Governance as a condition of aid

From Appropedia
Jump to navigation Jump to search

A campaign was planned to get the US government's Millennium Challenge Corporation (MCC) to reverse their decision on suspending funding to Nicaragua. However, there are reasons for not asking the MCC to change their decision, but rather supporting them in following their own policy - some are expressed below.

The Millennium Challenge Corporation was specifically designed as a funding agency that would provide support to countries that adhere to certain standards of good governance. Its purpose was to set high governance standards, reward the countries that achieved them, and suspend funding for the countries that did not. From their website “MCC is based on the principle that aid is most effective when it reinforces good governance, economic freedom and investments in people.” Biased municipal elections legitimately qualify as “A significant policy decline or policy reversal,” in the MCC criteria for suspension of funds.

You can object to the establishment of the MCC, and argue that all US funding for international development should go through USAID, which makes an effort to support development over political pressure, although it is not always allowed to do so. You can also, as I suggested on the SGHE blog, advocate for giving USAID more autonomy and immunity from political pressure.

However, it seems unfair, and a poor use of time and energy, to lobby MCC to go against its own stated policies. It seems unlikely that they will do it, and following the reasoning presented here, we should not ask them to. If you want aid with this kind of conditionality, you could lobby congress for the end of the MCC. They could easily move the Millennium Challenge Account funds to USAID, and have them take over current projects and select future ones.

There is a good argument for the MCC. This doesn't mean that all US foreign assistance should be subject to this kind of process, because there are many countries with restrictive, undemocratic governments with people who need and deserve development assistance. However, as an experiment with its own separate funding stream, MCC is doing some things we can learn from.

We’re seeing a lot of discussion right now about aid conditionality. A decent summary of the arguments is here. Some interesting reports say it does lead to good governance, and some convincing papers say that it does not. MCC’s obsessive focus on indicator tracking could actually give us some definitive answers on whether a big chunk of governance-conditional aid actually affects things.

Notes[edit | edit source]