The Foreign Service Journal, April 2005

ment banks, with the World Bank taking the lead, undertook certain modest changes to shore themselves up against international calls for their reform and even elimination. These changes included a shift toward increasing the accountability of recipient governments. From the 1970s into the 1990s, leaders of these governments, many of which were authoritarian and corrupt, treated the banks’ loans as their own personal slush funds, transferring the lion’s share to a labyrinth of per- sonal offshore accounts while doling out the rest to cronies through networks of administrative and politi- cal corruption. A World Bank report, for example, documented how Indonesia’s former President Suharto managed to abscond with over $300 million in World Bank loan funding during the 1990s alone. As a result, even the banks began projectizing their loans, at least in the project appraisal and design stage, to prevent wholesale theft of funds intended for loan-funded projects. In addition, they broadened participa- tion in the loan approval process to include both national and internation- al nongovernmental advocacy groups and revamped internal procurement processes to be more competitive at the country level. Therefore, it is surprising, even disconcerting, that slightly more than a decade after these reforms were initiated, the World Bank and other multilateral development institutions are now joining the Bush administration in calls for a return to non-projectized assistance, a dis- carded, discredited form of aid. They justify their decision by point- ing to poor performance levels asso- ciated with projectized assistance. But rather than looking inward to examine the causes, the Bush administration is merely chucking the proverbial baby out with the bathwater. Performance Measures vs. Procedural Constraints Proponents of the MCC approach point to purportedly objective perfor- mance measures, arguing that they are a less politicized, more analytically sound means of selecting countries, measuring their performance and ensuring that funds are allocated, dis- bursed and spent responsibly. But just how valid is the claim that perfor- mance measures are more effective than procedural constraints imposed by rules and regulations? The Bush administration assumes that the compact negotiated by the MCC will ensure that the recipient country government uses MCC monies appropriately. Moreover, countries will have been selected based on a determination that they have been and are likely to continue to be “good performers” across the MCC’s 16 performance indicators. But this assumption is problematic on several counts. 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 39 SERVING THOSE WHO SERVE AMERICA S I NCE 1 9 7 1 2004 represents our 34 th year helping to maintain America’s fleet of vehicles throughout the world. All of us at D & M consider it an honor to have worked with all of you through these years. We are aware of the importance of your official and private vehicles, forklifts, generators, tools and equipment. We look forward to continuing this service in a professional manner. We are here to help, just ask! Gary Vlahov www.dmauto.com (516) 822-6662; FAX: (516) 822-5020; E-mail: info@dmauto.com