Earl Anthony Wayne Interview: Conversations with History; Institute of International Studies, UC Berkeley

U.S. Economic Policy after 9/11: Conversation with Earl Anthony Wayne, Assistant Secretary for Economic and Business Affairs, U.S. Department of State; December 13, 2004, by Harry Kreisler

Page 7 of 9

The Millennium Challenge Account

The other broad component of President Bush's strategy is the transformation of society, whether there's a military occupation or not. The administration, as you said, started even before 9/11 developing the Millennium Challenge Account. We had Steve Krasner from Stanford on the program and we talked a little about it.

As I was reading a speech that you gave recently about the Millennium Challenge, it struck me that in some ways what you're trying to do is not unlike components of European enlargement, in the sense that you are defining criteria that justify aid in our case, and in their case, membership in the EU. What you have here is, in a non-war, non-occupation situation, the U.S. negotiating with potential failed states to say, "Here's a list. You've got to do these things. Once we check off the list, you're in a position to receive aid from the United States." Is that a fair statement of what you're trying to do?

Yes, that's the direction in which we have moved. This thinking came out in 2001 and 2002. We started looking at development policy and we said, "We've got forty years of history of giving money to poorer countries and helping them develop, but the record isn't that great. What are we doing wrong? Does the focus on official development assistance need to be fine-tuned, and do we need to look at other things?"

A UN gathering in Monterrey, Mexico, a summit on development, helped us with that goal. We knew that everybody was going to be looking at it. We had the option of just pouring more money in without thinking it through. We said, "We have to be smarter about this. What have we learned? What can we learn?"

So we started with a very simple notion: It's not just money, it's how you use the money. With those countries that have transformed themselves and done well, what's common? What have they done well? We came up with a notion that President Bush blessed, that you need to look at what countries are doing to govern their people justly, what they're doing to care for their people, invest in their people, and what they're doing to free-up the economy. This was based on the notion that those countries that have taken off are countries that have gotten their own economic system running. They've traded with others. Their entrepreneurs have grown. They've gotten foreign investment. So: when all those things come together. Of course, you can't do that unless you've educated people and they're healthy.

To the degree that you have good governance -- you've limited corruption or worked against corruption, you have representational systems, you have voice and vote freedoms, all of that -- where that comes together, we've seen a big take-off for countries.

We put that all together into a proposal called the Millennium Challenge Account, and we said, "Let's reward these poorer countries that are doing the best in these areas with their limited resources." It's like rewarding the best students in the class.

The proposal was to set up objective indicators. These are indicators that the United States doesn't [measure], but the World Bank does or Transparency International does, or the IMF does. We'll see how all these countries rank.Those countries that rank above the median in these areas, we will offer them the possibility of additional assistance from the United States.

We argued that this had to be additional assistance. We didn't want to take away from the development aid that's going to the poorest countries that have disasters, that need help or that are helping to establish a civil society in a certain other country. We want to have an additional slice on top of that.

This came in a context for the first time in the national security strategy of the United States, having development as one of the pillars of national security. So [it involved] understanding and arguing to Congress and others that this is important for our security. It's not just that we're being nice. We are being nice, but we're being nice in our own interest, too.

So President Bush put forward the proposal. Congress passed the proposal in January of [2004]. We've now launched this effort for the first time. We have an independent corporation within the government, the Chairman of the Board and the Secretary of State, with the Secretary of Treasury and others on the Board, the trade representative. They are now in the process; they've collected project proposals from the first sixteen countries that were chosen as being the "best students in class," so to speak. They're now negotiating with those countries.

One of the interesting things we're going to do as this goes forward is [to develop] something like a business plan, we're calling it a compact, where you set out goals and objectives. Unless you meet those benchmarks, you're not going to get the assistance along the way.

So it's a really interesting experiment. We're seeing many more people around the world now interested in this. One of the reasons I'm out here is we're having a conference in San Francisco called "Eradicating Poverty through Profit." The idea is to get the private sector more involved in reaching out to the poorest people at the bottom of the pyramid, and involving them, and encouraging their entrepreneurship. So there's a lot of new thinking going on in the development area.

Next page: Oil and Energy Policy

See also the Stephen Krasner interview, Sovereignty* (2003)

© Copyright 2005, Regents of the University of California