Backing Winners; A new U.S. foreign-aid plan is spurring change.(Millennium Challenge Account)

Byline: Tom Masland

In May an elite group of development experts, culled from U.S. government agencies, private firms and universities, slipped unnoticed out of Washington and scattered across the planet. They visited 16 of the world's poorest countries, including Cape Verde, Honduras and Vanuatu. The 20 specialists, set to return to their Arlington, Virginia, base in June, were deployed in the service of the Millennium Challenge Account, or MCA--the Bush administration's innovative approach to foreign aid that links financial assistance to reform initiatives promoting democracy, government transparency and civil liberties.

The MCA holds the promise of boosting American foreign aid by half over three years, to $5 billion annually--if the plan's administrators find sufficient evidence of progress to merit doling out the funds. Apparently they have: on May 10 President George W. Bush announced the first 16 nations to qualify for $1 billion in U.S. grants available this year. All have met a series of good-governance incentive standards established by the new program. The winners include eight countries from Africa, including Benin, Mali and Ghana. Compared with U.S. military spending, the foreign-aid sum is microscopic; still, under the program, the United States would become the biggest foreign donor in each country selected. "This news is a tank of oxygen for us," says Henri Rabesahala, a presidential adviser in Madagascar, another MCA winner that's started an ambitious program of judicial reform. "It means we are doing the right things."

That's the point. The U.S. plan reflects a sea change in thinking about how best to use development aid. Created in 2002, the MCA developed out of World Bank research showing that aid money is most effectively spent in countries that are governed well. Instead of relying on subjective considerations to select aid recipients, the ...