On October 5, the Senate Foreign Relations Committee held a hearing to examine the progress of the Millennium Challenge Corporation (MCC). The MCC was established in January 2004 to administer the Millennium Challenge Account (MCA), a foreign aid program that links assistance to democratic reforms.
Praising the MCC for “charting an innovative course in development assistance,” Chair Richard Lugar (R-IN) pointed out that fighting “poverty, disease, and economic hopelessness” helps to “overcome anti-American opinion in dozens of nations around the globe.” Sen. Lugar said that Congress has been “parsimonious” with foreign aid funds, adding, “President Bush has pledged to seek $5 billion for the MCC in its third year of operation, which will be 2006. This Committee authorized $1 billion for 2004 and $2 billion for 2005. I am hopeful that appropriators will find a way to increase funding for the MCC.”
Sen. Russ Feingold (D-WI) agreed that the aims and purposes of the MCC are “admirable,” but voiced his concern that “good ideas are not always easy to implement.” He stressed the need for the MCC to have “concrete plans” to monitor and evaluate its projects.
MCC Chief Executive Officer Paul Applegarth stated, “We believe that by providing incentives for countries to adopt policies for governing wisely, investing in their own people, and promoting economic freedom, we strengthen abroad the critical relationship between free market ideals and fundamental democratic principles that together form the ‘bedrock’ of stable and responsible nations.” He emphasized that countries applying for MCA assistance must meet “stringent standards mandated by Congress,” and must “participate as full partners in the development process.” Mr. Applegarth said that, based on indicators “developed and monitored by the World Bank Institute, Freedom House, and other entities independent of the U.S. government,” 16 countries were chosen in May 2004 to submit aid proposals. “We are evaluating the first proposals and concept papers that have arrived from 13 of the 16 countries,” he added.
Highlighting the role of public feedback, Mr. Applegarth reported a change in one of the indicators concerning girls’ education: “In a direct response to public comments, MCC replaced the Primary School Completion Rates indicator (for all students) with a Girls’ Primary Completion Rates indicator. We made the change to emphasize clearly the proven importance of primary education for women in terms of poverty reduction and high economic return because data was now available to provide a measurable ranking.”
Mr. Applegarth also outlined the MCA Threshold Program, which provides funds to countries that are close to qualifying for MCA assistance and have made a commitment to reform. “Distinct from the poverty reduction and economic growth programs that are MCC’s primary focus,” he said, “the hope of qualification presents these countries with an opportunity to actively address and improve their performance on the policy indicators.”
