Kinsley High School
Kinsley, Kansas 67547
Teacher:  Dr. Galen R. Boehme

 

The Challenge for Improving Foreign Aid
Through the MIllennium Challenge Account

By:  Teresa K. Hogan
Grade 12

 

Even though the Millennium Challenge Account (MCA) has enough merit for the American people to implement per capita increase and develop community awareness, the MCA proposal overlooks the economic conditions and places too much emphasis on special interest groups.

President George W. Bush established the MCA in March 2002 as a way of helping the underdeveloped and or impoverished countries gain some degree of stability and independence.  Bush outlined four basic goals for a country to reach in order to receive aid:  To improve the health care system, to enhance the educational services, to provide a just government, and to have a sound fiscal system.  To help countries reach these goals, Bush has stressed the importance of establishing benchmarks so that an objective measurement exists to show how much progress a country has had in reaching the goals.

Unemployment, cutbacks in social spending, and decreased wages have made many countries, including Brazil, lose money.  In Latin America, economics slipped two percent in 1998, and another one percent in 1999 after a five percent expansion in 1997.  This caused a per capita loss of over 2.5 percent.  The 1990’s saw a less than three percent per capita increase, which is one percent better than the 1980’s.  But that three percent will lower in the new millennium.  Money in foreign countries has decreased in value.  This decrease ruins many families.  Inequality is worse.  Income and health have become more skewed instead of remaining stable.  A need exists for deepening and expanding foreign economics, while still striving for a more equitable dispersal of the benefits.  With all of the additional funds that the countries will receive through foreign aid measures, such as the MCA, per capita should increase instead of decrease.

Many steps have been taken to increase community awareness.  Americans teach people in foreign countries how to grow food, and teach how to meet health care issues.  Community members can help each other plant the foods.  Many American based groups are involved in the process.  People are learning how to use computers to communicate with people in other countries.  People are taught how to better their own lives instead of depending on the government for help.  These people are taught to create an economy that develops.  Primary education for girls and boys is extremely important as it promotes gender equality.  Countries have to be able to build a stronger economy so they can trade with other developing and developed countries.  For each dollar of aid from private and public sources comes two dollars of increased aid.

Corruption runs deep, but who decides what corruption is exactly?  Finland is the least corrupt, and Bangladesh is the most corrupt on the 2002 transparency corruption index which includes 102 countries.  This index uses a 10 to indicate the countries with the least corruption and a zero for the countries that are very corrupted, with a 5.5 as the borderline for help.  The United States (U.S.) sends the most money to Israel, Egypt, and Columbia.  The U.S. is at a 7.7 on this scale, Columbia is listed as a 3.6, Egypt a 3.4, and Israel a 7.3.  If Israel is barely below the United States on the corruption scale, why does Israel not give money to countries in need?  No country, thus far, is recorded as a perfect 10, and no country is a zero.  Countries below the 5.5 median will not receive as much money through the MCA as the countries above the 5.5.  This means that as the less corrupt countries become less and less corrupt, the poorer countries will continue their downward spiral.  Chile is the only country that has a high rate economic expansion that is stable, yet Chile is a 7.5 on the corruption scale.  Maybe corruption means governmental policies are not sound.  If this is the case, how is a corrupt country going to survive when the money received is given to the government to use?  Money is too frequently given to government officials, not directly to the people of the country.

President Bush wants to give grants instead of loans, and declares that peace is never too expensive.  Bush would like more people to become active in supporting his $5 billion MCA plan on helping developing nations.  Bush knows his goals for securing peace might be a little too high, but with help nations will be able to “double the size of the world’s poorest economies within a decade.”  This would not be a bad idea if the policies were established correctly.  Many groups want their ideas to come first.  If those ideas are not good enough, the groups do not want to help the ideas of the other groups to develop.  A women’s group believes that the policy needs to include good governance, sound policy, quality health and education and should promote entrepreneurship.   Entrepreneurship is not necessarily a good idea, unless the people stay with whatever they start.  This women’s group also believes that it is necessary to have women as a part of successful strategies because women make up 50 percent of the world’s population.  Money should go to the poor, especially women that are poor.  Many programs should be more focused on females.  If people want the MCA to work successfully, they need to stop focusing on the wants of the special interest groups, and start focusing on the people that are really in need. The U.S. needs to start listening to the concerns of the local people.

The MCA has enough merit to work properly if the administrators of the program can eliminate the oversights.

Selected Bibliography

Bush, George W.  “Global Poverty and Development.”  April 15, 2003.  www.episcopalchurch.org/peace-jusice/article_47.asp>

Faith Action for People - Centered Development Policy.  "Testimony before the Foreign Operations Subcommittee U.S. House of Representatives."  Singer Contest Packet, 2003.  May 7, 2002.  January 16, 2003.  www.singerfoundation.org/Current%20Contests/EssayContests.../morerequiredreading2003.htm

"Latin America's Economic Future."  Americas at the Millennium.  April 15, 2003.  www.iadialog.org/publications/policy_reports/PlenaryReport99.asp

"The Millennium Challenge Account." Singer Contest packet, 2003. January 16, 2003. www.singerfoundation.org/Current%20Contests/EssayContests2003/questions2003.htm

"More Required Reading 2003 Harry Singer Foundation Essay Contest."  Singer Contest packet, 2003.  January 16, 2003.  www.singerfoundation.org/Current%20Contests/EssayContests.../morerequiredreading2003.htm

Myers, Beth. “Women’s EDGE White Paper on the Millennium Challenge Account April 2002.”  Women and International Development. January 2002.  April 15, 2003. www.womensedge.org/development/mcawhitepaper.htm

Radelet, Steve. “Initial Reactions to the Announcement on the MCA.” Singer Contest packet, 2003. January 16, 2003. www.singerfoundation.org/Current%20Contests/EsssayContests.../morerequiredreading2003.htm

“The 2002 Transparency International Corruption Perceptions Index.” General World Statistics. April 15, 2003. www.infoplease.com/ipa/AO781359.html

USAID. “Millennium Challenge Account Update.”  The United States Agency for International Development. June 3, 2002. April 14, 2003. http://www.usaid.gov/press/releases/2002/fs_mca.html

Questions

 

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?

·   Forms of development other than international aid include domestic capital, foreign investment, and trade.  With domestic capital, people are more careful with it because they earned it.  The foreign investment is given to people so the local people can make more money.  This money will help the countries grow.  Trade deals with imports, exports, and loans.  Grants can be considered a trade, but the giving country will more than likely not receive the money back.  The emphasis is upon helping a developing country grow rather than profiting from a country in distress.

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?

·   Successful development includes citizens who are literate, healthy, and prepared and able to work.  If people are literate, they will be able to read and improve their lives.  If a person is healthy, that person will be able to work and provide for a family.  If a person is willing to work, that person does deserve to be helped.  When citizens are literate, healthy, and able to work, the development of the poor countries will therefore increase at a higher rate.

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

·   When corruption runs deep, money is counterproductive, private property is not protected, markets are not open, and fiscal policies are unsustainable.  This seems reasonable because corruption can create bad polices.  Corruption will delay reform.  Corruption does not allow for a lot of private investments.  This difficulty will cause economic troubles.  Money that is used needs to be accounted for, to figure out how and where the corruption can be overcome.

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

·   The Millennium Challenge Account (MCA) is a form of foreign aid.  The MCA gives money to developing countries from those countries already developed.  The donors are to give money to the account for the use of the poorer countries.  The countries are to show results in their development.  These countries need to use the money for their people and not let the leaders keep the money for themselves.  Many standards are set for these countries.  The standards include the country trying to eliminate poverty and hunger, fight diseases, develop a partnership for global development, and reduce the child mortality rate.

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

ź        If leaders rule justly, invest in their people, and encourage economic freedom, developing nations will receive aid from the United States.  After a certain amount of time, these countries should not need the support any more.  When a nation has sound polices and laws, that nation will attract foreign investments.  The investments will also increase the number of trade revenues.  When the money is invested correctly, the money will create jobs for the nation’s people.  The developmental money, in a sound policy, will lift four times the number of people out of poverty.

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

ź        The plan is to give more money to the World Bank.  The Administration needs to put some of the loaned money into a grant program. The money should be loans so the money is replenished.  The amount of money given to the account by the United States does not need to increase.  We have people here that need that money too.  That may seem selfish, but it is the truth.  Other countries need help too, but we need to solve our nation’s problems before taking on the problems of other countries.

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

ź        I estimate that less than 10 percent of the national income (GNP) is used for foreign aid.  In 2001, .1 percent of the GNP was used.  According to the Center for Global Development and the Center on Budget and Policy Priorities Policy Brief in March 2002, by 2003 the .1 percent would increase to .135 percent.  Isaac Shapiro and Nancy Birdsall project the $10 billion proposed increase will be put into play.  The United States (U.S.) does not give as much money as other countries, and that makes us look bad.  Although, if we stop and look at what the rest of our money is being used for, the U.S. may not be able to give more money.  We use the money for our own country’s needs.  We give what we can to the foreign aid programs.  www.brookings.org/rios/data/sources/image/83f7c524afb9ff3b7fff57480a141465.gif

Question #8: Describe and defend a “Me First” attitude.  (Use your head --- you won’t find the answer in the required reading.)

ź        A “Me First” attitude deals with people who think they need the money the most.  Countries in dire need should be helped first, so they think.  On the other hand, the money comes from the United States (U.S.); we should start focusing on our homeless also.  People in the U.S. go without food and shelter because these people cannot afford these luxuries.  Before we start worrying about the needs of others, we need to worry about the needs of the local people.  I am completely for the “Me First” idea.  The ”Me” should be the U.S.  Taking care of our local people will ultimately improve our own economy.

Question #9: Describe and defend a “Mutual Benefit” attitude.  (Use your head --- you won’t find the answer in the required reading.)

ź        A mutual benefit is a way for other countries to benefit themselves.  This spirit, in turn, will allow us to trade with them, which will benefit us.  This agreement will allow us to help developing countries grow economically.  When this cooperation happens, we can give more money to other developing countries instead of the one that we helped become independent first.  This developed country can also start helping another underdeveloped country as we helped these people.  This form of help will assist both countries in developing a better foundation for their futures.  A good attitude between developing countries will make working together easier.  All countries should be interdependent upon one another.

Question #10: Describe three unsuccessful foreign aid programs operated by the U.S. government or private American citizens.  (Do not use the programs discussed in the testimony of Faith Action for People-Centered Development Policy included in your required reading.  Conduct research using the Internet.  Duplicate examples from the same class will not be accepted.)

ź        Three unsuccessful programs include Taiwan’s Non-Government Organization (NGO), the World Bank and International Monetary Fund for Ethiopia, and Ministry of Foreign Affairs with the United Nations Economic and Social Commission for Asia and the Pacific (UN-ESCAP)

ź        The Taiwan NGO is unsuccessful because of miscommunication. The absence of a strong collaboration between the NGOs and the government has reduced the ability of Taiwan to deliver foreign aid. Taiwan wanted to donate money to the countries infected with the polio virus. The money was to be put in a program in UNICEF, through the local Rotary Club, but the attempt was unsuccessful. USAID offers funding for the NGOs. Taiwan’s NGOs need time and support to be accepted into the international aid arena.

ź        Ethiopia has a dependency history on foreign assistance. Even though the amount of the loans has increased, the per capita figure has not changed, leading to the country’s expanding poverty. Ethiopia has fallen behind and has become one of the worst tragedies in Africa.  The government wants more money to fight poverty and gives statistics on hunger and disease.  The government, however, does not mention if the loans have helped.

ź        UN-ESCAP in Indonesia has a leakage problem.  A lot of the funds go to people who are not poor.  Lay-offs during the 1997 crisis led to millions of “new” poor people. Approximately $60 billion in bonds were used to help banks recover. “The banks were left with $43 billion in bad loans.” The people are still paying off the $60 billion plus interest.

ź        These and other unsuccessful programs cannot make a positive difference in the lives of the people they attempt to serve.

Question #11:  Describe three successful foreign aid programs operated by the U.S. government or private American citizens.  (Do not use the programs discussed in the testimony of Faith Action for People-Centered Development Policy included in your required reading.  Conduct research using the Internet.  Duplicate examples from the same class will not be accepted.)

ź        Three successful programs include the United Methodist Committee on Relief -- Non-Governmental Organization (UMCOR-NGO) -- Azerbaijan, UMCOR’s Love in the Midst of Tragedy, and UMCOR’s help with the Turkey earthquakes.

ź        The Azerbaijan project is successful because UMCOR encourages community development. Almost 800,000 internally displaced persons (IDPs) are plagued by unemployment and a collapsed economy. Over 100 self-reliant projects are in place to increase the access to agricultural input, build water pumps for people, construct day-care centers for children of the community, encourage activity programs for the youth, promote leadership within the community, and begin economic development programs for women. In 2000, UMCOR provided legal aid, medical assistance, training skills, and counseling. A medical clinic was built in Baku for the refugees. Over 1,200 patients are served a month.

ź        UMCOR’s program helping victims of the Turkey earthquakes is successful. The program provided $1.3 million to build houses in October of 2000. In February 2001, the money was still helping the victims rebuild their lives. In February 2002, UMCOR provided trauma counseling to the earthquake victims. Local agencies built centers for pre-school children in the area of the earthquakes. Money is also given to the “One Great Hour of Sharing” that is an ongoing task around the world. This equals the cost of the Advance gifts. Money and counseling from this source also went to a couple who lost four grandchildren in the earthquake.

ź        The most recent success is the “Love in the Midst of Tragedy” Program. This program was developed after the World Trade Towers were destroyed. This project provides spiritual and financial resources for the victims’ families. Its purpose is to serve those who do not have access to other assistance and to make the people speak out when they need help. Most victims believe “others need it more than I” so it is hard to urge the families to step forward. Counseling was needed more for the 9/11 attacks than for any other disaster in recent history. Witnesses saw bodies falling, charred corpses, and body parts falling. Many of the people thought they were going to die. These people have to figure out how to carry on. The holidays that followed the attacks were thought to bring on more depression. Suicide attempts would also take place. Many counseling sessions cost between $80 and $150 per hour. Money from the project is also used to help fleeing refugees that had been passing on the borders of Afghanistan. Many of the refugees are women and children who are tired of suffering under the control of the Taliban.

ź        Many programs are successful, and have such an impact on so many people’s lives.

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

ź        If the United States (U.S.) manages the Millennium Challenge Account funds correctly, we would be able to help other countries as well as our own. The U.S. needs to make sure our people are taken care of. It seems inappropriate to give money to poor people in foreign countries when people ignore the poor people in the U.S. The money should be divided evenly among the countries in need. Who is the U.S. to say how bad a country needs money? If the people in that country do not have money to buy food, they need the money just as bad as the country who needs houses for the people.

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.”?

ź        The statement about the administration leaning towards a system that eligible countries should write proposals describing their strategy and objectives, stating how they would use the money, and using benchmarks for evaluation, is somewhat worthy. The United Sates would give money to the countries with the best proposal of what the money should go to. This proposal will need to have an outline of where and how the money will be used. Money should not be given to just anyone to use. The money will have to be used for the poor, not just for the government officials to split amongst themselves.

Question #14: Which of Mr. Radelet’s three concerns regarding the MCA concerns you and why? -- -- 3. The separation of US foreign assistance into two agencies could lead to a lack of coordination and overlapping functions.

ź        The third concern bothers me the most. If the MCA decides to divide the money into two agencies, the communication would not be as good. People can misunderstand each other and end up sending too much money to one country, and none to another. The functions that each agency has to perform would overlap and cause problems. People in the agencies would have to make sure everything is clear, and that the procedure would take too long to place the money. One agency offers more benefits. One agency means miscommunication will be less likely to occur. One agency means money will be able to be sent to the counties more quickly.

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.

ź        We need to reduce our concentration of mass destruction such as guns and bombs. The United States does not need to aid countries in their plots to destroy the world. This action could only come back to harm us. If we instead concentrate on weapons of mass assistance (WMA), the world should become a better place to live. Money donations and volunteer work are forms of WMAs. People would not have to worry about being destroyed.

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

ź        The aid required by 2015 is $40-60 billion a year. The United States’ (US) share of that aid would be an additional $10-15 billion per year. The U.S.’s economy is in decline. The people here cannot afford give up $10 billion annually. If the U.S. wants to give that kind of money, the U.S. needs to start finding jobs for the people here first. The economy is going through a difficult period, and time will be the only way to get through our current financial crises.

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.”?

ź        The money that is paid to the government in taxes should be used for government-funded programs. The Non-Governmental Organizations (NGO) and grassroots organizations should have outside assistance. The funds that are used in NGO’s should not be government money because they are non-government organizations. This means they do not deal with the government and should not expect funding from the government. These organizations need support from private citizens. 

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

ź        According to the Commission on Macroeconomics and Health (CMH), health-related investments will help 83 countries. The members of the CMH analyzed the effect of good health on the development of an economy. The assessments of need, building, and the improvement of countries were based upon the models found in Science Magazine. In 2003, the United States should give $2.5 billion to help fight AIDS.  These figures found during research, suggest that by the year 2010, eight million lives could be saved.  If eight million lives were saved, the economic gain and trade value would also increase.

Question #19:  According to the 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?

ź        If an increase in economic growth and the increase of the number of lives saved should occur, $360 billion would be accumulated annually.  If the U.S. invests $2.5 billion in 2003 it will help the long-term goal.  The $2.5 billion is based on a global GNP of 25-30 percent.  The effort to stop AIDS globally is ongoing.  The money should be used for researching a cure for this terrible disease so that more lives can be saved.  The more lives saved, the better the trade potential for a country.

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

ź        House of Representatives members Rep. Chris Smith (R-NJ) and Rep. John LaFalce (D-NY) introduced H.R. 4524. The bill is currently in the committee stage. The International Monetary Fund and World Bank will cover their own costs of the proposals, as will the current Heavily Indebted Poor Countries (HIPC) Program. The bill will lower the debt so no qualified HIPC pays over five percent of its budget on debt. The multi-million dollar program will help write off multilateral debt. The money will go towards reforms in the economy, to help fight HIV/AIDS, and to fight for a just government. http://dfms.org/peace-justice/article_45.asp

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