Oct. 16 (Bloomberg) -- The governments of Iraq and Afghanistan for a third straight year received failing grades in key measures of democratic rule on a score-card of poor nations compiled by the Bush administration.

The Millennium Challenge Corp., an agency President George W. Bush established in 2004 to distribute aid, said in reports released today that Iraq and Afghanistan failed their 2007 assessments in six categories of ``ruling justly:'' political rights, civil liberties, control of corruption, government effectiveness, rule of law and accountability.

Bush is attempting to maintain and bolster public support for the continued U.S. military presence in Afghanistan and Iraq, and the MCC reports show that progress in the two countries is incremental.

``Democracy-building is a process and it requires intelligent investments, political commitment and time,'' said Christopher Walker, director of studies at Freedom House, a Washington-based nonprofit group that contributed data to the rankings. ``Expectations of quick changes in any number of countries are really unrealistic.''

For now, the rankings won't have an impact on the U.S. relationship with Iraq and Afghanistan, which already get billions in military, humanitarian and other forms of aid.

Some signs of success are reflected in the report. In 10 other categories used in the rankings, ranging from immunization rates to inflation, Iraq passed two in fiscal 2005, two in 2006 and four in the 2007 report, according to the MCC. Afghanistan passed 1 category in 2005, four in 2006 and four in the most recent report for 2007.

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``Given the preceding decades of violence and political repression in Iraq and Afghanistan, it will undoubtedly take an enormous period of time to advance democratic development in these countries,'' Walker said in a telephone interview from Freedom House's New York office.

The MCC's reports are used to help decide which countries are eligible for grants under a program designed to provide incentives for better governance. The U.S. House and Senate have tentatively approved about $2 billion for the fund in 2007.

The MCC reports grade countries based on data from the World Bank, the World Health Organization, the United Nations, the International Monetary Fund and Freedom House, which gets three-quarters of its funding from the U.S. government. Countries got failing grade if they ranked below the median score of 98 nations in each category.

Other countries that failed all measures in ``ruling justly'' for 2007 include Sudan, which passed five of 16 total categories; Iran, which passed four; Haiti, which passed three; and Serbia and North Korea, each of which passed two. Somalia passed none.

Poor nations that passed the just rule rankings include Bolivia, Honduras, India, Georgia and Nicaragua.

In statements accompanying the reports, the MCC said its strategy of giving aid based on the recipient country's governance policies is helping improve the institutions of democracy in impoverished and poorly managed countries. Since last year, for example, the median score in the ``days to start a business'' category has fallen to 33 days from 41. Countries eligible for MCC assistance are also scoring better on reducing corruption, it said.

To contact the reporter on this story: Brendan Murray in Washington at brmurray@bloomberg.net

Last Updated: October 16, 2006 16:09 EDT