Heritage Foundation Leadership for America

President Bush’s new, performance-based foreign aid program, the Millennium Challenge Account (MCA), has received widespread bipartisan support because of its potentially transformational approach to require the nations that receive economic development assistance to satisfy a "work requirement" by adopting policies consistent with good governance and economic freedom.

On July 16, the House of Representatives passed the Millennium Challenge Account, Peace Corps Expansion, and Foreign Relations Authorization Act of 2003 (H.R. 1950), 382 to 42.

Yet already there is a movement afoot to divert money away from the MCA to fund other programs. Congress should not do this because:

1. The MCA is a good idea. If given a chance to succeed, the MCA could reduce global poverty and change foreign aid, as it exists today. Unlike traditional aid, burdened with multiple and sometimes conflicting objectives, the MCA would focus solely on economic development. Because foreign aid works best by accelerating economic development through sound policies, MCA aid would be distributed only to those countries most committed to governing justly, investing in health and education, and promoting economic freedom--policy areas empirically related to economic development. If the MCA succeeds, it could be used as a model for reforming traditional development assistance.
   
   
2. Without sufficient funding in its first year, the MCA will likely fail. As an experimental program, the MCA will face its toughest challenges in its first year. The money--ideally, the $1.3 billion originally requested by the Administration--wouls be useed to do the following:
3. • Establish the Millennium Challenge Corporation (MCC), its new independent agency;
   • Identify the specific criteria to measure a potential recipient’s commitment to good governance, investment in health and education, and economic freedom;
   • Construct a fair and transparent methodology that would determine what countries will qualify for the MCA; and
   • Evaluate and fund the specific development programs for each eligible country.

Recommendation: Congress should oppose any bill, or amendment to an existing bill, that would divert money away from the Millennium Challenge Account.

For more info on the MCA, see

• How to Prevent the Millennium Challenge Account from Becoming Like Traditional Foreign Aid
• How to Improve the Bush Administration’s Millennium Challenge Account