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The United States' decision to pull the plug on millions in aid to Nicaragua amid a municipal-elections dispute has heightened tensions between the two countries.
Complaints of fraud in the Nov. 9 elections, in which President Daniel Ortega's Sandinistas are accused of stealing more than 40 mayors' offices, triggered Wednesday's aid cut-off.
In response, Sandinista officials accused the United States of being "manipulative," "anti-ethical" and "invasive of Nicaraguan internal political affairs."
The Sandinista government is also accusing the United States of trying to blackmail it over an additional $40 million in bilateral aid, which would be suspended next month.
In broad terms, Ortega's response to the United States shows he still has "a huge amount of emotional baggage," said Rodney Bent, executive director of the Millennium Challenge Corporation (MCC), a George W. Bush-era initiative that provides development aid.
The MCC's board of directors, chaired by Secretary of State Hillary Clinton, cut some $62 million of the $175 million pledged to Nicaragua in 2006. The roughly $111 million that has already been contracted for road projects and agricultural assistance will be honored, the MCC said.
Prior to that, the MCC considered the program in Nicaragua one of its best in the world.
"This decision is made with deep disappointment, as our partnership with Nicaragua has yielded tremendous progress over the past years in reducing poverty through innovative economic growth projects," Bent said in a statement from Washington.
He added, "The MCC regrets that the government of Nicaragua has not taken steps to respond to concerns expressed by its people and the international community surrounding the recent municipal elections. This has made it impossible for us to fully continue our collaboration with the government of Nicaragua."
The MCC first suspended new aid to Nicaragua last December, amid widespread criticism of election fraud and subsequent bouts of political street violence. The European Budget Support group followed suit by suspending $70 million in funding. The European donors have just concluded their own series of talks with the government and are expected to announce their decision on suspended funds at any moment.
The MCC gave the Ortega government six months to find "a Nicaraguan solution" to the electoral issue.
The MCC's leadership said it tried to work with the Ortega administration because "we really wanted to prove that we could make it work."
In the wake of the MCC cancellation, both the Sandinistas and opposition have escalated their political spin and mutual attacks. The Sandinistas are trying to pin the blame on opposition politicians and outspoken leaders of civil society, who are concerned about a government crackdown as reprisal for denouncing fraud and abuse of power.
The government has been working on new regulations that would restrict foreign non-governmental organizations from giving money to Nicaraguan civil society groups involved in political activity.
Though the project appears to be on hold, civil society leaders say it's still not dead and is aimed at preventing foreign donors from shifting resources from a problematic government to civil groups.
Tim Rogers is editor of The Nica Times in Nicaragua.
One of the Millennium Challenge Corporation’s (MCC) key innovations is its transparency criteria for country selection. But is the MCC as transparent in its decision-making process, particularly in decisions that are exceptions to rules? This paper argues that the MCC should deepen its transparency agenda, particularly with the consistency and clarity of the country selection decisions and the compact and threshold program development process.
*This is a joint posting by Sarah Rose and Sheila Herrling
Initially opposed to the selection of the Kyrgyz Republic as a Threshold eligible country in FY2006, the timing now appears right for the $16 million Threshold program the Board approved for the Central Asian republic on August 9.
The Kyrgyz Republic, when it was selected as Threshold eligible in FY2006, had failed every Ruling Justly indicator for three years in a row (with passable performance on Investing in People and Economic Freedom). At that rate, designing a targeted Threshold program to actually get the Kyrgyz Republic over the hurdle to eligibility would have been difficult, considering the range of interventions necessary to address all the indicators in question; thus it should never have been selected.
Ghana and the U.S. Millennium Challenge Corp. are scheduled to sign the MCC's biggest compact yet in July, for half-a-billion dollars over five years. CGD senior associate Sarah Lucas interviewed dozens of people in Ghana and filed this MCA Monitor Field Report about such issues as country ownership, donor coordination, political pressures, and the links between poverty reduction and economic growth. Are Ghana and the MCC up to this challenge? Learn More
MCC CEO John Danilovich has taken the reins of the MCC in what may prove to be its most critical year to date, a year that firmly transitions the corporation from program start-up to program implementation. MCA watchers -- supporters and skeptics alike -- are anxious for proof that the MCA is truly innovative, nimble, transformative, and able to maintain its development focus. And there is mounting pressure for the MCC to show results on the ground, never mind that real growth and poverty reduction results won't appear for at least another year.