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 37 ast September the Washington Post added its voice to the chorus of foreign policy insiders, embracing the Bush administration’s Millennium Challenge Corporation. One of the more disturb- ing reasons for its support of the Millennium Challenge Corporation was that it “operates outside the government’s traditional aid pro- gram … and promises to distribute money in the efficient manner pioneered by the World Bank.” Leaving aside the naiveté of associating “efficiency” with anything having to do with the World Bank, an institution that has operated for years with a policy of benign neglect toward the corruption and waste committed by its loan recip- ients, the governments of developing countries, it is impor- tant to ask the following question: Will the Millennium Challenge Corporation, as currently designed and operated, produce significantly better development outcomes than the government’s traditional aid program, which is to say, the programs carried out by the U.S. Agency for International Development? For many longtime development policy experts in and outside of the government, the answer is no. Rep. Tom Lantos, D-Calif., one of the few members of the U.S. Congress to assume an active, constructive role in overseeing foreign assistance, made the following assessment: “I have severe reservations about the administration’s proposal to create a new independent agency to administer the MillenniumChallenge Account and to further fragment U.S. foreign assistance.” Steve Radelet, of the Center for Global Development, has expressed similar reservations, stating: “Dividing the U.S. foreign assistance program into two major agencies [USAID and the MCC], in addition to several smaller agencies … could impede coordination and increase redundancy.” The issue of fragmentation in program imple- mentation speaks to the larger issue of incoherence in policy design. Potentially, however, the MCC could help sharpen the focus of U.S. development policy and program approaches, or at least serve as an assistance delivery mechanism that places a premium on achieving results while insisting on accountability. It is intended to represent the antithesis of the “traditional aid program,” long criticized for redundancy, ineffectiveness and worse. As currently designed, the MCC’s resources will be substantial, rivaling and in some cases exceeding those of USAID development assistance monies. (The Bush administration has initially designated USAID’s role as preparing countries for potential eligibility to the MCC program of assistance.) But to succeed in breaking new ground, the MCC will have to overcome major challenges centered on the issues of financial and program accountability. The MCC’s institu- tional design, as codified in the enabling legislation, does not address accountability adequately. But to deal with this problem effectively, the MCC will have to confront head-on the habits of institutional practice in the U.S. foreign policy apparatus, which weigh heavily against real reform. Accountability v. Flexibility The MCC operates without the multilevel accountability systems associated with USAID programs. It is still unclear in the enabling legislation, The Millennium Challenge Act of 2003, 22 U.S.C.A. 7701, 7707(b), whether the countries T HE M ILLENNIUM C HALLENGE C ORPORATION : M AKING I T W ORK P OTENTIALLY , THE MCC COULD HELP SHARPEN THE FOCUS OF U.S. DEVELOPMENT POLICY . B UT TO SUCCEED IN BREAKING NEW GROUND MAJOR CHALLENGES WILL HAVE TO BE OVERCOME . B Y A ARON M. C HASSY The author is a former USAID FSO. He and his wife, an active-duty USAID FSO, reside in Pretoria. L