Like last year, President Bush requested $3 billion for the Millennium Challenge Account in his FY07 budget request. Many MCC champions will disappointed that the President didn't ask for the $5 billion he said he would by now when he first launched the MCA. And, like last year, the $3 billion request is very likely to be slashed by Congress.I think the $3 billion request is both a reasonable and a ridiculous request. It's certainly reasonable in the fact that it is probably an honest request reflecting the reality of the pace with which the MCC has been able to roll out country-designed programs. As it enters its third year of operations, the MCC has approved 8 compacts totalling $1.6 billion and 3 threshold programs totalling $55 million. Appropriations to the MCC to date total $4.3 billion. Since MCC funding is multi-year funding (appropriations can roll over year to year), the $3 billion request leaves the MCC some $5 billion for future programs. MCC officials are projecting 3-5 more compacts this year and 9-12 in 2007. If compact sizes remain as they have been, it looks like plenty of money. Hence, reasonable.But here's why I think it's ridiculous. The MCC is supposed to be "transformative" -- transform the poor but well-governed countries that meet the program's eligibility criteria with substantive poverty reduction and economic growth. Compacts averaging $200-$300 million aren't likely to do that in MCA countries with weak institutions and large numbers of poor people. But perhaps the more important reason I think it's ridiculous is that in the context of the overall foreign aid for development purposes, the MCC along with PEPFAR, both of which receive large increases in this year's request, stand out more at Presidential pets than as part of a strategic "development in our national interests" agenda. As much I as welcome the MCC request, I regret very much that it appears to come at the expense of reductions in “core” development accounts such as development assistance (15% reduction) and child survival and health (13% reduction). Today’s FT notes that, other than states that qualify for MCA funding, it’s the frontline states in the war on terror – Afghanistan, Pakistan, and Iraq – that stand to gain the most aid in 2007
