Wednesday, June 22, 2005

Beacon No. 46: Two (African Islands) Plus Two (Contiguous Latin Republics) Equals Four


The Millennium Challenge Accounts are one of President Bush's bolder policy initiatives. An overseas version of Bill Clinton's vow to end welfare as we know it, the MCA program is supposed to "provide financial assistance to poor nations that show progress in establishing what the United States considers stable democratic governments and pursuing sound economic and social welfare policies," a June 16 New York Times article says.

The MCAs are all about accountability: "Show some determination in getting your house in order," America murmurs, "and we'll send funds to help you do it better and faster." The job of determining just how orderly another country's house is belongs to the Millennium Challenge Corporation—but it looks like MCC head Paul V. Applegarth will resign in the near future.

Applegarth, who helps determine which countries get Millennium Challenge money, said he would walk following complaints by visiting African leaders about how slowly his organization was disbursing funds. At least one news report has it that Applegarth is leaving because Congress is cutting his agency's funds, but it's also possible he had to fall on his sword because the MCC isn't disbursing money fast enough.

The MCC has been a bit stingy in its first 17 months: On the eve of the African leaders' visit, only two countries—Madagascar and Honduras—had qualified for funds out of 16 candidate nations.

Interestingly, the Millennium Challenge Corporation announced—on the very day of the Africans' complaints—that two more countries had qualified: Cape Verde and Nicaragua.

(The announcement coincided nicely with the visit of leaders from the world's poorest continent, and has the short-term effect of rewarding a Central American nation that might help out in future sparring with Venezuela. It seems strange, though, that the MCC has so far only chosen two African island states and two contiguous Latin American republics. Isn't there an Asian nation or a mainland African country like Benin or Ghana that qualifies?)

Since relatively little money has been given out, the Millennium Challenge Corporation makes the case that it's having a beneficial effect just by setting aggressive criteria for candidate nations, noting increases in those countries' anti-corruption campaigns along with drops in economically vital factors like the waiting period to start a business.

The Millennium Challenge Accounts are the carrot approach on a grand scale; countries that want relatively modest amounts of funding—the MCC's budget adds up to $2.5 billion in fiscal 2004 and 2005—have to modify some pretty large chunks of their laws and practices. I'll be interested to see how high the MCC sets the bar for candidate countries—and how their perceptions of the U.S. change over time.

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