Meeting

A Conversation With Alice Albright

Monday, July 11, 2022
Dimitar Dilkoff/AFP via Getty Images
Speaker

Chief Executive Officer, Millennium Challenge Corporation; CFR Member

Presider

Former Executive Washington Editor and Chief Commentator, Wall Street Journal; CFR Member

CEO of the Millennium Challenge Corporation (MCC) Alice Albright discusses the role MCC plays in the U.S. foreign policy toolkit and how foreign assistance can address long-term global trends while simultaneously managing humanitarian crises. 

SEIB: Hey, everybody. Welcome. I’m glad you all made it out on a bright, sunny Monday morning.

I’m Jerry Seib. I’m the former executive Washington editor at the Wall Street Journal and chief commentator. And as you know, we are pleased to be here today to talk with Alice Albright, chief executive officer of the Millennium Challenge Corporation.

Just as a reminder, this conversation is on the record. Today’s audience consists of those of you here—Council members in the room—but also a virtual, online audience. And about half hour into our conversation I’ll stop talking and we’ll turn to questions from you all and from our virtual listeners as well. And again, this conversation is on the record.

So Alice, thank you for being here. Let’s start with a—kind of a baseline standard-setting question, which is remind people of what the Millennium Challenge Corporation is and how it got created.

ALBRIGHT: Thank you, Jerry. And let me thank the CFR for holding this session, having been both a term member many hundreds of years ago—(laughter)—

SEIB: Me, too, by the way.

ALBRIGHT: —a junior member, a term member, and then a permanent member. It’s just wonderful to be here, and wonderful to be here with you, and so thank you for taking the time for this.

Just a few of the basics of what MCC is. The agency was created in 2004. Our mission is to reduce poverty through economic growth. Thus far we have deployed about fifteen billion dollars in forty-nine different countries across a handful of major sectors. So these are infrastructure, electricity, water, health, education, agriculture. And we do so with a process of real selectivity—and we can talk about that more in the details—but we select countries that are democratically governed, that are committed to managing well. We have a very analytical process that identifies what we call the key constraints to growth, which are the major problems. When I say we, it’s the countries that identify those major problems, and we of course work alongside. And then we deploy two different types of grants. One is what we call a threshold, which is a smaller program that addresses principally policy and institutional reform challenges. And then our major grant is called a compact, and the average size of that is $350 million, and it can be deployed, on the one hand, also for policy issues, but then to build things, so health clinics, roads, investing in different aspects of agriculture challenges, and what have you.

And one of the most important numbers I like to share is how many people we’ve helped, and since the beginning of the agency’s founding, we have helped 215 million people in one way or another. So while we are—compared to the size of the U.S. government—a relatively small agency, we’re small but mighty, and we have made a big impact in many of our partner countries.

SEIB: You know, I am reminded of a conversation that I had recently with Bob Gates, the former defense secretary, former head of the CIA, who was talking about the effort for the U.S. to exert influence and build bridges, particularly in the post-Ukraine invasion world. And he said one of the problems is that we, as a country, have allowed our non-military sources of power—foreign aid in particular—to atrophy since the end of the Cold War, A. And B, we don’t have enough mechanisms for allowing the government to work with the private sector to address some of these questions. How does MCC address those two shortcomings?

ALBRIGHT: Well, it’s a great question, and I really do applaud Secretary Gates’ sort of vision on all of that. I mean, I would agree that international development tools are a huge, powerful way that that U.S. should be engaging, and MCC is a terrific of that along with, of course, USAID, the DFC, the Peace Corps, USTDA, our neighbors in the international development sector. So I agree with him on that.

We work with the private sector in a number of ways. It starts by understanding that our intent is not to subsidize companies to come in and invest. What we do instead is—what I say—set the table for them to come in. First of all, when we’re at the beginning of our process, we consult very heavily with the private sector on what they think the key constraints to growth are in a country. We then look at what are some of the regulatory barriers that might be in some of the key sectors. And then, of course, companies do come in and invest alongside of us. So there’s many different steps in the process.

SEIB: So you can use your funds to leverage private investment down the line.

ALBRIGHT: Exactly. And just to give you an example of that, one is in Benin where we’ve invested a significant amount of money to upgrade the port facilities in the port of Cotonou, which is a very important port in the region, and we now see private sector companies coming in and also working to upgrade the port facilities there. And there’s a number of examples that are like that.

SEIB: You know, for his part, President Biden has pretty clearly—and he’s not alone in this—defined the great international struggle, the global struggle of our times as being one between democracies on the one hand and authoritarians on the other hand.

You pay a lot of attention to countries that are trying to either develop or maintain democracies. How does—is it a conscious effort on your part to support that broad goal of American foreign policy?

ALBRIGHT: Yes, it is, and it’s a very important part of our context right now. We do see the rise of authoritarian governments. I think there is a statistic that you can look at that the number of people in the world that are living under authoritarian regimes is now higher than otherwise. So it’s something that we pay very close attention to in many, many steps of our process. But if you think about one of the intents of MCC, we can help democracies deliver. And we can do that by helping them deliver on what I call the basics: health, electricity, water, agriculture, sanitation. And by delivering those basic public services, democracies will continue to gain and increase their legitimacy. So you can see a very strong correlation between the basics of what we do and how it helps democracies sustain themselves.

The how part is very interesting. We have a very strong selectivity process at the beginning where we identify what countries to look at. And on the one hand, it’s determined by per capita income statistics, but also it’s by some policy measures, and one of those is democracy. We measure civil rights and political rights, and we score countries. So we already start by working with countries that are on the right democratic governance pathway.

Now, from time to time, we have to step back, and where countries have had a coup, we have had to swallow hard and make a very hard decision to not work with those countries. But in the process, we wind up working with democracies, and then, by the nature of our grant financing, we help them deliver better. And that has been particularly important in our past, but now, given where we are, it makes the agency stand out as a particularly important tool.

SEIB: So desire to be a democratic nation is one of the criteria.

ALBRIGHT: Yes.

SEIB: You talked at the outset about sort of a checklist of things that you go through in deciding whether a project fits for you. What are the other items on that checklist?

ALBRIGHT: So there’s—think about it in sort of three stages. The first is per capita income statistics, and a country has to be a low-income country or a lower-middle-income country. We are in the middle of a conversation to determine whether or not that number ought to go up to be 125 poorest countries, which would put us into the lower range of the upper-middle-income countries. We can talk—

SEIB: As opposed to where is it now?

ALBRIGHT: Now it’s low income and lower middle income, and that’s about eighty-one countries or so, and we can talk about that more a little bit later.

The second one is our scorecard, and we are, I think, now famously known for our scorecard. There’s twenty indicators, and they measure, in essence, three different types of things. One is are you trying to manage an economy well, so that’s where you look at various measures around the economic environment. The second is ruling justly; this is where the democracy measures come in. Another one of the ruling justly figures is battling corruption. And those two, democracy and corruption, are what we call the hard hurdles. And then the third one is investing in people, and this is where you see measures on is a country investing in health, and education, and so forth.

So that’s really the policy lens, and that’s where we really become quite selective. Then once a country gets through that, then we look at what we call the key constraints to growth, and this is where we—working very much with a country, and this is where the democracy dividend comes in because it’s really the country in the driver’s seat on this one—identify what are the main barriers to growth. And then, once that’s identified, then we start identifying what the particular projects would be. So you can see the different stage of the process.

SEIB: I imagine that’s beneficial because there is a sense, I think—you know, having lived and traveled overseas—in some countries that American decisions about helping other countries are subjective. You are creating, really, an objective, data-driven way of deciding who warrants the kind of assistance you have, and—

ALBRIGHT: Yes.

SEIB: —and I assume makes people feel relieved perhaps.

ALBRIGHT: Well, it was an experiment that was started in 2004 by President Bush, and one of the aspects of the experiment was could you do international development being very, very data driven.

SEIB: Yeah.

ALBRIGHT: And I think eighteen years in the answer is yes. And one thing we launched about ten days ago—and we’ve very excited about this—is a whole evidence platform that brings together all the different pieces of evidence. And I encourage you all to look at it. Every one of our scorecards that I mentioned is on the database, and it’s public. So you can imagine how countries are studying it.

So it has been, I think, a successful experiment, and we continue to try to hone it. But one of the benefits of it is that it is objective, and it does not lend itself to getting pushed and pulled in various directions depending on what’s going on. So it has been very robust.

SEIB: There’s quite different model out there, as you well know. It’s the Chinese model, and you could describe it in a lot of different ways. I won’t attempt to, but they are distributing large amounts of money, but in ways that—particularly in Africa, but elsewhere; to some extent in Latin America—has countries wondering about the conditions and whether those conditions will become more onerous over time, and whether, frankly, it’s worth the effort or not.

Contrast what you are doing with what China is doing, and what you hope countries conclude about the difference between the two approaches.

ALBRIGHT: Well, this is another big part of the context that we’re living in now, and there are many, many differences in the model.

So we start, as I said, with being very objective about data. One thing that’s very important to understand about MCC and the way we work is that we are a grant maker, so we do not expect money to come back to us. We’re not lending; we’re giving money. And so once we identify with a country what the right sectors and projects are, you can imagine how valuable it is to have $500 million, let’s say—which is what we’ve given Nepal recently—of grant money. And so that’s a big part of the model.

But there’s much more to it than that. We work very much with countries as partners. We work in a very transparent manner. We share all of the information with the countries. We insist on a lot of transparency in procurement processes and overall sort of how we engage with partners, and it winds up in a very different place. And we also spend a lot of time working with ministries and countries on overall capacity. So if you—while we wouldn’t have, by comparison, the same amount of aid money that the Chinese would, we think our model stands up very well based on its qualitative aspects.

SEIB: You said it winds up in a different place. What do you mean by that?

ALBRIGHT: Well, it winds up with countries not having debt, with countries having significant ownership over the projects that are undertaken. We actually deploy the money through an entity that is set up and then governed, and as I say, loved and kept by the government. And there is also an enormous amount of consultation with various stakeholders in the countries to determine what the projects are. So this notion that the countries own it after we leave is not just rhetoric; it’s very significant, and it winds up helping that government pursue their own priorities. It’s very different.

SEIB: So that begs a kind of cynical Washington question, I guess, which is that you are using taxpayer dollars, obviously. If the country owns it, how do you make sure the investment is going the way it was supposed to go, and that it is achieving what you wanted it to achieve. In other words, what’s the post-decision, post-grant oversight process from your point of view?

ALBRIGHT: Well, the degree of selectivity that I talked about a second ago is, first of all, the way to start off on the right foot. We then have a very—some deliberate process to negotiate the compacts with the country. They identify a number of entry requirements—they’re called conditions precedent—that have to be put in place before the money actually flows, and then we have a very rigorous process for identifying how money is spent, and then watching how money is spent. And we then have a very significant monitoring and evaluation program afterwards. We’ve evaluated every single project that we’ve done, and every one of those reports is on our website.

SEIB: And do the countries accept, welcome that post-decision oversight, or does it engender resentment in some cases?

ALBRIGHT: Well, where I’ve traveled thus far—which is Belize, Zambia, Lesotho, and Timor-Leste—those governments are welcoming MCC and very eager to work with us. And so I think that’s a very strong indication of the role that we play. And then when we visit with others—not necessarily in their countries—the reception that we get is very strong.

SEIB: You mentioned Nepal briefly a minute ago, and I think the prime minister is coming soon to Washington. Maybe you can just offer that up as a case study on how this works in a real practical way, and a highly relevant one, because Nepal is, obviously, also a country where China has a great deal of interest and is paying a lot of attention, and not necessarily thrilled about American influence.

So walk us through the Nepal example if you could.

ALBRIGHT: Well, it’s a fascinating example, so let’s just remember the geography. It shares a border with China, and we were in the process for quite a while of deploying $500 million to help that country improve its electricity grid. And for anybody who has been to Nepal and has driven around just Kathmandu, you know how much they need a much more efficient electricity grid.

So we had worked closely with the government in our standard way to identify electricity as the main issue. But then what happened was that China became very concerned that MCC and the U.S. government would be engaging with Nepal and engaged in a significant, what we call mis- and disinformation campaign. And it got pretty heated. But we also worked very closely with the embassy and others there, and said, no, you know, we think this is a good thing to be done, and we would encourage your parliament to ratify it because every compact that we enter into needs to be—according to the local legislative process—be approved by the country, and in that country it required parliamentary ratification.

So there was a lot of back and forth and back and forth, but ultimately the parliament did approve the compact, and we’re now getting on to the next stage. And once it’s all done, we will have helped, through our compact, 80 percent of Nepalese get better electricity. So you can see that, from a development perspective, our compact is going to make a big difference in the lives of Nepalese. That’s certainly one of our goals. But it’s also going to forge very strong relationships with that government in a region where it really matters. So it’s a terrific example of both the development piece but also the geopolitical piece.

SEIB: And I think that the assertion by China—and also I think by some of the internal domestic critics in Nepal—was that this was kind of a wolf in sheep’s clothing; that the real aim here was to lure Nepal into a security arrangement, not a development arrangement—probably a fairly common line of criticism that maybe you encounter other places. Was that a problem in Nepal? And how do you counter that kind of argument?

ALBRIGHT: Well, we do hear that from time to time, and it’s unfortunate. And what we have to do is just dispel it and explain that, no, we’re an international development agency. We work in the following way: you know, per capita income, constraints to growth, et cetera, et cetera. And we demonstrate the case. But we do hear it, and I think going forward we’re going to hear it more, and so one of the things that we’re talking about internally is making sure that, in our sort of overall programmatic skill set, let’s call it, that strong advocacy and outreach at the country level to make sure that people know what we’re doing and why we’re doing it is part of our overall—our overall activity set in the countries.

SEIB: But it must be a little tricky for you because, on the one hand, you are trying to support American foreign policy goals at the ten-thousand-foot level, but on the other hand, you’re not to be seen as a tool of any other part of the American government, I guess. It’s a difficult balance, particularly because what you do is different from what most aid agencies do. It must involve some explaining on your part.

ALBRIGHT: Well, there’s always explaining about our process, but there is strong bipartisan support and common ground about the importance of democracy.

SEIB: Yes.

ALBRIGHT: And so—and nobody will debate us on that one, and we’ve got strong support throughout the city for that. And it’s something that we take very, very seriously, and you can tell by our process how much democratic governance means to us. And so that’s something that’s quite straightforward, and that’s something that we explain to the countries.

SEIB: Well, let’s talk about that a little bit because I do find the creation of MCC all by itself a fascinating story, even now, you know, eighteen years later. It was a bipartisan achievement.

ALBRIGHT: Uh-huh.

SEIB: Those are pretty rare in this town. If you’re doing anything meaningful in a bipartisan way, that sort of makes people sit up and take notice. What was the bipartisan sentiment or the urge that created the agency in the first place, and maybe more importantly, does it still exist? Can you still tap into that bipartisan spirit in what you do?

ALBRIGHT: Well, it’s fascinating to read about the history of the organization, and I did so when I was under consideration to take on the position. So having been created in 2004, for those of us who have been in the international development world for a while, you’ll remember that the early 2000s was a time of great experimentation in international development, and it was in part because of the kick-off of the MDGs. And there was many efforts underway to look at new ways of doing international development. The Global Fund was created, GABI was created, a number of others were created. So it was out of that era that it was created.

There was also a big focus at the time on what we call international aid effectiveness. So it was an experiment at the time to look at whether or not you could put together a very data-driven model to try to really direct aid dollars in a particular way—democracies investing in people, you know, strong economic growth, helping to bring in the private sector—and in doing so, really create impact. And so that was the logic of it.

You asked whether or not we have, you know, bipartisan support now. We absolutely do, and I was just on the Hill in the middle of June with several others from the DFC and from the Peace Corps talking about our budgets, and the comments and the questions that were made there indicated to me that we do have very strong bipartisan support. But it’s something we take very, very seriously, and we look to make sure that we are in very close touch with both sides of the Hill to continue to make sure that we understand what people are thinking, what their concerns are, what they are saying so that we keep that bipartisan common ground very fully intact. It’s very important to us.

SEIB: And is it—is it the push to bolster democracy—is that the glue that holds the bipartisanship together do you think?

ALBRIGHT: Well, there’s a couple pieces. It’s that, but it’s also the desire to work with countries that are combatting corruption. From a development perspective, we all know that the more money does not go to the place that it is intended to go, the more people who are living in poverty aren’t getting what they need.

SEIB: Yeah.

ALBRIGHT: So corruption and democracy go hand in hand as important levers of better development, and it’s those two things that really make a difference.

There is also agreement on other things. For example, I think there is agreement that when other parts of the world are unsettled, particularly low-income and lower-middle-income countries, it creates issues for the United States. And so MCC is a tool for helping us make progress in counteracting those issues.

SEIB: Yeah, I think that unsettledness—if that’s even a word—is probably on the increase over the next year or so because, among other things, we have a looming food security crisis that is going to make poor countries poorer probably.

ALBRIGHT: Well, we’ve seen—that is absolutely true, and we’re seeing that already. We’ve also seen how pandemics that start far away can create issues, and what that means for us here, but what it means for a lot of our partner countries. So there are points of consensus around those areas of unsettledness, and what it means for the United States, and what the United States has to do about them.

SEIB: You know, there—I think a fair criticism of foreign assistance—not just by the U.S. but by other countries—has been that it’s essentially the fire truck rushing to the fire. In other words, it’s mostly crisis response—or maybe not mostly but a lot of it is crisis response.

You’re not doing that, but is—if you step back from what you are doing and you look at the way foreign assistance is used around the world, is too much of it just putting out fires and not building long-term, sustainable development models?

ALBRIGHT: Well, there are a lot of fires to put out at the moment—(laughs)—

SEIB: Yeah.

ALBRIGHT: —for sure, but as the U.S. government tool kit, we need to do both. And so certainly USAID spend a fair amount of their time and energy, as they should, in the fire-putting-out business. And thank goodness they are doing that.

Our business is more the long-term business, so we help countries look at what are their areas of vulnerability. Another way of thinking about it is: Where are they not as resilient as they need to be in face of what is a looming set of complex, compounding crisises (sic; crises)? And so we help countries look at the long term and then build the resilience that they need to to contend with long-term issues as they emerge.

SEIB: But it—

ALBRIGHT: So governments need both.

SEIB: But they—I mean, if you are running a—if you are in charge of a government in one of those developing countries, it must be hard to take your eye off the crisis of the moment and think about long-term development. Do you have to persuade them to do that? Or do they come to you and say we need to do this in addition to putting out the fires of the hour?

ALBRIGHT: They come to us knowing that they have long-term needs that need to be addressed, but also knowing that the fiscal space that they have in order to set money aside to do so is shrinking, and it’s shrinking for a variety of reasons. First of—

SEIB: You mean—you mean their own resources.

ALBRIGHT: Their own resources—so that’s where having grant money to be able to really target the needs of the day, but the long-term needs of the day, why that’s such a compelling model.

And, you know, another example to illustrate that is in Timor-Leste. So we are in the process of deploying $120 million there to, first of all, help them build a water and sanitation treatment plant which has obvious merits; not only water, but it’s also very much a health intervention, and also build a secondary school teacher training capability that will have huge impact in the country. Without our money—and we will be one of the largest if not the largest packages of aid that they will ever get—they probably won’t have the fiscal space to build those kinds of things. So we are, in part, an answer to the growing threat of other things that take up budgetary money when we can come in and help countries.

SEIB: And do those other things include climate change mitigation? Is that a growing part of the problem and the need that you perceive?

ALBRIGHT: Yes. So most countries realize that their vulnerability to climate change, in different ways, is going to be an existential threat to them whether or not it’s in the form of drought, or floods, or having a water capability that is not good enough. It sort of spans many, many different types of problems. So we provide a lot of financing in the area that we call climate-related, and this is to help countries build the resilience in different sectors to a very changing picture on climate.

SEIB: I have to assume that countries that have climate mitigation needs have become more acutely aware; they don’t need to be convinced of this anymore, right?

ALBRIGHT: No, they do not need to.

SEIB: They know it.

ALBRIGHT: They know it.

SEIB: Let me ask you about one final area, then I’ll turn to you all for questions. But I wanted to, at the end of our conversation, cast forward a little. You are nearing twenty years as an organization—not quite yet, but close. Think about the next twenty years for both the foreign assistance environment and world, and also MCC’s role in it. What do you think the next twenty years bring?

ALBRIGHT: Well, it’s a great question and something that we’re spending a lot of time thinking about internally. And one of the questions that we’ve asked ourselves is, given the changing nature of poverty compared to what it was when the agency was started in ’04, where are we seeing poverty. So we’ve done a lot of number crunching around where is poverty showing up, and we’ve identified a number of different factors. This is, you know, post-pandemic: climate, as we’ve just talked about; food security, for example; the lack of availability of broadband, for example, where it needs to be. And we’ve identified 90 percent of where poverty is likely to occur. And it is in the 125 poorest countries. So that would involve for us an expansion of the candidate countries that we could work with. So we are in the middle of a significant conversation about whether or not we ought to expand our candidate pool up to 125 so that we can work in the places where poverty is occurring.

We’re also looking at a lot of our internal processes so that we can, on the one hand, work faster, but also not short-change any of the important analytical processes that I’ve mentioned earlier. We’re also looking at whether or not some of our tools ought to be adjusted to meet the sort of opportunities that exist now that didn’t necessarily exist when we were created; you know, digital is a very important example of that. Some people think that digital is a sector. Other people would tell you that digital is a sort of threshold, you know, foundational thing to the delivery of public service in an improved way across many different public services: health, education, financial services, scaling up agriculture.

So we’re thinking about what the next—how we need to show up as an agency over the next twenty years in terms of scope, operations and how we work. And we want very much to be as meaningful a tool in the USG toolkit—international development toolkit as we can, and we think that some of those questions are going to continue to help us to do the job that we need to do.

SEIB: But just to be clear, you are describing a scenario for the next couple of decades in which poverty kind of creeps up—

ALBRIGHT: Yes.

SEIB: —the development ladder and moves higher into countries that you don’t now think of as being poor.

ALBRIGHT: For a variety of reasons, the number of countries that are poor now—there’s more poverty in more places than there was in 2004, and a lot of that has been the function of climate, post-pandemic, food security—are just three of them—or increases in food insecurity I should say.

So we think that the types of tools that we offer are going to be relevant to a broader set of circumstances than was the case on a forecast basis in 2004.

SEIB: Great.

Let me—let me turn to you all. Just as—I’d invite members here, for starters, to ask questions, and then, we’ll turn to the online audience as well. Just a reminder that this is on the record.

And we’ll take the first question from here in Washington. I’ll go right back there, and then over here, and I’ll come back in that direction. And please do identify yourself.

Q: Witney Schneidman, Covington. Alice, thanks for the great presentation. I actually have two questions, if I can.

One is, MCC’s charter was modified so you can make investments or loans to countries that are contiguous with one another, which I think is a really important innovation. Can you just share some examples where that has gone down and been successful?

And the second, coming out of the G-7 conference there was a commitment to create a $600 billion partnership for global investments and infrastructure, and just curious, will MCC play a role in that? Thanks.

ALBRIGHT: Thanks for the questions, Witney. Yes, we were given regional authority—we call it regional authority—in 2018, and that does enable us to work on areas where regional integration would be a benefit to economic growth. And it is a high wire act in some ways because each country that would be involved in the regional program has to qualify, and then the project as a whole has to qualify.

So right now we’re working on a regional program between Benin and Niger, and it looks to improve the flow of goods from Niger down to the port in Cotonou and Benin and create a more favorable sort of trade and flow of goods environment down to the port.

So we’re at the beginning of that and looking forward to that. We were working on a regional energy program between Cote d’Ivoire and Burkina Faso, but we’ve had to pull away from Burkina Faso because of the coup. So we’re now looking at Cote d’Ivoire and how we can add to that.

But I do think this is going to be a very important tool, and you know, one of the things that one could imagine is different solutions to food security done on a regional basis.

On your second question about the PGII, yes, just by virtue of the work that we do MCC will be a part of that.

SEIB: Let’s go to an online question, and then we’ll come here next and then there.

OPERATOR: Great. Our first question will be from Mahesh Kotecha.

SEIB: Please go ahead and unmute if you want to go ahead. There you go. Maybe.

OPERATOR: OK. We’ll try that again. OK—

Q: Can year hear me now? Hello?

SEIB: Now we can. Thank you. Go ahead.

Q: OK. Thank you very much. Yes, thank you very much. Very interesting discussion so far and excellent question that was just addressed.

You know, I was just looking through your compact countries—or the countries where you’re active, and they’re a number of compacts. What I’m—my question relates to the evolution of programs, right? So you have some that are the threshold, and then you go to the compact. But then there are some that are closed. There are some that are cancelled. There are some that are in implantation.

Could you describe, really, what—you mentioned already that you had to terminate Burkina Faso—a collaboration with CDI, Cote d’Ivoire, because of the coup, and there’s—Mali has other things. So things change, and your criteria are very tough. So if the country was meeting the standards at the outset, but then suddenly down the pike in a five-year program it goes off the road, so what do you do then? And then how do you get them back, and how do you manage that process? That must be very, very difficult.

ALBRIGHT: Thank you. It’s a great question, and it gets to this question about how important democratic governance is to MCC. And I’m looking at you on the screen, so I’ll answer you directly on the screen.

So let me just talk about Burkina Faso as an example. So we had been very active with Burkina Faso, and in fact, they had two different pieces of compacts in process. One was part of the regional compact that I mentioned on energy, and the other was a compact for Burkina Faso itself.

So altogether there was just under a billion dollars on its way to Burkina Faso, but with the coop that happened around February 25th, we were in a position where we had to say, is this country continuing exhibit democratic governance, and we actually have a process where we check in with—there’s a department at the State Department that determines is a coup a coup. And in fact, they determined that a coup was a coup.

And so we had a decision to make, which is what do we do, and we decided to suspend our activities with Burkina Faso in the hopes that they will announce a timetable that is an aggressive timetable to host an election and get back on track. So that’s where we are.

And so if you look at our list and you see other examples in our history where we’ve pulled away from countries, it has been reasons that are similar to that. I don’t have time to go to every single one of them, but there are a number of examples where similar decisions have been made.

SEIB: OK. I think we’ll go here.

Q: Thank you. My name is Daniel Mandell. I’m a term member also, and also, I am a CFR international affairs fellow, where I’ll be going to Japan shortly to look at how the U.S.-Japan and similar countries can best work together to counter China in the Pacific region.

So, to that extent, I’m wondering how does the MCC work with other soft-power institutions such as the DFC and USAID here in the U.S., but also complementary institutions in Japan, such as their International Cooperation Agency and their Bank for International Cooperation.

Is there some sort of official organized, detailed strategy in place? Is there any cross-border work, or is it on an ad hoc basis?

ALBRIGHT: That’s a great question. So with the DFC and USAID—who are our neighbors in the international development toolkit—we work very closely with both of them in different ways. We have a specific facility with the DFC where we’re looking to specifically leverage private sector investment, and with USAID it very much depends on the project. We consult with them in a variety of ways, and we’re always looking to make sure that the puzzle pieces between the different agencies in the U.S. government are fitting together as sort of efficiently as possible.

With international donors, we consult with them regularly, and we don’t have a what I’ll call sort of a formal mechanism that sort of specifically ties money together. But depending on what country you’re talking to—talking about, they’re very interested in what we’re doing. They pay a lot of attention to our score cards, and we oftentimes see some of our donor—others in the bilateral donor space wanting to sort of put money alongside into projects that MCC is doing.

So you see that often, and Japan is a very good friend of ours. And we’re always happy to talk to them about where their seeing their interests, so we can figure out if we can synergize in some way.

SEIB: I think we have another online question, and then, we’ll come to you next.

OPERATOR: Sure. Our next question is from Natalie Liu of Voice of America. She asked: Does Ms. Albright think the MCC’s procurement process could use an evaluation or updating, given President Biden’s buy American agenda as well as the buy from allies and partners proposition a number of panelists have advocated? Our research has shown that MCC-backed projects have purchased large amounts of goods and services from countries like the PRC.

ALBRIGHT: I think there’s—I think you’ve got a bunch of questions in there. So we—so let me really answer your last question. We have, actually, provisions—one of them is that a country has to be a market economy—that act as barriers to actually buying goods coming out of the PRC. In terms of our general procurement, we follow all the different regs and provisions that we’re required to follow.

But I think a sort of strategic question coming out of there is, how do American companies actually get to engage in compacts? And we set a level—help countries set a level playing field with their own procurement, and that level playing field, that degree of transparency plays to the advantages of American companies. And American companies often are successful in securing pieces of business coming out of MCC compacts.

SEIB: There, and then, we’ll go there.

Q: Thank you. Irving Williamson, former commissioner of the U.S. National Trade Commission.

Two, sort of, questions. When would a country—assuming it’s eligible, go to MCC, and when would it go to USAID? Just so we get a better understanding of the contrast in the different programs.

And also, looking forward, with the rapid development of the African Continental Free Trade Agreement, the ACFTA, will any programs in Africa change? Or will you be—you already talked somewhat about regional programs, but this a much bigger thing.

And also maybe just comment on the African Growth and Opportunity Act as the main, you know, U.S. trade policy—vehicle, and how does MCC fit in with that? Thank you.

ALBRIGHT: Thank you for those questions. Let me start with the questions about Africa and AGOA. I mean, just big picture, about two-thirds of our activity is in Africa just given where those countries stack up in terms of the per capita income, statistics, and then how they sort of flow through the rest of our eligibility.

And a number of the—and the question you really asked is about the importance of trade, and a number of the projects that we work on lead into stronger trade relationships. For example, ports. We are working on, as I said a second ago, improving the sort of access of goods from Niger and Benin down to the port of Cotonou.

We’ve done quite a bit of work with Morocco, for example, on industrial zones, which creates a lot of jobs. So there’s a variety of things that we do that feed into better trade.

We’re very interested in AGOA and trying to do—we’re not specifically a trade agency, but AGOA, in a sense, creates I think a favorable environment for us.

In terms of USAID and MCC, MCC is a very specific tool that provides grants for all the reasons that I’ve mentioned. USAID is our flagship international development agency and has a much wider set of tools. But we do work in a lot of the same countries, so it just depends—if a country—it would have to be sort of a case-by-case for a country to figure out where would they go to a USAID and where would they go to an MCC. But the tools are quite different.

SEIB: Let me just interject with a quick question because I meant to ask this earlier. There’s a—I guess there’s a chicken and egg question wrapped up in what you just said.

Is most of your business—if that’s the right term—done by countries approaching you with a thought, or an ask, or a request? Or are you approaching countries that you think could benefit? In other words, who’s the initiator here in most cases?

ALBRIGHT: Well, we had—it’s a very good time of the year to be doing that because we typically make our selections in the second half of the year typically towards the end of the year. So we run an annual process of this whole selection process that I’ve just mentioned, and out of that comes, usually, a few countries that are eligible. We would then talk to our board about those. Our board has to approve those, and then we tell the country about them.

But we also have—and this is one of the most interesting parts of the model—we have ongoing dialogues with countries regardless of whether or not they’re eligible because they want to become eligible. So countries often approach us about how do they become eligible because they know that getting the kind of grant funding that we have is so valuable. So it’s two ways.

SEIB: So they know—they know they’re eligible and then they know they can come to you with a project idea or a need.

ALBRIGHT: Well, at the front end they want to become eligible then the board—and we with information to the board— they decide they’re eligible. And then we start working with them on projects.

SEIB: I see. OK. All right. Go ahead.

Q: Thank you. Hi. Morgan Keay, Motive International.

Earlier in my career, I spent many years living and working in Mongolia at the time when MCC had its initial compact. One of the big criticisms of that compact and others in MCC’s portfolio is the elements dealing with land privatization have been criticized for disenfranchising smallholder farmers, and pastoralists in particular. So my question is, what has MCC learned to improve—or to minimize the risk of land disenfranchisement in its compacts dealing with land privatization?

ALBRIGHT: That’s a great question. When we do heavy infrastructure projects that do require people to move, we do a lot of work on the front end on looking at the costs of that, reaching out to communities to talk about it. So there’s a lot of preparatory work that’s done in those cases.

SEIB: Right there, and then we’ll come here.

Q: Hi there. My name’s Kate Collins. I’m with the DFC.

It’s interesting to hear you talking about looking to move into upper middle-income countries and sort of your next phase. We’re certainly talking about that a lot as well at the DFC. I’m curious how you all are thinking about ensuring that your grants are targeted to benefit the poorest within those populations versus being widespread and likely flowing—having benefits flow to very wealthy people in those economies. Thanks.

ALBRIGHT: That’s a very timely question. So one of the bits of language that’s in our founding legislation is that we have to orient our money to countries in need and where there is poverty—I’m paraphrasing—and so we will continue to make sure that that’s our North Star. And our board will continue to—I’m guessing, but it’s their decision—but favor countries that are truly experiencing poverty.

So I think that the net of that is that we will probably continue to work with the poorer range of the upper middle-income countries where it makes sense.

SEIB: So let me interject myself on one—one more time here. You referred a couple of times to the board. Just for informational purposes, can you describe the board, its membership, and how it’s constructed?

ALBRIGHT: Sure. So we have a board of nine people, and—so the five government representatives. The chair of the board is the secretary of state. The vice chair is the secretary of the treasury, and then we have the administrator of USAID, the U.S. trade representative, and myself.

And then there are four private sector members, two Democrats and two Republicans, that are chosen—there’s a process that involves the White House and the Hill. And so we have a board that’s made in that way.

So you can see it seeks to achieve a balance between the public sector and the private sector. They meet four times a year, and they decide on, you know, selection. They approve compacts, and you know, various steps in the process.

SEIB: Thank you. Go here.

Q: Hi. Zach Watson, Evidence Action.

Given the immense unmet needs that MCC could potentially fill, what are the limits to its ability to achieve impact? I can imagine funding, the stringent-ness of your criteria, authorities, or sort of high-quality projects that are sort of ready. What are your limits, and are they the right limits?

ALBRIGHT: Well, there’s—it’s a great question, and we can always do more with more. But we have—we have I think—and it’s stood to the advantage of the agency—a very selective process for countries to get to the starting line—and I’ve discussed many pieces of that—because it really enables us to focus on countries that are in the right position to make change and to make impact.

And then once projects get started, we have certainly budgetary limits, and we do—we make the best decisions we can with the budget that we have, but we can always do more with more. And then we have human capital constraints, and we make the best of our wonderful staff and their time and their talent.

SEIB: Other questions? Let me interject with a couple things that have occurred to me while we’ve been talking.

You’ve mentioned the pandemic a couple of times. At some level, the pandemic changed everything everywhere, so it’s almost cliché to say it changed your world because it changed everybody’s world. But how did it change the development challenge broadly speaking, and how did it change the corporation’s challenge, specifically?

ALBRIGHT: Well, goodness, we could talk about that—(laughs)—for the rest of the afternoon.

SEIB: (Laughs.) Sorry to bring it up.

ALBRIGHT: So it—oh my gosh a variety of ways. I mean, it presented a significant economic shock to many of the countries that we work in. So if you think about a country like Belize that is vitally dependent on tourism, tourism stopped, you know, virtually overnight. So that country now faces a much more challenging economic picture.

It also created what I’ll call fiscal space challenges for countries. So they had to spend—many countries had to spend a lot more money on addressing the health challenges, which meant less room to address other challenges. So it presented just a huge constraint across the board.

So one of the things that we’ve heard is that countries want to reinvest in some of their health infrastructure—health clinics, for example. So we in a compact in Lesotho had already financed the construction of health clinics. We’re now about to put in some additional money into health clinics to continue to build up their capacity.

So it has presented both economic and health delivery challenges to countries. I also think it’s built awareness about how vulnerable health systems are to the next pandemic.

So it’s been an earthquake alongside of all the food security issues. I think that generally both together have made people realize that human capital-related challenges are significant in the development world, alongside of investing in some of the—what I’ll call the sort of hardcore areas of infrastructure.

So it has been—it has really changed the landscape dramatically in many, many ways.

SEIB: Other questions? If not, I’ll keep rolling because I’ve got plenty. Let me go to the back there, and we’ll come back to you. And there’s one other topic before we run out of time I do want to raise. But please go ahead.

Q: Meredith Broadbent at CSIS. How successful have you been in underwriting broadband projects?

SEIB: Did you hear? I think the question was, how successful have you been in underwriting broadband projects?

ALBRIGHT: Well, it’s early days for us in broadband, and some countries are beginning to talk to us about broadband. We have a very exciting project—it’s a threshold project in Togo—that is beginning to work on broadband, and we’re very excited about that.

But I mean the challenge, of course, with broadband is it’s at its outset an infrastructure challenge, and so how do you lay fiberoptic cable across countries that have vast expanses of their territory where there’s very little infrastructure of any kind?

But one of the things that we’re hearing over and over again is that countries are not thinking about broadband as a sector only, but as sort of a cross-cutting capability that then would help them make progress in a whole range of other sectors. So that’s very exciting, and I think we’re at the beginning of this.

There’s all kinds of cost issues. It’s not just the difficulty of laying a fiber optic cable, it’s how it gets connected to the network. There’s also all kinds of downloading challenges. You know, how do you get devices to people in a way that connects to the system well?

But this is beginning to change, and I expect that we would get more interest in this area as time proceeds.

SEIB: We’ll go there, and then there. And then you’ll probably have the last one I’m guessing, so.

Q: Thank you. My name is Wafa Ben Hassine. I’m at the Omidyar Network and a term member as well.

So with the full recognition that the MCC does not make loans and is instead a grant maker, what role does the MCC have in the implementation of different projects? And what measures do you have in your toolkit to ensure the good implementation of the projects that you support?

ALBRIGHT: We are a grant maker, and we set up an entity in each country called the MCA—although its actual name takes on different forms in each country. And that becomes the receiver of the grant funding, and then the implementor of the project. And often the MCA is sort of under the auspices of the Office of the Prime Minister, and it’s all governed by local colleagues who are identified by the government, but they often come from different sectors.

And we have a very detailed process for working with that entity to make sure that the projects that were originally proposed and approved actually get implemented. And so while we don’t have a—I know loans often have sort of a very certain kind of relationship with a borrower. We have every bit as rigorous a relationship with our—let’s call them grantees—but it’s a government-sponsored entity, so it’s a very detailed process of making sure that projects that get completed.

We also have—it’s actually beneficial—once we actually what’s called enter into force, which means start implementation of a project, we have to get it finished within five years, and that’s a congressional mandate. And that’s a very valuable timeframe. If you think about big heavy infrastructure projects, that’s a very good forcing factor to have a five-year, sort of, end date.

So there’s a lot of different pieces along the way that give us a very rigorous relationship with our counterparts in-country.

SEIB: We’re going to go here and then there. Oh, the other way around. OK. You get the last question. I’m going to stick one in. Go ahead. Sorry.

Q: Hi. My name is Marisol Maddox. I’m with the Wilson Center and I’m a new term member.

So I have a follow-up question from the broadband one, which is basically that, you know, as we are extending access to the internet in different parts of the world, it’s kind of a value-neutral proposition in terms of the types of information that they’re then able to access.

And so when you look at the way that perhaps the Russian government or the Chinese government have been targeting through their information operations some places in Africa, for instance, is MCC working with State Department or any other partners to help to develop media literacy in terms of, OK, these communities now have better access to internet? How do you discern good sources of information from bad ones?

ALBRIGHT: Goodness. We have not been asked that question yet from a country partner in terms of how they would like to work with us, but it’s certainly something that’s possible. I think that our entry point would probably be more on the infrastructure hardware access broadband side of the equation. Is it possible that down the road in maybe some of our education work an area of literacy which would be part of a curriculum that a government would choose might like to elect that? Possibly, but I think—I’m not sure we would get that granular in a government’s curriculum choices.

But certainly, for the future, let’s see what countries are interested in. That’s a good question.

SEIB: So since we’re in sort of an end game lightning round here, let me throw one other thing at you first before I’ll turn to you for a final question. You talked about the pandemic as being just a giant new reality on the international stage.

There’s another one out there, which is refugees. We’re in a period of unprecedented refugee crises, one laying on top of the other on top of the other. How does that affect—or does it affect what you see, what you do, and how your criteria are applied?

ALBRIGHT: That’s a great question. I mean, we—our mandate wouldn’t be a—what I would call a front-line responding agency to a refugee crisis much as we are concerned about them.

But what we do see from refugee crises—and you know we’re at—as many people in the room must know—sort of a high-water mark in terms of the refugees in the world right now, and it’s gotten even higher with the war in Ukraine—the movement of refugees puts pressure on the adequacy of public services in the countries where the refugees go or even within a country.

So I would expect that the types of projects that we get asked to consider by countries possibly are ones where refugees are putting pressure on a particular system—a water system, a health system, an education system, a transportation system. So it’s something that we’ll factor into our work for sure.

SEIB: Probably in a forthcoming way yet to be seen.

ALBRIGHT: Yes.

SEIB: Last question.

Q: Always pressure with the last question.

SEIB: Yes, a lot of pressure, sorry.

Q: So, Daniel Mandell, CFR term member.

And again, thinking about the Pacific Islands and many countries which are just very small—I was in the Republic of Palau for two years, which is a country of twenty thousand people, not eligible for MCC because of their other relationship. But as an example, they lack domestic capacity in just the skills they have in house, and then also because of the small size of their economy, things that we would consider as being necessary, such as a functioning market economy with multiple sources to choose from, just doesn’t exist. It’s just not reasonable because when you have a country of twenty thousand people, you know, three food stores is all you need.

How does the MCC account for and deal with the issues, such as a very small economy or a very small population, that lacks domestic capabilities in choosing whether or not the country should be eligible for assistance? And then in requiring, you know, whatever goal posts or whatever standards they’re going to put in place, such as privatization or a market-based response, which may or may not be reasonable in that given economy given its size, how does the MCC address that in its operations?

ALBRIGHT: So it’s a great question, and I’ll answer it by talking about an ongoing dialogue that we have with Kiribati right now. So Kiribati fits many of the characteristics you just talked about.

We would—first of all, we’ve got two different types of programs. We’ve got our threshold programs, which are earlier, and then our compact programs. We would not be likely to change our per capita income standards or our scorecard guidelines, but where you see those types of characteristics come in is what—the kinds of things that we’re working on.

And it would be more likely that we probably would focus on things in the policy and institutional reform area that might be helpful. So we’d really adjust for those kinds of characteristics in the nature of the projects that we would undertake.

But let me mention—given that you talked about some island environments—that we are very interested in those areas provided they go through our scorecard because they do have particular challenges, and the cost of public service delivery—be it health and education, for example—is a big one.

So we do pay attention, and as those countries come through our process, we’d be very happy to work with them.

SEIB: Well, we’ve hit the one o’clock hour. Just a final note here that both the transcript and the video of this program will be available on the CFR website. I want to thank you all for coming and our virtual audience for being here. Most of all, I want to thank you, Alice, for a really fascinating conversation. I hope we can do it again some time.

ALBRIGHT: Thank you so much, Jerry. Thank you. (Applause.)

(END)

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