The Millennium Challenge Corporation (MCC) announced on Friday that it is partially terminating assistance to Nicaragua - specifically, $65 million of the original $175 million compact. This aid was originally suspended in December 2008, after the Chief Executive Officer of the MCC, along with the MCC Board of Directors, determined that the Government of Nicaragua had "engaged in a pattern of actions inconsistent with the criteria used to determine the eligibility of Nicaragua for MCC assistance." Basically, these "patterns of actions" were mostly referring to the controversy surrounding the fairness of the 2008 municipal elections in the country - with many national and international groups calling the elections fraudulent.
The Millennium Challenge Corporation is a U.S. Government corporation designed to help developing countries reach the Millennium Development Goals. For a country to be eligible to receive assistance, the MCC looks at multiple policy indicators that measure rule of law, investment in people, and economic freedom in the particular country. Nicaragua was one of the first countries to be deemed eligible for MCC assistance in 2004 (the official compact was signed in 2005), making the MCC the largest source of aid to Nicaragua among U.S. aid programs in the 2006-2008 period. However, an increase in corruption indicators over the past two years and the manner in which the 2008 municipal elections were carried out resulted in Nicaragua being deemed ineligible for further MCC assistance, according to a December 2008 press release announcing the initial suspension of aid to Nicaragua. (See past news coverage of the Nicaraguan municipal elections)
Nicaraguan President Daniel Ortega called the termination of $65 million in MCC assistance "disrespectful," according to CNN. He continued, saying that "President Barack Obama knows that the United States of today is not the United States of 30-40 years ago. Today, the U.S. cannot do whatever it wants, it no longer has moral force, even though it has the material force to do it. It has lost the support of the people in its warring adventures."
Venezuelan President Hugo Chávez has already stepped in and promised $50 million in assistance through the ALBA (Bolivarian Alliance of the Americas) Solidarity Fund in order to continue many of the projects that the MCC funds would have supported - including $12 million for property regularization programs, $18 million for the construction of the highway that leads to the "Bolivar's Supreme Dream Oil Refinery" and $16 million for two rural roads to provide improved access for rural producers to the market.
El Salvador and Honduras are the other countries in the region that receive MCC assistance, while Paraguay has received "Threshold Assistance" in the past (this assistance is aimed at helping a country improve their policy indicators in order to become eligible for MCC compact assistance) and Peru and Guyana have both signed "Threshold Agreements," yet assistance has not yet been allocated. Colombia has also been deemed eligible for "Compact Assistance" though no agreement has been signed. To see the amounts of MCC assistance allocated to countries in the region since 2005, check out the Just the Facts database.