Speech

June 17, 2008

As Prepared by John J. Danilovich, Chief Executive Officer

Washington, DC

‘Post-Board of Directors Public Outreach Meeting’

Thank you, Matt, and let me also welcome you all to the headquarters of the Millennium Challenge Corporation.  It’s good to see you all, and I’m extremely pleased to have MCC Board Member Lorne Craner join us this afternoon for this meeting. The private board members play an important role for the MCC Board and having Lorne here will help round out our conversations today.

Our Board of Directors met this morning, and I’m pleased we could meet this afternoon to update you on the Board’s key decisions and brief you on some pressing issues relating to our mission of reducing poverty through sustainable economic growth in partner countries worldwide.

I’d like to brief you on three main issues: First, our newest compact with Burkina Faso; Second, our implementation progress on the ground; And, third, the current state of discussions related to MCC in Congress.Let me say a few words about each of these.
First, our newest compact.  I am pleased to report that MCC’s Board of Directors approved a $481 million compact with Burkina Faso. This means that we now have a total of 17 compacts worldwide, totaling nearly $6 billion in grants to help our partners overcome their specific barriers to poverty reduction and economic growth. Burkina Faso performed very well on its MCC threshold program to expand access to education for girls, opening 132 “girl-friendly” schools. 

When I visited the country, I was able to see these schools in action and see young girls and boys learning to read and write. What a sight to behold!  Now, Burkina’s compact will expand upon this success by focusing on completing additional classrooms for thousands of 4th through 6th graders in poor areas.  The compact also provides sustainable, long-term solutions to Burkina Faso’s rural agricultural economy, already hard hit by the global food price crisis, by investing in land security, agriculture, irrigation, and roads.

Darius Teter, our Deputy Vice President in our Department of Compact Development, is on hand to answer any specific questions about MCC’s compact with Burkina Faso. We also have with us Maureen Harrington, the Vice President for our Department of Policy and International Relations, and Darius Mans, the Vice President for our Department of Compact Implementation.
The second matter I’d like to brief you on is: implementation.  MCC’s partner countries continue the hard work of implementing their compacts and delivering results.With cumulative commitments now at half a billion dollars—we want to be at $1 billion by the end of this fiscal year—and cumulative disbursements now at $235 million—we want to be at $450 million by the end of the fiscal year—we are seeing these investments become realities on the ground in ushering in life-changing improvements for some of the world’s poorest countries.  With the steady increase in both disbursements and commitments, we are on track to be within 90 to 120 percent of our year-end targets.

We, at MCC, are working hard to improve how we communicate our progress to date in one “Success Story” after another, which we are posting to our website at www.mcc.gov.  If you have not already seen this new feature, I’d invite you to visit our website—and visit often—as we are regularly updating and posting new success stories. We invite you to learn about farmers in Armenia, Honduras, Nicaragua, and Madagascar taking advantage of opportunities to expand their operations.
Learn about how the people and businesses of Georgia are benefiting from a more dependable energy supply. Learn about students benefitting from scholarships in El Salvador.

Learn about how MCC is rehabilitating schools in Ghana to allow children in  rural communities to start school in September in even greater numbers.  And, learn about how government ministries in Cape Verde are expanding transparency and efficiency through a new e-procurement system.

To learn from each other and to exchange best practices, we were thrilled to welcome over 50 representatives from partner countries worldwide to MCC University here at our headquarters during the first week of June.  As a capacity-building initiative, MCC U is a week of intense learning, workshops, and peer-to-peer exchanges for these partner countries, providing them with the information, resources, and materials they need to return home better equipped to successfully implement their compacts. 
In addition to the work partner countries are doing, MCC has joined forces with other partners and recently signed groundbreaking memoranda of understanding to amplify and maximize results on the ground.
We signed an MOU with The General Electric Company in April to explore areas of cooperation in MCC partner countries in such sectors as energy, water, health, transportation, and the environment.

Last week, former UN Secretary-General Kofi Annan joined us here to sign an MOU with the nonprofit organization he now chairs: The Alliance for a Green Revolution in Africa.  The MCC-AGRA MOU creates a deeper framework for joint cooperation to promote broad-based agricultural growth and poverty reduction in specific African countries.

We also signed a unique MOU with the Phelps Stokes Fund (Ralph Bunche Societies) to create opportunities for greater minority involvement in the international arena by providing student leadership development opportunities, summer internship experiences, mentoring, and speaker exchanges for international education events. We are helping to cultivate the next generation of leaders in development, who will play a role in the successful implementation of our programs.  We are very proud of our MOU with Phelps Stokes as a continuation of our commitment to diversity in the workplace. 

These memoranda are relevant and important because they allow us to deepen our impact by leveraging the expertise and resources of others who believe in MCC’s mission.   They allow us to stretch and get far more out of each and every U.S. taxpayer dollar we invest in foreign development assistance.

As we proceed with implementation, let me say a word about a few specific countries. The Board discussed MCC’s ongoing partnership with Armenia this morning.  MCC continues to monitor events on the ground in Armenia, and the Board is taking an active interest in the situation.   MCC, as a friend of the Armenian people, wants to help their country succeed as a partner in economic growth and poverty reduction.  However, we also believe strongly that assistance through MCC is earned through the achievement AND maintenance of a good policy environment.  Following the March Board meeting, I communicated concerns to the government in a warning letter,  underscoring our hope that the government would address some of the very troubling patterns that occurred around the last election. 

Recent events made it necessary to communicate ongoing concerns to the new Armenian President Sargsyan. In my conversations with him and others, I have added MCC’s voice to the concerns of the international community over the government’s actions with respect to freedom of assembly, the arrests and detentions of opposition supporters, and the need for an independent inquiry into the conduct of the election and post-election events. 

These communications are part of a process in accordance with MCC’s publicly available policy that governs suspension or termination of assistance.  MCC’s Board will continue to monitor and discuss the situation in Armenia, and is expecting that the Armenian government will continue to make appropriate reforms so that our cooperation on poverty reduction programs can continue as fruitfully as it has to date. 

In addition to Armenia, let me also say a word about Madagascar.  Madagascar, our first compact partner and the only copmpact that is four—and not five—years in length, has requested a one year extension.  The Board voted to grant Madagascar’s request and we are amending the compact to five years to match the length of our other compacts.  This does not change the monetary value of the compact; it only gives Madagascar the extra time it needs to complete its designed programs.   

The third matter I wish to discuss with you is: Congress.  We were confronted with unexpected news in late May when the Senate passed an amendment to the War Supplemental to cut $525 million from MCC’s current budget.  If enacted, this would be, of course, shortsighted and damaging to U.S. foreign policy interests. But I would like to thank the several groups, including the Initiative for Global Development, InterAction, the Center for Global Development,  the U.S. Global Leadership Campaign, and others who have all voiced their strong opposition to such cuts.

Presumably, the Senate took this action because they see undisbursed balances in MCC’s accounts that they would like to target for other purposes.  The notion that MCC has unspent money that isn’t committed to fighting poverty is simply wrong. 

Signing our compact with Burkina Faso—and an upcoming one with Namibia—will mean that 99 percent of all funds appropriated to MCC will be committed to specific countries and specific projects by the end of this fiscal year.  Having the funds upfront and fully committed is one of the defining principles of MCC and gives our country partners the confidence they need to make real reforms and invest their own money into our process.  Reneging on these agreements, negotiated in good faith and based on predictable funding,—after countries have made substantial political, economic, and social reforms to qualify—will seriously damage MCC’s ability to incentivize reform and jeopardize U.S. engagement with developing countries. 

It sends the wrong signal to them that all their hard work to reform their policies, and consult with their citizens, and develop a results-driven program for poverty reduction and economic growth will go unrecognized and unrewarded. 

We believe in the effectiveness of aid predictability.  Sixty years of development experience reinforces MCC’s practice of setting aside full funding upfront so that we do not end up with half-built roads or unfinished agricultural programs at U.S. taxpayer expense.  To ensure accountability and efficient use of U.S. taxpayers’ funds, MCC programs are designed to disburse money predictably over a five-year timeframe.

It is unfortunate that some are actively seeking to prevent MCC from using these best practices to maximize the effectiveness of American assistance abroad. We continue to talk with the White House and our Congressional partners about this, and I have met personally with several members to share our concerns.  If partner countries keep their commitments to qualify and remain in the MCC program, we should also honor our commitments to them and make sure funding is available.
During the last few months, I have received a number of invitations from around this country to educate taxpayers about their investments abroad and share MCC’s story—from groups in New York, Indianapolis, Los Angeles. Later this month, I will be in Chicago. I’ve met with Salvadoran, Philippine, and Armenian diaspora groups.  I’ve spoken at universities, with the press, and before World Affairs Councils, UN associations, and business groups. 

There is great interest in knowing more about MCC, and a great enthusiasm all across the United States, among so many interested Americans, for how we deliver foreign aid—with predictability and accountability, and a focus on results.
At a reception marking the second anniversary of the Georgia compact entering into force—where a major contract to move ahead with road rehabilitation in that country was announced—Georgia’s Prime Minister described MCC best when he said: “This is one of the most important programs implemented in Georgia over the past few years. Georgia has changed and its economy has improved dramatically during these two years…[MCC is] exactly the kind of donor we like to work with.” 

Our model is working—working in partner countries worldwide. And, with ongoing support from Congress, we will continue maximizing the effectiveness of American assistance abroad through the Millennium Challenge Cooperation, to serve our interests as well as those of partner countries working to create a better life for their citizens.

With this overview, I’ll stop here and would like to introduce Lorne Craner.  Lorne serves as President of the International Republican Institute, “IRI,” a position he has held twice, from 1995 through 2001, and again since 2004.  IRI is a non-profit, non-partisan organization whose mission is to advance freedom and democracy worldwide through support for good governance, institutions and the rule of law.  Lorne served as Assistant Secretary for Democracy, Human Rights and Labor under Secretary of State Colin Powell and Director of Asian Affairs at the National Security Council under Brent Scowcroft.   He also served as the Foreign Policy Advisor first to Congressman Jim Kolbe and later to Senator John McCain. Lorne played a firsthand role in helping construct MCC’s “good governance” criteria. Please join me in welcoming MCC board member Mr. Lorne Craner…