In March 2002, with one war raging in Afghanistan and another looming in Iraq, President Bush announced that he intended to undercut terrorism by attacking poverty overseas. "I'm here today to announce a major new commitment by the United States to bring hope and opportunity to the world's poorest," Bush declared. Under his watch, the president said, America would increase its annual foreign aid to $5 billion. And instead of giving handouts, he added, the program would employ an entirely new model: investing in countries to spark their economic growth and holding them accountable for their policies. "I carry this commitment in my soul," Bush said, concluding his speech with a trademark religious touch. "We will make the world not only safer but better."
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In a pattern that has become a hallmark of the administration, however, Bush's aid initiative -- the Millennium Challenge Corporation -- has become an object lesson in dramatic ideas followed by disastrous action. Over the past three months, Rolling Stone has reviewed the MCC's "compacts" with foreign countries, compared the work of similar agencies and spoken with a wide range of supporters and critics -- including many of the conservative insiders responsible for creating the program. Instead of hiring aid experts, the administration at first staffed the MCC with conservative ideologues. Rather than partnering with other countries, the White House operated on its own, disconnected from the rest of the world. And when experts criticized the new agency, the administration responded with a bunker mentality, refusing to talk to detractors and learn from its mistakes.
Today, four years after the president announced his initiative, the MCC has signed compacts with six countries -- offering only $1.2 billion in assistance. In February, Bush released a budget for 2007 that falls another $2 billion short of his pledge, bringing the total aid to less than half of what he promised. And the new budget once again pushes back the goal, stating that the administration "expects" to provide $5 billion annually in 2008.
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Even leading conservatives who initially supported the program are now blasting the MCC. "The great promise of the Millennium Challenge was met with tremendous hope and anticipation," said Rep. Henry Hyde, who voted to authorize the initiative as chairman of the House International Relations Committee. But now, he said, "we see a program struggling to get off the ground . . . lacking the boldness necessary to break the cycle of poverty" -- a failure that "belies the original vision."
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The six compacts signed by the MCC reflect this pro-business ideology. In Cape Verde, the agency plans to spend almost $86 million to mobilize investment and build the infrastructure needed to move goods to market -- nearly all of the $110 million in aid to the impoverished country. In Nicaragua, another $92 million in aid will be spent on infrastructure. In Georgia, the MCC will spend $32.5 million to establish a Wall Street-style investment for "enterprise development." Other projects under consideration have included an industrial park in Senegal and a tourist resort in Central America. "The early compacts don't reflect a broad swath of needs, like health and education," says David Gootnick, director of international affairs and trade at the GAO.
In some cases, the MCC appears to be using aid to reward countries that support the president's war on terror -- even though it is not supposed to base assistance on political favoritism. Georgia, which has served as a base for U.S. military operations, received $295.3 million from the MCC -- despite corruption and human-rights abuses that should make it ineligible for assistance under the MCC's own guidelines. "I see an awful lot of politics in this," says Fiona Hill, an expert on the former Soviet states at the Brookings Institution. "Georgia has taken steps back in terms of rights and freedoms." Testifying before Congress, even Applegarth acknowledged that the aid to Georgia involved what he discreetly referred to as an "element of judgment."...
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