Georgia On My Mind: A Slippery Slope Toward Politicizing the MCC

On September 3, Secretary Rice announced a $1 billion economic and humanitarian support program for Georgia. Included in that program is a $100 million top-up to the existing MCC $295 million compact with Georgia . The top-up will be funded through existing MCC FY08 funds that would likely have been used to fund a couple of threshold programs. On September 17, the MCC Board will be asked to approve this action. Here's a couple of questions they will liklely face in the decisionmaking process:1. What is the motivation behind supporting Georgia and should it matter? The motivation was 100% political -- there would be no topping up of the MCC Georgia compact without the U.S. looking to support its political ally. It's not a question of should the U.S. provide economic assistance (we should) as much as it is how the U.S. should provide that assistance. The MCC was established to champion and support development motivations not political ones. Accounts like ESF and the kinds of contingency support funds being pushed in various U.S. foreign assistance reform efforts exist to support political and emergency reconstruction motivations. The motivation for engaging MCC assistance does matter regardless of whether, in the end, we can accept the value of MCC's involvement. It is a slippery slope toward making the MCC the ATM of State Department when it needs money fast for political purposes.2. Despite the fact that the motivation was political, is the $100 million top-up egregious? No, but beware. Georgia is already an MCC eligible country and has passed the performance indicators squarely the past two years. Its current compact is under implementation and the MCC claims that "most of the infrastructure projects under consideration were previously included in the original compact but were later scaled back as a result of external pressures such as dollar depreciation and increased international construction costs." That said, there is an opportunity cost (albeit small in this case) of the money. It would likely have been used to fund several threshold programs, some of which would no longer be in play -- Mauritania (now ineligible post-coup), Yemen (still on hold) -- but some of which, mainly the Phase II programs, would no longer have funding.3. So why beware? Beware the precedent it sets. Although the opportunity cost in this case might be bearable, the door would now be open for future emergency response packages in times when there isn't any carry-over money and funds would need to be deobligated from other compacts to finance the action. And beware sacrificing the high standard MCC due-diligence process, thus far a hallmark of the model, when and if new projects are financed through the expanded compact. Should the Board approve the top-up, it should demand written commitment from the MCC that its normal accountability procedures -- public consultation, economic rate of return and beneficiary analysis, and evaluation indicators -- will be followed. And, lastly, remember that additional finance does not bring with it additional years on the end of the compact. The MCC and Georgia will now need to finish a substantially beefed up compact in two years; if they can't the credibility of model will be on the line.It is almost a given that the MCC Board will endorse what has essentially already been committed by the U.S. to the Georgia economic support package. And, based on various reports, it could have been worse in terms of larger amounts and/or outright poaching (i.e., deobligating the full amount from the MCC and putting it toward budget support or a non-development activity). So, on a positive note, putting the resources through the MCC system and toward development projects will continue to support the country-driven, results-based foreign aid model we have. But on a note of concern, it could be the beginning of a slippery slope of using the MCC for political purposes and, for me, having monitored the MCC since its inception, it is disappointing to see that Congressional champions emerge for the model when it can support diplomatic and geopolitical foreign policy objectives but are lacking when it needs support as a critical foreign policy tool for global development being in the national interest.