H.R. 7644 — Millennium Challenge Corporation Strategic Modernization Act

This section states congressional findings concerning (1) the Millennium Challenge Corporation (MCC) as an independent U.S. agency providing results-driven foreign assistance based on good governance, economic freedom, and investment in people; (2) strategic competitors including China, Russia, and Iran using state-directed finance, infrastructure, and resource investments for leverage in developing countries; (3) vulnerabilities in the global supply of critical minerals due to concentration and coercion risks; (4) the suitability of MCC tools such as grants, policy reforms, and governance standards to address critical mineral supply chain constraints; (5) benefits of earlier MCC engagement with the U.S. private sector to improve project design and attract private capital; and (6) the need to strengthen, rather than dilute, MCC's core development mission and independence through modernization.

This section expresses the sense of Congress that (1) strategic competition considerations should inform but not replace the Millennium Challenge Corporation's (MCC's) existing eligibility standards; (2) reforms should increase transparency, accountability, and value to U.S. taxpayers; and (3) the MCC should be modernized as a strategic asset in an era of global competition. (As background, the MCC provides grants to low-income countries that demonstrate commitment to good governance, economic freedom, and investing in people.)

This section adds a third purpose to the Millennium Challenge Act of 2003, which authorizes foreign assistance grants through the Millennium Challenge Corporation (MCC) to promote poverty-reducing economic growth in eligible low-income countries: to advance United States economic security and strategic competitiveness by supporting eligible country reforms and investments that strengthen critical mineral supply chains, strategic infrastructure, and market-based economic integration, while also supporting poverty reduction and sustainable economic growth.

This section establishes a Critical Minerals Task Force within the Millennium Challenge Corporation (MCC), to be created by the Board of Directors. (The MCC provides foreign assistance grants to low-income countries that demonstrate commitment to just and democratic governance, economic freedom, and investing in people.) The Task Force must (1) assess global and regional critical mineral supply chain vulnerabilities to U.S. economic and national security; (2) identify candidate countries for MCC engagement to enhance transparent, diversified, and sustainable mineral supply chains; (3) evaluate infrastructure, regulatory, environmental, labor, and governance constraints affecting mineral development and downstream processing; (4) recommend priority policy reforms and investment areas for MCC assistance; and (5) coordinate, as appropriate, with U.S. government agencies, multilateral institutions, and private sector stakeholders. This provision specifies that it does not authorize the MCC to engage in extractive activities or subsidize mineral production.

This section requires the Millennium Challenge Corporation Board, when determining eligible countries for Millennium Challenge Compacts, to assess candidate countries' strategic exposure and resilience to the People's Republic of China, the Russian Federation, the Islamic Republic of Iran, and other U.S. strategic competitors using a "Great Power Competition Factsheet" that considers available data on (1) trade volumes, export dependencies, and import reliance; (2) foreign direct investment, sovereign lending, and state-owned enterprise activity; (3) foreign assistance, concessional finance, and debt exposure; (4) ownership, control, financing, or operation of strategic infrastructure (e.g., ports, rail, power generation, digital networks); (5) critical mineral endowments, processing capacity, export controls, and governance; and (6) alignment with international transparency, labor, environmental, and anti-corruption standards. (Thus, the factsheet informs Board deliberations but does not replace existing eligibility criteria.)

This section revises the duration provision for Millennium Challenge Compacts and adds new requirements for private sector engagement and project due diligence. Specifically, it (1) limits Compact implementation to 5 years maximum (previously, up to 5 years with possible 2-year extensions); (2) requires the Millennium Challenge Corporation to obligate all Compact funding upon execution; (3) requires consultation with the appropriate congressional committees at the start of Compact implementation; (4) directs early engagement, to the extent practicable, with U.S. private sector entities, investors, and technical experts in Compact development to improve project feasibility, mobilize private capital, and enhance sustainability; and (5) requires best efforts to complete constraint analyses, feasibility studies, environmental assessments, economic analyses, and other due diligence expeditiously and efficiently, consistent with agency policies (without circumventing Compact requirements), including periodic written updates to the Board and consultations with congressional committees on implementation status, issues, and mitigation measures.

This section requires the Millennium Challenge Corporation (MCC), in addition to the economic rate of return analysis required under current law for congressional notifications on the projected economic justification of proposed Compacts (i.e., multi-year grant agreements with eligible countries to promote poverty reduction and economic growth), to develop and include a complementary framework assessing benefits accruing to the United States. Such framework may include (1) diversification and resilience of critical supply chains and inputs to U.S. productive activities; (2) increased participation of U.S. companies and investors; (3) actions to reduce recipient country exposure to strategic competitors; (4) export of goods and services from the United States; and (5) strengthened diplomatic and economic partnerships.