Remarks by MCC CEO Daniel W. Yohannes at Open Society Institute/Freedom House event

Mort, thank you for that kind introduction. It’s great to be here. I am pleased to be co-hosting this event alongside the Open Society Institute and Freedom House. And special thanks to Brian Atwood for joining us on this side of the Atlantic.

The role democracy plays in sustainable development is one that we think about at the Millennium Challenge Corporation in very practical terms. Like so many of you, we see democracy as a powerful tool for promoting peace and stability, fostering a culture of transparency, accountability and good governance,creating opportunities for private enterprise, and stimulating growth—all building blocks for reducing poverty.

If you believe there is a link between accountable governance and sound economic development, then that belief should inform how you work. While many share this view, I believe MCC has taken a number of steps to act on it in practical ways. So, with that in mind, I appreciate the opportunity to be a part of this conversation.

I will leave the panel to go into the details, but let me say just a word about the one thing most people know about MCC—that we select our potential partners based on their commitment to good democratic and economic governance.

In fact, MCC uses 20 indicators taken from third party sources to assess this commitment. And, last year, for the first time, we added an explicit democratic rights hurdle to our criteria.

Now, for a country to meet MCC’s eligibility, it must score above a minimum level in either political rights or civil liberties. As a result, some people say that we “raised the bar” on democracy expectations. Well, I hope we did.

Now, here’s the bottom line: From our creation, MCC has maintained that sound economic and political governance is key to our success.

It is key to delivering effective development assistance and ensuring the sustainability of our investments.

It is key to attracting private sector-led growth, which flourishes in an environment that respects the rule of law, fights corruption, enforces contracts, invests in the health and education of workers, and reforms policies to enable entrepreneurship and promote trade and investment.

It is key for transparency and accountability that keep us on track to deliver the results we say we will.

It is key for protecting and advancing the rights of people.

But until last year, it was not explicit. Now it is. And, I am extremely proud of that.

And, we rely on Freedom House for the data on democratic rights. It has been a very productive partnership, and one that has led to countless conversations with national actors who always ask me ‘what do I need to do to improve my scores.’ Not all these conversations move to the next steps, but some are really genuine.

I want to conclude with a true story that I am extremely proud of. It is the story of Malawi’s suspension and reinstatement. It is a story that demonstrates what it looks like when MCC holds countries accountable for maintaining a commitment to democratic governance. It also shows what political will can accomplish.

Last year, we placed our compact partnership with Malawi on hold due to concerns about negative democratic trends. By March of this year, we actually suspended the country’s $350 million compact.

However, when President Banda came to office following the death of President Mutharika, she declared she would address the concerns that had led MCC to suspend our investment in her country.

By June 2012, we had witnessed new laws, new patterns of action, respect for human rights, and a stronger, more consistent economic policy.

I was part of those conversations, part of that dialogue. And I can assure you: They were as much about the rights of the citizens of Malawi as they were about the economic futures of those same citizens. I think in Washington we have a tendency to think of either democratic or economic development. But, the experience with Malawi drove home for me how both are deeply connected.

This recognition—this commitment to democracy—is how we start partnerships with countries. It is also what we want to see continue as our relationships mature. And, this is the surest way for MCC to achieve our mission of reducing poverty through sustainable economic growth.

With that, I leave you to what I trust will be a productive discussion. Thank you so much.