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Madagascar Named First Recipient of US "Millennium Challenge" Aid

Madagascar Monday was named the first recipient of U.S. aid under the Bush administration's Millennium Challenge program. The program is aimed at channeling aid to developing countries that commit to financial accountability, economic reform and democratization.

The Millennium Challenge program came into being when President Bush signed enabling legislation early last year.

But Monday's announcement of $110 million to Madagascar was the first commitment of funds under the program aimed at rewarding countries for sound economic policy and good governance.

The Millennium Challenge is framed as an alternative to traditional foreign aid programs derided by critics as vulnerable to waste and abuse, and more prone to create dependency than long-term economic gains.

Countries seeking funds are required to propose specific projects with means for tracking their progress, while also meeting minimum standards in such areas as governing justly, investing in their citizens and encouraging economic freedom.

The Madagascar program is intended to boost living standards for the African island country's rural poor through reforming land registration and banking services, and training farmers in production and marketing techniques.

At a news conference, Paul Applegarth, the chief executive officer of the Millennium Challenge Corporation, the MCC, hailed the government of Madagascar for introducing changes in economic laws that helped it meet program standards.

He said the MCC is notifying Congress of its intention to commit funds soon to several other countries, including Honduras, Nicaragua and Georgia.

While all three of them are either current or past contributors to U.S.-led coalition in Iraq, Mr. Applegarth said commitment to reform is behind the decisions of the MCC board, not Iraq or other political factors.

"Millennium Challenge will only have its true impact if governments believe that those criteria are what's driving the board's decisions. And it's those criteria and those policies that ultimately promote poverty reduction. And the minute you started to introduce other elements into decision-making, you cut out the core of what MCC's about," he said.

To qualify for MCC money, countries must have a per capita income below a threshold figure, currently $1,450 a year.

A total of 17 countries, mainly from Africa and Latin America, are now eligible for the program.

President Bush said when he first unveiled the concept in 2002 that it would mean a five billion dollar annual increase in U.S. foreign aid.

But Congress, criticizing delays in getting the program up and running, has not fully funded administration requests.

The White House had asked for $2.5 billion in MCC money for the current fiscal year but received $1 billion less.

The administration has asked for $3 billion for the program for 2006, but is already facing pressure in Congress to channel some of that money to other aid programs.