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New MCC Board of Directors Reviews Partnerships to Combat Global Pover
[07:43 pm] 12 March, 2009

Board expresses significant concern on Armenia and Nicaragua and
calls for extraordinary interim session to review progress

Washington, D.C.’The Millennium Challenge Corporation (MCC) Board of
Directors held its quarterly meeting today, the first chaired by
U.S. Secretary of State Hillary Rodham Clinton and attended by new
Board member Secretary of the Treasury Timothy Geithner, to discuss
MCC programs generally and review in detail MCC’s current partnerships
with Armenia and Nicaragua.

Given ongoing concerns about governance issues in Armenia and
Nicaragua, the Board decided to convene an extraordinary interim
review session prior to its June meeting to assess its partnerships
with these countries. The new Board will make a final determination
regarding MCC’s ongoing engagement in these two countries once it has
had time to assess the current status.

`During this turbulent economic time, MCC remains committed to
performance-based foreign assistance as an effective `smart power’
tool to reduce poverty through economic growth,’ said Acting MCC Chief
Executive Officer Rodney Bent. `We are pleased to welcome our new
Chair, Secretary Clinton, along with the other new Board
members. Their vision and vigorous advocacy for development in
advancing America’s global engagement is energizing.’

As a result of today’s meeting, MCC will continue its suspension of
assistance for certain activities under the $175 million MCC compact
with Nicaragua. In December 2008 ` in response to the government of
Nicaragua’s manipulation of municipal elections and a broader pattern
of actions inconsistent with the MCC eligibility criteria ` MCC
suspended assistance for all new activities not yet under contract and
the property regularization project, which was being implemented by
the government of Nicaragua. MCC called on the government of Nicaragua
to address credible allegations of fraud during the November 2008
municipal elections and to demonstrate a clear commitment to
democratic principles by taking concrete steps to restore the
legitimacy and transparency of Nicaragua’s electoral process. To date,
the government of Nicaragua has not taken any meaningful steps to
address these policy concerns.

The continued suspension sends a strong message to the government of
Nicaragua that now is the time for serious and sustainable reform, and
that the responsibility for these actions lies with the
government. MCC’s commitment to poverty reduction and economic growth
in Nicaragua will continue through MCC assistance for a rural business
development project benefiting small and medium agriculture-related
enterprises, including some 30,000 people in rural areas. The Board
will review the current suspension under the compact at a special
session prior to the June Board meeting. `Aid accountability and good
governance are founding principles of MCC. The government of Nicaragua
has failed to reaffirm its commitment to democratic principles and
practices since its suspension in December,’ said Bent. `MCC’s primary
mission is to support sustainable poverty reduction, which requires
MCC to partner with country governments committed to democracy and the
rule of law. The government of Nicaragua must find a Nicaraguan
solution to restore citizens’ faith and confidence in their system.’

As a result of the meeting, the Board reiterated its concerns about
the status of democratic governance in Armenia and will not lift the
hold on MCC assistance for the rehabilitation of rural roads, while
allowing the government of Armenia to fund construction. MCC will
continue to provide assistance for irrigation infrastructure, which is
well underway and assists Armenian farmers. The Board will review the
current hold on funding road activities at a special session prior to
the June Board meeting.

`The Board’s decision today signals to the government that it has
failed over several years to address concerns raised not only by MCC
and other U.S. Government agencies, but the international community as
well. It’s now incumbent upon the government of Armenia to restore the
Board’s confidence to its commitment to democracy and good
governance. MCC has given the government of Armenia every opportunity
to make meaningful reforms and will continue its direct communication
about its expectations moving forward,’ said Bent.

The Board also reviewed the progress and emerging results from MCC’s
partner countries implementing poverty reduction and policy reform
programs worldwide. Although MCC’s funding level was reduced in the
FY2009 Omnibus Appropriations Act, ongoing compact and threshold
programs will not be affected by these cuts. MCC also will continue to
work with partner countries to develop compact proposals to reduce
poverty.

The Board discussed the status of MCC’s compacts in development with
Moldova, Senegal, Jordan, Malawi, and the Philippines. In addition, it
discussed the compact development process for Colombia, Indonesia, and
Zambia, the three new countries selected by the Board in December as
eligible for MCC compact assistance.

The Board also received an update on MCC’s threshold programs. Liberia
and Timor-Leste were selected as eligible for MCC’s threshold program
by the Board in December. The threshold program assists countries that
have shown progress and commitment toward policy reform. These
countries are considered for assistance to further improve their
performance on the indicators that comprise the MCC eligibility
criteria. To implement the threshold program, MCC works
collaboratively with other U.S. Government agencies, primarily USAID.

`MCC has developed a strong relationship with these countries, which
present real opportunities to address critical policy issues and
reduce poverty in Asia, Latin America, the Middle East, Africa, and
Eastern Europe,’ said Bent. `These countries include some of the most
populous and poorest countries in the world and contain striking
pockets of poverty.’ Bent added that, `MCC’s ability to support
countries vitally depends on substantial funding from Congress.’

The Millennium Challenge Corporation is a unique government agency
that includes private and public sector members on its Board. The MCC
Board of Directors is chaired by Secretary Clinton and also includes
Vice-Chair Secretary of the Treasury Timothy Geithner, Acting
U.S. Trade Representative Ambassador Peter F. Allgeier, Acting
Administrator of USAID Alonzo Fulgham, Acting MCC CEO Rodney Bent, and
four private sector members appointed by the President of the United
States with the advice and consent of the U.S. Senate: Former Senator
Bill Frist, Catholic Relief Services President Ken Hackett,
International Republican Institute President Lorne Craner, and
Greycroft, LLC founder Alan Patricof.