On July 14, the West African nation of Burkina Faso signed a compact that will bring it nearly $481 million in U.S. aid, but there’s a catch: funding is tied to the nation’s ability to show it is committed to improving governance, encouraging economic freedoms and investing in its citizens to reduce poverty by promoting growth.

Since its creation in 2004, the U.S. Millennium Challenge Corporation (MCC) has approved $6.2 billion in compacts with 16 other countries: Madagascar, Cape Verde, Honduras, Nicaragua, Georgia, Armenia, Vanuatu, Benin, Ghana, Mali, El Salvador, Mozambique, Lesotho, Morocco, Mongolia and Tanzania.

The program embodies the Bush administration’s “steadfast commitment to global development, to ending the scourge of poverty that robs communities of hope and opportunity,” Secretary of State Condoleezza Rice said at the July 14 signing ceremony.

Steve Radelet, in an essay published by Center for Global Development (PDF, 184 KB), summarizes the MCC approach as follows:

“Once countries qualify, the recipient countries set priorities, design the programs to be funded and implement them. This approach places much more responsibility for development programs with the recipient country. In return for this flexibility, the MCC – in theory – demands greater accountability for achieving results, including being willing to cut off funding when programs fail.”

The MCC process sets metrics to measure the effectiveness of the aid. The program is so new that there are insufficient data as yet to draw conclusions, but the most recent MCC report on Madagascar, party to the first MCC compact on March 14, 2005, gives cause for optimism:

“[E]conomic growth in Madagascar picked up and GDP growth accelerated to 6.1% in 2007. This was mostly due to prudent macroeconomic policies, ongoing construction of large mining projects and progress in structural reforms. Inflation slowed to single digits and averaged 8.2% by the end of December 2007.”

Radelet, who holds a doctorate in public policy from Harvard University, calls MCC a significant accomplishment but asserts deeper reforms are needed, and lays out a number of possible approaches to revamping the entire system.

“The United States can and should do a much better job of getting the right kind of assistance in the right amounts to the right countries to fight poverty, address some of the root causes of state failure, and support democracies around the world.

Should international assistance be linked to a country’s progress in political and economic reforms? Is that an effective way to promote democracy and good governance?

At a conference intended to renew international support for Afghanistan’s reconstruction, the issues of security, illegal drugs and corruption topped the agenda.

In Paris on June 12 Afghan President Hamid Karzai presented his government’s five-year national development strategy to the International Conference in Support of Afghanistan in hopes of surpassing the $10.5 billion in international aid pledged at the 2006 London conference to continue Afghanistan’s recovery.

But getting the pledges is only the first step; delivering that aid continues to be a challenge, with the road to Afghan recovery blocked by enormous potholes in the form of violence, narcotics trafficking and corruption of law enforcement personnel and government officials. (See “Afghan Government Charts Challenges.”)

Half a world away, at a different international meeting, that same set of problems got a different kind of attention as representatives to the General Assembly of the Organization of American States noted the dramatic progress Colombia has made against violence and narco-trafficking.

“We have witnessed a transformation of our hemisphere,” said Deputy Secretary of State John Negroponte, and “no country embodies this transformation more than Colombia.” (See “Western Hemisphere Meeting Showcases Progress in Colombia.” )

Are there lessons from Colombia’s experience that can be useful in Afghanistan, or is the situation – cultural, historical and political – too different for the same approaches to work?