U.S. Foreign Aid Agency Delays Distribution of Approved Funds
The Millennium Challenge Corp., a federal agency set up almost four years ago to reinvent foreign aid, has taken far longer to help poor, well-governed countries than its supporters expected or its critics say is reasonable.
The agency, a rare Bush administration proposal to be enacted with bipartisan support, has spent only $155 million of the $4.8 billion it has approved for ambitious projects in 15 countries in Africa, Central America and other regions.
And the agency’s slow pace is making it politically vulnerable at budget crunch time. Both the House and the Senate have slashed the Bush administration’s 2008 budget request for the agency, but the Senate has gone a step further, pushing for a change that African leaders say threatens the essence of the agency’s novel approach.
Eyeing the unspent billions of dollars, the Senate has proposed that Congress provide no more than half the money up front for future five-year projects, which typically come with a price tag of $250 to $700 million. Such projects are now fully financed at the start to make sure countries have the wherewithal to finish.
Patrick J. Leahy, the Vermont Democrat who heads the Senate appropriations subcommittee on foreign aid, said that Congress could be counted on to approve the rest of the money if the assisted countries fulfilled their end of the bargain. But, he asked, where else should Congress look for savings in its foreign aid budget?
“Do we cut maternal health?” he asked. “AIDS? Malaria? Do we cut refugees? The only thing that’s got a blank check is the war in Iraq.”
Agency officials and the African leaders they assist said in recent interviews that the change would be a big step backward. U.S. foreign aid often takes the form of modest, short-term projects planned in Washington and carried out by American contractors and charities. But under the agency’s approach, poor countries with sound economic policies and strong track records of helping their people are chosen to conceive and carry out big undertakings themselves.
The Millennium Challenge Corp.’s budget now makes up less than 10 percent of the U.S. foreign aid budget. By changing how its projects are financed, “then MCC becomes like the World Bank and all the other countries using overseas development aid in stop-and-go-fashion,” said John A. Kufuor, the president of Ghana, who heads the African Union. “The aid is spread so thin that at the end of the day the necessary difference is not made.”
The Millennium Challenge Corp.’s chief problem has been its sluggish record in getting projects beyond the planning stage to the point where contractors can actually build the roads, irrigation canals, power generating plants and clean water systems that poor countries say they need.
Sheila Herrling, who follows the agency at the Center for Global Development, a nonprofit research group in Washington, says there are understandable reasons projects take time and suggests that the agency’s current five-year timeline for each one may be too short.