Compassionate Conservatism Confronts Global Poverty

Lael Brainard
Lael Brainard National Economic Advisor - National Economic Council

March 1, 2003

On March 22, 2002, President George W. Bush announced his intention to request an increase of $5 billion per year over current foreign assistance levels of $12.5 billion through the creation of a bilateral development fund, the Millennium Challenge Account (MCA). The MCA presents an enticing opportunity to transform U.S. development policy. Because the MCA is being crafted at a time when national security has returned to the forefront of the nation?s consciousness, however, there is an acute risk that the MCA will instead further add to the confusion of overlapping U.S. programs and criteria for developing nations. In announcing the program, Bush stated explicitly, “We fight against poverty because hope is an answer to terror.”

To implement the program, the administration has recommended the creation of an independent agency, the Millennium Challenge Corporation (MCC), to allocate the new funding based on objective selection criteria measuring a nation?s commitment to ?governing justly, investing in people, and encouraging economic freedom.? Yet, numerous aspects of the MCA?s internal design and operation that will prove crucial to its ability to meet these goals still have to be developed. On what kinds of programs will the MCA focus? Will the established methodology to select countries yield the types of recipients intended, or will geopolitical imperatives influence the allocation?

Moreover, the MCA should not be designed in a vacuum, or it will fall prey to the tension between foreign policy and development goals that chronically afflicts U.S. foreign assistance programs. The president?s decision to establish a new agency to administer the MCA was a clear vote to design around the 7,000-strong U.S. Agency for International Development (USAID), established in 1961 with the mission of ?promoting sustainable development,? rather than confront the messy challenge of reforming it. Nevertheless, a successful transformation of U.S. development policy requires a concrete plan for how the efforts of the two organizations can complement each other.

Congress must also be a committed partner if the MCA is to break new ground on development assistance. The unprecedented flexibility sought for the MCA will only be possible if the design contains adequate self-executing safeguards and is presented in the context of a coherent foreign assistance strategy.