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Why Does the MCC Call Its Flagship Aid Programs Compacts Rather than Grants?

May 21, 20241:49

This year, the Millennium Challenge Corporation (MCC) celebrates its 20th anniversary. What makes its model of development assistance unique? President and CEO Amb. Mark A. Green, the longest serving member of their board and an original proponent of its founding legislation, joins us to explain.

Video Transcript

  • This transcript has been lightly edited for clarity.

    Millennium Challenge Corporation or MCC, refers to its grants as compacts because they're not grants in the conventional sense of the term. There are lots of conditions attached to them. They're partnership agreements between two countries, the US and a partner country. And through those agreements, through those compacts, the partner country has to undertake significant reforms and take a number of steps in order for the assistance to flow 100% transparency. 

    Big reforms and done as an equal partnership. It's a form of assistance that partner countries like a great deal because it's aimed at taking on particular issues that may be hard for them. But it provides significant resources in order for them to do it. It also is something that a country has to qualify for. They don't get the money unless they're able to achieve certain scores and undertake certain reforms. 

    So at the end of it, you not only have the work product of the compact, oftentimes it's an improvement in infrastructure, whether it be a road, a bridge or energy grid. But more significantly, it builds the capacity for a country to do similar projects in the future. And in order to get there, you have to have these scores. It also creates a sense of pride. It reminds the country its young people and the world that the partner country is able to do big things in significant ways, undertake reforms and that they're open for business.  So it's a conditional form of assistance, not a grant, but instead a compact, a partnership, an agreement between equal partners.


Ambassador Mark Green

Ambassador Mark A. Green

President & CEO, Wilson Center
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