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Regional CompactsMany developing countries struggle to catalyze their economies because they are isolated and their governments are ineffective. When corruption is rampant, it is difficult for meaningful change to happen. And when countries are unable to collaborate with their neighbors, they usually stagnate. These kinds of issues, however, are being addressed by the Millennium Challenge Corporation (MCC), an American agency that draws up regional compacts to promote prosperity in developing countries.

The MCC works mainly with African countries but also creates regional compacts in South Asia and Central America. To date, its 32 regional compacts benefit 26 countries and about 175 million people around the world.

The compacts serve several purposes. Firstly, they encourage partner countries to achieve and maintain good governance. When governments are reformed along the lines set down by the MCC, it is easier for adequate economic changes to be properly implemented.

The economic changes consist of promoting sound investment and securing economic freedom. The MCC invests about $1 billion in grants per year in its partner countries. Most of this money is used to improve road and energy infrastructure, facilitate access to clean water and increase people’s educational and financial opportunities.

What makes the compacts successful is that they encourage countries to collaborate in achieving these goals. Improving infrastructure across national boundaries facilitates trade and migration, thereby increasing opportunities for growth and exchange. Measures to preserve the health of workers and consumers, in addition, keep economies going once they start to expand.

Because of the MCC, private investment has soared in Benin, Ghana and Jordan. Governments of Honduras, Cabo Verde and Senegal have achieved greater transparency and accountability because they follow MCC guidelines. The guidelines also encourage the empowerment of women. In Burkina Faso, for instance, thanks to regional compacts, improved test scores have expanded girls’ opportunities in the job market.

The World Bank estimates that the regional integration of Sub-Saharan African countries could double that region’s share of global trade, which is beneficial to both the MCC and the U.S. Since its inception in 2004, the MCC has enjoyed an average economic rate of return of over 16 percent. By helping other countries become more self-sufficient, it has generated many new opportunities for American businesses.

At the moment because of congressional restrictions, the MCC’s ability to use regional compacts to promote prosperity is significantly limited. But a bipartisan group of politicians in Washington are looking to change that. The House Foreign Affairs Committee has already passed legislation to strengthen the MCC — and an effort to do the same in the Senate, the M-CORE Act, is currently being considered.

Testifying before the Senate Foreign Relations Committee in December 2015, Chief Executive Officer Dana J. Hyde stated that the MCC “helps drive U.S. efforts to promote American values and the market democracy model” and is “creating new opportunities for the private sector, including U.S. businesses, to invest and grow.”

Joe D’Amore

Sources: Borgen Project, Senate, USGLC, World Bank

foreign aid

1. Why does the U.S. give foreign aid?

The U.S. gives aid for several reasons: economic interests, national security and American values. Economically, aid builds trading partners and supports the demand for U.S. goods. For national security, U.S. aid can sustain efforts to reduce injustice and poverty, which can contribute to instability and social tensions. Providing aid can also validate the kindness of the American people, advance democracy and human rights and build a better world.

2. What types of U.S. assistance does it include?

Foreign aid is a very comprehensive term. It incorporates several types of assistance, from the international affairs budget to poverty-focused assistance. The international affairs budget includes the resources to finance U.S. endeavors abroad. For example, it provides funds for USAID and the Department of State’s diplomatic costs and expenses that are sustained in protecting the interests of U.S. citizens and businesses abroad. In addition to helping people in poor countries, this aid provides money to allies for strategic purposes. Poverty-focused assistance concentrates on promoting economic growth and providing services like education and health care.

3. How much does the U.S. government spend on poverty-reducing foreign aid?

The U.S. government spends around $80 per taxpayer on foreign aid. To put that into perspective, compare that number to what Americans spend on other items: $204 per person on soft drinks, the $126 per person on lawn care and $101 per person on candy.

4. What is Americans’ understanding of how much the U.S. spends on this aid?

Americans think the U.S. spends more money on foreign aid than Medicare and Social Security – as much as 30 percent. However, only 0.7 percent of the U.S. federal budget is spent on poverty-focused foreign aid.

5. How can we ensure development aid is not wasted by corrupt governments?

Most poverty-reducing foreign aid is not actually provided directly to foreign governments. Around 85 percent goes through NGOs and U.S.-based government contractors. It may actually force governments to increase transparency and accountability.

6. What is the U.S. doing to make this kind of aid more effective?

The U.S. is doing many things to make foreign aid more efficient, such as defining aid’s purpose, modernizing USAID, developing new models of providing aid and making it more transparent. In 2010, President Obama put forth the first U.S. Global Development Policy which clarifies that the main purpose of U.S. development aid is to pursue global economic growth to fight global poverty. For modernizing USAID, USAID Forward is a new reform agenda that is working to make USAID more efficient, transparent and accountable. President Bush introduced the Millennium Challenge Corporation (MCC) during his presidency. MCC is a “United States foreign aid agency that is applying a new philosophy towards foreign aid.” The MCC model demands that countries to meet criteria in three areas: investments in people, economic freedom and good governance.

7. How can the U.S. improve it to better fight poverty?

There are a few ways. The United States could focus aid more on combating poverty worldwide, provide more transparent information about their foreign aid and give more aid to effective local leaders.

– Colleen Moore

Sources: Alliance for Peace Building, Oxfam America, The Borgen Project
Photo: The Spectator

MCC_Tanzania_Agriculture
When several U.S. Mennonite conferences convened in Elkhart, Indiana to found the Mennonite Central Committee (MCC) in 1920, their aim was modest in comparison to their current work. Originally focused on providing aid and assistance to famine-stricken Mennonites in Ukraine, Russia, and Turkey, MCC’s efforts now spread over more than 50 countries across five continents, and are no longer focused on aiding those of their own faith.

MCC works primarily by partnering with local organizations, both secular and religious, to distribute aid funded primarily by donations from Mennonite and Brethren in Christ Church communities in the United States and Canada. While MCC’s mission statement is inspired by and based upon Christian scripture, in practice their work is secular and is primarily focused on peace-building efforts, disaster relief, and sustainable community development.

The work done by MCC and its partners is as diverse as the needs of the specific communities in which they operate. Their food-relief programs include both aid and development based approaches. Last year the Canadian MCC supported over $1.3 million in food aid for people whose livelihoods have been disrupted by the ongoing conflict in Syria. Just one example of MCC’s more development-focused programs is a partnership with organization Global Service Corps that works towards educating Tanzanian farmers on sustainable agricultural methods that increase crop yield and prevent soil erosion and nutrient depletion. MCC funds similar agricultural education programs in 15 other countries around the world including Mozambique, Honduras, Palestine, and North Korea.

In addition to food relief, MCC also supports initiatives that provide easier access to safe drinking water, education for children, disaster relief, and HIV/AIDS related aid and education. One area of MCC’s work that has sparked some controversy, however, is their peace and justice related work in Palestine/Israel. MCC supports a number of Palestinian and Israeli organizations devoted to reaching a peaceful resolution of the Israeli and Palestinian conflict. Some of their partners are focused on ending what they view as destructive behavior on the part of Israel’s government, such as the Israeli Commission Against House Demolitions, and the Palestinian organization Stop The Wall. This has led to the Israel-based organization NGO Monitor decrying MCC as “promoting a radical pro-Palestinian agenda.”

While MCC’s efforts to end conflict and aid communities in Palestine/Israel have seemingly shed a negative light on the organization for some in this highly politicized arena, it is clear that their focus remains global. And, despite this wide focus, the Mennonite Central Committee continues to provide aid and funding to local organizations that have real tangible impact upon the lives of those less fortunate across the world.

– Coleman Durkin

Sources: Mennonite Central Committee, ReliefWeb, NGO Monitor
Picture: Mennonite Central Comittee