27 June 2010

TL and the Millennium Challenge Corporation

Lao Hamutuk has posted a new web page about the Millennium Challenge Corporation (MCC, a U.S. government agency) which includes Timor-Leste’s history of negotiation for funding and the recently-agreed $10.5 million, three-year program to improve childhood immunization and combat corruption. The page contains much more information than this summary, including tables, graphs and links to relevant documents.

A few years ago, Timor-Leste hoped to get more than $300,000,000 from the MCC to construct local infrastructure. Timor-Leste qualified for MCC funding in early 2006, but the process of negotiating an agreement (called a "compact") was never finished, due to the "crisis" and the change of government in Dili. MCC tabulates new scores every year, which are used to decide whether a country is eligible to sign a compact. In the figures announced at the end of 2007, Timor-Leste's indicators (particularly the one on controlling corruption) had fallen below the required levels.

However, the U.S. Ambassador and Timor-Leste Government persuaded the MCC to bend the rules, and Timor-Leste remained eligible for another year, although a compact was not agreed. When scores dropped further at the end of 2008, the MCC board ruled Timor-Leste ineligible for a compact but allowed "Threshold" status which provides a lower level of funding to help improve the scores.

The scores tabulated by MCC in October 2009 were slightly lower, in part because Timor-Leste's scores are now compared with those from less impoverished countries, because of high oil revenues. To again become eligible for a compact, Timor-Leste needs to pass the Control of Corruption and at least one additional indicator.

In May 2010, Timor-Leste and MCC agreed on a "threshold program" designed to improve the Control of Corruption and Immunization Rates scores.Under the program, which is managed by USAID, anti-corruption will get $5.2 million, immunization $2.3 million, and the remaining $3 million is for Monitoring and Evaluation of the program.

Information about the upcoming MCC anti-corruption program here began circulating in Washington in 2009, and several companies came to Dili to assess their chances for getting the contract. USAID did not announce a public tender, but invited six pre-selected companies to bid. Even before USAID defined the program and invited proposals, these companies began recruiting possible staffers. Although only one company will get the contract, it is so lucrative that they have each spent tens of thousands of dollars preparing their bids.

On 8 June 2010, USAID issued a Request for Task Order Proposal describing the anti-corruption project's objectives and structure and asks for bids by 16 July. The "Background" section does not mention anything that occurred before 2006, although we hope that project implementers will have a better understanding of the history and context of Timor-Leste.

The project "seeks to reduce corruption in Timor Leste by strengthening institutions and organizations with mandates to promote government transparency and accountability, and by fostering integration and collaboration among these institutions/organizations." It has many components including working with the Anti-Corruption Commission, Prosecutor General, External Audit , Inspector General, Procurement Policies, National Parliament and civil society. Some have already expressed doubts about how effective this scatter-shot approach can be in Timor-Leste.

La’o Hamutuk will continue to update information about the MCC projects on our website.

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