(with apologies for the late posting due to blog platform migration issues at CGD)
The new MCC Board of Directors, chaired by Secretary of State Clinton and with Secretary of Treasury Geithner in attendance, met for the first time on March 11th. On the agenda was a general discussion of MCC programs and a specific discussion on the partnerships with Armenia and Nicaragua. Both Nicaragua and Armenia previously had parts of their compacts suspended due to concerns over governance issues. In the case of Nicaragua, electoral integrity issues that were inconsistent with MCC political freedom, civil liberties and rule of law criteria led the Board to suspend all new disbursements. The main impact of this decision was that a major road project could not be initiated; the community-based rural agriculture program, however, was allowed to continue. At the December Board meeting (the last meeting of the Bush Administration Board) a decision was made to continue the suspension and defer any final decision on Nicaragua to the new Board.
In the case of Armenia, post-election crackdown on the opposition last May also led to a suspension of a road component. Armenia decided to start construction with its own money and wait for the MCC to lift the suspension. Almost one year later, with government resources now almost fully spent and little done to respond to the MCC's policy concerns, Armenia waited anxiously for the new Board's decision.
Well, the new Board did meet. But they did not take decisions on what to do in Nicaragua and Armenia. Apparently not ready to take a bolder decision to actually terminate the road components of both compacts until they could study the issues more fully, the new Board punted the issue to a "special session" apparently to occur before the regularly-scheduled June Board meeting.
Too bad, actually. Too bad the last Board didn't have the courage to act on information it knew well in both cases and not put the new Board in a situation where it could claim it needed more time. And too bad that the new Board, based on the expertise of the MCC staff and the private sector Board members, weren't prepared enough to take the decision. If there is no teeth to the MCC's policy requirements on economic freedom, investing in people and ruling justly, I fear the MCC will head the way of other foreign aid programs where excuses around the costs -- financially or politically -- of cutting countries off will in substandard programs in countries that own bad policies. That is not the kind of country ownership embedded in the MCC model. The day the MCC terminates even a portion of a compact for bad policy or program performance will be the day the MCC will clearly separate itself from the rest of the foreign aid pack.
