The coup that ousted Honduras' democratically elected president has the potential to end the compact between that country and the Millennium Challenge Corp.
President Manuel Zelaya was removed June 29 by the Honduran military by the order of the Honduran Supreme Court, according to reports. The removal has been almost universally condemned.
MCC has a $215 million compact with Honduras. The arrangement enables the country to receive funds to boost agriculture productivity and improve transportation infrastructure.
"MCC is monitoring the situation," said MCC spokeswoman Sarah Stevenson, when asked whether the coup would affect the compact. "MCC has policies and procedures in the event of situations such as this and will provide more information as the situation unfolds."
MCC's "Fiscal Year 2007 Guidance for Compact Eligible Countries" contains guidelines for compact cancellation. One of the conditions for cancellation is if the country acts in a way that is inconsistent with one of the compact's original 17 criteria to determine if a country can partner with MCC.
"For the purposes of this Policy, a country can be deemed to have engaged in ‘a pattern of actions inconsistent with the criteria used to determine eligibility of the country' if the country has taken actions which result in, or could reasonably be expected to result in, a decline or deterioration of performance in one or more of the policy indicators used to determine eligibility as published by MCC," the guidance reads.
As Zelaya was democratically elected, his removal – which President Obama has condemned – seemingly violates MCC criteria dealing with strength of democracy.
MCC has suspended compacts before. MCC terminated its compact with Madagascar in May 2009 after a coup there, and cancelled $65 million in aid for Nicaragua in June 2009 after the country failed to sustainably meet selection criteria.
