MCA Monitor Blog

One only need to predict the worst that will happen with MCC in Georgia to open eyes as what may be the potential policy fallout. An example of a development initiative in Georgia well illustrates what is going on in how things change over time.

The Millennium Challenge Corporation (MCC) is a new U.S. Government corporation assistance/development programme that hopes to redefine the role of providing aid to developing countries. It also defines if there is a ‘future in foreign assistance’ (Atwood: 2002) which introduces the concept of Millennium Challenge Accounts and assistance for countries that are willing to invest in their people and provide democratic institutions.

Certainly this is a strong statement regarding the imposition of democracy in societies and cultures, which have never subscribed or valued that form of government. The US government wants to support growth and poverty reduction in carefully selected countries that demonstrate a commitment to just and democratic governance, economic freedom, and investments in their citizenry. However, as in Reforming Foreign Assistance, Washington Post, Tuesday, January 3, 2006, this may be a daunting task.

The Washington Post article addresses the way in which money, given directly to governments, would often go missing, and so a shift was made to working through non-governmental organizations in order to build firewalls and develop local ownership. However, it soon became apparent that the efficiency and direct contact these large NGOS had with local communities was weak and it soon became obvious that the countries themselves could just as effectively implement these programmes (and even perhaps more effectively). Naturally, there are special interests here, as the Washington Post article clearly indicates, and these ‘special interests’ have lobbyists (Reforming Foreign Assistance: A6). It is clear that success will lie in organization and management unless the concept itself is fatally flawed. In this case, it is good to help those selected countries that are doing ‘some’ things right, and have some track record while making them accountable. Using Georgia to illustrate it appears that ‘good change’ does not occur in isolation from political realities. Moreover, one must take a look at both sides of the debate on the effectiveness of foreign assistance as in a speech entitled: ‘Is there a future in foreign Assistance, (Atwood, B, December 3, 2002, available at www, developmentex.com {accessed February 22, 2006]

Moreover, being able to evaluate the topic from a local perspective is helpful in understanding the larger picture of if there is a future to foreign assistance programmes or no? There are certain contradictions: Georgia did not meet all the MCC indicators. A Washington based non-governmental organization did an analysis ‘Who Qualified and Who Did Not’ and it was not flattering (MCC Press Release, 2005).

The NGO confirmed that Georgia should have been given funding from a different account (economic support funds) until they could meet the qualifying indicators. Bolivia was another country that did not quite meet its indicators. There appears to be some politics in the selection process, although it is not certain whether this decision ever made it to the US president.

Nonetheless, it does appear that the US government and the Bush Administration are concerned about the "total" lack of accountability NGOs (including a host of international organizations) have when receiving grants and cooperative agreements from USAID. These NGOs can do what they want, and are "assumed" to be doing well, because they are "fellow travelers" with USAID. They all claim to be helping in improving the livelihood of local farmers, small business, etc. However, as far as the concept of MCC is concerned, it is a good one. After seeing the way USAID money has been used to no real benefit in Georgia, it seems as if change is needed. The concept may be good, but the key will be sufficient overseeing and transparency. Inevitably there will be some corruption as described in n analytical framework for combating corruption need to improve transparency and accountability in assistance programmes (TAPEE, 2005).

In an email message from Gia Maisashvili, former Enron employee, and a likely presidential candidate to challenge the current Georgian leadership, it seems that that George W. Bush may have authorized funding for Georgia even when it did not meet the eligibility criteria. He wrote ‘Georgia didn't meet the ‘conditionality’ of the Millennium Challenge; however, Bush himself authorized it.

He wrote, ‘you are right on the money about the feeding frenzy’ [referring to how MCC money will be used], but since none of them have started to function, it is too early to say.’ (Maishashvilii, 2005). To draw the conclusion, many people have the wrong impression about the NGO sector, and much of this problem appears to be the result of the way in which public money is used.

In comparison, Millennium Challenge Accounts (MCA), an alternative, could function really poorly and still be better than USAID. USAID knows this, and it is afraid they are going to lose their funding to MCA, and they just might. It is not a certainty even if projects have “hiccups” in the start-up, whether MCA can help but it may still be more efficient and better than USAID

Jeffrey Silverman, journalist, long-time resident of Georiga, going-on 14 years, MSc University of Kentucky