Senate Removes Hold on MCC Yemen Threshold Program But Questions Broader Program Purpose

On October 16, Senators Biden and Lugar, Chairman and Ranking Member of the Committee on Foreign Relations, removed their two-week hold on signing of the Millennium Challenge Corporation's $20 million Threshold Program with Yemen. As we previously blogged, the decision to reinstate Yemen's eligibility for Threshold Program funding was appropriate based on demonstrated reform progress, however, such swift progression to negotiating an actual program was perhaps a bit premature.
At the heart of the Biden/Lugar hold was an issue that we have raised repeatedly: it is essential that the MCC clearly define the purposes of the Threshold Program and the criteria for country eligibility selection. And it needs to include Congress in its deliberations. There are basically two camps in the use of the Threshold Program debate: those that interpret the MCA authorizing legislation language (Sec. 616.b.2) -- "demonstrating a significant commitment to meet the requirements of [the MCA eligibility criteria] but failing to meet such requirements..." -- as strictly related to indicator performance and those that would also like to consider "windows of oppportunity" (although with positve trends on the indicators) to support reform momentum.
The two cases that have pushed the issue are Yemen and Kyrgystan, both of which at their selection date failed about half the indicators. For those in the first camp, the fact that Yemen failed 8 of 16 indicators at selection (which fell to 13 of 16 in 2007 and stays about the same in 2008 failing 12 of 17) and Kyrgystan failed 7 of 16 at selection makes it impossible to argue that these countries are on the cusp of passing the indicators and could do so with a little help via a Threshold Program. Those in the second camp see the the potential impact that the MCA program with its "good housekeeping seal of approval," even through a Threshold Program, could have in sustaining and compelling further policy reforms and deeper civil society participation at critical junctures.
As regular readers of our blog might recall, I tend to fall more in the second camp, particularly for those countries making progress on the democracy and control of corruption indicators which I believe are important undergirdings of citizen- (not just country-) owned development strategies. But having been around at the inception of the MCA, I understand the frustration expressed by Senators Biden and Lugar because it absolutely was the intent of Congress to focus the Threshold Program on that set of countries truly on the cusp of passing the indicators. Biden and Lugar suggest that those countries falling in the second camp ought to be funded via other US foreign assistance programs. Probably a valid point for some of the countries but ultimately I would like to see the MCC and Congress enter into a dialogue on experience under and future direction of the Threshold Program. In the end, I would hope to see a portion of that Program directed, at the discretion of the MCC Board, to a risk-capital fund for countries undergoing dramatic democratic reforms where assistance and the symbolic backing of the US MCA at a critical juncture could be the difference between progressive improvement in the indicators and disaster.