E6-17914. Report on Countries That Are Candidates for Millennium Challenge Account Eligibility in Fiscal Year 2007 and Countries That Would Be Candidates but for Legal Prohibitions-Update

AGENCY:

Millennium Challenge Corporation.

ACTION:

Notice.

SUMMARY:

MCC is providing an update to the report originally submitted on August 11, 2006 to reflect a change in the statutory eligibility status of candidate countries.

Report on Countries That Are Candidates for Millennium Challenge Account Eligibility for Fiscal Year 2007 and Countries That Would Be Candidates but for Legal Prohibitions—Update

MCC is providing an update to the report originally submitted on August 11, 2006 to reflect a change in the statutory eligibility status of candidate countries. This report to Congress is provided in accordance with section 608(a) of the Millennium Challenge Act of 2003, 22 U.S.C. 7701, 7707(a) (“Act”).

The Act authorizes the provision of Millennium Challenge Account (“MCA”) assistance to countries that enter into compacts with the United States to support policies and programs that advance the progress of such countries toward achieving lasting economic growth and poverty reduction. The Act requires the Millennium Challenge Corporation (“MCC”) to take a number of steps in determining the countries that will be eligible for MCA assistance for fiscal year (FY) 2007, based on their demonstrated commitment to just and democratic governance, economic freedom and investing in their people and the opportunity to reduce poverty and generate economic growth in the country. These steps include the submission of reports to the congressional committees specified in the Act and the publication of notices in the Federal Register that identify:

1. The countries that are “candidate countries” for MCA assistance for FY 2007 based on their per capita income levels and their eligibility to receive assistance under U.S. law and countries that would be candidate countries but for specified legal prohibitions on assistance (section 608(a) of the Act);

2. The criteria and methodology that the MCC Board of Directors (“Board”) will use to measure and evaluate the relative policy performance of the “candidate countries” consistent with the requirements of subsections (a) and (b) of section 607 of the Act in order to select “MCA eligible countries” from among the “candidate countries” (section 608(b) of the Act); and

3. The list of countries determined by the Board to be “MCA eligible countries” for FY 2007, with a justification for such eligibility determination and selection for compact negotiation, including which of the MCA eligible countries the Board will seek to enter into MCA Compacts (section 608(d) of the Act).

This report is the first of three required reports listed above.

Candidate Countries for FY 2007

The Act requires the identification of all countries that are candidates for MCA assistance for FY 2007 and the identification of all countries that would be candidate countries but for specified legal prohibitions on assistance. Sections 606(a) and (b) of the Act provide that for FY 2007 a country shall be a candidate for the MCA if it:

• Meets one of the following two income level tests:

○ Has a per capita income equal to or less than the historical ceiling of the International Development Association eligibility for the fiscal year involved (or $1,675 gross national income (GNI) per capita for FY 2007) (the “low income category”); or

○ Is classified as a lower middle income country in the then-most recent edition of the World Development Report for Reconstruction and Development published by the International Bank for Reconstruction and Development and has an income greater than the historical ceiling for International Development Association eligibility for the fiscal year involved (or $1,676 to $3,465 GNI per capita for FY 2007) (the “lower middle income category”); and

• Is not ineligible to receive U.S. economic assistance under part I of the Foreign Assistance Act of 1961, as amended, (“Foreign Assistance Act”), by reason of the application of the Foreign Assistance Act or any other provision of law.

Pursuant to section 606(c) of the Act, the Board has identified the following countries as candidate countries under the Act for FY 2007. In so doing, the Board has anticipated that prohibitions against assistance as applied to countries in the Foreign Operations, Export Financing, and Related Programs Appropriations Act, 2006 (Pub. L. 109-102) (FY 2006 FOAA) will again apply for FY 2007, even though the Foreign Operations, Export Financing and Related Programs Appropriations Act for FY 2007 has not yet been enacted and certain findings under other statutes have not yet been made. As noted below, MCC will provide any required updates on subsequent changes in applicable legislation or other circumstances that affects the status of any country as a candidate country for FY 2007.

Candidate Countries: Low Income Category

1. Afghanistan

2. Angola

3. Armenia

4. Azerbaijan

5. Bangladesh

6. Benin

7. Bhutan

8. Bolivia

9. Burkina Faso

10. Burundi

11. Cameroon

12. Central African Republic

13. Chad

14. Comoros

15. Congo, Democratic Republic of the

16. Congo, Republic of the

17. Djibouti

18. East Timor

19. Egypt

20. Eritrea

21. Ethiopia

22. Gambia, The

23. Georgia

24. Ghana

25. Guinea

26. Guinea-Bissau

27. Guyana

28. Haiti

29. Honduras

30. India

31. Indonesia

32. Iraq

33. Kenya

34. Kiribati

35. Kyrgyzstan

36. Laos

37. Lesotho

38. Liberia

39. Madagascar

40. Malawi

41. Mali

42. Mauritania

43. Moldova

44. Mongolia

45. Mozambique

46. Nepal

47. Nicaragua

48. Niger

49. Nigeria

50. Pakistan

51. Papua New Guinea

52. Paraguay

53. Philippines

54. Rwanda

55. Sao Tome and Principe

56. Senegal

57. Sierra Leone

58. Solomon Islands

59. Sri Lanka

60. Tajikistan

61. Tanzania

62. Togo

63. Turkmenistan

64. Uganda

65. Ukraine

66. Vanuatu

67. Vietnam

68. Yemen

69. Zambia

Candidate Countries: Lower Middle Income Category

1. Albania

2. Algeria

3. Belarus

4. Brazil

5. Bulgaria

6. Cape Verde

7. Colombia

8. Dominican Republic

9. Ecuador

10. El Salvador

11. Fiji Islands

12. Guatemala

13. Jamaica

14. Jordan

15. Kazakhstan

16. Macedonia

17. Maldives

18. Marshall Islands

19. Micronesia, Federated States of

20. Montenegro

21. Morocco

22. Namibia

23. Peru

24. Samoa

25. Suriname

26. Swaziland

27. Tonga

28. Tunisia

29. Tuvalu

Countries That Would Be Candidate Countries but for Legal Prohibitions That Prohibit Assistance

Countries that would be considered candidate countries for FY 2007, but are ineligible to receive United States economic assistance under part I of the Foreign Assistance Act by reason of the application of any provision of the Foreign Assistance Act or any other provision of law are listed below. As noted above, this list is based on legal prohibitions against economic assistance that apply for FY 2006 and that are anticipated to apply again for FY 2007.

Prohibited Countries: Low Income Category

1. Burma is subject to numerous restrictions, including but not limited to section 570 of the FY 1997 Foreign Operations, Export Financing, and Related Programs Appropriations Act (Pub. L. 104-208) which prohibits assistance to the government of Burma until it makes progress on improving human rights and implementing democratic government, and due to its status as a major drug-transit or major illicit drug producing country for 2005 (Presidential Determination No. 2005-36 (9/15/2005)) and a Tier III country under the Trafficking Victims Protection Act (Presidential Determination No. 2005-37 (9/21/2005)).

2. Cambodia's central government is subject to section 554 of the FY 2006 FOAA.

3. The Cote d'Ivoire is subject to section 508 of the FY 2006 FOAA which prohibits assistance to the government of a country whose duly elected head of government is deposed by decree or military coup.

4. Cuba is subject to numerous restrictions, including but not limited to section 620A of the Foreign Assistance Act which prohibits assistance to governments supporting international terrorism, provisions of the Cuban Liberty and Democratic Solidarity Act of 1996 (Pub. L. 104-114), and section 507 of the FY 2006 FOAA.

5. North Korea is subject to numerous restrictions, including but not limited to section 620A of the Foreign Assistance Act which prohibits assistance to governments supporting international terrorism and section 507 of the FY 2006 FOAA.

6. Somalia is subject to section 620(q) of the Foreign Assistance Act and section 512 of the FY 2006 FOAA, which prohibit assistance to countries in default in payment to the U.S. in certain circumstances.

7. Sudan is subject to numerous restrictions, including but not limited to section 620A of the Foreign Assistance Act which prohibits assistance to governments supporting international terrorism, section 512 of the FY 2006 FOAA and section 620(q) of the Foreign Assistance Act which prohibit assistance to countries in default in payment to the U.S. in certain circumstances, section 508 of the FY 2006 FOAA which prohibits assistance to a country whose duly elected head of government is deposed by military coup or decree, and section 569 of the FY 2006 FOAA.

8. Syria is subject to numerous restrictions, including but not limited to section 620A of the Foreign Assistance Act which prohibits assistance to governments supporting international terrorism, section 507 of the FY 2006 FOAA, and section 512 of the FY 2006 FOAA and section 620(q) of the Foreign Assistance Act which prohibit assistance to countries in default in payment to the U.S. in certain circumstances.

9. Uzbekistan's central government is subject to section 586 of the FY 2006 FOAA, which requires that funds appropriated for assistance to the central government of Uzbekistan may be made available only if the Secretary of State determines and reports to the Congress that the government is making substantial and continuing progress in meeting its commitments under a framework agreement with the United States.

10. Zimbabwe is subject to section 620(q) of the Foreign Assistance Act and section 512 of the FY 2006 FOAA which prohibit assistance to countries in default in payment to the United States in certain circumstances.

Prohibited Countries: Lower Middle Income Category

1. Republika Srpska, which is part of the country of Bosnia and Herzegovina, is subject to section 561 of the FY 2006 FOAA, which prohibits assistance to any country, entity, or municipality whose competent authorities have failed, as determined by the Secretary of State, to take necessary and significant steps to implement its international legal obligations with respect to the International Criminal Tribunal for the former Yugoslavia.

2. China, according to the Department of State, is not eligible to receive economic assistance from the United States, absent special authority, because of concerns relative to China's record on human rights.

3. Iran is subject to numerous restrictions, including but not limited to section 620A of the Foreign Assistance Act which prohibits assistance to governments supporting international terrorism and section 507 of the FY 2006 FOAA.

4. Serbia is subject to section 561of the FY 2006 FOAA, which prohibits assistance to any country, entity, or municipality whose competent authorities have failed, as determined by the Secretary of State, to take necessary and significant steps to implement its international legal obligations with respect to the International Criminal Tribunal for the former Yugoslavia. In addition, section 563 of the FY 2006 FOAA restricts certain assistance for the central Government of Serbia if the Secretary does not make a certification regarding, among other things, cooperation with the International Criminal Tribunal for the former Yugoslavia.

5. Thailand is subject to section 508 of the FY 2006 FOAA which prohibits assistance to the government of a country whose duly elected head of government is deposed by decree or military coup.

Countries identified above as candidate countries, as well as countries that would be considered candidate countries but for the applicability of legal provisions that prohibit U.S. economic assistance, may be the subject of future statutory restrictions or determinations, or changed country circumstances, that affect their legal eligibility for assistance under part I of the Foreign Assistance Act by reason of application of Foreign Assistance Act or any other provision of law for FY 2007. MCC will include any required updates on such statutory eligibility that affect countries' identification as candidate countries for FY 2007, at such time as it publishes the notices required by sections 608(b) and 608(d) of the Act or at other appropriate times. Any such updates with regard to the legal eligibility or ineligibility of particular countries identified in this report will not affect the date on which the Board is authorized to determine eligible countries from among candidate countries which, in accordance with section 608(a) of the Act, shall be no sooner than 90 days from the date of publication of this report.

Dated: October 20, 2006.

John C. Mantini,

Acting General Counsel, Millennium Challenge Corporation.