LONDON, United Kingdom — A new emerging bill known as the Millennium Challenge Corporation (MCC) Eligibility Expansion Act seeks to expand the MCC’s pool of eligible countries for investment. If passed, it could in many ways prove to enable the MCC to better tackle global poverty through investment in the development of various countries.
About the MCC
The U.S. Congress formed MCC in 2004 to bridge partnerships with countries to promote development. Seeking to alleviate people from poverty, MCC invests in the coming generations. As a leading anti-poverty foreign assistance agency, MCC prides itself in its innovative and independent policies.
Partner countries receive time-limited grants to foster economic progress, minimize poverty and establish strong institutions. However, there are requirements that need to be met by a potential partnering country. These include a commitment to good governance, economic freedom and investment in its citizens through numerous methods, an example being country-led solutions.
MCC tackles a plethora of areas, some examples being agriculture and irrigation, anti-corruption, education and health, according to its website. Whilst these investments primarily seek to support partner countries, in the same breath, they also enhance American interests.
Demands to Congress
The MCC has asked congress to write legislation granting it more flexibility in terms of funding for investments in lower-middle-income countries and the criteria used to decide which countries are eligible for funding from the agency. In order for these changes to come into practice, there needs to be a change in legislation and possibly more funding.
Also, the MCC is dealing with an increase in misinformation in several countries they are looking to work with. These forms of misinformation include the notion that the MCC is seeking to build army bases and that upon ratifying a compact deal the country will join a U.S. military alliance. These false claims are threatening the establishment of potential compacts with countries like Sri Lanka. Therefore, MCC hopes to be removed from pending legislation that involves the U.S. military and its aims to counter China, according to Devex.
The current requirements that countries need to meet to qualify for MCC funding have proved to hinder certain compacts from developing. A country particularly affected by this is Burkina Faso. On March 31, 2022, after a coup d’etat had taken place in the country, the MCC Board of Directors made the executive decision to suspend MCC’s assistance to Burkina Faso and its eligibility for a concurrent regional compact. These actions go against MCC selection criteria which commit to democratic governance and upholding the rule of law.
As such, countries that do not adhere to these principles risk losing eligibility for MCC investments. However, the passing of this bill may counter this. As such, this is why the Millennium Challenge Corporation Eligibility Expansion Act came to become.
The Millennium Challenge Corporation Eligibility Expansion Act
This Bipartisan bill, which the House Foreign Affairs Committee has approved, would expand the pool of countries that the MCC can work with. This pool of potentially eligible nations would increased from the current amount of 81 to a total of 125 countries that have the lowest gross national income each fiscal year according to the World Bank.
The bill provides solutions to several issues. For example, it would speed up the process taken to formally establish an MCC compact which includes three principal processes – negotiation, ratification and implementation, according to Devex. Oftentimes, this process is prolonged due to a country no longer qualifying in the income category in the midst of the process, an issue that greater flexibility offered by this bill could address.
The Millennium Challenge Corporation Eligibility Expansion Act is currently making its way through U.S. Congress and the aim is to get this bill on the House of Representatives calendar for a vote within the coming months. It is already gaining support and several senators have co-sponsored it. According to Devex, Rep. Young Kim is particularly supportive of this bill as she believes that it creates an opportunity for the U.S. to build financial partnerships in developing countries amidst Beijing’s international infrastructure program.
Tackling Global Poverty
If passed, this bill could help tackle poverty on a great scale. It could contribute to developing global infrastructure. The addition of eligible countries would allow the MCC to work in middle-income countries where extreme poverty is growing as income does not always negatively correlate with levels of extreme poverty.
One of MCC’s major objectives is to diversify the regions they work in given that two-thirds of its work is based in Africa, according to Devex. MCC wishes to expand to parts of Eastern Europe and Asia where poverty is notably on the rise. Hence, this would open an opportunity to establish regional compacts – for instance, between Ukraine and a neighboring country post-conflict. Whilst it may cause a re-establishment of partnerships with countries that previously did not qualify for a variety of reasons, as arguably people should not suffer for their government’s incompetence
Whether or not these advancements occur depends on the success of the bill within congress over the next few months.
– Claudia Efemini