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AID: U.S. Names Nations Eligible Under New Scheme

Emad Mekay

WASHINGTON, May 7 2004 (IPS) - The Bush administration has chosen 16 countries to receive aid under a new programme that provides financial assistance for nations that undertake political and economic reforms approved by Washington.

U.S. President George W Bush had promised 15 billion dollars over five years to combat the HIV/AIDS pandemic and an additional five billion dollars annually in development assistance by 2006 via the new Millennium Challenge Account (MCA), which is designed to reward countries that spend the money on health and education, to remake their laws, and to adopt market-opening measures.

The eligible countries announced Thursday are Armenia, Benin, Bolivia, Cape Verde, Georgia, Ghana, Honduras, Lesotho, Madagascar, Mali, Mongolia, Mozambique, Nicaragua, Senegal, Sri Lanka and Vanuatu.

The U.S. Congress has appropriated one billion dollars for the MCA, which is run by the Millennium Challenge Corporation (MCC) for this fiscal year.

Ninety percent of this year’s one billion dollars in assistance will go to the 16 countries named, with the rest going to countries that were ranked lower.

Bush has requested 2.5 billion dollars for the MCA for the next fiscal year.

"Our mission – encouraging and rewarding good policies that produce sustainable economic growth – holds profound implications for freedom and security across the globe," MCC Chief Executive Officer Paul Applegarth said Thursday.

"Today really is a milestone for MCC … and it’s really intended to be a new approach to foreign assistance," he told journalists. The programme, he added was established "to focus on the longer-term; to really encourage policy reform in countries that promote growth."

The recipient countries were chosen according to 16 development indicators listed in three broad categories: "ruling justly, encouraging economic freedom, and investing in people."

The indicators include civil liberties and political rights; fiscal and trade policy and control of corruption; and immunisation rates for diseases like measles.

Before they receive the money the 16 nations are expected to develop plans outlining measures they intend to take to fulfil their pledges.

There are no specific deadlines for that process, and the money will be disbursed depending on how fast a country develops its plan.

The funding is not guaranteed, said Applegarth. Countries’ plans, which should be developed in consultation with civil society, must then be approved by the MCC.

"MCC will evaluate them in terms of growth, the same way (that) if you were doing an investment, you would look at financial returns. Well, MCC is not looking at financial returns; it’s looking at economic growth returns, first and foremost," he said.

The official said that a delegation from MCC will visit each of the recipient countries, probably starting in late May, to discuss their plan.

Applegarth also called the MCA a key part of the U.S. national security strategy.

"It’s important to look and see these efforts as a part of the United States’ international security strategy," he said. "Development assistance was added to the security strategy, along with defence and diplomacy, at the beginning of the Bush administration. These are tangible efforts to implement that strategy."

U.S. Secretary of State Colin Powell said earlier Thursday the MCA will link with other U.S. efforts to fight HIV/AIDS and foster development.

Humanitarian and advocacy groups had previously warned that Washington increasingly views foreign assistance as a tool for national security.

InterAction, the largest U.S. alliance of international development organisations, had argued that judging aid results partly on the criteria of national security goals would impose ”unrealistic indicators of success” and distort the long-term development work necessary to produce sustainable reform and growth.

InterAction, which includes groups like Bread for the World, Save the Children, World Vision International, Catholic Relief Services and Oxfam America, faulted the policy for fragmenting aid efforts and dividing work among too many government agencies.

For example, the MCC, an independent entity, will administer the new foreign assistance programme, the MCA, while the State Department will separately run the Middle East Partnership Initiative, a scheme that provides aid to countries that reform their education systems and promote open economies.

The United States has been under fire for penny-pinching on development aid. Washington’s level of donations has fallen progressively over the last 15 years to about 0.1 percent of gross domestic product (GDP), the lowest level of all industrialised countries.

The World Bank says that financing the United Nations millennium development goals, which include halving world poverty by 2015, could cost up to 60 billion dollars a year in additional aid for the next 15 years. This is more than double the current global levels of assistance.