Last week, the U.S. government’s Millennium Challenge Corporation (MCC) approved a five-year, $277 million foreign aid compact with El Salvador. But, as Mary O’Grady reports in The Wall Street Journal, since the ruling FMLN party came to power in 2009, El Salvador has become poorer, less democratic, and less free. So this decision by the MCC amounts to a reward for bad behavior by the government of President Mauricio Funes.
It is bad enough that the MCC’s new compact with El Salvador deviates from the core values of the MCC program, which require foreign aid recipient governments to be held accountable for results and insist they make sustained efforts to combat corruption. MCC programs should also focus on private-sector-led economic growth, strong protection of property rights, and the rule of law to spur economic growth and development, which can never be replaced by foreign assistance no matter how well intentioned.
What we see today in El Salvador is a government heading in the opposite direction from those core principles. In 2000, El Salvador was ranked as the 11th-freest economy in the world, according to the annual Index of Economic Freedom co-published by The Heritage Foundation and The Wall Street Journal. Today, it is 53rd and has registered declining scores in six of the 10 economic freedoms, including investment freedom, the management of public spending, labor freedom, and freedom from corruption. El Salvador’s performance in other world economic indices has also plummeted.
The MCC board ought to reconsider and cancel the new compact until El Salvador returns to the path to economic freedom.