The Millennium Challenge Account: Transforming US Foreign Assistance Policy?

In January 2004, the United States established a new foreign assistance programme called the Millennium Challenge Account (MCA) designed to provide substantial new funding to a select group of low-income countries that, in the administration’s view are ‘ruling justly, investing in their people, and encouraging economic freedom’.1 In principle, the MCA could bring about the most fundamental changes to US foreign assistance policy since the Kennedy administration, although that outcome is far from certain. The significance of the proposed programme lies partly in its scale: the administration’s proposed annual funding of US$5 billion, if realized, would represent almost a 40 per cent increase over the 2002 US foreign aid budget of US$13 billion, and a near doubling in the amount of aid that focuses strictly on development objectives. Perhaps even more important than its size, however, is that the new programme (on paper, at least) brings with it the opportunity to improve significantly the allocation and delivery of US foreign assistance.