Bush's Millennium Challenge Account a Down Payment for Development say US -based NGOs (2002)

Rethinking Bretton Woods | Tue, Mar 19, 2002

By U.S. NGOs in Monterrey
"Representatives from some 20 US-based NGOs participating in the Foro Global of civil society in Monterrey from March 14 to March 16 and the official FfD Conference starting today in Monterrey have released a statement welcoming, but challenging President George W. Bush's announcement of a $5 billion increase in U.S. foreign aid over a 3-year poeriod beginning in 2004 for ""good performing countries.""

In the unveiling of The Millennium Challenge Account, President Bush recognized that systemic poverty is a national and global priority, and that Official Development Assistance is a critical instrument for addressing the challenge of poverty eradication. We, the US-based NGOs participating in the Global Forum, congratulate President Bush for responding to public opinion on this important issue. We commend his acknowledgement of the underlying factors that cause poverty and instability, and the role that the United States can play in alleviating these conditions. We also commend President Bush's leadership in endorsing the Millennium Development Goals, and a commitment to reach out to the world community in defining the parameters of this new account.

The details of the Challenge Account are not yet clear. We look forward to participating in the deliberative process that will both outline and monitor the application of the selection criteria for this Account. To initiate this collaboration, we put forth the following comments and recommendations about President Bush's proposal.

President Bush has made a commitment to a down payment for development. His proposal is a modest first step toward meeting the Millennium Development Goals and reversing the downward trend in aid levels. (This additional commitment will only bring the 2004 foreign aid spending level back to that of 1997.) The US now has an opportunity to take a proactive stance to advance global peace by addressing the underlying causes of instability and improving the living conditions of those who survive on less than $2 a day, fully half the world's population.

The US motivation for allocating aid must be driven fundamentally by the need to eradicate poverty, create opportunity, and promote health and education for all -- elements that President Bush correctly recognized as fundamental preconditions for economic development.

It is critical in distributing this new aid, that the US recognize that there are many paths to development. The Millennium Challenge Account must allow for a diversity of development strategies which are designed by developing countries in response to the needs of their populations, and are effective in advancing both social and economic development. In addition, the spirit of this Account can best be realized by aligning the selection criteria with internationally accepted indicators that consider social as well as economic conditions.

We welcome the US recognition of the need to improve accountability on the part of both rich and poor nations. We urge the US to extend its understanding of rich country accountability by moving toward a more cohesive set of policies that improves the development prospects of poor countries. We encourage the US to reexamine several policy areas that currently hinder global poverty eradication and economic development, and undermine the value of foreign assistance. Specifically, the Bush Administration should rethink

  • The world trading system from a perspective that gives priority to, and levels the playing field for developing nations, including the poorest among them.
  • The conditions under which Foreign Direct Investment
  • promotes development.
  • The thus far insufficient attention given to solutions to the debt burden of developing countries, including an orderly and neutral debt arbitration mechanism.
  • The current efforts being undertaken to prevent and resolve financial crises.
  • The causes of the existing asymmetries in global economic governance.
  • The practice of tied aid, which should be eliminated.

The US should lead by example and work with other rich nations in reexamining the above policies. In the run-up to Monterrey, US and other industrialized nations resisted efforts to specify concrete commitments. NGOs watched in dismay as the promises of FfD remained unfulfilled, and the Monterrey Consensus contained few new global commitments. While we welcome the new announcements of additional foreign assistance made by the US and EU, such uilateral declarations undermine the spirit of the Monterrey process.

The down payment has been committed. It is up to President Bush to maximize the returns to this investment. The above recommendations are fundamental to laying the groundwork for a real enabling environment for development -- one that will foster the creation and equitable distribution of wealth. We look forward to future installments and cohesive policies that will create a truly new compact for global development.