June 10 MCC Board Meeting: Not Bad, Coulda Been Better

The June 10 meeting of the MCC Board didn't quite stack up to what I had anticipated.  The two decisions that would send signals on the degree to which the Obama Administration would allow politics to encroach on the MCC -- Nicaragua and Armenia partial compact terminations -- were made.  In the case of Nicaragua, an uncomplicated decision to terminate the road and property rights components from the full compact, deobligate the associated funds, and return them to the general pool.  The case of Armenia, as anticipated, was far more complex.  Complex enough to come up with a new option, above the six I predicted would be in play.  According to the MCC's press release, "MCC will not resume funding for any further road construction and rehabilitation."   Acting MCC CEO Rodney Bent is quoted as saying "I do not anticipate that the Board will revisit this issue in the future,”  a point characterized by private sector Board member Lorne Craner the next day at a public outreach session as "in effect a [partial] termination."Recall there were a lot of interests brought to bear in this decision.  State Department didn't want a decision that elevated sanctions to the level of either disrupting peace talks between Armenia and Turkey or necessitating a Congressional notification which could draw in the powerful Armenian lobby groups in DC.  MCC, presumably with support of the private Board members, wanted to maintain the high standards and principles of the MCC model.  The fact that the decision was not status quo is a good outcome.  The decision to indefinitely hold the road component without officially terminating it appeared to be an attempt to thread the needle between the two sides -- wouldn't resume funding nor strain diplomatic relations with Armenia nor require a Congressional notification.   Not bad.But it could have been better.  Congress got officially notified anyway -- by the Armenians who claim that they are being unfairly treated among Caucus countries.  (There are holes in their argument vis Georgia, the one MCC comparitor if you look at the indicator scorecards in detail.)  But more importantly, the decision to place an indefinite hold on the road component instead of terminating it means the MCC cannot deobligate the money, putting it to better use elsewhere and officially ending its own obligation to deliver the promised results on that component at the end of the compact period.  This is a real problem for an organization  that claims it is different from other foreign aid organizations because it is results-based.   Now, folks will say it is the Armenians who need to bear the blame and the consequences of not delivering on promised results.  I fear, however, that without a decisive act by the MCC to terminate their own responsibility as a partner, the nuance of blaming the Armenians will go lost on a Congress and an American public ever skeptical of foreign aid.It is, and always has been, a tremendous burden for the MCC to prove the skeptics wrong.  Which is why defending its founding principles becomes the ultimate self-defense