A Challenge That Should Not Be Met | Citizens Against Government Waste

A Challenge That Should Not Be Met

The WasteWatcher

Six years ago, President Bush called for the establishment of the Millennium Challenge Corporation (MCC), “a new compact for global development defined by new accountability for both rich and poor nations alike.”  

The program would supposedly provide aid to poor nations in return for improvements in economic and civil liberties.  However, like most “new” government programs, the MCC soon revealed itself to be the same old foreign aid waste, thinly veiled by free market language and platitudes toward “accountability.”

Yet that has not stopped the program from doling out new grants.  The MCC announced on June 17 that it would approve a $480.7 million grant to the nation of Burkina Faso, largely to provide land reform, agricultural reform, and “girl-friendly” schools.  The money was provided under the guise of alleviating the cost of rising food prices.

Meanwhile, political rights in Burkina Faso have deteriorated into a one-party ruling system, and the State Department describes the state of human rights as poor.

The MCC’s own country fact sheets indicate declining standards in Burkina Faso.  Control of corruption in the West African nation has deteriorated significantly from a score of 0.78 in FY07 to 0.34 in FY08, leading one to wonder how exactly the MCC plans to keep control of the funds that are being doled out in such an environment.  Indicators of economic liberty, such as regulatory policy (a drop from 0.48 to 0.29) and trade policy (a drop from 60 to 57.2), have either stagnated or decreased. 

This recent showering of gifts comes on the heels of a $285 million grant from the MCC in March 2008 for railroad infrastructure spending in Mongolia, a country that recently proposed a allowing for the nationalization of Western assets.  This development is particularly chilling, as Mongolia is strongly influenced by its powerful autocratic neighbor, China.  

Ironically, the MCC press release announcing the Burkina Faso grant also contained a paragraph regarding Armenia, and the MCC’s board of directors’ “concern” over that government’s “respect for the freedom of assembly, the arrests and detentions of opposition supporters, and the need for an independent inquiry into the conduct of the election and post-election events.”  Armenia was one of the first countries enrolled in the MCC, and signed a $235.7 million contract in 2006 for road building.  Yet corruption remains as entrenched in the Armenian government as it ever was.  Armenia's score from the Index of Economic Freedom, a country-by-country ranking of economic freedom (conducted by The Wall Street Journal and The Heritage Foundation), has remained virtually unchanged, from 70.35 in 2004 to 70.34 in 2008.  

Of the 17 countries initially made eligible for MCC grant money in 2004, only four have improved their scores in the Index of Economic Freedom by more than a point, while nine have seen their scores decrease.  This new form of direct foreign aid by the MCC has done seemingly little except allow ruling political groups in these countries to consolidate power, pointing to the new roads and irrigation systems that American taxpayers have provided as their chief accomplishments.

 If there is anything positive in all of this, it is that Congress has consistently under-funded the program.  When President Bush first proposed the program in 2002, he vowed to appropriate $5 billion to it by fiscal 2006.  Today, the MCC has $1.54 billion to its name, thanks in part to repeated calls for spending restraints by concerned citizens and watchdog groups such as Citizens Against Government Waste.

 Yet even this amount is far too much for a program that has contributed so little.  It is time for Congress to step up to the plate and abolish the MCC.

- Evan Lisull