proposed the Millennium Challenge Account (MCA) in 2002 as a means
to give aid to countries "that have demonstrated a commitment to
ruling justly, investing in people, and encouraging economic
passed the House this summer, and the Senate version will be voted
on this month. Though the current bills differ in criteria, the
final version should:
- Contain a sunset
- Administer the
program independently of the State Department and the U.S. Agency
for International Development (USAID), and
- Focus on sound
economic policies as the criteria for eligibility.
These are key
issues that will determine if the MCA lives up to its mission.
The President is
seeking $5 billion per year when the MCA is fully funded by FY
2006. This funding will be an addition to the $11 billion per year
that the United States earmarks to Official Development
The MCA has the
potential to move economies towards self-sufficiency, while
reforming traditional foreign aid, where there has been,
historically, little return. Many countries have taken the money,
promised to do better and then squandered it.
Sound Economic Policies
As a performance
based foreign aid program, the MCA seeks to eliminate this vicious
cycle by requiring countries to have sound policies in place in
order to qualify. As President Bush noted in a speech last year,
"Sound economic policies unleash the enterprise and creativity
necessary for development. So we will reward nations that have more
open markets and sustainable budget policies, nations where people
can start and operate a small business without running the
gauntlets of bureaucracy and bribery."
inception, the has revealed that open
markets are associated with higher standards of living.
The focus should
be sound economic policy. The final legislation should not be
watered down with provisions that have nothing to do with this
improperly or in the same method as traditional foreign aid, this
program will be doomed to fail. The MCA should not fall under the
State Department and USAID simply because they administer foreign
aid. The MCA should be administered by an independent agency and
should be held accountable.
Sunset = Effectiveness
MCA should have a sunset provision. The House legislation has a
sunset provision ending the MCA on October 1, 2007; yet, the Senate
version does not.
Without imposing a
sunset, the MCA has the potential to become another perpetual
government program. Imposing a sunset will force the MCA to prove
its worth by being effective. Countries that do not currently
qualify for the MCA will be slow to change if they know the MCA
will continue indefinitely. If a sunset is implemented, countries
will be motivated to implement sound reforms in order to qualify
before the money is gone.
As the saying
goes, "the devil is in the details." The MCA has the potential to
assist and reward developing nations that have chosen to implement
sound economic policies. Yet, without sound criteria, good
administration, and a sunset provision to keep the program
accountable, the MCA will likely become another expensive
bureaucratic tool that produces few results.