THE COMMONWEALTH OF INDEPENDENT STATES ON THE MILLENNIUM CHALLENGE ACCOUNT SELECTION INDICATORS: OVERNANCE IS THE MAIN CHALLENGE
Abstract
On March 2002, in Monterrey, Mexico, President Bush announced the creation of a bilateral development fund, the MCA, as the U.S. contribution to the United Nations Conference on Financing for Development. According to the plan, Bush pledged US$1.7 billion for FY 2004, US$3.3 billion for FY 2005 and US$5 billion for FY 2006, representing a 50 percent increase in the amount of aid focused strictly on development assistance.1 This marshaled the largest U.S. foreign aid increase in decades. Steve Radelet wrote in Foreign Affairs, “This move was one of the greatest surprises of George W. Bush’s presidency so far.”2 Indeed, the MCA could bring about the most fundamental changes to U.S. foreign assistance policy since the Kennedy administration.3 Historically, the bulk of U.S. foreign assistance did not have economic development as its pri-mary purpose. Instead, it was based on foreign policy goals. Brainard et al. note that though development assistance was originally intended to address development needs, decisions on aid allocation were based on foreign policy priorities.4 In other words, aid was given primarily to strategic partners though it depended on recipient countries whether they used aid for their growth. During the Cold War, foreign aid was mainly allocated to contain communism. For example, Taiwan, South Korea, Turkey, Vietnam, and others have received aid from the U.S. on this principle. In addition to the containment of communism, the aid was allocated to advance U.S. foreign policy in hydrocarbon abundant Middle East. As a part of the Camp David accords, Washington also provided a large share of ESF5 to Egypt and Israel, which are considered the largest aid recipients up to this day.6
The allocation of aid on strategic considerations has continued to be the dominant modus oper-andi long after the end of the Cold War. For example, after the demise of the U.S.S.R, the U.S. has been very active in providing assistance to the formerly communist countries to advance democratic and free-market reforms. The political gains have been tangible as well. Eastern Europe and Baltic States have joined the European Union and popular democratic revolutions have occurred in Georgia, Ukraine and Kyrgyzstan. However, outside of formerly communist countries, Middle East and Southeast Asia, the U.S. has somewhat lost coherent strategic rationale for aid allocation. The overall U.S. assistance to poor countries also fell by 25 percent.7
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The author would like to acknowledge valuable comments provided by Professor Andrew Glassberg.
See: B. Schaeffer, “The Millennium Challenge Account: An Opportunity to Advance Development in Poor Nations,”Heritage Lectures, No. 753, 27 June, 2002.
S. Radelet, “Bush and Foreign Policy,” Foreign Affairs, Vol. 82, No. 5, 23 September, 2003, pp. 104-117.
See: A. Natsios, “Challenging Orthodoxy: Changing Perspectives on Development.” The Remarks by Andrew Natsios at the U.S. Agency for International Development, 21 October, 2002.
See: L. Brainard, C. Graham, N. Purvis, S. Radelet, C. Smith, The Other War: Global Poverty and the Millennium Challenge Account, Center for Global Development and the Brookings Institution Press, 2003.
Washington’s aid accounting makes a key distinction between developmental assistance and geopolitical aid, which is distributed to strategic countries mostly as economic support funds (ESF).
See: S. Radelet, op. cit.; L. Brainard, C. Graham, N. Purvis, S. Radelet, C. Smith, op. cit.
See: S. Radelet, “Will the Millennium Challenge Account Be Different?” The Washington Quarterly, Vol. 26,No. 2, 2003, pp. 171-187.
See: S. Radelet, “Bush and Foreign Policy,” p. 108.
See: L. Nowels, “Millennium Challenge Account: Implementation of a New U.S. Foreign Aid Initiative,” CRS Report for Congress, Updated 1 July, 2005.
See: S. Radelet, Challenging Foreign Aid: A Policymaker’s Guide to the Millennium Challenge Account, Center for Global Development, 1 May, 2003; L. Brainard, C. Graham, N. Purvis, S. Radelet, C. Smith, op. cit.; L. Nowels, op. cit.
See: Sh. Herrling, S. Radelet, “The Millennium Challenge Account: Soft Power or Collateral Damage,” Center for Global Development Brief, Vol. 2, No. 2, April 2003.
See: S. Radelet, “Bush and Foreign Policy,” pp. 104-117.
FY 2004 MCA eligible countries are: Armenia, Benin, Bolivia, Cape Verde, Georgia, Ghana, Honduras, Lesotho,Madagascar, Mali, Mongolia, Mozambique, Nicaragua, Senegal, Sri Lanka, and Vanuatu.
See: L. Nowels, “Millennium Challenge Account: Implementation of a New U.S. Foreign Aid Initiative,” CRS Report for Congress, Updated 1 July, 2005: CRS-8.
Bolivia, Cape Verde, Georgia, Lesotho, Mozambique and Sri Lanka.
Armenia, Benin, Bolivia, Burkina Faso, East Timor, The Gambia, Georgia, Ghana, Honduras, Lesotho, Madagascar,Mali, Mongolia, Morocco, Mozambique, Nicaragua, Senegal, Sri Lanka, Tanzania and Vanuatu.
See: MCC Press Release, “Millennium Challenge Corporation Board Names Fiscal Year 2006 Eligible Countries,”8 November, 2005 [http://www.mca.gov/public_affairs/].
See: S. Lucas, S. Radelet, “An MCA Scorecard: Who Qualified, Who Did Not, and the MCC Board’s Use of Dis-cretion,” Center for Global Development Working Paper, May 2004.
The level of GNI per capita is an indication of the need for funds.
S. Radelet, “A Note on the MCC Selection Process for 2005,” Center for Global Development, 23 September, 2004, p. 5.
S. Lucas, S. Radelet, op. cit.
See: MCC Press Release, “Millennium Challenge Corporation Signs $295.3 Million Compact with Georgia,” 12 September, 2005 [http://www.mca.gov/public_affairs/].
Kyrgyzstan had equal to the median and Moldova and Ukraine fell slightly short of the median.
Except Russia, which has a GNI per capita of $3,410, which is higher than the minimum requirement of $3,255 and Uzbekistan, which is subject to Section 577 of the FY2005 Appropriations Act, all of the CIS countries can compete for the MCA funds (see: MCC Report FY06, “MCA Report on Countries That Are Candidates for Millennium Challenge Account Eligibility in Fiscal Year 2006 and Countries That Would Be Candidates but For Legal Prohibitions.” MCC Pub-lic Document on Identification of Candidate Countries, 2005 [http://www.mca.gov/countries/selection/index.shtml]).
See: MCC Press Release. “Millennium Challenge Corporation Board Approves Armenia Compact but Expresses Concern Regarding Irregularities in the November Referendum,” 19 December, 2005 [http://www.mca.gov/public_affairs/].
S. Radelet, “FY06 Threshold Countries—Some Disturbing Choices,” MCA Monitor Bloc, 15 November, 2005 [http://blogs.cgdev.org/mca-monitor/].
State Department, “Briefing on Secretary Rice’s Upcoming Trip to Central Asia and Afghanistan,” Washington,DC, October 2005 [http://www.state.gov/p/sa/rls/rm/2005/54624.htm].
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