Aquino signing of millennium challenge account paves way for more problematic policies

September 22, 2010

by superadmin

The MCC is about promoting the US’s preferred version of neoliberal free market democracies– democratic in form but severely undemocratic in their outcomes

Pres. Benigno “Noynoy” Aquino is set to witness the signing of the Millennium Challenge Account (MCA) during his US visit, but research group IBON warns that the agreement is biased against national interest and gives way for more erroneous policies that have eroded the local economy.

The MCA, a US$434-million compact grant agreement of the US government’s Millennium Challenge Corp. (MCC), requires the Philippines to meet certain indicators such as open trade, economic freedom, good governance, adherence to human rights, etc. to continue receiving the aid. To qualify for support, recipient countries are required to implement neoliberal economic and political policies approved by the World Bank and International Monetary Fund (IMF), and neoconservative US think-tanks Heritage Foundation and Freedom House.

According to IBON, the requirements to meet the indicators for trade policy, inflation and fiscal policy are exactly the same policy measures contained in the discredited World Bank structural adjustment programs and IMF stabilization programs of past decades. They seek to completely open up the economy to foreign capital at the expense of real domestic development, and to promote fiscal austerity to be able to keep repaying debt. These policies are designed to benefit mainly US commercial and strategic interests and not development or poverty reduction in the country. Moreover, the MCC indicators are inconsistent with real asset and wealth redistribution in the domestic economy.

The requirements for the indicator on “regulatory quality” for instance are about further shrinking the capacity of government to intervene in the economy in the greater social interest. This is a rehash of the old 1980s ‘minimalist state’ approach that the recent global financial crisis has exposed as grossly inadequate in terms of national development. Even the indicators on anti-corruption, rule of law and government effectiveness are more concerned about creating a stable and consistent business environment for US firms to operate and profit than on improving the people’s welfare.

The indicators on political rights and civil liberties also appear little considered with the real state of human rights in the country. Meanwhile, the supposed poverty alleviation projects (US120-million for the Kalahi CIDSS) has been proven by experience to momentarily disguise poverty causes and divert from the need for basic structural economic reforms.

IBON adds that MCC is also a tacit endorsement of the failed Comprehensive Agrarian Reform Program (CARP) which enshrines ‘just compensation’ rather than ‘free distribution of land to the tiller’ as the cornerstone of agrarian reform. This is likely one of the measures for the indicator on land rights.

IBON stresses that the MCC is about promoting the US’s preferred version of neoliberal free market democracies– democratic in form but severely undemocratic in their outcomes. As clearly shown in how the last decade of the most rapid economic growth in the country has been accompanied by rising poverty, these policies have excluded the majority of Filipinos from the benefits of growth. (end)