- The Washington Times - Friday, April 15, 2005

The program at the heart of President Bush’s plan to overhaul U.S. foreign aid will not get the big funding boost Mr. Bush wants for the coming fiscal year, senior lawmakers in both parties warned this week.

Even as the new Millennium Challenge Corp. (MCC) prepares to sign its first aid and reform “compact” with Madagascar Monday, House Appropriations Committee members said Congress was almost certain to slash the MCC’s $3 billion fiscal 2006 request.

“It’s very clear we are dealing with very limited funds,” said the committee chairman, Rep. Jerry Lewis, California Republican, at a Wednesday hearing on the program.

He and other members noted that the fledgling agency has yet to spend much of the $2.5 billion given to it to date — including $1.5 billion in the current fiscal year — as it gears up to sign deals with potential recipient countries.

Mr. Lewis said the Millennium Challenge Corp. concept still has broad bipartisan support, but “I fear other priorities will come to the surface as the committee deliberates.”

Rep. Jim Kolbe, Arizona Republican who chairs the appropriations subcommittee overseeing foreign aid programs, said he doubted Congress would fully back Mr. Bush’s request for a 17 percent boost in foreign aid next fiscal year, including a doubling of the MCC account.

“Congress is unlikely to accept that increase in an environment where domestic programs have little or no growth,” he said.

Mr. Bush proposed a radical break with past aid programs to the developing world at the March 2003 summit in Mexico. The MCC would target U.S. aid to countries that devised their own programs to fight corruption and poverty, boost internal markets and improve government efficiency and accountability.

Madagascar President Marc Ravalomanana is scheduled to sign the first $110 million compact next week, and MCC Chief Executive Officer Paul Applegarth told lawmakers four more countries — Honduras, Georgia, Nicaragua and Cape Verde — could sign on by the end of the summer.

Even though most of the $2.5 billion given the agency over the past two years has not been spent, Mr. Applegarth said it was critical to the MCC’s mission to build up a “war chest” as it prepares to sign an accelerating number of compacts over the next 18 months.

The money in the compacts is doled out over a number of years, and poor countries are unlikely to make politically risky reforms if the promised U.S. funds are not there, he said.

A budget below Mr. Bush’s $3 billion fiscal 2006 request, he said, “will most likely require reductions in the number and scope of MCC compacts, and/or force us to forgo good proposals.”

New York Rep. Nita M. Lowey, the appropriations subcommittee’s ranking Democrat, said she worries that the MCC funding would come at the expense of more traditional U.S. aid programs.

She said the MCC approach did not focus enough on issues such as basic education and the treatment of women.

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