Bush's foreign aid "competition". (Insider Report).

On November 25th, the Bush administration unveiled a blueprint for its "Millennium Challenge Account," an ambitious proposal to administer a new $5 billion foreign aid fund. "Under the plan, a new federal corporation will be set up to administer the aid, and decisions will be made by a Cabinet-level panel that will dole out the money much the way colleges assign scholarships," reported the November 26th New York Times. To qualify for the aid, "countries must demonstrate that they are curbing corruption, spending more on education and following free market economic principles."

The problem with this program should be obvious: Any regime either giving or receiving "foreign aid" (transfers from taxpayers in one country to ruling elites in others) is violating "free market economic principles."

Mr. Bush announced the initiative in a speech given shortly before the UN's foreign aid summit in Monterrey, Mexico (see our on-site report "March Madness in Monterrey" in our April 22, 2002 issue). If Congress fully funds the Millennium Challenge Account, it will amount to a 50 percent increase in nonmilitary foreign aid from the United States. Supporters of the plan describe it as a "bonus pool" intended to encourage competition among potential recipient governments.

Of course, genuine free market advocates understand that foreign aid discourages market-oriented reforms and encourages corruption by insulating recipient regimes from accountability to those they govern.