A Better Way to Fight Global Poverty: Broadening the Millennium Challenge Account

Abstract

Last March, at UN-sponsored Inter national Conference on Financing for Development in Monterrey, Mexico, President George W. Bush pledged to significantly increase U.S. development assistance to poor nations through creation of a new Millennium Challenge Account (MCA). The fund would set strict standards of accountability and performance for recipients and would reward a select set of poor countries with as much as $5 billion in new aid by 2006. This initiative has potential to be a step forward in evolution of U.S. development policy. But, in its current form, MCA could also be a step back ward in ongoing U.S. effort to reach out to majority of poor countries in a coordinated and effective way. The proposed MCA is a step forward because it builds on an emerging consen sus that development works best when poor countries have strong policies on governance and economic reform and take responsibility for reducing poverty and spurring economic growth. This philosophy has helped shape a number of major development initiatives in recent years, including Heavily Indebted Poor Country (HIPc) debt relief program (which reduces debt for countries that develop independent national poverty reduction strategies); Global Fund to Fight AIDS, Tuberculosis, and Malaria (usually referred to simply as the Global Fund, it awards money to countries with most comprehensive strategies to combat infectious diseases); and Education for All (EFA) initiative (which makes funding contingent on countries' producing credible national plans for achieving universal education). In addition, MCA is a step forward because it underscores a growing bipartisan commitment to development assistance. Although some notable Republicans joined Clinton administration and a coalition of religious groups in pushing for debt relief, during most of l990S Republican Congress sought to limit