The Foreign Service Journal, April 2005

pact” that spells out a results structure against which the program’s progress will be evaluated. Political Conditionality All of the MCA innovations are designed to answer longstanding crit- icisms within the development com- munity of assistance effectiveness. Study after study done in the World Bank during the 1990s connected poverty reduction and sustainable development with a “good policy environment” — meaning a well-gov- erned country. One of the most star- tling conclusions of a 1998 study was that the only robust correlation with successful structural adjustment pro- grams was “democratically elected governments.” Because the World Bank charter prohibits political condi- tionality this was not a usable correla- tion, at least not directly. World Bank officials from President James Wolfensohn on down say that the Bank is, in effect, “doing democracy” — without talking about it. Transparency, accountability and participation are all key to successful programs of sustainable development, but the best mechanism for all is func- tioning democratic institutions. The question is, does doing democracy while using “governance” circumlocu- tions undercut the pressure for democracy-building needed to make programs of poverty reduction and sustainable development work? Given that the MCA was devel- oped in the Treasury Department, it is no surprise that it reflects the World Bank’s reluctance to use the “D” word, even while incorporating indicators that move further into political condi- tionality for development assistance. Though he didn’t use the “D” word, on May 10, 2004, President Bush told representatives of the first 16 MCA- eligible countries that the intent of the program is to “link new aid to clear standards of economic, political and social reform.” In his May 19, 2004, statement to the House International Relations Committee, MCC CEO Paul Applegarth didn’t mention democracy either, but did lay out a goal for MCA countries of “developing capacity to govern wisely.” The use of political indicators for selection criteria is frequently touted as a major innovation of the MCA. The “Ruling Justly” category has six indicators: Voice and Accountability, Rule of Law, Control of Corruption, Government Effectiveness, Political Rights and Civil Rights. The first four use World Bank assessments. The final two, however, use Freedom House ratings. Freedom House’s scoring for “political rights” includes free and fair elections (the core demo- cratic institution), as well as other fun- damental political rights. A country, however, need not score above the median on political rights to be eligi- ble for the MCA. In fact, two MCA- eligible countries — Armenia and Morocco — rank low on the 2004 Freedom House political rights rat- ings; neither has held elections that meet international standards. In theory, even if democracy is not an explicit condition, the MCA will contribute to democratization in four ways: Act as an incentive regime. Given the significant amounts of assis- tance, the “Ruling Justly” indicators will act as an incentive for govern- ments to meet international democra- cy standards to qualify. One element in the evaluation of MCA grant pro- grams will be “progress on meeting MCA indicators.” Legitimize democratic reform. The significant size of the MCA grants should legitimize democratic reform by providing concrete benefits to ordinary citizens, especially if democracy is perceived to be an eligi- bility criterion and the benefits are distributed in wide-impact areas such as agriculture, education and health. Strengthen transparency and accountability. The MCA process should strengthen transparency and accountability in government institu- tions through MCA program develop- ment consultation and evaluation mechanisms. Give general and sustained attention to MCA countries. Given the high profile of the MCA, grant- recipient countries will be a focus of U.S. attention. Even without direct American pressure on democracy- building, spotlighting the country in such a broad manner should inhibit anti-democratic developments. Countries Named, Questions Raised In May 2004 the MCC board, chaired by the Secretary of State, announced the first group of MCA- eligible countries. The 16 countries are Mongolia, Armenia, Georgia, Honduras, Nicaragua, Sri Lanka, Vanuatu, Ghana, Benin, Senegal, Mozambique, Lesotho, Madagascar, Mali, Bolivia and Cape Verde. Morocco was added in 2005. In six cases the MCC board gave justifica- tions for inclusion of countries that did not meet the eligibility rules, rang- ing from mitigating circumstances on Lesotho’s falling below the median on the “days to start a business” indicator 32 F O R E I G N S E R V I C E J O U R N A L / A P R I L 2 0 0 5 All of the MCA innovations are designed to answer longstanding criticisms within the development community of assistance effectiveness.