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Millennium

20 Jan 2017Business Essays

   Misfortune and tragedy has a way of making people sit up and notice. Each time terrible things occur, people began to recall the events that led to the present malaise and vows not to repeat the same mistakes.

    At the turn of the 21st century the United States of America was greeted with one of the most infamous events in the country's history. September 11 will now and forever be remembered as a day of infamy. The lessons of 9/11 will not easily be forgotten. In fact, five years after the event the current administration -also the incumbent in the 9/11 event - is still trying to find ways to keep America safe once again.

    In connection to the effort of stopping terrorism on its tracks there are currently two kinds of international wars being waged. One is a direct attack against terror. Afghanistan and Iraq, perceived symbols of terrorist activities were brought to their knees. Both nations felt the full force of America's armed forces.

    The second kind of war does not use gunpowder and electronic weapons. Instead of lethal force this one is an indirect attack on the source of terrorism – extreme poverty. There is no hard evidence to support the assumption that poverty breeds suicide bombers. But it is a well-known fact that terrorists are a dime a dozen in poor countries. No wonder many would easily make the connection between desperation – brought about by intense poverty – and terrorism.

    The indirect war against terrorism is now one of the most important initiatives by the Bush Administration. Concrete steps were made in the year 2002 when President George W. Bush announced to the world that the US government will lead the way in giving assistance to very poor nations. It is not hard to understand there was a radical change in foreign policy. After such a long time of indecisiveness with regards to policies concerning poor countries, the US is back as one of the most generous philanthropist nation in the world.

The Millennium Challenge Act

    The new Millennium has brought new kinds of challenges to the human race. Foremost of these are in economics and health. It is surprising that even in the modern age poverty could still not be conquered. Most, importantly in the time when information can now travel so fast; there are still places where ignorance about communicable diseases is rampant. So for this new age, America boldly declares it will become part of the solution.

    The first time the program was unveiled to the world was on March 14, 2002 at the Inter-American Development Bank where President Bush was heard advocating retooled foreign aid concepts, “...a new compact for global development, defined by new accountability for both rich and poor nations alike. Greater contributions from developed nations must be linked to greater responsibility from developing nations” (see White House website).

    The second time the world heard about such a bold attempt to eradicate poverty was a week later. On March 22, 2002 at Monterrey, Mexico, President Bush challenged all those who would listen and he said, “For decades, the success of development aid was measured only in the resources spent, not the results achieved. Yet, pouring money into a failed status quo does little help to help the poor, and can actually delay the progress of reform” (see US Department of State website). This one clarifies earlier statements about the need for raising the bar in terms of compassion and giving.

The second part of his speech was the follow up that made clear the purpose for such a radical transformation in US foreign policy and President Bush expertly lays it down by saying:

The lessons of out time is clear: When nations close their markets and opportunity is

horded by a privileged few, no amount of development aid is ever enough. When nations

respect their people, open markets, invest in better health and education, every dollar of

aid, every dollar of trade and revenue and domestic capital is used more effectively (US Department of State website).

President Bush then proposed a different approach, “All of us here must focus on real benefits for the poor, instead of debating arbitrary levels of inputs from the rich [...] We should give more of our aid in the form of grants, rather than loans that can never be repaid” (US Department of State website).

    The brilliance of this program can be seen in the last few statements by George Bush. He was able to hit so many birds with just one stroke: 1) he was able to put the US in an admirable position therefore improving the image of America to the rest of the world; 2) he was able to effect a chain reaction of events that could change the landscape of international business; and finally 3) President Bush was able to offer a carrot on a stick that will encourage poor countries to shape up and become stable for the sake of their citizens and world peace.

The Millennium Account Corporation

    To implement a radical approach to foreign aid require the establishment of an organization that focuses on the goals of the MAC. In this regard what immediately followed after the announcement of the MAC is the creation of the Millennium Account Corporation (“MAC”). Backtracking a little bit to the speech made in 2002, President Bush was heard to say that he is more in favor of grants than loans since poor countries will be able to pay them anyway and therefore perpetuating the cycle of defeat. This can be understood as an easier way of getting money from rich donors but this is not the case. In fact this is where the beauty of the program is fully manifested. The offer of more grants is actually a gambit that once accepted will lead to a series of conditions that must be followed in order to enjoy foreign aid. Here now begins the squeeze.

Gootnick and J. Franzel made a report to the U.S. Government Accountability Office, regarding eligibility determinations, making it clear that not everyone can take a piece of the pie, and they wrote:

For fiscal years 2004 and 2005, MCC's process for determining country eligibility for MCA assistance had both a quantitative and a discretionary component [...] countries that performed above the median in relation to its peers in at least half of the quantitative indicators in each of the three policy categories – Ruling Justly, Investing in People, and Encouraging Economic Freedom – and above the median on the indicator for control of corruption. (2005)

As mentioned earlier, the entity tasked to administer the MCA – the Millennium Challenge Corporation (2006) – published the following criteria for selection.

Ruling Justly:

  • Civil Liberties
  • Political Rights
  • Voice and Accountability
  • Rule of Law
  • Control of Corruption

Investing in People:

  • Public Expenditure on Health
  • Public Expenditure on Primary Education
  • Girl's Primary Education Completion Rate
  • Promoting Economic Freedom
  • Cost of Starting a Business
  • Inflation
  • Fiscal Policy
  • Days to Start a Business
  • Trade Policy
  • Regulatory Quality Rating

Conclusion

    The MCA is a heart stirring and a kind of legislation that makes one proud to be an American. Imagine this, the ability to help the poorest of the poor with the government’s resources at one’s disposal. There is almost nothing wrong with this plan and bipartisan support is proof of how badly America wants to stop terrorism and rectify whatever it is that makes many citizens in the world hate the United States.

    The only problem that can be seen here is how MCA can reach a level of practicality and efficiency that will not make it look as a mere tool for serving U.S. interests. For this program to work then it must be a system that imparts gifts from a truly generous giver concern only with the welfare of another human millions of miles away from home. But stipulations in the Millennium Challenge Act already made it clear that the U.S. is not merely giving away money for free but it is more of a business partnership. Although this type of business can be rightly called non-profit, nevertheless care must be exercised on how the program is implemented. In this regard tensions and conflicts are already arising that could cause the defeat of an otherwise perfect strategy.

    Lael Brainard et al. in the book “The Other War” made the following comments that in a nutshell predict two possible directions for MCA:

At best the MCA could transform U.S. policy toward the poorest countries over time […] Unfortunately darker scenarios are at least as plausible, wherein the MCA becomes one more pot of money among a morass of U.S. programs and conditions. (2003).

    This prediction is not far fetched for even at present there is already a problem on how to implement the program. For example, one criterion calls for existing policies (investing in  people) to be in place before funds will be released. Now, how can a government invest when in the first place the coffers are empty? Another criterion requires the existence of an environment that fosters economic freedom. Now, how can a poor country exhibit structures that facilitates economic freedom when they are so inefficient because they have no resources to start with in the first place?

Problems about the selection process are not the only thing that can bring MCA down. The political aspect that comes naturally with the creation of such complicates matters to say the least. The MCA theoretically allows aid to more affluent countries such as Israel and Egypt and the Bush administration is not ashamed to admit that they plan to do so. This prompted Brainard and his team of researchers to remark, “At one extreme the MCA could become the preferred fund, not only for the best performers but also for politically salient countries.

This outcome could very well emerge if the increased calls on aid for geopolitical reasons […] conspire to undermine the MCA’s purity […] In this case the lines between MCA and other forms of assistance would blur, and Congress would feel compelled to constrain the MCA as it currently constrains existing assistance programs” (Brainard et al, 2003).

For the sake of the stability of the world, step must be taken to ensure the success of both the MCA and the MCC. If not then back to the drawing board and huge amount of time and effort was wasted on nothing.

References

  • President G. Bush. (2002). President Outlines U.S. Plan to Help World's Poor. U.S.
  • Millennium Challenge Corporation. (2006, August) Stages of the Selection Process for MCA
  • Brainard, L. et al (2003). The Other War: Global Poverty and the Millennium Challenge Account. Washinton, D.C.: The Brookings Institution Press.
  • Gootnick, D. & Franzel, J. (2005) Millennium Challenge Corporation: Progress Made on Key Challenges in First Year of Operations. Washington, D.C.: Diane Publishing Co.

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