Preliminary plans on the reorganization of foreign assistance include the merging of the Millennium Challenge Corporation (MCC), US Development Finance Corporation (DFC), and US Trade and Development Agency (USTDA) into a single entity under the Secretary of State. Potential benefits in consolidating MCC, DFC, and USTDA include more effective working relationships as these agencies have complementary capabilities. However, for such a merger to succeed, a clear development mandate must be established and maintained, focusing on specific priorities, better matching financing instruments to country needs, preserving the strengths of each agency’s culture, and ensuring adequate funding and staffing.
A recent Executive Order directing DFC to create a domestic mineral fund poured cold water on some of these expectations. There’s also the lingering idea of turning DFC into a sovereign wealth fund. These conflicting visions for US development finance represent a significant departure from the status quo. The key question is whether the administration will move beyond its transactional mindset to recognize development finance as beneficial for both America and the world, or if the merger will become a pretext to diminish these tools and American global influence further.
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