MCC Board Meeting Tomorrow: Implementation Update and Tricky Decision on the Philippines

March 23, 2010

The MCC Board of Directors meets tomorrow and is expected to cover two agenda items: whether to move ahead with the Philippines compact and an implementation update on other signed MCC compacts. I’m hoping we also get an update on the status of the vacant civil society board member seat.Implementation updateThe implementation update will likely be a fairly straightforward overview of current MCC compacts, most of which seem to be moving along and meeting expected targets. I suspect the biggest concern of the compacts currently signed will be Senegal. There have been growing reports about corruption in Senegal linked to the expanding role  of President Abdoulaye Wade’s son, Karim Wade, who now wears several hats as the minister of state for international cooperation, urban and regional planning, air transport, and infrastructure. Our readers will recall that Senegal’s $540 million MCC compact, signed last  September, focuses almost entirely on roads, irrigation and water management—aspects that seem to fall directly under the younger Wade’s purview. The MCC has a number of tools at its disposal to closely track and monitor compact implementation, but I hope the MCC and its board will seriously consider and communicate a range of options—tougher oversight and accountability, channeling funds through non-government entities, shifting the compact priorities away from the ministries under Karim Wade’s control, and in the extreme, cutting funds altogether—before the compact enters-into-force and funds start flowing. Given the MCC’s core principle of operating in good-performing countries—and corruption being the one hard hurdle for countries to become eligible—the situation in Senegal poses a serious risk to the MCC.The PhilippinesThe Philippines compact is trickier. Readers will recall that that the Philippines was selected in a highly unusual out-of cycle decision in 2008, following board concerns over the fragility of the country’s control of corruption score during the FY2008 selection round. It then failed the control of corruption indicator for the first time in FY2009. Its score dropped sharply from the 76th percentile in FY2007, to the 57th percentile in FY2008, the 47th percentile in FY2009, and all the way down to the 26th percentile in FY2010.  (It is worth noting however that the Philippines also graduated to lower middle income country status in FY2010, putting it in a more competitive peer group.) The board publicly stated, however, that the Philippines must pass the control of corruption indicator in order to finalize its compact. The Philippines has since developed a compact and the MCC board now faces the tough decision of whether or not to move forward.  Added to this is the fact that the Philippines will hold presidential elections in May to determine President Arroyo’s successor since she has reached the end of her term limit.So what is the MCC to do? My own view is that the Philippines should not have been selected as eligible in FY2008 and certainly not reselected in FY2009 and FY2010. In essence, the board missed three opportunities to send signals that they were concerned with the Philippines’ performance. But given that the board repeatedly selected the Philippines for eligibility – and assuming the compact is technically sound – I fear not going forward with the compact now discredits the Arroyo government that worked to develop it and will seem like a purely political decision. While I strongly agree that eligibility does not and should not guarantee funds, it seems disingenuous to overlook the corruption problem in selection but then take issue with it at compact signing. It is important to note that if the board moves forward with the Philippines compact, there will still be several months before it enters-into-force and the new Filipino government will have to agree to the compact terms for funds to start moving. The prudent, if not entirely comfortable decision, at this point is to evaluate the technical merits of the compact and, if it meets MCC standards, move forward.Vacant board seatThough it may not be on the agenda for the board meeting, it’s worth noting that the civil society board seat previously held by Catholic Relief Services President Ken Hackett remains vacant. I’ve heard that Senator Reid (who is responsible for putting forward a name for this position) sent a name or names to the White House for consideration, so we may be waiting on the White House now to approve a nominee. It would be helpful to have clarification on the status of Hackett’s successor, and a signal that we can increase the pace of selection given that Lorne Craner and Alan Patricof are also nearing the end of their terms. The MCC board—five government officials and four civil society members—remains one of the most innovative and effective aspects of the MCC model and the administration and Congress should ensure the vacant civil society positions are filled quickly.We look forward to hearing more about the board meeting including the implementation review which no doubt will cover progress of other compacts in addition to potential challenges in Senegal, the decisions with the Philippines and (fingers crossed!) news of a new civil society board member. The MCA Monitor team is also, of course, looking forward to seeing Sheila Herrling on the other side of the table on Thursday in her new role as MCC vice president for policy and international relations.


CGD blog posts reflect the views of the authors, drawing on prior research and experience in their areas of expertise. CGD is a nonpartisan, independent organization and does not take institutional positions.