MCC CEO Yohannes Responds to Kerry-Lugar Letter

In January, I blogged a letter from Senators Kerry and Lugar to new MCC CEO Daniel Yohannes in which the heads of the Senate Foreign Relations Committee described themselves as “strong supporters of the MCC model and its mandate to fight global poverty though economic growth.”  The predominantly supportive letter outlined both challenges and opportunities ahead and gave the MCC some running room to innovate while advising the MCC to stay true to its mission. Recently, Yohannes replied to the Senators in his own letter thanking them for their support and guidance and providing some insight and updates on the issues raised in the Senators’ letter.You can read the letter in full, but for me the most important signal is that the new MCC leadership is interested in working with Congress to innovate and tackle reforms but will maintain the MCC’s clear, selective model. In the letter, Yohannes says:

MCC has greatly benefited from ongoing consultations with the Senate Foreign Relations Committee. I look forward to continuing a strong partnership with the Committee, which is vital for MCC’s continued success, and believe that we share similar priorities for the agency—demonstrating tangible results; pursuing greater innovation; and increasing collaboration with the private sector, nongovernmental organizations, and other donors. To achieve these priorities, MCC must continually refine elements of our approach to maximize policy reform incentives and poverty reduction impacts in partner countries.

He further thanks the Senators and says he looks forward to “deepening our dialogue about the future of the MCC” including “continued guidance, support, and feedback, along with the substantive contributions” of the committee and their staff. In my reaction to the Kerry-Lugar letter, I said “the MCC management team should grab that hand of (congressional) support and, in partnership with Congress, tackle reforms specific to the MCC and related to other U.S. foreign aid programs.” I’m delighted to see this is underway.Among the other highlights in the letter are:

1. Thanks for support for concurrent and longer-term compact authority. Yohannes says these will improve MCC’s ability to manage the compact pipeline with greater predictability.  He also responds to concerns over regional compacts and says while the MCC has no plans to make regional compacts a priority, they would proceed cautiously if an attractive regional compact opportunity were to present itself.
2. Threshold program review is underway. Yohannes shares the concerns Kerry and Lugar described about the threshold program’s muddled mandate, diffuse results and unclear selection process. Kerry and Lugar called for an overhaul of the program, and Yohannes explains that the review is underway and will involve consultation with Congress before the review is complete. I understand the MCC’s Jim Greene, recently appointed as deputy vice president for policy and international relations, is leading the threshold review. Given Greene’s former position with the Senate Foreign Relations Committee, he is well positioned to maintain close contact and consultation with committee staff and members.
3. Country selection system is also under review. Kerry and Lugar also expressed concern about the growing MCC resources going to lower middle income countries rather than low income countries. This is in part due to challenges that exist in the MCC selection process and definitions of low income and lower middle income country categories. The MCC—and CGD’s MCA Monitor team—are both exploring proposals that would modify the selection process to address these concerns. More soon.
4. Do more with less. Yohannes echoes the concern about a scarcity of resources available for foreign assistance. He notes the $1.28 billion request level for MCC in FY2011, but doesn’t mention this is the lowest request level since the MCC’s creation. He does say the board will be more selective and flagged the decision not to select any new eligible countries for FY2010 as evidence.  
5. Innovation, especially with the private sector. Yohannes welcomes the encouragement from Kerry and Lugar for the MCC to seek greater innovation in its work, which he says is one of his top priorities. He highlights, in particular, looking at innovation with program design, financing mechanisms and engaging new partners, particularly the private sector. I’m sure the Hill and others are eager to see how the new MCC management team moves forward with these ideas.

The letters exchanged between Kerry and Lugar and the new MCC CEO are a welcome signal that there will be constructive engagement from both Congress and the MCC moving forward. In an increasingly constrained budget environment, this is all the more important. It is also critical as the MCC and the Hill interact with the major development reviews underway—the Presidential Study Directive on U.S. Global Development Policy and the Quadrennial Diplomacy and Development Review—and the various pieces of legislation related to foreign assistance reform. We were also pleased to see the appointment of the MCC’s new vice president for compact implementation, Patrick Fine, and hope Yohannes is able to fill the four remaining leadership positions quickly (vice president for compact development, vice president for congressional and public affairs, vice president for administration and finance and general counsel).We’ll be keeping an eye on the MCC board meeting tomorrow and the public outreach session on Thursday for more details on the issues raised by Kerry, Lugar and Yohannes. And we’re hoping Yohannes’ congressional budget hearings will be rescheduled for early April, where he will have the opportunity to speak directly to more members of Congress who are no doubt eager to hear how things are going at the MCC. Stay tuned!