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Diplomacy in Action

I. Introduction


U.S. Government Assistance to and Cooperative Activities with Eurasia
Bureau of European and Eurasian Affairs
January 2005
Report
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Events of the past year dramatically demonstrated the benefits of the U.S. Government's (USG) sustained commitment over the past twelve years to fostering political and economic transition in the former Soviet Union through the assistance programs funded under the FREEDOM Support Act (FSA). Inspiring democratic breakthroughs in Georgia at the end of 2003 and in Ukraine at the end of 2004 provided important evidence that patience and a long-term perspective can result in progress to the benefit of the general population. Both of these countries had been written off by many regional experts as hopelessly corrupt, and many believed that the citizens of these countries were too passive, too cynical, or too focused on basic survival to be able to organize and sustain mass protests against fraudulent election results. Yet that is exactly what happened, and both countries are now run by governments committed to fighting corruption, accelerating economic and political reforms, and aggressively pursuing integration with Euro-Atlantic institutions.

At the same time, the Rose and Orange "Revolutions" have caused many both within and outside the U.S. Government to take another look at the impact of FSA assistance throughout the Eurasian region. While it is impossible to ever know for certain the relative importance of FSA assistance among the many factors that led to the Rose and Orange Revolutions, we feel comfortable making the following three assertions:

  1. These transformations were only possible because hundreds of thousands of Georgians and Ukrainians decided to stand up for their civil and political rights; 

  2. These events unfolded the way they did primarily due to specific internal factors in each country, for example, the talents of particular political leaders, the unwillingness of security forces to use violence against their fellow citizens, the bravery of individual journalists willing to report objectively on what was happening, etc.; and 

  3. FSA assistance programs helped create the conditions under which all of these specific factors could coalesce into a transformational event.

Events in Georgia and Ukraine represented positive change, but the new governments in these two countries now face huge challenges, and their ultimate success is far from assured - which is why continued engagement through FSA assistance programs remains critical. In Georgia, the USG responded with increased assistance targeted to support the new government's ambitious anti-corruption and economic reform efforts. Indeed, the United States, other donor countries, and the international financial institutions (IFIs) pledged more than $1 billion (over three years) at a special donors' conference for Georgia held in June 2004. Georgia was also named as one of only 16 countries eligible for the USG's new Millennium Challenge Account (MCA). Armenia was also included in this program, and both countries are in the process of applying for MCA grants with the goal of broadening economic growth and reducing poverty. It is hoped that the selection of Armenia and Georgia for MCA will serve as an incentive for the other countries in the region to improve their performance with respect to the MCA's eligibility criteria, which emphasize the degree to which countries are governed justly, are economically free, and invest in the health and education of their citizens.

Most Eurasian countries enjoyed another year of strong economic growth in 2004. The private sector - particularly small and medium-sized enterprises - was the main source for growth and innovation. However, progress in developing a legal and policy environment within which the private sector can thrive remained slow. In many countries, murky insider privatization conducted in haste in the 1990s created a big-business sector with excessively close and non-transparent links to the bureaucracy. Our programs address these problems in a variety of ways. For example, in Azerbaijan, which is anticipating large oil and gas revenues in the coming years, we are focusing our economic programming on expanding the non-oil sector to help develop a broad-based economy, thereby increasing the likelihood that a majority of Azerbaijan's citizens will benefit from oil and gas revenues. In other FSA countries, such as the Central Asian countries, the emphasis is more on creating job opportunities and reducing poverty by building up the small-business sector. In turn, the entrepreneurs supported through these programs become a constituency pushing their governments for further economic reforms.

The generational change away from the leadership inherited from the last years of the Soviet Union has begun and will continue, toward a rising younger generation of leaders who have a greater familiarity with the West. Parliamentary and presidential elections in the Kyrgyz Republic in 2005, for example, will be closely watched as offering the potential for an openly contested succession to the presidency.

The social sector - and especially the HIV/AIDS challenge - is a growing focus of FSA programs across Eurasia. FSA programs in Russia and Ukraine promoted public awareness of the serious threat of HIV/AIDS and helped public health officials address the threat more effectively. Russia's HIV/AIDS epidemic is considered to be one of the fastest growing in the world. FSA funds will support the development of an International Health Corps of Russia to both encourage a high-level political commitment to fight HIV/AIDS - in partnership with the United States - and to draw upon Russia's extensive scientific resources and technical expertise to fight the pandemic in Russia and abroad. Tuberculosis has likewise emerged as a major public health threat in Eurasia. In Kazakhstan, an FSA-funded program has helped reduce the tuberculosis mortality rate by 37 percent since 1998. Armenia's health sector is also being transformed with the help of FSA funding, including the development of a legal framework, social insurance systems management, and primary health care centers - and can now serve as a model for other countries.

While democracy, economic, and social service reforms remain the core focus, FSA programs have increasingly reached out to engage Eurasian governments and societies in their response to new global challenges: confronting the danger of terrorism and extremism, the proliferation of weapons of mass destruction (WMD), narcotics trafficking, and trafficking in persons. The Eurasian countries have given key support to the United States in the Global War on Terrorism. Almost all of the Eurasian countries have actively supported Operation Iraqi Freedom and Operation Enduring Freedom. Many have provided overflight rights and, in a few cases, bases for the use of U.S. and coalition forces. USG assistance funds were an important instrument for cementing these strategic partnerships.

In Central Asia, USG-funded programs that combat terrorism and a variety of other threats, such as WMD proliferation and illicit drug trafficking, have assumed greater prominence. Improved conditions in neighboring Afghanistan offer hope for the region over the medium term, but in the shorter term, the increasing flow of narcotics from Afghanistan is seriously destabilizing. U.S. programs aimed at making law enforcement and border control more effective could help prevent the emergence of more failed states in this region.

Most Eurasian states took important steps to fight trafficking in persons (TIP) in FY 2004. In Russia, the USG provided critical technical assistance to strengthen anti-TIP legislation. FSA assistance also supported shelters for the victims of trafficking and facilitated cooperation between law enforcement and anti-TIP NGOs. In Uzbekistan, a new shelter for protecting and treating trafficking victims was opened in 2004 with U.S. assistance and is functioning with the full cooperation of local government officials.

Although the political transformations in Georgia and Ukraine seem to have reaffirmed the relevance and effectiveness of FSA assistance, we never stop retooling our strategies, adjusting programs to fit changing realities, and trying to ensure that our programs are cost-effective. We are also aware that our ultimate goal is to see FSA assistance phase out completely. The FSA account was conceived as a transitional account, aimed at fostering the emergence of stable democratic states with market economies in the former Soviet Union, and was expected to phase out when this objective was accomplished. Consistent with this original intent, as well as with President Bush's management reforms, which emphasize performance measurement and results-based budgeting, the Coordinator's Office conducted in 2004 a comprehensive interagency review of the transition status of all twelve FSA countries. The review analyzed progress in the political, economic, social and security/law enforcement sectors, and ultimately recommended phase-out dates for each sector of FSA assistance in each country. These phase-out dates have been identified for planning purposes and do not convey any commitment to funding levels or entitlement to continued assistance until the phase-out date. At the end of five years, FSA economic reform assistance is expected to be phased out in Kazakhstan, Russia and Ukraine. Within ten years, we expect to have fully phased-out FSA assistance for Moldova, Russia and Ukraine. In the meantime, we will be actively pursuing options for transitioning our highest-priority programs to other, more long-term USG assistance accounts. In the other countries of the region, FSA assistance is projected to continue for more than ten years in at least one of the four above-mentioned sectors.

The comparative analysis conducted during the course of the FSA phase-out review made it quite clear that the post-Soviet transition process in democracy and the social sector has not been as fast as the drafters of the FSA had anticipated. In fact, in both of these sectors there has been considerable backsliding in recent years. Notwithstanding the important breakthroughs of the past year, there is a long way to go before the original intent of the FSA can be realized. There are sure to be setbacks along the way, and the coming years will require us to maintain a long-term perspective and to persist in engaging the peoples and governments of the Eurasian countries through technical assistance, training, exchanges and partnership programs.


Thomas C. Adams
Coordinator of U.S. Assistance to
Europe and Eurasia



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