President Bush's global development initiative, "The Millennium Challenge Account" directs U.S. aid money to poor countries that encourage western-style democratic and economic reform. But some U.S. lawmakers are concerned that the new, multi-billion dollar initiative is drawing money away from existing U.S. aid programs. Others wonder why its money is not being spent faster
The African island-nation of Madagascar is the first country to sign a Millennium Challenge "compact." The four-year contract will provide the country with some $110 million to implement a market economy, secure property rights and boost agricultural production.
Negotiations are underway with Georgia, Honduras, Nicaragua and Cape Verde for similar agreements.
Paul Applegarth, the C.E.O. of the Millennium Challenge Corporation, or MCC, told the Senate Foreign Relations Committee Tuesday that he believes the two-year old program is the most effective way of distributing development aid around the world.
"A consultative process to receive aid is going to vary country to country. There is no cookie-cutter approach. It's going to reflect a country's own history, or culture or customs," says Mr. Applegarth.
President Bush introduced the Millennium Challenge Account in 2002, saying the world needed a new approach to eradicating poverty that included increased accountability by both rich and poor nations.
But, the MCA, as it is known, has $2.5 billion in unspent funds, and some members of Congress want to know why the initiative is moving so slowly.
Others, such as Democratic Senator Paul Sarbanes, fear the growth of the Millennium Challenge Account is coming at the expense of the principal U.S. foreign aid agency -- USAID.
"Despite the assurances, we see in the administration's fiscal 2006 budget proposal, that the MCA is slated for large increases -- in fact, a doubling from last year's level of $1.5 billion to a request of $3 billion this year. But at the same time, the president has proposed significant cuts in core USAID accounts,” says Senator Paul Sarbanes.
Mr. Sarbanes says some of the USAID cuts include key child development programs.
But, Mr. Applegarth says the the Millennium Challenge will complement the work of USAID. He says the initiative encourages developing countries to undertake long-term economic and political reform, while also upholding key U.S. foreign policy goals.
"There's a genuine need, a genuine recognition that development assistance is not only a projection of American values, but is also important for the national security of the United States and it is fundamentally the kind of thing Americans want to do," says Mr. Applegarth.
The House Committee on International Relations will take up concerns over the MCC's effectiveness in hearings later this week.