*EPF309 02/12/2003
New Aid Program Would Assist Countries' Growth, Official Says
(Partnerships key to Millennium Challenge Account, Larson adds) (720)

By Kathryn McConnell
Washington File Staff Writer

Washington -- President Bush's proposed Millennium Challenge Account (MCA) will affirm the notion that the poorest countries can achieve economic development and improve the lives of their people, says Alan Larson, under secretary of state for economic, business and agricultural affairs.

Speaking on a panel at a February 11 meeting in Washington of the Advisory Committee on Voluntary Foreign Aid, Larson said the proposed fund would be based on "mutually responsible and accountable partnerships" between the United States and eligible countries.

The MCA would supplement existing U.S. foreign aid programs by rewarding those developing countries where the governments rule justly, invest in their people and promote market economics.

Larson said in developing the legislation to authorize the MCA and its management body -- the Millennium Challenge Corporation -- administration planners took advice from nongovernmental organizations (NGOs). "We value your expertise," he told the committee, mostly representatives of NGOs. The MCA concept also draws from the United States' 50 years of development aid experience, he said.

The administration submitted the "Millennium Challenge Act of 2003" to Congress February 5. It calls for spending an additional $1,300 million in foreign aid for the fiscal year beginning October 1 and increasing that annual amount to $5,000 million a year by 2006, Larson said.

Larson emphasized that MCA has "one clear goal: to reduced global poverty through increased economic growth by supporting a new compact for global development."

The account would be used to establish time-limited, business-like contracts between the United States and eligible countries, Larson said. It will "challenge countries to create the institutional environment that will support economic development and make development assistance effective," he said. "We feel the incentive effects are very important" in encouraging countries to qualify, he added.

According to the Bush administration's legislative proposal, MCA contracts would contain specific objectives and state the responsibility of the recipient country and the United States to achieve those objectives. They would set benchmarks to measure progress toward the objectives and a plan describing how and when the objectives would be achieved. The contracts would include a section on the roles and contributions of the business community, private and voluntary organizations and other members of civil society, and a plan to ensure the accountability of funds used to achieve the objectives.

The contracts would be publicly available on the Internet, Larson said. "We want to make it clear to all countries" what is needed to qualify for MCA funding, he said.

Recipient countries would be expected to have participation by all sectors of their societies to develop proposals for MCA funding, Larson said. Key focus areas of the MCA would be agricultural development, education, enterprise and private sector development, governance, health, and trade and investment capacity building, the bill states.

The Millennium Challenge Corporation, chaired by the secretary of state, would use 16 indicators to decide which countries would receive MCA funding, Larson said. Each eligible recipient country would have a contract with the United States written for its special circumstances, he added. The corporation also will have a chief operating officer named by the president and approved by the Senate.

"It is not just the quantity of aid [the United States provides] but the quality that counts," said panelist Patrick Cronin, U.S. Agency for International Development (USAID) assistant administrator for policy and program coordination.

USAID, which organized the February 11 meeting, will be a key MCA partner, according to Larson. He said it will help ensure that countries that don't initially qualify for MCA assistance will "not be left behind." The agency will increase its focus on helping "near-miss countries" qualify for MCA finding in the future, said Cronin.

USAID also is revitalizing some of the United States' most important development programs, such as agricultural development, Larson said.

Panelist Edward Fox, USAID assistant administrator for legislative and public affairs, emphasized that MCA is an administration priority. He said that following the Cold War and September 11, 2001, terrorist attacks, U.S. foreign policy has become identified with "three Ds" -- defense, diplomacy and development.

Urging public support for MCA, Larson said, "We can make 2003 a landmark year in development."

"MCA will revolutionize development," Cronin added.

(The Washington File is a product of the Office of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)

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