JessicaJensenKinsley High School

Kinsley High School
Kinsley, Kansas
Teacher: Dr. Galen Boehme

Improvements for the Millennium Challenge Account
By Jessica Jensen
Grade 12

The Millennium Challenge Account will have more merit in expanding American foreign aid providing that the eligibility standards are refined, that fraud is handled appropriately, and that needs are evaluated realistically.

The MCA will be directed by a government corporation consisting of cabinet level officials. The objectives for the officials to fulfill are healthcare, a just government, and quality education. To carry out the objectives the MCA could cost up to $5 billion per year for the fiscal year 2006. Countries not meeting the criteria will not be eligible to receive funds.

Eligibility standards must be refined for the MCA to achieve more merit. For the FY 2005 all countries with incomes per capita below $1,435 will be considered. If the minimal standards for income per capita are raised, fewer countries will then be eligible. The more eligible countries, the less money to give. If the standards are raised, we will accomplish more by giving larger sums of money to fewer countries of need.

Furthermore, MCA must reconsider the countries that are already eligible. Aid goes to some states now where terrorism is known to exist. Some of these states are Columbia, Indonesia, Philippines, and Yemen. MCA must rethink its eligibility standards, because aid to these countries could endanger the well being of the United States. Terrorism is a major threat. It the United States continues to give aid to countries that support terrorism, the fear of terrorism will continue.

A study by Alesing and Weder suggests that the MCA must face the problems of corruption to be a more worthy foreign aid program. The United States could be favoring more corrupt governments over dictatorships. Foreign aid money is given for “strategic reasons,” not real needs. An example of this is the United States giving aid to Saudi Arabia for economic reasons. Debt relief may not be effective, because the aid may never reach the needs of the people. Corruption must be dealt with. Corruption can have a negative impact on the economic growth of any developing countries.

Corruption also exists in organizations. This corruption happens when an organization frequently strays from its original tasks. Am example of this is the International Monetary Fund. This organization moved beyond its area of expertise, which caused avoidable hardships for groups of poor people. This flaw in the program design led to confusing signals to private investors. A reduction in aid to developing countries was the end result. The MCA must deal with all forms of corruption to be successful.

Needs must be evaluated realistically for the MCA to have merit. The top recipient of foreign aid is Israel. The United States is taking money from the military and turning that money into grants to give to Israel. Israel receives approximately one-third of the American foreign aid budget. Israel comprises .001 percent of the world’s population and already has one of the highest per capita incomes in the world. Israel is the sixteen in the ranking of the world’s wealthiest countries, yet Israel still receives aid from the United States.

Foreign aid must go to countries that exhibit a need for the better welfare of the people. The United States aid may be going to countries without needs for aid. Along with Israel, two other top recipients include Egypt and Jordan. Egypt’s human rights record is very poor, so obviously aid is not helping. Even with these facts our government supported Egyptian requests for additional aid. Jordan is receiving aid due to its increasing pivotal role in the Middle East. The United States is basically paying Jordan to stay on our side. No major needs exist within any of these countries, so the United States aid is wasted.

To make sure that the United States aid has merit, the United States must first decide the balance between weapons of mass assistance (WMA) and weapons of mass destruction (WMD). In order to help the developing countries, Americans must feel safe in the country. If a country has WMD’s, how safe will we feel there? WMA’s are a good idea, but WMD need to be taken care of first. More money, volunteers, and education will achieve nothing when a threat of nuclear weapons exists. WMA’s are very important to the development of the country, but the safety of the country must come first.

The MCA must raise eligibility standards, fight every form of corruption, and give aid to the needy countries. With these factors implemented, the MCA will have more merit.

Selected Bibliography Page

Bush, George W. “Millennium Challenge Account.” Paper in Singer Packet, 2003,
pp. 1-5. January 18, 2003. http://www.singerfoundation.org

Question #1: President Bush Claimed that most funds for development do not come from international aid. He mentions three things that do fund development. What are they?

· Development sources include domestic capital, foreign investments, and trade. Domestic capital is important to the economy of the developing country. This money is earned and kept in the country itself. The country will become more self-reliant as the economy strengthens. Foreign investment is a way for developed countries to help developing countries. If businesses are opened in the developing countries, more job opportunities will exist. This will help to decrease the poverty. Trade is important to the development of a country. When trade ties are made with developed countries, this will help to earn aid from a developed country. International aid is important, but development would not be possible without these other sources.

Question #2: President Bush reminded his audience that successful development in a third world country requires more than funds. What two items did he mention in this regard?

· President Bush discusses the importance of security for citizens to take care of themselves. Security is important, because to develop the nation must first feel safe. No development can happen when chaos and violence surround the people. Development requires citizens with literacy, good health, and willingness to work. Poor nations need our help to fulfill their education and health care needs. Right now the United States provides more than $10 billion a year for developing countries’ health care and educational needs, but so much more is needed. Our commitment needs to be increased by showing love and compassion as the countries organize, develop, and succeed. A lot of the development depends on the citizens and if they are not healthy or willing, development becomes more difficult.

Question #3: When is money sometimes counterproductive, according to President Bush?

· Sometimes the country does not use the money in the way it was meant to be used. The country needs to be reformed legally and economically so that the citizens are protected. Three ways to reform include establishing a just ruling government, investing in their people, and encouraging economic freedom. With a just ruling government certain people would not be allowed to keep all the money to themselves. The money would be used as it was meant to be - - to decrease poverty. Investing in their people would help to use the potential of the poor citizens. By putting the citizens to work, the developing country would be helping the economy and reducing the poverty at the same time. Economic freedom is important, because the citizens will become more independent. The development will be faster if the country reforms and uses the aid as it was meant to be used.

Question #4: Describe the Millennium Challenge Account and include in your description what is anticipated from donors and recipients.

· Millennium Challenge Account asks the people to help each other to make life better for everyone. MCA promotes the fight against AIDS, educates developing nations on computers, assists needy parts of Africa, provides textbooks and training for some countries, and uses science and technology to decrease hunger. The recipients are expected to adopt the reforms and policies of development. Some of these policies include: Keeping the country in good health, decreasing the amount of corruption, and developing a “just” form of government. The recipients are rewarded for making the right decisions. Donors also need to encourage citizens, or recipients, to stay healthy and educated. If recipients cooperate, the donors will reward them with better options to stay healthy and educated.

Question #5: What are the three broad standards that President Bush expects the leaders of the developing nations to adopt?

· The three broad standards that leaders of developing countries are expected to adopt include these: Ruling justly, investing in their people, and encouraging economic freedom. Leaders that accomplish these standards will receive more aid from America. These standards will help the countries to become more self-reliant, and over time the aid will not be needed. The reason for this is because the developed nation will attract foreign investments. With these standards, the capital earned by investments will be used more effectively and productively. This will create more job opportunities for the people. The three standards will not only help the developing country to become more self-reliant, but the country’s leaders and people also.

Question #6: Describe President Bush’s Challenge to development banks and explain why or why not you favor it.

· President Bush challenges banks to not give loans, but give grants. Bush’s challenge is smart, because why just end part of the debt, when all of it can be cancelled? The loans to poor nations are not a good idea, because the country will be unable to repay the loan, which causes more debt for the country. The grants do not have to be repaid, and therefore are a step closer to the country being out of debt and poverty. The one problem with grants is that the bank could end up with debt. The grants need to have sponsorship from developed countries to ensure the banks stay in business. Grants are the best way for developing countries to stay out of debt.

Question #7: What percentage of our national income (GNP) do you think the United States government committed to foreign aid in 2002? First answer the question and then use the Internet to find the answer.

· My estimate is that the United States government commits approximately 50 percent of our national income (GNP) to foreign aid. In reality the United States only contributes around .1% of the national income of foreign assistance. The major investments come from private investors. The United States contributes to foreign aid in many ways. Citizens must look at all the factors before accusing the Government of using all the GNP for foreign related matters. Money is not the only one. Volunteers from the United States donate their time and talents to countries in the development process. Many United States citizens believe all of their tax money is going to other countries, but in reality the only help given to developing countries is the help of volunteers.

· “Me first” attitude refers to self-interests. The country or person thinks only about self. With foreign aid, the phrase says that every country want aid first. The country does not care what happens to other countries as long as it has aid. It is hard to defend this selfish thinking. The only possible explanation would be that the country is desperate for aid. The developing country may feel that aid to another country would damage the development further. If aid is given to a different country before this country, the country will not be able to develop as quickly as the first country. Therefore, its economy will suffer, which would mean the aid will be pointless. “Me first” thinking will help only one country.

· “Mutual benefit” is when everyone is helped from the same aid sources. Poor countries receive more aid, because they have a greater need for the aid. This way of helping makes it possible for developing countries to compete with developed countries. The development is easier, because everyone is given aid. No countries with needs are left out. The giving is “mutual.” Problems exist with mutual benefits, because the developed countries are not given the same amount as help as the developing countries. But these developed countries give help to others, and they can help themselves. Poorer, developing countries are helped out, because they are not able to help themselves. They need help to develop and that help comes with foreign aid.

Question #10: Describe three unsuccessful foreign aid programs operated by the U.S. government or private American citizens.

· Three unsuccessful U.S. supported foreign aid programs include Food for Peace, International Monetary Fund, and Aid to Russia.

· Food for Peace is an organization that has fed the same people for more than a decade. The United States has pampered a large segment of the Third World, because the United States continues to give food to the people in many countries. The large supply of food has led to a decrease in demand for locally produced food, therefore creating a welfare class. People in Third World countries are not going to pay money to have what they are already receiving for free. The United States aid to these countries is penalizing the business, while the aid is pampering the citizens.

· International Monetary Fund (IMF) as an organization was designed to help developing countries with the task of managing economic crises. The IMF is causing avoidable hardship for groups of poor people, because it has moved beyond its area of expertise. US support of this program has led to the image of the organization as “bossy.” Instead of allowing the governments of the developing countries to choose their economic policies, the IMF is deciding what policies the countries should use. The IMF is also sending confusing signals to the private investors, causing reductions in the aid to the developing countries. With the IMF helping outside of the area the program was designed to help, it has led to many flaws in the program’s design.

· Aid to Russia is a specific program within the USAID organization. The aid given by the US is having no effect, because more aid is needed every year to stop Russia from falling into a crisis. The problem is that the power is in the hands of only a few people. The aid is financing their political battles, and is not helping the country. Many organizations are backing out, because the aid is being wasted. No organizations are doing anything around the tycoon capitalism, despite all the corruption and lack of popularity. Aid to Russia will not be effective until a different form of government is established.

Question #11: Describe three successful foreign aid programs operated by the U.S. government or private American citizens.

· Three successful U.S. supported foreign aid programs include Village of Hope, Heifer International and Honey Care Africa.

· Village of Hope is located in over 17 different countries, and they hope to expand to 30 or more countries. The purpose of VOH is to help children earn an education. VOH has started many new elementary schools with volunteer teachers from the United States. VOH also helps children to travel to the school. Many children would have to walk three miles to school, but VOH offers them transportation. VOH not only helps the children, but also the adults. Americans help to train the villagers on health practices and new agricultural advances. VOH has also started a program to help villagers understand computers. VOH persuades the villagers to establish set laws, and generates involvement within the community.

· Heifer International is a way for families to produce a steady source of food and income. Heifer International has been referred to as “the gift that keeps on giving.” The purpose of Heifer International is to train farmers to manage grazing, plant crops, and tend the animals. Americans farmers donate many of the animals. Heifer International gives the citizens of developing countries the opportunity to gain new skills and self-esteem from the training and support. Volunteers from the U.S. help to train the citizens on the proper way to care for their animals. The main principle of Heifer International is “passing on the gift.” This means that a family gives the first healthy offspring to another needy family. Heifer International works with the people to fight hunger, and poverty and to restore the environment. With Heifer International rural families and communities are strengthened through improved health, knowledge of new skills, and a sense of self-reliance.

· Honey Care is an organization sponsored by U.S. corporations. Honey Care was recently established in Kenya, Africa. The purpose is to make it easier for rural farmers in Kenya to engage in bee keeping. Americans donate time and money to help the organization be successful. In the four years since the organization started over 11,750 hives have been established. These hives are a way of income for the farmers. The procedure also incorporates the element of Fair Trade. Americans help the citizens of Kenya to understand how to make their bee keeping successful. The organization promotes community involvement, and independence.

Question #12: Steve Radelet, Senior Fellow at the Center for Global Development, believes we can do both—take care of our people and lend a helping hand to citizens of less developed countries. Explain why you think we can or cannot offer aid to both.

· Helping both the American people and the citizens of developing countries is possible. The only factor is that we must help our own citizens first. Something must be done about the poverty in our own nation, before aid is given to other countries. Otherwise, what is the nation saying to the people? Americans need to know that aid is being offered to them, before they will support aid to foreign countries. Yes, aid is needed in other countries as well, but what will happen if all of our efforts are to the foreign nations? There could be a time when the money and resources run out, and no help has been given to our own nation. Giving aid to both the American people and developing countries is possible, but we must first think of the citizens in our own nation.

Question #13: What do you think about Mr. Radelet’s assertion that “the administration is leaning towards a system in which eligible countries would write proposals (or business plans) describing their objectives and strategy, how they would use the money, the benchmarks used for evaluation. Giving recipient countries this responsibility is a revolutionary change in US foreign assistance.”?

· The idea of developing countries making their own proposals will be very effective. A country will work harder for success, if the goals the people are working towards are their own. Compared to the old strategy, where the US makes the goals for the developing nation, this approach will give the country a sense of independence. With this plan, the country will not feel as if it is being told what to do, but doing what is needed for development. The country will feel that it is receiving assistance to achieve its own goals. The development process will be easier and faster, because the country will be working hard to reach its own goals. The idea for countries to make their own proposals will also make the work load easier for the US, because America will be able to have an idea of what is needed in the country.

Question #14: Which or Mr. Radelet’s three concerns regarding the MCA concerns you and why?

· The concern of Radelet about the make-or-break requirement concerns me as well. The margin of error is an important factor that must be considered. A country could be at the borderline for assistance. The only reason it is on the non-receiving side is because of an error. Some leeway must be available for the countries that are on the borderline. America must look at the needs that the country possesses, and if the people of the country can survive without aid. Another consideration is the country’s willingness to develop. If the country has resistance to change the aid could be wasted. The make-or-break requirement must have other opportunities for the countries that do not make it.

Question #15: There is evidence of an increase in negative world opinion towards U.S. foreign policy, not necessarily the American people. To counter this negative perception of the U.S. some people want the U.S. to concentrate more on weapons of mass assistance (WMA) and less on weapons of mass destruction (WMD). Please comment.

· The negative world opinion of dealing with weapons of mass destruction (WMD) before weapons of mass assistance (WMA) should be positive. In order to help the developing countries, Americans must feel safe in the country. If there are WMD in the country, how are we going to feel safe? WMA are a good idea, but WMD need to be taken care of first. More money, volunteers, and education will achieve nothing when there is a threat of nuclear weapon. WMA are very important to the development of the country, but the safety of the country must come first.

Question #16: What does the World Bank recommend the United State’s “just and appropriate share” to reach the Millennium Development Goals of 2015? Do you think our citizens can afford that kind of increase? Defend your views.

· The recommendation by the World Bank of “just and appropriate share” to reach the Millennium Development goals is not fair to the United States citizens. When calculating the amount of money that the share of the United States is, several factors must be considered. These factors include non-taxpaying citizens, homeless citizens, and citizens in poverty. The United State’s approximate population is 290 million. If the United State’s annual share is $10-15 billion, that means that the taxes of every citizens will be raised approximately $50. When we consider all of the factors of the people that do not pay taxes, or cannot afford taxes, that amount is considerably larger. U.S. citizens cannot afford to pay that amount as it will rise every year, because the need will keep increasing.

Question #17: What do you think about the request of Faith Action for People Centered Development Policy’s request that tax dollars be used to fund, not only government-sponsored foreign aid programs, but “that funds also go to NGOs and grassroots organizations.”?

· The requests by the Faith Action for People Centered Development Policy that tax dollars go to NGOs and grassroots organizations will be very effective. Two positive reasons include these: Money goes directly to the need, and increased local ownership will exist. With the money going directly to the organizations, it does not have to filter through the government. The money is used for the need immediately. Plus, more money will go to the need, because the government will not be able to keep the money. Local ownership is very important, because the people know what they are working towards. The money is used for the needs that the people have decided upon. The people are not told how to use the money. Both reasons will lead to a more efficient use of the funds for the existing needs.

Question # 18: How many countries would be affected positively by health-related investments according to the Commission on Macroeconomics and Heath (CMH)?

· The Commission of Macroeconomic and Health(CMH) states that 83 countries would have a positive effect from health-related investments. The impact of these countries would be positive on economic growth and equity. CMH estimates that $10 million would be needed for the fiscal year of 2003. That amount seems small when 83 countries are helped. This money would be used in a variety of reasons, such as AIDS prevention. Approximately 70 percent of the population could be reached with prevention education. CMH found that by 2010, eight million lives could be saved annually by these investments. How can we put a price on eight million lives? Ten million dollars does not seem to be enough. When we consider all these factors the U.S. should commit itself to educate these countries about AIDS.

Question #19: According to CMH, how much would be gained annually between 2015-2020 due to saved lives and increased economic growth, if an increased investment were made in global AIDS and other health services?

· According to the Commission of Macroeconomics and Health (CMH) $360 billion will be gained annually between 2015-2020 providing that lives are saved and economic growth is increasing. If the United States contributes only $2.5 billion a year, the profits will be highly increased. The profits will not only be in money, but also in lives. Approximately 8 million lives could be saved. How can anyone put a profit on 8 million lives? The investments that the United States would make now, will pay for themselves and then some in the long run. The United States must begin in 2003, because it is a critical year for providing the necessary resources.

Question #20: Use the Internet for you research and name the two congressmen who introduced H.R. 4524. Give a 2-line synopsis of that bill.

· Chris Smith of New Jersey and John Lafalce of New York introduced H.R. 4524 to the House of Representatives on April 18, 2002. The bill was to amend the Debt Relief Enhancement Act of 2002. This act would increase the resources available for human development and poverty reduction in heavily indebted countries. This bill was referred to the Committee on International Relations and the Committee on Financial Services. The bill never made it to the floor of the House, because it was pigeon holed within the committees

Selected Bibliography Page

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