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Bush Proposal Would Link Foreign Aid to Economic and Social Policies - 2002-11-26

President Bush has come up with a proposal to award foreign aid to governments on the basis of their economic and social policies. The plan would revolutionize the way U.S. aid is distributed around the world. But there is concern in the international relief community that some countries might be left out.

The Bush Administration is proposing the creation of a new entity that would distribute a portion of U.S. aid based on the recipient government's economic, social, and educational policies.

Officials say the proposed federal corporation would operate separately from the existing U.S. Agency for International Development. It would disburse some $5 billion from a fund, dubbed the Millennium Challenge Account. But to qualify, a country would need to meet certain criteria, such as a demonstrated willingness to fight corruption, encourage civil liberties, and battle illiteracy and disease.

Steven Radelet, a former Treasury Department official who worked on the proposal, says the plan first proposed by President Bush in March, is a revolutionary one. "This is the biggest change in U.S. foreign assistance policy in several decades, partly because of the size of the program adding $5 billion to our existing funds of about $10 billion, but mostly in the way it will be delivered," he said.

U.S. officials say the Bush Administration came up with the plan because of concerns about U.S. aid disappearing in the hands of corrupt foreign governments. The idea, they say, is to reward governments in developing countries with sound policies.

Mr. Radelet said only a small number of countries most of them in Africa and Latin America would qualify for the new aid program. "This kind of program can't work in all developing countries, especially where there are less accountable governments, where there's greater amounts of corruption, and where, frankly, we don't trust what the government is doing. But for the small group that do pass the tests of having lower levels of corruption and have shown improvement in immunization rates and in their school programs, this makes a lot of sense to support the progress that they're making," he said.

Private international aid organizations welcome the plan, but cautiously. Mary McClymont, president of InterAction, a coalition of relief organizations says they are concerned that Millennium Challenge Account, or MCA, not become the method for distributing all foreign aid.

"We need, however, to not leave behind the people who are in countries that will not qualify for the MCA. There are plenty of ways to deliver good, strong assistance to them, and we believe that can and should still be done. That's why we're urging that there be sufficient funding for that out of the United States government," Ms. McClymont said.

White House press secretary Ari Fleischer assured reporters Tuesday that the new program will complement existing aid programs of the Agency for International Development, not replace them. "It's not a substitute for other development assistance. Our levels of aid have not changed. But we believe this is a way of enhancing the existing institutions to provide development assistance on a formula around the world to create greater incentives for nations around the world to combat corruption and have transparency. It's a new approach, a fresh approach to providing aid," Mr. Fleischer said.

Under the proposal, Governments that meet the criteria would submit proposals about how they would allocate the aid. If the plan is implimented, a Cabinet-level board, operating as the Millennium Challenge Corporation, will make the final decision on what countries will get the new aid.