I appreciate this opportunity to join you here in Los Angeles to discuss the partnership between the Millennium Challenge Corporation and Armenia in achieving a shared goal—the reduction of poverty through sustainable economic growth.
As involved members of the Armenian community, I welcome this opportunity to talk with you about the work of the Millennium Challenge Corporation in Armenia—about the progress made and the path ahead. Like you, the Millennium Challenge Corporation cares deeply about poverty reduction and economic growth in Armenia. I could see the country’s tremendous promise when I visited there last year. MCC is committed to transparency and an open dialogue with key stakeholders to ensure the most effective use of our aid—that is also why I am here.
As stewards of American taxpayer dollars, we have a fiduciary responsibility to make sure our assistance delivers results in the lives of the poor. We all have great interest in and a deep concern for what is happening in Armenia. I recognize the positive, constructive impact you continue to have on what happens in Armenia. So, let me take this opportunity to update you on MCC’s partnership with Armenia and then ask for your help.
MCC and Armenia 101
Armenia signed a five year, $236 million anti-poverty compact with MCC in March 2006 to increase the economic performance of its agricultural sector through strategic investments in rural roads and irrigated agriculture. The Millennium Challenge Corporation, created by an Act of Congress in January 2004, is a different and demanding model of development assistance. We partner with some of the world’s poorest countries and provide them with grants, not loans, to reduce poverty through sustainable economic growth.
MCC awards assistance based on sound policy performance, using 17 publicly available indicators taken from non-U.S. Government organizations that measure whether a country governs justly, invests in health and education, promotes economic freedom, protects the environment, and fights corruption. We partner with countries willing to build their capacity to lead their own sustainable development and willing to deliver results in the lives of the poor.
To date, we have provided $5.5 billion in compacts to 16 partners worldwide and have signed threshold programs with 17 additional countries totaling nearly $365 million to move them closer to compact eligibility. Around the world, MCC partner countries are using these investments to: issue land titles, increase farmer incomes, create jobs, increase market access, improve infrastructure, open health clinics, build girl-friendly schools, strengthen access to credit, and improve access to water and sanitation services.
These early results prove that the MCC model is working, and we are seeing measurable change take root in our partner countries, including in Armenia. As we require of all our partner countries, Armenia set up its own accountable entity—MCA-Armenia—to manage the implementation of its MCC compact. As part of ongoing consultations with all segments of Armenian society to implement the compact with transparency and accountability, MCA-Armenia organized 13 outreach sessions, 20 events with wide public and media participation, and 13 sessions with key stakeholders and civil society representatives.
We welcome this healthy, active engagement by the Armenian people to ensure that the compact delivers the results it promises.
And, we see those results begin to emerge.
The rehabilitation of rural roads kicked off last November with construction on a 25-kilometer pilot road segment. The road is the main link to major agricultural markets for farmers in northern Armenia. And, by the end of 2008, we anticipate that nine villages along the route will benefit from the new road. In addition to road improvements, irrigation upgrades are also underway. MCA-Armenia signed a construction contract to begin repairing 6,500 meters of canals that will transmit water to irrigate over 1,000 acres of farmland, benefiting nearly 650 farmers. And, to demonstrate their own commitment to the sustainability of these improvements, farmers, who will benefit from the enhanced irrigation, provided 15 percent of the funds needed for the repairs. To date, some 6,000 farmers have also been trained in the use of new and improved farming technologies because of the MCC-Armenia compact. These developments are making a meaningful difference in the lives of poor farmers, setting the stage for further growth and development. We hope these MCC investments in Armenia’s development will attract foreign investors, who can use them for commercial activities as well as complementary or parallel investments of their own.
Let me underscore that MCC’s approach to development fundamentally believes that our aid is most effective in an environment of sound political, economic, and social policy performance. Because of this, we evaluate how a country performs in terms of political rights, civil liberties, the rule of law, and government effectiveness. We maintain that development assistance goes further—and should be awarded only—when good policies are in practice. We share the concerns of the international community about the recent election and the post-election situation in Armenia and call on all sides to act fully within the law.
I sent a letter to President Kocharian in March officially warning him that the government’s actions could have a negative effect on Armenia’s continued eligibility for MCC funding. I have discussed with Armenian leaders what needs to be done at this point and continue to communicate these points to them.And, MCC continues monitoring and reviewing operational aspects of our ongoing work in Armenia.
Points We are Raising with Armenian Leaders Now
MCC has been closely monitoring events in Armenia for some time. For a country to be eligible for MCC assistance, it must demonstrate a commitment to policies that promote political and economic freedom, investments in education and health, control of corruption, and respect for civil liberties and the rule of law as measured by 17 independent policy performance indicators.
We have previously expressed our concern about Armenia’s performance on MCC’s Ruling Justly indicators, most recently through a letter to President Kocharian dated March 11, 2008, following the February 19 presidential election.
The events surrounding the presidential election have significantly increased our level of concern. Like many others in the international community, MCC is alarmed by the widespread evidence of continuing issues in Armenia, including:
- limitations on freedom of assembly,
- limitations on media freedom,
- restrictions on citizens’ exercise of political rights, and
- the delay in convening a non-partisan and transparent public review of the conduct of the election and the handling of post-election events.
Work is already underway on some of the projects comprising the Armenia Compact. One of these projects, the major roads project, has reached a decision point in connection with negotiation of the road construction contract. In light of recent events and the serious concerns outlined above, MCC is holding off on forward movement on the roads project until actions are taken by your government to demonstrate progress toward favorably resolving the issues set forth above. We will continue to monitor the situation in Armenia over the coming weeks in order to assess the extent to which these troubling issues are being addressed.
At the meeting of MCC’s Board of Directors in June, we will present our assessment to the Board and will seek input on the circumstances under which MCC would be prepared to allow MCA-Armenia to proceed with the road construction project. MCC remains committed to the Compact’s objectives and to the principle of partnership. We also remain committed to MCC’s founding principle of working with countries that actively exhibit a commitment to democracy and the rule of law, as well as economic freedom and social investment. As the new Presidents begins his term, we have the opportunity to open a dialogue on ways that your government can demonstrate its commitment to these principles.
Working with the Armenian Community
It is up to Armenia to remain eligible. MCC cannot do for Armenia what the country is unwilling to do for itself. We do not want to see an exemplary program—a program that is showing results on the ground—be discontinued, but the MCC model is clear about with whom we, by law, can partner. This is where you come in and where I need your help.
Help us convey this message of urgency to Armenia. We have to see positive movement now. The time to act is now. A lot of eyes are on Armenia, and as a result, a lot of eyes are on MCC. MCC wants to be as open and fair as possible with Armenia as well as with you, who, as taxpayers, want to see the most efficient use of our taxpayer dollars invested in other countries and who, as staunch friends of Armenia, care passionately and deeply about the country’s future. There are no easy answers. That is why we are engaged in this honest and cooperative dialogue, and why I encourage you to continue being part of this conversation—to share your concerns and your insights—as we work to find the best possible solutions. Thank you again for your interest in the Millennium Challenge Corporation and in our partnership with Armenia, and I look forward to our conversation here his morning.