MCC Board Meeting Wednesday: Whither Malawi, Three Compact Completions, Heeding MCC Lessons

The Millennium Challenge Corporation (MCC) Board of Directors meets Wednesday. Likely on the agenda: whither the Malawi compact signing; upcoming completion of compacts in Georgia, Vanuatu and Nicaragua; and no decisions on threshold countries. The still unresolved FY2011 budget will hang over the meeting. And eyes are on President Obama in El Salvador today for mention of the MCC and a new U.S. Partnerships for Growth focus.Malawi:The MCC board approved a $350 million compact with Malawi in January. Shortly thereafter, Malawi passed 206 penal code reforms that had been on the docket for almost a decade. The reforms included two provisions problematic for the U.S.: 1) permitting a cabinet minister to ban press that the minister believes is not in the public interest, and 2) criminalizing female homosexuality. The official signing of the MCC Malawi compact is presumably on hold and the board is likely to discuss its options—from moving ahead should the Malawi government adjust its policies, continuing to delay signing, to reversing its approval—at the meeting on Wednesday.End of first MCC compacts in Georgia, Vanuatu and Nicaragua:The first five-year MCC compacts in Georgia, Vanuatu and Nicaragua will end in the next few months. Georgia's $395 million compact ends April 7; Vanuatu's $66 million compact ends April 28; and Nicaragua will complete their $114 million compact May 26. The board will discuss interim results, plans for completing the compacts and what will happen to investments after MCC funding ends. So far Georgia is the only country of these three currently eligible for second compact funding.Other compact and budget updates:The board will review other compacts, compacts in development and the status of the federal budget.  The issues Rep. Ed Royce (R-CA) raised about Senegal in the House Foreign Affairs Committee hearing last week should be on the board's radar. And compact development continues in Zambia and Indonesia both now apparently on an accelerated timeline for approval this fall.I'm sure the board had hoped that the FY2011 budget would be settled by now, but the meeting comes on the heels of another three week continuing resolution. This makes it extremely difficult for the MCC to plan future compact signings and puts many of the best MCC lessons learned at risk, including not rushing compact signing with Zambia and Indonesia.Tunisia:MCC watchers may have noticed news articles reporting that Secretary Clinton announced Tunisia is "now eligible to be considered for a Millennium Challenge Account grant." Unless something completely out of the norm has taken place, I'm assuming Clinton means that Tunisia is an MCC candidate country (as it has been since FY2006) which means the MCC runs the lower middle income country through the indicators but to date has not selected Tunisia to be specifically "eligible" in MCC parlance to apply for funding.  In FY2011, for example, Tunisia scored well on economic freedoms, control of corruption and government effectiveness (100th percentile!), but failed all three democracy indicators and three of the five investing in people indicators. Not surprisingly, Tunisia was not selected for full, technical MCC eligibility in FY2011 and I don't think it makes sense as a threshold candidate country either.Threshold:The MCC has not yet selected any countries for its revamped threshold program. Without settled funding or any obviously good candidates, I don't expect the board to announce threshold decisions this week.Obama in El Salvador:President Obama will also be in El Salvador today. El Salvador is set to complete it's first five-year compact in 2012 and is eager to be considered eligible for a second compact. I'll be listening to see whether President Obama or President Funes mentions the MCC. We may hear an announcement from President Obama about "Partnerships for Growth" which would apply the principles of the Presidential Policy Directive on U.S. global development to four focus countries: El Salvador, Ghana, the Philippines, and Tanzania. These are countries with multiple U.S. development initiatives at work and "Partnerships for Growth" is not a new initiative on top of the others, but an effort to coordinate U.S. development programs already operating in a given country, with a heavy focus on economic growth, transparency, and results (and even pulling foreign assistance, trade and other development policies together).And as always, I'd also love to hear whether there is any progress on filling the remaining two MCC public board seats.Stay tuned for the post-board meeting outreach meeting.