MCC budget cut - how would it affect Ghana?

The Millennium Challenge Corporation (MCC), is likely to suffer budget cuts in the 2008 fiscal year. How far reaching would this be for Ghana's development plans?

The Millennium Challenge Corporation (MCC), charged with overseeing development projects in fledgling democracies from South America to Africa and beyond, is in danger of seeing its budget slashed in half in the current budget battle between Congress and the White House.

Proposed as a signature initiative of the Bush Administration and enacted by Congress in 2004 with bipartisan support, the MCC has been hailed by foreign aid specialists as a novel approach to development in the third world.

Now, however, the agency's fiscal year 2008 funding may become a casualty of the Iraq war debate and a victim of the program's perceived lack of timely progress on development projects worldwide.

Critics of the agency in Congress are concerned that it has spent only
$155 million on development projects out of $4.8 billion approved for
funding. MCC CEO John Danilovich acknowledges that he agency's slow
progress is hindering it in funding discussions on Capitol Hill and recently reorganized the agency to focus more on results in the near term.

However, independent aid groups say that the relative lack of
progress on development projects is understandable given the agency's
ambitious rules and the manner in which it oversees its development
budget.

For a country to be approved for MCC funding, it first must meet strict standards of democracy and good governance. This is a key element of the agency's mission, since for years foreign aid money has been squandered, diverted from its intended use, or outrightly stolen by less than scrupulous governments and officials. Once a nation qualifies for aid under the MCC, it develops its own development project.

The project can encompass anything from road building, to irrigation, to port infrastructure, and other needs. This feature is another improvement over past aid regimes and helps to ensure that the project proposed is one that will have real benefits for the country to receive the aid.

MCC personnel, working closely with U.S. Embassy personnel in host countries, oversee the project at every stage, releasing MCC monies only when they are sure that they will go towards actual development, and not be lost to corruption.

The Bush Administration requested $3 billion for the MCC in fiscal year 2008. So far, however, Democrats in the House have approved $1.8 billion and the Senate just $1.2 billion. If the agency's budget is cut so drastically, countries that have met MCC standards and been approved for funding may have to stand in line before receiving actual funds to develop their projects.

Further hampering the MCC is a Senate proposal to change the way the agency distributes funds. Under the proposal, Congress would only provide half of the money for a given project up front. This change, says J. A. Kufuor, President of Ghana and Chairman of the African Union, would make the MCC more like the World Bank. "The aid [would be] spread so thin that at the end of the day the necessary difference is not made."

Sen. Patrick Leahy (D-VT) put the MCC budget debate in stark terms. He
asked rhetorically where else the Congress can find budget savings in
foreign aid. "Do we cut maternal health? AIDS? Malaria? Do we cut
refugees? The only thing that's got a blank check is the war in Iraq."

This thinking seems short-sighted. Democrats have decried the United
States' flagging relations with foreign nations big and small and have
stated a desire to rebuild the image of America in the world.

In the MCC, the United States has a well recognized and received foreign presence that aims to assist countries develop both their physical and political structures. Furthermore, it cannot be said that the MCC is wasting money. Only in government could good stewardship of the people's resources be seen as a drawback.

Congress should re-examine the Bush Administration's funding request and find savings elsewhere in the budget. By all appearances, the MCC is a program worthy of Congress' full support.