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Foreign Aid Fund Poured Millions into Honduras in Months Leading Up to Coup

August 9, 2009

Millennium Challenge Corp. poured millions into Honduras in months leading up to putsch

Posted by Bill Conroy – August 9, 2009 at 5:46 pm

U.S. aid agency, established under Bush, seeks to promote “economic freedom”

The coup d’état that rocked Honduras in late June and removed democratically elected President Manuel Zelaya from office, sending him into exile in Costa Rica, was preceded by a multi-million dollar build-up of foreign aid from a U.S. agency that includes on its board of directors the president of the International Republican Institute as well as Secretary of State Hillary Clinton.

That taxpayer-funded agency, called the Millennium Challenge Corporation (MCC), oversees a multi-billion dollar foreign-aid fund called the Millennium Challenge Account. It was established in 2004 under the Bush administration as means of combating terrorism by funding development in poor nations under a strict neo-conservative free-trade model.

A review of publicly available financial records reveals that between April 1 and July 31 of this year, nearly $17 million in aid was disbursed to Honduras through the MCC program. That money flowed into Honduras after President Zelaya called for a national referendum in March to decide whether a ballot question should be included in that nation’s November 2009 general elections — which would have asked voters to decide if a national assembly should be convened to amend the Honduran constitution.

But Zelaya had fallen out of favor with the Honduran business class that controls the country well before that point. He was accused of becoming too intertwined with the agenda of Venezuelan President Hugo Chavez, a long-time nemesis of the Washington political class and Wall Street capital interests. That drift toward the left was marked by Zelaya’s decision to join the Chavez-led, Latin American-centered Bolivarian Alternative for the Americas (ALBA in its Spanish initials) — a move ratified by the Honduran Congress in October 2008.

At the time, media reports warned that Honduras’ decision to join ALBA might result in the MCC rescinding its five-year, $250 million aid compact with Honduras — inked in 2005. But it seems quite the opposite happened.

In fact, since Oct. 1, 2008, according to public records, a total of $45.3 million in MCC aid has been pumped into Honduras, representing 56 percent of all aid disbursed under the program through July 31 of this year. (Even though the MCC compact with Honduras calls for an aid package of $250 million to be distributed between 2005 and 2010, as of July 31, 2009, according to MCC records, a total of only $80.3 million in aid has been disbursed to the country — more than half, as mentioned, since October 2008.)

The MCC Honduras program is designed to fund agricultural and transportation projects that “will increase the productivity and business skills of farmers and their employees who operate small- and medium-sized farms, and will reduce transportation costs between targeted production centers and national, regional, and global markets,” according to the MCC’s description of the aid compact.

But a criticism of the MCC program is that, though designed in theory to help the poor, its programs actually do more to benefit the wealthy and business class.

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