09 November 2004

Seventeen Countries Eligible for New U.S. Aid Program Funds, November 9, 2004

(MCC chief Applegarth says disbursals could begin by end of 2004)

By Berta Gomez
Washington File Staff Writer

Washington -- Seventeen of the world's poorest countries are now eligible to compete for grants from the Millennium Challenge Corporation (MCC), the new U.S. aid agency designed to support developing countries' efforts to eliminate poverty through pro-growth reform, says MCC Chief Executive Officer Paul Applegarth.

Briefing reporters November 9 at the State Department's Foreign Press Center in Washington, Applegarth said the MCC -- the high-level group that administers Millennium Challenge Account (MCA) funds -- is reviewing proposals and concept papers submitted by potential partners and could begin disbursing funds by the end of 2004.

Congress approved close to $1 billion for MCA for fiscal year 2004, and the Bush administration is seeking another $2.5 billion for 2005, Applegarth said.

The MCC list of countries eligible for the 2004 money are Armenia, Georgia, Mongolia, Sri Lanka, Vanuatu, Libya, Honduras, Nicaragua, Benin, Mali, Madagascar, Ghana, Lesotho, Mozambique, Senegal and Cape Verde.

On November 8, the MCC added Morocco to the list of eligible countries for 2005 funds but removed Cape Verde from the 2005 list because it had risen above the per-capita income ceiling for MCA grants.

Applegarth stressed that Cape Verde nevertheless remains eligible for 2004 funds and that MCC officials "are in the midst of discussing with [Cape Verde officials] their proposal for development."

The MCC chief said that he was not sure when the first grants would be made from the 2004 funds and that his office had so far received 14 of 16 expected proposals from eligible countries. The MCC has notified Congress that it has begun compact negotiations with four countries -- Nicaragua, Honduras, Madagascar and Georgia -- and is continuing to work with the others, he said.

The MCA grant proposals received thus far cover projects ranging from rural development to education and micro-finance, Applegarth said. The projects "show a remarkable amount of thought and imagination by our partner countries," he added.

Applegarth stressed that eligibility is no guarantee of a grant for any of the countries and that MCC officials will examine all proposals to see which promise the greatest amount of poverty reduction and economic growth.

The MCC involves "an investment of a scarce resource and so we want to get ... the highest return in terms of poverty reduction," he said.

Applegarth said that the MCC also continues working with so-called "threshold countries" that are moving in the right direction but have not yet met MCA criteria. On November 8, the MCC announced that six countries -- Burkina Faso, Guyana, Malawi, Paraguay, Philippines and Zambia -- will be added to its threshold program, which already includes East Timor, Kenya, Sao Tome, Tanzania, Uganda and Yemen from 2004.

The administration set aside $40 million in 2004 for these countries to encourage changes that could eventually make them eligible for the larger fund program.

Providing background on the MCA, Applegarth told reporters that the program grew out of the 2002 international development summit in Monterrey, Mexico, at which developed and developing countries alike agreed that development requires both the active participation of recipient countries as well as measurable results.

"The deal that was struck at Monterrey was that for those emerging countries that took greater responsibility for their own growth and for their own poverty reduction and who put good policies in place ... the developed countries would provide additional foreign assistance," Applegarth said. "And that's what Millennium Challenge is on behalf of the United States: It's the delivery by the United States on the promise that it made at Monterrey two years ago."

According to Bush administration plans for the MCA, funding will reach $5 billion annually by 2006, at which point it will represent the largest increase in U.S. international assistance since the Marshall Plan helped reconstruct post-World War II Europe, Applegarth said.

Administration officials are "very concerned" that both the House and Senate have approved bills that would reduce MCA funding for 2005, and the administration has made full funding of President Bush's $2.5 billion request "a priority" for the coming weeks, Applegarth said.

The emphasis on the MCA is based in part on the Bush administration's decision in 2002 to revise the United States' long-standing National Security Strategy, which had long identified defense and diplomacy as the two pillars of U.S. security, he said.

Under the direction of President Bush and his top foreign policy advisers, the strategy was amended "to add development as the third 'D' and to state that it was in the national security interest of the United States to promote poverty reduction and growth and development in the emerging world," Applegarth said.

To that end, he said, the MCA is part of a broad U.S. effort to promote global development on a number of fronts. He cited U.S. efforts to ease trade barriers with countries in Africa and Latin America, and U.S. leadership in providing debt relief for countries struggling under unsustainable debt burdens. The United States' traditional official development assistance has risen "quite dramatically" since 2001, Applegarth said, and he also noted the administration's pledge to provide $15 billion in funding for global HIV/AIDS programs over five years.

The initiatives on trade promotion, debt relief and foreign assistance all relate to U.S. national security and are all representative of how the United States views its international role, Applegarth said.

"This effort is a bipartisan effort," he added. "It is not Republican, it is not Democratic. This is the United States itself trying to do something."