An American "Millennium Challenge" Faces a Test in Turbulent Georgia
The United States intends to use Georgia as a proving ground for a new foreign aid strategy. Whether or not Tbilisi can take full advantage of the US-backed Millennium Challenge Account program remains questionable given that Georgia is fast becoming entangled in another round of separatist conflict.
Fighting in South Ossetia has steadily escalated in the past week, with Georgian government troops battling separatist forces. Overnight clashes August 18-19, left three Georgian troops dead as government forces reportedly drove South Ossetian fighters from several key strategic locations in the region, according to the Civil Georgia web site. According to some reports, Georgian forces have started shelling the outskirts of Tskhinvali, the regional capital. At least 12 Georgian soldiers have died in action over the past week while dozens of South Ossetian militia members have reportedly been killed.
South Ossetia has operated beyond Tbilisi's control since the early 1990s, when Georgia was consumed by separatism, along with domestic political and economic turmoil. [For background see the Eurasia Insight archive]. Georgian President Mikheil Saakashvili has made the restoration of Georgian territorial integrity one of his top policy priorities. [For background see the Eurasia Insight archive]. While Tbilisi appears to enjoy a strategic advantage at present in South Ossetia, there are signs that Russia is not willing to remain a silent witness to a Georgian reconquista. On August 18, Russian President made his first public comments on the deteriorating Ossetian situation, cautioning Georgia to eschew force in favor of a negotiated settlement to the region's political status.
"We [Russia] are particularly concerned at the explosive development of events in connection with South Ossetia, and an alarming situation in connection with Abkhazia," Putin told Russian television. "We are unanimous that today, as never before, it is important for the sides to show their readiness to settle the conflict by peaceful means. A threat is a method which leads to a dead end."
Russia has long acted as the protector of Abkhazia's and South Ossetia's interests, and many residents in the regions have been granted Russian citizenship. Already, reports are circulating about the presence of Russian mercenaries in the ranks of the South Ossetia militia. If the fighting continues, Russia could feel compelled to adopt a more active interventionist stance. Greater Russian involvement, in turn, could bog down Georgia in a conflict that it cannot really afford.
The South Ossetian crisis is overshadowing domestic reform efforts, including Saakashvili's anti-corruption campaign. Some political observers worry that reform progress made since Saakashvili took office in January could be lost, as the government appears increasingly preoccupied with South Ossetia.
Georgia's reform efforts are largely dependent on foreign economic assistance. A major potential source of aid is the Millennium Challenge Account system, which began operating in May. Georgia was among 16 nations designated by the United States as eligible to tap into a $1 billion development fund controlled by the Millennium Challenge Corporation (MCC). The US government has indicated that it will contribute billions of more dollars to the fund in coming years. Also among the original 16 MCC eligible nations are Armenia and Mongolia. Overall, 74 nations applied to participate in the Millennium Challenge Account system.
US President George W. Bush characterized the system as "a new and hopeful approach in America's aid to developing nations," linking aid "to clear standards of economic, political and social reform." The Bush administration hopes that MCC will enable the US foreign aid apparatus to become more flexible. The new system's distinctive feature is that it places the onus on the potential recipient governments to shape aid programs. As such, the 16 eligible nations will only be able to receive assistance after submitting detailed proposals to the MCC and having them approved. Bush, during a May 10 ceremony honoring MCC eligible nations, stressed that "funding is not guaranteed for any selected country."
"To be awarded a grant, nations must develop proposals explaining how they will further address the needs of their people, and increase economic growth proposals that set clear goals and measurable benchmarks," Bush added.
In June, the MCC's head, Paul Applegarth, visited Georgia to hold talks with government officials and civil society activists on potential MCC program proposals. "It [the Millennium Challenge system] is really built on the thought that ... the [recipient] country gets to choose what the priorities are ... and how we provide assistance to make it happen," Applegarth said in a statement.
Applegarth's visit occurred before the latest flare-up of tension with South Ossetia. Now, some political observers wonder whether the Ossetia issue will hamper Georgia's ability to access MCC grant money. Others believe the crisis will have little bearing on the level of MCC support. They cite the fact that Georgia's inclusion among the original 16 MCC eligible states appeared heavily influenced by geopolitical considerations. Washington, they believe, is eager to utilize Georgia as an outpost to defend its strategic interests in the Caucasus, including the Baku-Tbilisi-Ceyhan pipeline. [For background see the Eurasia Insight archive].
Judging purely by the political, social and economic criteria standards established by MCC, Georgia would not seem to qualify for inclusion on the list of 16 aid-eligible nations. For example, despite Saakashvili's efforts to combat corruption, Georgia ranked 124th out of 133 countries on a corruption index compiled by Transparency International. [For additional information see the Eurasia Insight archive].
The Millennium Challenge Corporation acknowledged that Georgia's statistical qualifications may be lacking, but it argued in a statement submitted to the US Congress that the existing data did not accurately reflect the reform potential in Tbilisi. The MCC said that Saakashvili's administration had made great strides in 2004 in restoring political and economic order, and could be expected to continue the present trend. During his June visit to Georgia, Applegarth said Tbilisi's inclusion in the Millennium Challenge system was "recognition of the steps taken by the new government."
Alec Appelbaum is freelance writer based in New York.
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