Remarks by MCC CEO Ambassador John Danilovich at the "MCC in Latin America: Managing Programs in Politically Changing Environments"

October 2, 2007; 9:30 to 11:00 a.m

As prepared.

INTRODUCTION

Welcome! Bienvenidos!

Acknowledging the great importance of Hispanic Heritage Month, we wanted to host this event to showcase the tremendous work Millennium Challenge partner countries are undertaking to convert the promise of prosperity into reality for the people of the Americas.

Let there be no doubt: MCC firmly supports growth and development in the Americas to transform the lives of the poor, to reduce poverty and to sustain economic growth.

Work in the Americas

Our commitment to the Americas is already visible in three Central American partner countries with whom we have signed compacts: El Salvador, Honduras, and Nicaragua. It is also evident in the two threshold programs we have signed with Guyana and Paraguay.

In El Salvador, compact progress will be about improving the lives of some 850,000 Salvadorans living in the country’s poverty-stricken northern region with investments in

transport infrastructure,
agriculture production,
rural business development, education,
and community-based projects.

A new “Fondo del Milenio” (FOMILENIO) has been established in San Salvador and the program begins active implementation this month.

In Honduras, our compact will increase the incomes of thousands of small farmers as they diversify to produce higher-value, exportable crops. It is about supporting improvements in secondary roads and highways that will enable these farmers to reach national, regional, and international markets. So far, some 800 farmers have been trained in production techniques and small business skills for more profitable commercialization of horticultural products.

In Nicaragua, our compact will improve the quality of life for small farmers and entrepreneurs in the departments of Leon and Chinandega by

reducing transportation costs,
improving access to markets,
strengthening property rights,
and increasing private investment in the region.

To date, approximately 1,000 bean, cassava, and sesame producers have received technical assistance and other support through MCC to help them improve and market their products, increasing the prices they receive for them in the process.

On one of my early trips to Nicaragua, I inaugurated a milk-collection facility for an association of poor dairy farmers to help improve product quality and to promote rural business development in processing activities.

Our commitment to the Americas is also evident in MCC threshold programs. Our threshold programs target poor indicator performance in the hope of improving those indicators and pushing those countries over the threshold to compact eligibility.

Guyana’s threshold program signed in August seeks to improve fiscal management of public revenues and decrease the number of days and costs required to start a new business, which will improve the investment climate.

Paraguay’s threshold program seeks to reduce corruption and is also building a more transparent and attractive business environment. As a result, the cost to start a business in Paraguay has been reduced from $750 to $250, and the time involved to do so has been cut in half from almost 70 to 36 days.

In total, over the past 2+ years, the Millennium Challenge Corporation has made investment commitments of more than $890 million in the Americas through both compacts and threshold programs.

Yet, this dollar figure alone—as significant as it is—does not capture fully the impact of our work.

MCC Model in the Americas

In the Americas, we are seeing how the MCC model is working as Congress intended it to work when they established us in 2004.

It is a model focused on one mission: to reduce poverty through economic growth.

It is a model that provides grants—not loans—to countries that

practice good governance,
reject corruption,
invest in their people,
and provide economic freedom.

It is a model grounded in partnership with countries

willing to undertake the often difficult work of policy reforms,
willing to build their capacity to lead their own sustainable development,

and

willing to deliver results where they matter most—in the lives of the poor.

MCC investments in the Americas—and for that matter in all partner countries—create a culture of competitiveness and independence that allows assistance, over time, to be replaced with the self-sustaining economic growth led by private enterprise and with an expansion of trade with other countries. And, we are seeing how partner countries are leveraging their MCC investments to make such a transition possible, especially in Central America.

We see it in the policies partner countries are adopting to overcome barriers to development. Good policies and good governance are essential for business development, for creating a culture of transparency and the rule of law that builds confidence in public institutions. As countries come to own their development, they are thinking critically about what policies are needed to sustain poverty reduction and economic growth beyond the period of MCC’s investment.

For example, El Salvador dramatically reduced the time and cost required to start a new business. New businesses create new jobs. Nicaragua passed critical road maintenance funding legislation to ensure the long-term sustainability of the road network.

We see it in how partner countries in the Americas are building the physical and commercial infrastructure to convert aid into trade. Consider the powerful regional effects that emerge when we look at El Salvador, Honduras, and Nicaragua not only as partners with MCC but also as U.S. partners in trade through CAFTA-DR. MCC compacts among these neighbors are accelerating the pace of market-led growth in each country, while building their capacity to expand trade both regionally and internationally.

In addition to efforts in all three countries to expand production of exportable crops, MCC funding is helping to construct and improve transportation links between El Salvador and Honduras and between Honduras and Nicaragua. These linked routes will allow goods to cross the isthmus from the Atlantic to the Pacific and will help farmers move their products to markets in the region and in the U.S.

And, we see it in how partner countries in the Americas are creating conditions to empower private enterprise, which is the engine driving growth and poverty reduction. Being part of the MCC family gives countries a “good housekeeping seal of approval,” which sends a powerful signal to private investors that conditions for doing business in MCC countries are improving swiftly. One recent example of this is in Nicaragua, where MCC helped attract over $9 million in new investments that will create some 1,200 jobs in the country’s northwest region.

Conclusion

The State Department’s Assistant Secretary for Western Hemisphere Affairs Tom Shannon describes the Americas as “on the cutting edge of transformational political and economic change...”

MCC drives this transformation, and we mean to continue to encourage it and support it.

There will, of course, be challenges along the way. Development takes time, especially in politically changing environments as our panel will discuss. Let me underscore, though, that MCC’s focus has been and will remain on the policies—and not the politics—of the region.

MCC partner countries continue to move forward and our programs are showing tangible results. We are seeing progress on the ground—

in farmers gaining access to new markets,
in transport costs being reduced,
in new private sector investments.

We see our partner countries leveraging MCC’s investments to further

reform their policies,
expand their trade,
and encourage new private enterprise.

We are proud of our work in the Americas, but the pride, rightfully so, belongs to the peoples and governments in partner countries who continue to shoulder the work of their own development. We recognize the progress the Americas have made in fighting poverty and stimulating growth in partnership with the Millennium Challenge Corporation, and I appreciate your support and interest in these ongoing efforts.

Introduction of the Next Speaker

It is now my pleasure to yield the podium to His Excellency Roberto Flores Bermúdez, Ambassador of Honduras to the United States. This is his second tour as ambassador in Washington, D.C.

As a career diplomat, Ambassador Flores Bermúdez has dedicated 30 years to representing Honduras abroad. He served as Honduras’s Permanent Representative to the United Nations and as his country’s Ambassador to the U.K. and Germany. Ambassador Flores Bermúdez also served as his country’s Minister of Foreign Affairs.

Please join me in welcoming Ambassador Flores Bermúdez…

Mr. Ambassador…