratic and Republican administrations, said he was pleased that the MCC had resisted pressure to rapidly expand the number of middle-income countries in the program, and had largely kept the focus on the poorest, so-called low-income countries.
“The rubber is meeting the road this year and the MCC faces some critical choices in terms of its mission, its institutional capacity, and its placement within the broader foreign assistance apparatus,” he said.
Of the 34 countries that passed the performance indicators, the Board chose to add only 6 new countries to its current list of 17 eligible for MCC funding. Two of the six—El Salvador and Namibia—are lower middle income countries, with average incomes much higher than the countries previously covered by the program.
“It’s great news that more countries passed the basic eligibility tests of good governance and strong economic policies. But not all of these countries that passed the tests were selected. Faced with a budget appropriation that will fall well below the requested $3 billion, the Board appears to be sending some clear signals that it will reward a more selective group of countries with larger, higher-impact programs,” he said. “I hope that the Board will clarify to the public why several countries that passed its criteria were not chosen for the program.”
Radelet said he disagrees with the MCC decision to expand from low-income countries to lower middle-income countries this year, or ever. “It makes little sense for the United States to be considering providing grants to countries that are three times richer than the low-income group on average, have access to other sources of financing, and for the most part have already graduated from other aid programs,” he said. “Faced with the budget reality and lack of accumulated experience, expansion was premature. But it could have been worse. The Board deserves credit for only selecting two lower-middle income countries this year,” he said.
Radelet, a leading expert on foreign aid and economic growth, was previously Deputy Assistant Secretary of the U.S. Treasury for Africa, the Middle East, and Asia developing policies on U.S. financial relations with the countries in these regions, including debt rescheduling and programs with the IMF, World Bank, and other international financial institutions. CGD’s MCA Monitor Initiative http://www.cgdev.org/section/initiatives/_active/mcamonitor tracks the progress of the Millennium Challenge Account.
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Comments
I reviewed the lists of Compact & Threshold eligible countries and was not surprised to see Kyrgyzstan included. As today's NYTimes points out, "Pentagon's Fuel Deal Is Lesson in Risks of Graft-Prone Regions" (http://www.nytimes.com/2005/11/15/international/asia/15fuel.html?), Kyrgyzstan's selection most probably had less to do with (almost) meeting requisite levels of the 16 indicators and more to do with geo-political considerations. Clearly, this is a bone thrown to the new Kyrgyz government in lieu of receiving some degree of justice from the Pentagon's and USG's "don't ask, don't tell" policy towards the now-deposed, corrupt President Askar Akayev.
The CGD's choice not to investigate or at the very least to highlight these issues - the trumping of the MCA's supposed evidence-based selection process by higher-level U.S. foreign policy considerations - diminishes its credibility to play the role an honest broker.
It is wholly insufficient to mention only that discrepancies exist in the MCC Board's stated selection policy and its actual selections and then go no further. As a non-partisan think-tank, it is incumbent on the CGD to investigate the reasons behind these discrepancies.
I can only guess that the CGD has allowed its strong support for the MCA and the MCC, as alternatives to the "old way" of doing development through USAID to inhibit its willingness to "monitor" the MCC objectively. To do so, especially in this, the Year of "the rubber...meeting the road," might simply prove to be too much criticism for the MCC, which was established on a foundation of development hype and policy rhetoric, rather than actual best practices and policy reform.
I would humbly suggest that the CGD start practicing some tough love with the MCC, if only to ensure that its new Chief Emperor Officer realizes his new clothes are much like the old ones, non-existent.
Posted by: Aaron Chassy at November 15, 2005 08:37 AM
A provocative, but welcomed comment from Aaron Chassy. Shifting attention from our analysis and commentaries on the FY'06 full program country selection process, we are now indeed working on a piece assessing the threshold program country selection guidelines and looking at some of this year's choices. Hold tight folks, and make sure to share concerns like thesewith the MCC as well.
Posted by: Sheila Herrling at November 15, 2005 05:11 PM