New MCC Board of Directors Reviews Partnerships to Combat Global Poverty
Board expresses significant concern on Armenia and Nicaragua and calls for extraordinary interim session to review progress
The Millennium Challenge Corporation (MCC) Board of Directors held its quarterly meeting today, the first chaired by U.S. Secretary of State Hillary Rodham Clinton and attended by new Board member Secretary of the Treasury Timothy Geithner, to discuss MCC programs generally and review in detail MCC’s current partnerships with Armenia and Nicaragua. Given ongoing concerns about governance issues in Armenia and Nicaragua, the Board decided to convene an extraordinary interim review session prior to its June meeting to assess its partnerships with these countries. The new Board will make a final determination regarding MCC’s ongoing engagement in these two countries once it has had time to assess the current status.
“During this turbulent economic time, MCC remains committed to performance-based foreign assistance as an effective “smart power” tool to reduce poverty through economic growth,” said Acting MCC Chief Executive Officer Rodney Bent. “We are pleased to welcome our new Chair, Secretary Clinton, along with the other new Board members. Their vision and vigorous advocacy for development in advancing America’s global engagement is energizing.”
As a result of today’s meeting, MCC will continue its suspension of assistance for certain activities under the $175 million MCC compact with Nicaragua. In December 2008 – in response to the government of Nicaragua’s manipulation of municipal elections and a broader pattern of actions inconsistent with the MCC eligibility criteria – MCC suspended assistance for all new activities not yet under contract and the property regularization project, which was being implemented by the government of Nicaragua. MCC called on the government of Nicaragua to address credible allegations of fraud during the November 2008 municipal elections and to demonstrate a clear commitment to democratic principles by taking concrete steps to restore the legitimacy and transparency of Nicaragua’s electoral process. To date, the government of Nicaragua has not taken any meaningful steps to address these policy concerns.
The continued suspension sends a strong message to the government of Nicaragua that now is the time for serious and sustainable reform, and that the responsibility for these actions lies with the government.
MCC’s commitment to poverty reduction and economic growth in Nicaragua will continue through MCC assistance for a rural business development project benefiting small and medium agriculture-related enterprises, including some 30,000 people in rural areas. The Board will review the current suspension under the compact at a special session prior to the June Board meeting.
“Aid accountability and good governance are founding principles of MCC. The government of Nicaragua has failed to reaffirm its commitment to democratic principles and practices since its suspension in December,” said Bent. “MCC’s primary mission is to support sustainable poverty reduction, which requires MCC to partner with country governments committed to democracy and the rule of law. The government of Nicaragua must find a Nicaraguan solution to restore citizens’ faith and confidence in their system.”
As a result of the meeting, the Board reiterated its concerns about the status of democratic governance in Armenia and will not lift the hold on MCC assistance for the rehabilitation of rural roads, while allowing the government of Armenia to fund construction. MCC will continue to provide assistance for irrigation infrastructure, which is well underway and assists Armenian farmers. The Board will review the current hold on funding road activities at a special session prior to the June Board meeting.
“The Board’s decision today signals to the government that it has failed over several years to address concerns raised not only by MCC and other U.S. Government agencies, but the international community as well. It’s now incumbent upon the government of Armenia to restore the Board’s confidence to its commitment to democracy and good governance. MCC has given the government of Armenia every opportunity to make meaningful reforms and will continue its direct communication about its expectations moving forward,” said Bent.
The Board also reviewed the progress and emerging results from MCC’s partner countries implementing poverty reduction and policy reform programs worldwide. Although MCC’s funding level was reduced in the FY2009 Omnibus Appropriations Act, ongoing compact and threshold programs will not be affected by these cuts. MCC also will continue to work with partner countries to develop compact proposals to reduce poverty.
The Board discussed the status of MCC’s compacts in development with Moldova, Senegal, Jordan, Malawi, and the Philippines. In addition, it discussed the compact development process for Colombia, Indonesia, and Zambia, the three new countries selected by the Board in December as eligible for MCC compact assistance.
The Board also received an update on MCC’s threshold programs. Liberia and Timor-Leste were selected as eligible for MCC’s threshold program by the Board in December. The threshold program assists countries that have shown progress and commitment toward policy reform. These countries are considered for assistance to further improve their performance on the indicators that comprise the MCC eligibility criteria. To implement the threshold program, MCC works collaboratively with other U.S. Government agencies, primarily USAID.
“MCC has developed a strong relationship with these countries, which present real opportunities to address critical policy issues and reduce poverty in Asia, Latin America, the Middle East, Africa, and Eastern Europe,” said Bent. “These countries include some of the most populous and poorest countries in the world and contain striking pockets of poverty.” Bent added that, “MCC’s ability to support countries vitally depends on substantial funding from Congress.”
The Millennium Challenge Corporation is a unique government agency that includes private and public sector members on its Board. The MCC Board of Directors is chaired by Secretary Clinton and also includes Vice-Chair Secretary of the Treasury Timothy Geithner, Acting U.S. Trade Representative Ambassador Peter F. Allgeier, Acting Administrator of USAID Alonzo Fulgham, Acting MCC CEO Rodney Bent, and four private sector members appointed by the President of the United States with the advice and consent of the U.S. Senate: Former Senator Bill Frist, Catholic Relief Services President Ken Hackett, International Republican Institute President Lorne Craner, and Greycroft, LLC founder Alan Patricof.
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Millennium Challenge Corporation (MCC), a United States government
agency designed to work with developing countries, is based on the principle
that aid is most effective when it reinforces good governance, economic freedom,
and investments in people that promote economic growth and help eliminate extreme
poverty. For more information about MCC, visit www.mcc.gov.