Hearing of the Senate Foreign Relations Committee - Millennium Challenge Corporation Progress Report

Federal News Service

HEADLINE: HEARING OF THE SENATE FOREIGN RELATIONS COMMITTEE

SUBJECT: MILLENNIUM CHALLENGE CORPORATION PROGRESS REPORT

CHAIRED BY: SENATOR RICHARD LUGAR (R-IN)

WITNESS: PAUL APPLEGARTH, CEO, MILLENNIUM CHALLENGE CORPORATION

LOCATION: 419 DIRKSEN SENATE OFFICE BUILDING, WASHINGTON, D.C.

BODY:
SEN. LAMAR ALEXANDER (R-TN): Thank you, Mr. Chairman. I have a statement I'd like to put in the record. And I'd like to say these things.

One, I fully support what Chairman Lugar said. I support the Millennium Challenge Accounts. It's a bold new approach. I hope that we as a Congress can appropriate at the level that the president has asked for. And I have also sent a letter to our committees along with some other senators, urging that --

The one thing I would like to suggest is you have 16 countries qualified for funding and another seven who came close. Temptation in government in some quarters would probably be to give everybody a little bit, and it is my hope that in-especially in this first round that the money go to fully fund the best projects. And I will be supporting you on that if that's the decision that you make, even though that means that some pretty good projects don't get funded because there's not enough money in the first round. But it's very important that the first projects be the best projects, and that they have the best chance of success and setting a good example for the future.

Thank you, Mr. Chairman.

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SEN. LAMAR ALEXANDER (R-TN): Thank you, Mr. Chairman.

Thanks, Mr. Applegarth, for being here. This is a fascinating process that we all hope succeeds. And as I was thinking listening to this, there's really nothing so new about it. I mean, this is-I can think of many examples in our society, from foundation grants-I remember when I was governor, Memphis, 20 years ago, went through a big jobs conference in which they got 2,000 people involved and came up with private money, county money, city money; had a great vision for the future, and then came and wanted the state to put some money in, and we did. Chattanooga then wanted its money! And what I remember doing is sending them back to get more people involved and to think bigger.

I can remember the New American Schools Development Corporation under first President Bush, where David Kearns and I raised $50 million private dollars to give to Break the Mold Schools, and 700 applied and 14 were chosen.

I think of the private-or entrepreneurial sector we have in our country where start-ups occur all the time, and they're always looking at the people who have a lot of money to try to do things the way the people with a lot of money want them to do it.

And I was trying to think of any lesson from that, and the two that I thought of were, it seems to me that you've got double objectives here. One is to introduce a way of thinking to people in a way that's attractive to them. You're clearly doing that with your indicator ratings.

So you've got people thinking differently.

But to succeed, it seems, you need to have five years from now and 10 years from now a success story. (Chuckles.) And it may only be one success story. It might only be two success stories. But it seems to me that that would be a success. I mean, of all the new companies that start in America, most of them fail. Of all those 700 schools that applied to the New American Schools Development Corporation, only 14 were chosen, some of them didn't do very well.

So I'd like to ask you to look down the road in two ways.

One would be, how will you work to make sure that given the uncertain amount of money and the large number of companies, that you end up, five or 10 years from now, with one or two or three real success stories?

And second, what will you do with everybody who doesn't make it? Is there some help you-is there some way you can say to someone who comes close but doesn't make it that-"Congratulations" -- (chuckles) -- "You know, you've really gotten to an important point now, and here's a plateau that you've reached or an area you've reached, and here are a number of things that we can do. We aren't able to give you the grant that you sought, but we can assist with all of these other things, give you a stamp of approval" and cause that country to feel good about having participated, rather than to have the government that got everybody excited be embarrassed and get thrown out of office in the subsequent election.

MR. APPLEGARTH: It's a wide-ranging question, Senator. I would think-one thing I would say. We're not having to encourage our partner countries to think bigger. I think we're trying to encourage them to think focused at this point.

But I think, you know, we really-I don't think we can wait five years or 10 years to show demonstrable success. And we are seeing successes on the policy side, and I've cited a couple of them.

But what's most important is where we really do have meaningful impacts on poverty reduction in the areas we're working in, in growth. And that's inherent in what we're trying to do in our basic compact proposals with the governments, to build in intermediate=term benchmarks and objectives, where we can see tangible linkages in terms of outcomes and results to this investment that we're making.

And so I-if we have to wait five years before we do that, I think we've-we aren't being ambitious enough. And I think we really do need to tie it to the projects.

In terms of countries that are close on eligibility side, we have that platform. It's the Threshold Program, where we do agree to work with them, are going to take their proposals. If they're willing to tackle corruption in their country, give us a proposal; it looks like we can provide some help, we will.

The same thing in terms of rule of law. If they need training of judges or other kind of things, we will try to do that, to help them.

In countries where we have successful compacts and ongoing programs, they get off the-off of the-off track, as long as the country commitment is there, you know, we'll do midcourse corrections. So I think tat's inherent in the kind of operational involvement and monitoring that we're trying to do.

You know, at the end of the day, though, I'd like to see some tangible results besides the policy reforms we're encouraging.

SEN. ALEXANDER: The-in terms of those that don't quite make it, do you have a name for them? What do you call them? I mean, what do you say in your letter when you say no?

I'm-here's why I'm-I'm not trying to be tricky with you. I am thinking of No Child Left Behind. You know, many schools were very good schools, but they had a few kids who didn't learn, so they didn't make the grade. So they were suddenly called, quote, "failing" schools. That really made everybody feel very bad in that school. That wasn't really a good name.

And I was thinking of an award or a designation for countries that apply, go through a process, get to a point, but don't get all the way. And I think it's-maybe you've thought that through and have that in mind, or maybe you're not to that point yet. But I would think about that, because to elected officials back in various countries, it could make a big difference how-whether they have something to brag about for having made this effort.

And funding huge amounts of money-the 17 countries plus six threshold countries-that'll be hard to do. And so you're going to have some who went a long way in the direction that you hoped they would go, but don't succeed. So I'm thinking of different levels of success. That's all I'm encouraging.

MR. APPLEGARTH: Well, I think you've put your finger on, first, the importance of the funding, that we get to address as many good proposals as we can.

Right now we're focused on getting good proposals, not on those who submit a proposal that are not-does not work. And I-we did, if you like, re-brand the-which I think you all called the near- miss countries the threshold countries because we thought that was a more looking-forward process or offered more opportunity.

In terms of countries that submit proposals that are well thought through and we couldn't fund, I'd rather not contemplate that possibility, frankly. I mean, the others we will deal with in the course of the conversations with the governments.

By being selected and recognized, they already have achieved something in their neighborhoods and, I think, in the world, but we'd like to have it backed up with a good program.

SEN. ALEXANDER: Yeah, but if you're going to fund well a few good projects, you're going to have a number of other projects that aren't funded, that may be okay but not the best. Otherwise, you'll be dribbling out a fairly insignificant amount of money among a lot of-we've got 63 potential countries, more than 17 plus six, and I --

MR. APPLEGARTH: Yeah, I-I agree with you, Senator.

SEN. ALEXANDER: I guess I've made my point.

MR. APPLEGARTH: I think you have. I think that we are really-that's where we ask the countries to focus first on the kinds of things that really are country transforming, to use our resources for that rather than things that other-particularly other donors could do.

I also believe-I don't have any evidence. I mean, I don't have any proof of it, but I have to believe that with-if a country has gone through this process well and a good consultative process, prepared good proposals, that somehow or rather we'll have other donors at least coming in to help on some of it. It's still-it's not a perfect solution in the absence of our full funding, but it's a step. And that's-you know, that's what we'll try to do.

SEN. ALEXANDER: Well, maybe there can be a very specific process for those that you-I mean, like an all-American first team and an all-American second team, and both are honored in their hometowns, one more than the other. But maybe you can have a specific process for the all-American second team or all-whatever-it-is second team that takes them to other donors and other places.

Thank you, Mr. Chairman.