Saving the MCC from the Solyndra Effect

An old Latin proverb goes "Corruptio optimi pessima," or corruption of the best becomes the worst.

The best government innovation of the past decade, the Millennium Challenge Corporation (MCC), is being corrupted by the worst State Department recent announcement.

Only responsible third-world countries are eligible for a MCC grant. But rather than treating one which qualified (Indonesia) responsibly, State pushed its own fashionable green agenda -- much as the Energy Department pushed for Solyndra. The result, failure, is likely to be likewise.

Even worse. For this push for Indonesia to take a so-called Green Prosperity Project corrupts the thrust of the MCC -- which is to encourage developing nations to act responsibly, and then for us to treat them responsibly.

The MCC was created in 2004 in response to myriad failures in US foreign aid, given to corrupt governments wasting our taxpayer funds. In her recently-published memoirs, Condi Rice justifiably takes pride in its creation.

Rather than using our dollars to prop up their kleptocrats and tinpot dictators, we'd reward countries who adopt democracy, fight corruption, allow civil society, etc. The good guys -- states with good governance, rule of law, protection of rights and property -- would get rewarded. And, thus, over time there would be more good guys.

Since 2004, MCC has played it straight. Reforms in Asian, African, and Latin American nations have been rewarded, and lead to higher growth rates and economic prospects. MCC grants and oversight helped achieved this.

But last month Secretary of State Hillary Clinton went to Indonesia to tout a huge MCC grant. The MCC is mandated to fund "country-led solutions for reducing poverty" -- not Solyndra-like projects abroad. Accounting for some half of the $600 million the MCC slated for Indonesia, the "Green Prosperity Project" does nothing to advance Indonesia's own economic priorities -- plantation agriculture and forestry, and low-cost energy.

It instead advances the Obama Administration priorities. In making the grant announcement, Secretary Clinton said she was "particularly excited, because we think that rural people will be able to raise their incomes while reducing their reliance on fossil fuels and on logging."

Like the Energy Department with Solyndra, the State Department with this grant is trying to pick winners and losers in energy. And we tried that for decades in foreign aid. And failed at it.
Hydroelectric power was long the go-to technology for the aid establishment. But then we saw that huge hydro projects brought unforeseen and huge environmental and humanitarian costs.

The MCC should not be corrupted. It should treat newly responsible nations responsibly. It should let them choose how best to help their own people to prosperity, rather than be used by our State Department to show how they fund the energy-approach flavor of the month.