NO MCC COMPACT UNTIL REFORMS, STUDY URGES

We stumbled upon this paper written by four undergraduate and graduate students from the Institute of Global Leadership at Tufts University in Massachusetts, entitled “Utang ng Loob: The ‘MCC Effect’ and Culture of Power in the Philippines.

Their conclusions appear to affirm what we’ve pointed out repeatedly in reporting about the grant of Compact agreement by the Millennium Challenge Corporation to the Philippines – that it is more prized for its political benefits than its promise of fighting poverty and corruption.

The report published last December, urged the MCC to hold off on granting a Compact Agreement with the Philippines, which the US agency did during a board meeting last month.

The authors traveled to Manila to interview people in the private sector, government, NGOs, academia, journalism, civil society and the US Embassy, USAID and international aid community. They met with Ayala Corporation Chairman Jaime Zobel de Ayala, Alberto Lim of the Makati Business Club, Cora Guidote of SM Investment Corp., Senators Jamby Madrigal and Panfilo Lacson, Aart Kraay of the World Bank, Jesus Estanislao, Lawrence Greenwood of the Asian Dev’t Bank, Joel Valdes of the Philippine Swiss Business Council, Sixto Macasaet and Cezar Belangel of CODE-NGO, former US Ambassador Stephen Bosworth, former Budget Sec. Ben Diokno, Bishop Pedro Quitorio, Yvonne Chua of the PCIJ and journalist Ellen Tordesillas, among many others.

Here are some of their findings:

“The MCC is relatively unknown in the Philippine business community, and the primary actor interested in receiving a Compact Agreement is the executive branch of government under President Gloria Macapagal Arroyo.

“Contrary to the logic behind the large-sum design of Compact Agreement grants, the students observed that in a country with as large of an economy as the Philippines, the potential funding amount was not a significant incentive for the Arroyo Administration to embark on earnest government reforms. Instead, the Administration appeared more interested in gaining the American ‘stamp of approval’ offered in a Compact Agreement in order to regain lost popular support and legitimacy as it entered its final months in office.

“The Arroyo Administration lacked the political will to pursue the tangible anti-corruption reforms needed to pass the Philippines 2009 Country Scorecard’s Control of Corruption Indicator.

“Nevertheless, the students observed print media and television outlets publicizing the government’s new partnerships with the MCC, creating the impression that the Administration has been working favorably with the US government to overcome these hurdles.

“We also noticed a strong sense of popular disillusionment with the Arroyo Administration, and the widely held sentiment that corruption had become far too entrenched in the national political system to be changed through democratic means.

“The inherently political nature of corruption creates an additional disincentive for lenders (banks) to push for substantial improvements. The anti-corruption efforts that do emerge tend to be overly administrative and fail to address the role of power inequities and local of domestic political will that entrench corruption within political systems.

“Development aid, no matter how imperative and well intentioned cannot be separated from the context in which it is granted. The very same force of brand recognition…can be abused by opportunist politicians acting in delegitimized environments.

“The MCC has rightfully identified the need for anti-corruption programming and should carry forth with funding these initiatives once the Philippines has passed the Control of Corruption indicator on its own – a sign that political will is in place to begin an MCA (Compact) partnership.”

The paper was prepared by Brigitte Brown, Madeline Gardner, Kelsi Stine and Cody Valdes of the Institute for Global Leadership, Tufts University.

It is recommended reading for all interested to explore the MCC’s work and the context of its involvement in the Philippines.