The Foreign Service Journal, April 2005

A P R I L 2 0 0 5 / F O R E I G N S E R V I C E J O U R N A L 31 he Millennium Challenge Act of 2003 set up a new entity, the Millennium Challenge Corporation, to implement a major new development assistance pro- gram. The Millennium Challenge Account is accurately described as a bold, fresh approach to development assistance, in its method of selecting countries, developing and implementing grant programs and in the significant size of the expected grants, although the president’s request for $3 billion in the 2006 budget is far short of the original $5 billion pledge. To date, 17 MCA-eligible countries have been selected. Of these, 15 have presented country proposals or concept papers that are under review by the MCC as the basis for grants. On Feb. 14, the MCC board approved the first country “compact,” awarding Madagascar $110 million over 4 years for projects focused in the areas of property rights, agricultural business and financial investment. In addition, 13 countries have been named eligible for the FY 2004 and FY 2005 “Threshold Program,” under which countries that do not yet qualify for MCA assistance are assisted by the MCC and USAID to improve their per- formance on the selection criteria. To qualify for the MCA in the first place, countries must have a per capita GDP level of $1,415 or lower, and must meet standards in three categories: “ruling justly,” “encouraging economic freedom” and “investing in peo- ple.” In all, there are 16 indicators under these three headings against which a country is scored, in competition with other countries. To be eligible for MCA, countries must score above the median in half of the indicators in each category, and must not fall significantly below the median on any single indicator. They must also score above the median on the anti-corruption indicator. Eligibility is not automatic, however. The MCC board can take other factors into account in evaluating the pool of candidates, through, inter alia, consulting with experts and drawing on supplemental information from the State Department Human Rights Reports and Transparency International’s Corruption Perception Index. MCA grants will be awarded on a foundation model, as opposed to the “country programming” approach used by USAID. Instead of the U.S. designing projects and pro- grams, recipient governments will have responsibility for developing proposals in line with their own development priorities. Such country “ownership” is justified by the pri- mary purposes of the MCA, to stimulate competition among countries to adopt a “good policy environment” (as mea- sured by the MCA indicators), and to minimize corruption and waste in development assistance. Each government’s proposal can be developed and implemented with the par- ticipation of nongovernmental organizations and the private sector and, indeed, all proposals must specify a plan for con- sultation with civil society and the private sector. Once a government has formulated its proposal, it then enters into negotiations with the MCC with the aim of signing a “com- T HE M ILLENNIUM C HALLENGE A CCOUNT : S PUR TO D EMOCRACY ? T HE MCA OPENS THE DOOR TO A DEBATE ON DEMOCRACY AND GOVERNANCE CONDITIONALITY FOR ASSISTANCE . NGO S IN DEVELOPING COUNTRIES NEED TO WALK THROUGH THAT DOOR . B Y E LIZABETH S PIRO C LARK Elizabeth Spiro Clark, a longtime member of the Journal ’s Editorial Board, was a Foreign Service officer from 1980 to 2000. She is now an associate at the Institute for the Study of Diplomacy at Georgetown University and is a former fel- low at the National Endowment for Democracy’s International Forum for Democratic Studies. T