The Foreign Service Journal, April 2005

40 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 First, the underlying assumption that a recipient country government’s good performance leads to account- ability is flawed. MCC CEO Paul Applegarth himself pointed to the challenges the agreement presents in a research paper he wrote in 2003 while he was an analyst at the Center for International and Strategic Studies. Foremost among them, he noted, the arrangement resembles very much the accountability system used by the World Bank with its struc- tural adjustment loans during the 1970s and 1980s, which has since been deemed a failure by many develop- ment policy experts. As was demon- strated then, such an arrangement left open several opportunities for grand- scale administrative corruption, exam- ples of which have been well docu- mented by the world’s environmental advocacy organizations. Most governments in developing countries lack the kinds of internal and external audit functions and other checks and balances necessary to assure a modicum of accountability, even under a contractual arrangement like the MCC’s compact. They also lack staff with the necessary skills and they lack the budgets to finance mon- itoring and audit operations. To be sure, corruption has many roots: the absence of a tradition of the rule of law, poorly developed safeguards for the freedom of speech, lack of trans- parency and accountability, a public inexperienced in assuming and prac- ticing their democratic responsibili- ties, and poorly-paid and poorly- trained civil servants. But the bottom line is that the combination of low lev- els of organizational capacity, institu- tional strength and political will makes assuring MCC financial and program- matic accountability problematic at best. True, these gaps could be addressed by targeted USAID devel- opment assistance programs, but then the problem arises of “project-centric development,” where the project “cart” is put before the development “horse.” In other words, the kinds of programs designed to enable the recipient country to meet the MCC’s operational requirements may not necessarily correspond to the country’s highest-priority development chal- lenges. MCC program officers, for their part, will most likely lack sufficient time and in-the-field organizational and administrative support to be able to follow and track the money trail effectively themselves. Even with a long-term presence in the field, USAID mission technical staff spend an enormous proportion of their time simply documenting how U.S. taxpay- er money has been spent, mainly by U.S. organizations, as intended. (This is true even though these groups, both for-profit and nonprofit, already have elaborate administrative management and financial reporting systems specif- ically developed to comply with U.S.