MANILA, Philippines – The Millennium Challenge Account (MCA), a $434-million compact grant agreement of the Millennium Challenge Corporation (MCC) of the United States government is a “Trojan Horse” that will bind the country to “blanket commitments at the expense of Philippine sovereignty.”

This is what debt watchdog Freedom from Debt Coalition (FDC) told the House Committee on Appropriations today during a consultation with civil society organizations in preparation for the plenary deliberation on the proposed 2011 National Government budget on Monday.

“The Millennium Challenge Compact which was signed by President Benigno Aquino III and US State Secretary Hillary Clinton is not in the interest of the Philippine government. Its sweeping conditionalities commit the country to the same political and economic policies that caused it to weaken in the last half century,” incoming FDC President Ric Reyes said.

FDC compared the MCA to the mythological “Trojan Horse” that allowed the Greek soldiers to finally enter the city of Troy by hiding in a wooden gift horse.

“We only have to hear from (US President Barack) Obama during the United Nations Poverty Summit in New York declaring that ‘development aid’ is actually a ‘core pillar’ of American power that will advance US economic interests,” Reyes said.

Reyes cites Section 3.2-c of the signed Covenant which states that from now on, “no law or regulation in the Philippines” will “prevent or hinder” the government's obligations under the Compact and “any other related agreement or any transaction.”

“Clearly, the Millennium Challenge grant is a dangerous gift to receive,” Reyes added.

False Solutions

The debt watchdog also criticized the controversial Conditional Cash Transfer (CCT) program of the Department of Social Welfare and Development (DSWD).

“While we believe that it is the moral duty of any government to assist the poorest of the poor or the ‘basement poor’ who suffer daily the devastating effects of hunger, disease and ignorance, the CCT as devised by the present administration lacks the accompanying basic elements to make it a positive component of a real poverty eradication program,” Reyes said.

Reyes added that CCT must be accompanied by “basic elements” including “sustained employment generation, wage increases and social service expansion.”  

“In Brazil where similar cash transfer programs have been implemented most extensively, there is growing recognition that this should only supplement the legislation of a guaranteed basic income for every citizen and a package of aggressive employment and social service expansion,” Reyes added.  

The group instead called for a National Employment Guarantee Program with unemployment subsidy as a “more sustainable means of finally resolving the poverty problem.”

Reyes in his presentation listed five reasons why CCT may fail:
  • CCT is debt-creating because it was financed by a loan from Asian Development Bank (ADB) worth $400 million (P18 billion). It transfers wealth from “future poor to today’s poor.”
  • With no support for job-generation and local industries, CCT only subsidizes the procurement of imported commodities and has “minimal impact” on the economy.
  • CCT program is conditional because it supposedly encourages people to patronize social services, but social services suffer from under-investment.
  • CCT program used as an excuse to cut social spending.
  • CCT suffers from implementation problems, ranging from how to target poorest of poor and local patronage.

“CCT might have its uses, but without fulfilling the requisite of job-generation and support for domestic production, it will fail,” Reyes concluded. -30-

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