VZCZCXRO6213
RR RUEHLMC
DE RUEHFR #2744/01 1771547
ZNR UUUUU ZZH
R 261547Z JUN 07
FM AMEMBASSY PARIS
TO RUEHC/SECSTATE WASHDC 8502
INFO RUEHLMC/MILLENNIUM CHALLENGE CORP WASHINGTON DC

UNCLAS SECTION 01 OF 02 PARIS 002744 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EB, F, EUR/WE 
 
E.O. 12958: N/A 
TAGS: EAID ECON AF FR
SUBJECT: FRANCE: MCC DISCUSSES DEVELOPMENT FINANCE 
 
 
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Summary 
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¶1.  (SBU) Maureen Harrington, VP for Policy and International 
Relations, and Richard Morford, Managing Director for Donor and 
Multilateral Relations at the Millennium Challenge Corporation met 
with French development officials Friday, June 15.  They discussed 
approaches to the private sector, aid effectiveness, MCC's mission 
and approach to aid, and potential upcoming Compacts this summer 
with Lesotho, Mozambique, and Morocco. 
 
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Proparco 
-------- 
 
¶2.  (SBU) Ms. Harrington and Mr. Morford met with Luc Rigouzzo, CEO 
of Proparco, the private sector development finance arm of the 
French Development Agency (AFD).  Rigouzzo described its structure 
(70% AFD, 30% private ownership) and noted its focus on sub-Saharan 
Africa, which accounts for 45% of its activities, with Africa as a 
whole accounting for about 60%.  He said that Proparco works closely 
with several other development finance institutions from other 
European countries, including the Netherlands, Germany, and the 
European Investment Bank.  Harrington and Morford expressed interest 
in Proparco's strategies to encourage more private sector investment 
and in some of the tools it uses to measure the development impact 
of its activities.  Mr. Rigouzzo said that Proparco and MCC share 
the same agenda in Africa. 
 
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AFD 
---- 
 
¶3.  (SBU) Pierre Jacquet, Chief Economist at the AFD was joined by 
Aude Delescluse, desk officer for Morocco; Jacques Moineville, 
director for sub-Saharan Africa; Yves Des Rieux, regional desk 
officer for Iraq, Jordan, and the Palestinian Territories; and 
Christelle Josselin, multilateral banks liaison officer.  Ms. 
Harrington and Mr. Morford presented the content of potential 
upcoming Compacts with Lesotho, Mozambique, and Morocco; Ms. 
Delescluse presented AFD's project in Morocco, which will total 150 
($195) million annually from 2007-2009 (30 million of which is in 
non-sovereign loans). 
 
¶4.  (SBU) Mr. Moineville asked about MCC's policy on donor 
cooperation and pooling of funds.  Mr. Jacquet pointed out that with 
the size of MCC's grants comes a significant structural effect which 
should encourage an active role in donor coordination for MCC.  Ms. 
Harrington responded that MCC does emphasize country ownership of 
programs and country responsibility for donor coordination, however, 
MCC also works very closely with other donors to ensure coordination 
and policy consistency and definitely "thinks of itself as part of 
the donor family."  She noted that  congressionally-mandated 
requirements to tie grants to results make budget support 
problematic and asked that AFD and other donors make an effort to 
keep MCC in the loop in the pre-Compact period before it has 
in-country staff. 
 
¶5. (SBU) Mr. Jacquet asked whether MCC is required by law to work 
exclusively with grants, and wondered if loans might be appropriate 
in some cases.  Ms. Harrington responded that MCC is looking for 
ways to better leverage its grants to encourage more private sector 
investment. Both MCC and AFD's programs in Mali were discussed 
briefly, and Mr. Moineville offered to share the information AFD has 
gathered from their long experience working with the Office du 
Niger.  Moineville and Mr. Jacquet asked why MCC was not supporting 
cotton production in Burkina Faso, Benin, and Mali, where AFD was 
trying to put together with the World Bank a cotton price-adjustment 
mechanism (fond de lissage).  Ms. Harrington responded that none of 
the mentioned countries included requests for cotton-related 
programs in the final drafts of their Compacts.  All participants 
agreed that follow-up meetings would be beneficial, possibly around 
the fall World Bank/IMF meetings, including a workshop to focus on 
leverage and approaches to the private sector. 
 
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Ministry of Foreign Affairs 
--------------------------- 
 
¶6.  (SBU) At MFA Harrington and Morford met with Jean-Luc Le Bras 
Head of the Africa and Indian Ocean Bureau of the Development 
Directorate (DGCID), who was joined by Catherine Corm Kammoun, 
regional desk officer for southern Africa and the Great Lakes 
region, and Jean-Claude Kohler, whose geographical responsibility 
includes Mozambique.  They discussed the Compacts scheduled to be 
signed with Lesotho and Mozambique, and Le Bras offered to provide 
the Ministry's framework agreements on development aid to these 
countries.  Le Bras questioned the large number of donors already 
 
PARIS 00002744  002 OF 002 
 
 
present in many countries MCC deals with and wondered if the MCC 
would ever consider Compacts with "aid orphans," such as the Central 
African Republic.  Ms. Harrington clarified MCC's mission of 
"reducing poverty through growth" in better performing developing 
countries and noted that USAID has many missions, including helping 
countries such as the CAR. 
 
¶7.  (SBU) Asked about potential changes after the election of 
President Sarkozy, Mr. Le Bras responded that MFA Development would 
be maintained in its current form, and that Africa will continue to 
be its priority. He said that infrastructure improvement and the 
Millennium Development Goals were the focus of AFD; with MFA 
Development focused more on higher education and research.  The 
Mediterranean basin is likely to become a more important focus, 
given that it is the gateway for sub-Saharan African migration to 
Europe.  He noted that the MFA would continue to work toward its 
goal of dedicating .7% of GDP to ODA, and concluded that it was 
difficult to predict any further changes until the 2008 budget is 
passed in July and the new State Secretary for Development was named 
(Jean-Marie Bockel, the Socialist mayor and senator from Mulhouse, 
was nominated June 19, 2007). 
 
 
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OECD 
---- 
 
¶8.  (SBU) Ms. Harrington and Mr. Morford briefed Richard Manning, 
Chair of the Development Assistance Committee/Development 
Cooperation Directorate (DAC-DCD) and James Hradsky, Senior Policy 
Analyst with the DCD at the OECD on the status of likely upcoming 
Compacts with Lesotho, Mozambique, Morocco, and Tanzania.  They 
discussed aid effectiveness and the growing impact of MCC's funding 
model on recipient countries.  Noting that the UK and Netherlands 
are cutting staff while raising development outlays, Ms. Harrington 
said MCC too is looking to find less staff-intensive ways to 
distribute aid.  Ms. Harrington described the "MCC effect": fourteen 
countries have set up commissions charged with improving their 
country's performance on MCC selection indicators, and the 
institutions who produce the indicators report "a flood of requests" 
for information from candidate countries. 
 
¶9. (SBU) Mr. Hradsky noted that the DAC peer review had questioned 
the 5-year time limit on MCC Compacts, and Ms. Harrington responded 
that MCC has approached Congress about the need for an extension of 
the time limit.  Overall, however, the DAC peer review had been 
impressed with MCC's "refreshing" approach, and characterized it as 
moving in the direction the international donor community would like 
to go.  Mr. Hradsky suggested that the DAC could be a useful asset 
as MCC's results were scrutinized and its mandate re-examined by 
Congress. 
 
¶10. (U) This cable was cleared by MCC.