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Subsequent Compacts Are the Future of the Millennium Challenge Corporation

May 5, 2014
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Summary

The Millennium Challenge Corporation (MCC) is at a crossroads. Many of its early compacts—large-scale, five-year grants that support country-led solutions to poverty reduction through economic growth in a select set of poor but well-governed countries—are coming to a close. Moreover, there are few new countries emerging as viable partners. In response to this dynamic, MCC is increasingly entering into second compacts with countries. Though MCC’s founding legislation expressly allows MCC to enter into one or more follow-on compacts, some reservations about this approach persist, particularly among some stakeholders in Congress and US development NGOs. It is time, however, to end the debate about second compacts for MCC and to expand the conversation to a broader notion of subsequent compacts.
 
Opposition to second compacts basically revolves around two premises. The first is that the need for a second compact is a sign that the first compact failed. The second is that engaging with a country on an ongoing basis eliminates the distinction between MCC and other forms of US foreign assistance. This paper presents five arguments that seek to address these and other remaining concerns and demonstrate why MCC should retain the flexibility to pursue subsequent compacts going forward.

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