Ukraine Needs the Millennium Challenge Corporation. The MCC Can’t Help.

Ukraine is in the midst of an existential conflict with Russia, one which is having a terrible impact—most importantly on people, but also on publicly owned infrastructure. And while the US is being generous in military and general budget support (about $10 billion of the latter to date), there is only really one agency of the federal government that is still involved in financing public infrastructure: the Millennium Challenge Corporation. But the MCC is MIA in Ukraine, for a ridiculous reason.

The MCC is particular about which countries it supports. Among the requirements, Ukraine passes the agency’s (important and legitimate) hurdle that it only works in the world’s low- and lower-middle-income countries. It also passes a lot of other tests the MCC lays out for support, based on a scorecard of indicators regarding perceptions and realities around candidate countries’ levels of development. Below is a screenshot of the top of the MCC’s scorecard page on Ukraine. The country vaults over the requirement of “half of the scorecard passed” –in fact, it passes on 16 out of 20 indicators. It also passes on measures democratic rights.

MCC’s scorecard page on Ukraine

Sadly, Ukraine fails MCC’s screening mechanism on “control of corruption”: a country must score above the median for its income group on the World Bank Worldwide Governance Indicator of the same name. The result: Ukraine isn’t eligible for significant MCC support.

Here's the thing about the MCC’s “control of corruption” hurdle: it is useless as a screening mechanism. Here’s a paper on that, but in short:

  • The indicator is largely based on perceptions, not reality: it is a terrible measure of the extent of surveyed corruption in a country.
  • It isn’t related to future progress in development outcomes, including economic growth, improvements in health, or educational enrollments. Nor is it significantly related to how well aid-funded projects perform in a country.
  • It changes slowly over time, with an opaque relationship to governance reform efforts, even of the kind for which Ukraine has been a global leader (and is far ahead of the US).

A valueless statistic is standing in the way of MCC support to a country that really needs it and could use it well. This isn’t for the first time: between 2004 and 2014, there were 85 instances involving 28 different countries that dropped out of eligibility purely on the basis that they failed on the corruption score. But this time should be different. Given Ukraine’s pressing need, the administration and Congress should at long last agree to drop the not-actually-corruption hurdle.


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