Signing Ceremony for Millennium Challenge Corporation's Compact With the Republic of Armenia

AMBASSADOR DANILOVICH: Madame Secretary, Minister Oskanian, Minister Khachatryan, Mr. Nercissiantz, Ambassadors and representatives of the Diplomatic Corps, distinguished guests: We are delighted to welcome all of you here today to witness the signing of the compact between Armenia and the Millennium Challenge Corporation and to celebrate the enormous achievement of the people of Armenia.

I would like to extend a warm welcome to the delegation from Armenia and to recognize many of the people who have worked so tirelessly to bring us to this day, especially our Ambassador John Evans and his colleagues at our Embassy in Yerevan and, of course, the superb group of professionals that make up our MC Armenia team who work closely with Stephen Groff and Alex Russin and other members of our MCC team here in Washington.

Finally, I would like to extend our appreciation to our board member Ken Hackett for taking part in today's ceremony and I would also like to thank Fred Schieck of USAID for being here with us today.

The MCC Armenia compact will provide $235 million that will trigger economic growth and create new opportunities for the reduction of poverty by assisting Armenia's farmers and their communities. A large percentage of Armenians live in rural villages and are dependent on agriculture for their well-being. Poor road conditions and unreliable irrigation have kept these communities from enjoying the benefits of the tremendous growth that other parts of the Armenian economy have experienced.

Therefore, Armenia has designed a program that will have a direct impact on 75 percent of the rural population. Armenia's program, with MCC help, will: one, upgrade nearly 600 miles of rural roads and provide access to jobs, markets and social services and create linkages between agriculture producers and market places, and; two, through improved irrigation, technical assistance and credit support, raise the incomes of a quarter of a million of Armenian households. With improved irrigation canals and better roads, rural residents will be able to grow better crops, get them to market and earn a more dependable income. MCC funding will also help rural residents take advantage of other programs funded by the United States: healthcare clinics, school internet centers and centers for public information, all of which will be accessible even during the difficult winter months.

I will be traveling to Armenia in early April and look forward to showing the MC Armenia program to Chairman Jim Kolbe and to meet with the broad spectrum of Armenian civil society that has been involved in the creation of this program and to discuss their future involvement to the program's implementation. Their engagement is essential to ensure that the Millennium Challenge Account funding is directed efficiently and effectively to the projects that Armenia has designed and its benefits go directly to the people that they are designed to help.

One of the critical components of an MCC compact is that partner countries must continue to maintain a high level of performance in ruling justly, investing in people and promoting economic freedom. The signing of this compact today is therefore an affirmation of our confidence that Armenia will continue to enact the institutional reforms that will support the effective use of our aid, including measures to support and protect democratic and electoral processes.

As we embark upon this dynamic partnership between our two nations to reduce poverty through economic growth, I want to extend to you, Ministers Oskanian and Minister Khachatryan, our sincere and heartfelt congratulations. And now it's a pleasure to ask our Chair, Dr. Rice, to say a few remarks. (Applause.)

SECRETARY RICE: Good afternoon, ladies and gentlemen. I am honored to welcome the distinguished members of the Armenian delegation. Minister Khachatryan, Minister Oskanian, thank you very much, and I think Ambassador Markarian is here as well. Are you? There you are. Yes. And I'd like to welcome the American Ambassador, Ambassador Evans, as well. There are many members of the Diplomatic Corps here. Thank you for being here.

Today's step is a promising one for the partnership between Armenia and the United States. The Millennium Challenge Corporation compact that our two nations are signing today, worth more than $235 million over the next five years, is a testament to the hard work and dedication of the Armenian people and their elected government. The compact is also the embodiment of America's transformational diplomacy because it will empower Armenian men and women to better their own lives, to strengthen their own communities and to transform their own future.

One of the greatest moral challenges of the 21st century is to alleviate the suffering posed by dire poverty. That is the goal of President Bush's Millennium Challenge Account initiative, to draw whole nations into an expanding circle of opportunity and enterprise.

This is the eighth compact that the Millennium Challenge Corporation has signed thus far, making a total of $1.5 billion committed since last April. This represents a tremendous effort both by partner countries and by the men and women of the Millennium Challenge Corporation. Ambassador Danilovich, I want to congratulate you and your staff on this very good work. I want to thank our board member Ken Hackett for being here. It's really been a team effort and we're very grateful for the work that is being done.

The Millennium Challenge Corporation is committed to making a real difference in the lives of people who suffer in poverty. It is focused on results, not merely good intentions. So the MCC uses 16 independent objective indicators to measure a country's progress toward governing justly, advancing economic freedom and investing in its people. The MCC also recognizes that you will only get results if developing countries have ownership over their own development, so this program allows our partner countries themselves to determine how much assistance to request, what they want to use it for and what criteria will measure success.

The compact we are signing today will directly improve the lives of 750,000 Armenians, three-quarters of the country's rural population. Over the next five years, Armenians will build almost 1,000 kilometers of rural roads. They will upgrade their irrigation and drainage systems. They will plant new crops. And through all of this, the United States will provide Armenia with the technical assistance and credit support that it urgently needs.

Our partnership will help Armenia to fight poverty through sustainable economic growth. To ensure that progress toward this end remains constant, Armenia must continue to advance its democratic reforms. International and domestic monitors did express concerns about the conduct of the recent constitutional referendum and the Armenian Government has acknowledged these difficulties and pledged to improve the conduct of the elections to be held in 2007 and 2008. These are important commitments and the United States stands ready to help Armenia to ensure that its upcoming elections are free and fair.

America is eager to strengthen our partnership with a democratic Armenia and the MCC compact that we are signing today will advance this goal. We view your success as our success and we will always help you to ensure the future of freedom and prosperity that all Armenians deserve and desire. Thank you very much. (Applause.)

MINISTER OSKANIAN: Secretary Rice, Ambassador Danilovich, I am here today on behalf of the President of the Republic of Armenia and my colleagues here from the Armenian Government to thank President Bush, Secretary Rice, Ambassador Danilovich, the U.S. Government and the American people for including the Republic of Armenian in the Millennium Challenge compact.

President Bush's visionary approach to development which complements the invaluable assistance that has already been provided to Armenia through USAID and other U.S. programs continues the best tradition of American missionaries from whom Armenians have benefited greatly. The Millennium Challenge compact is a natural extension of the practice, doing good borne of one's own convictions, but with the intent to nourish the recipient's sense of self-worth and ability.

In the 21st century, when philanthropy is not about charity but about finding solutions to deep-seated problems, we welcome the United States Government decision to assist and support directly those countries who have determined to rule justly, to invest in people and to promote economic freedom in order for their citizens to live in dignity and security.

I see our colleagues from other recipient countries, and I am certain that they join me in saying that what this grant -- the U.S. is recognizing with this grant -- the United States is recognizing the reality and duality of our lives: persistent poverty in the face of progress. On one hand, one-third of Armenia's population continues to live in poverty. Two-thirds of our rural communities are not directly connected to a central road of distribution system and most of our secondary and tertiary roads do not provide the necessary access. On the other hand, Armenia has managed, against great odds with an unresolved conflict and with closed borders, to be ranked first in the world in past utilization of foreign assistance, to privatize and to legislate such that our economy is ranked among the world's most liberal and to register the highest economic growth in the region without the benefit of extracting resources.

That is why a long consultative process concluded that with significant poverty reduction would request Millennium Challenge Corporation funds to be spent in two critical areas of infrastructure. Our program has been consciously designed to complement the work of other donors.

With this signing of the Millennium Challenge Compact, Armenia is aware that we have the obligation to build on the confidence that has been placed in our government and people. Just as economic development is a facilitator of democratization, so is democracy a tool for further and deeper economic development. We understand that the U.S. Government has chosen to use these funds for economic development only when a society and its leadership comprehend their political responsibility to nurture and sustain democratic practices.

Armenia is among the world's youngest democracies and our democratic and economic reforms are irreversible. Our significant progress, notwithstanding, we recognize that much remains to be done to make these reforms comprehensive. We know that corruption must not be tolerated and that law must rule, that the principles of democracy must be transformed to traditions of democracy in our country.

Madame Secretary, the elections of 2007 and 2008 that you referred to will test our democratic practices. Our task until then is to partner with the United States and European governments to implement the necessary corrective steps to improve the conditions necessary for an honest and fair expression of people's voices. In this regard, we welcome the American proposals for certain structural reforms and education and public outreach efforts. We are already begun the process of verifying voter lists. We're making progress in reforming the electoral law with the active participation and agreement of all political forces in our parliament. As in years past, OSCE monitors will be present and will monitor our elections.

In other words, Madame Secretary, Armenia and Armenians are determined to benefit from the intent and content of the Millennium Challenge compact because our people deserve no less.

Thank you. (Applause.)

(The Compact was signed.)

(Applause.)