II. Country Assessments and Performance Measures

With its educated population and strategic location as a transit route between Russia and an expanded NATO and European Union (EU), Belarus has the potential to contribute and benefit from regional economic development and stability. However, to fulfill this potential, it needs to implement appropriate democratic and market reforms. The Belarusian government’s policies hinder progress and isolate Belarus from Europe and the international community. It is therefore in the interest of the U.S. to remain engaged in promoting the development of democratic institutions, the rule of law, and a market economy. The U.S. Government (USG) seeks to work towards this goal in coordination with the EU, the Organization for Security and Cooperation in Europe (OSCE), and Belarus’ neighbors.

In FY 2004, the USG provided an estimated $21.49 million in assistance to Belarus (including $0.07 million in FY 2003 FREEDOM Support Act funds):

In FY 2004, some 124 Belarusians traveled to the United States on USG-funded training and exchange programs implemented by USAID and the U.S. Departments of Commerce and State, bringing the cumulative number of Belarusian participants in such programs to date to over 2,800.

Democratic Reform Programs: In FY 2004, USG democratic reform assistance aimed to engage diverse elements of Belarusian society to increase citizens’ awareness and implementation of democratic practices. The main priorities included helping to develop and strengthen the non-governmental organization (NGO) sector, increasing access to objective information through the Internet and strengthening independent print and broadcast media, developing skills and knowledge of democratic political processes including electoral reform, and building legal defense capacity and advocacy for the rule of law. The USG also supported capacity-building and legal assistance for independent trade unions. USG-funded exchange programs were tailored to familiarize a wide range of Belarusians, from students to professionals, with a democratic, market-based system.

Economic and Social Sector Reform Programs: In FY 2004, in part due to the USG’s policy of selective engagement with the Government of Belarus (GOB), as well as to limited resources, the USG program in economic and social reform was limited in scope. The USG sought to build professional expertise and interest in market reform in both the public and private sectors through International Visitor exchange programs. Small projects in environmental health and agricultural development continued. In the fight against trafficking in persons, the USG worked through grants to international organizations and NGOs to provide preventive education campaigns, training for alternative economic opportunities, and assistance to trafficking victims.

Security, Regional Stability, and Law Enforcement Programs: Due to policy constraints, the USG did not have a security assistance program with Belarus in FY 2004. The USG continues to send a select number of Belarusian military and civilians (a total of 42 in FY 2004) to seminars and courses at the U.S. Defense Department’s Marshall Center, with the goal of promoting military reform and future cooperation in areas of mutual interest.

In 2004, a year in which parliamentary elections and a constitutional referendum were held, the repression of civil society continued and even intensified. FY 2004 saw an increased level of harassment of civil society organizations, especially regional NGO resource centers, human rights groups, and independent media outlets. Pro-democracy activists, including opposition politicians, independent trade union leaders, and newspaper editors, were detained, fined and imprisoned for criticizing the government. The authorities closed or suspended about 20 independent newspapers, and many others were not allowed to print in Belarus. The GOB denied subscription licenses to many newspapers and access to others to state kiosks and the postal system, while also barring them in many cases from legally establishing or continuing their own distribution systems. The GOB made increased use of tax inspections and augmented technical registration requirements to control or deny registration to independent groups. Unregistered NGOs cannot operate while their registrations are pending, and groups that receive assistance from unregistered organizations can be immediately shut down. New registration requirements regarding legal residence for NGOs and political parties further complicate the ability of independent organizations to operate legally. A number of NGOs continued their activities without having legally registered. Educational institutions were also subjected to increased government interference, and in July 2004, the GOB forced the closure of the European Humanities University (EHU), the country’s leading independent university. The Parliament adopted a restrictive law on religion, and a proposed draft media law threatens to circumscribe press freedom even further.

As with other former Soviet states, Belarus has no history of independent civil society organizations playing a significant role in its political, economic, and social development. USG assistance seeks to build and strengthen civil society through a broad range of programs: Public Diplomacy exchange programs to study the U.S. democratic, market-based system; Democracy Commission small grants to support individual organizations’ initiatives; and a USAID civil society development program. The latter program, which provides small grants for community development projects, worked with 24 communities and 59 local, regional, and national NGOs in FY 2004. These NGOs initiated over 100 projects designed to improve lives in the community, ranging from the repair of local recreation areas and playgrounds to improving nutrition at kindergartens; HIV/AIDS, trafficking-in-persons, and substance abuse prevention campaigns, and improving the clean water supply and communal services. In addition, 47 local media outlets enhanced their objective coverage of community activities by partnering with NGOs to receive technical advice and modest material support. A school for managers was started to help community leaders from civil society, business, and local government maintain a dialogue and develop opportunities for cooperation. However, new government regulations on foreign aid and technical assistance approved in late 2003 complicated the implementation of this small grants program.

Other rule-of-law programs provided legal consultations and analysis for NGOs. A total of 19 Legal Advice Centers (LACs), operated by two Belarusian partners, provide citizens with legal advice and conducted 46 public education seminars. Despite a harsher legal environment, which restricted the ability of LAC lawyers to go to court, LAC lawyers helped several clients to be reinstated in their jobs, and a number of appeals were filed with administrative agencies and courts leading to successful resolution of community problems. One women’s group modified its management structure better to fulfill its strategic goals, conducted two peer impact evaluations with counterparts from Kazakhstan and Moldova, and assisted the Assembly of NGOs, which consists of 500 member NGOs, in strategic planning.

USAID and the U.S. Embassy’s Democracy Commission supported youth and women's NGOs with training and project support. Belarusian young people and women are playing an increasing role in non-governmental initiatives, and the U.S. Embassy places a high priority on programs to encourage their participation in social sector reform. In FY 2004, four percent of Democracy Commission program funding supported women's projects, and six percent went to youth-related activities. These grants supported a range of projects, including leadership training for women and programs specifically designed to help them prepare for roles in government. Grants for youth activities included support for debate clubs, school newspapers, journalism training for high school students, and projects to help young people develop a broader understanding of Belarusian historical and cultural heritage.

The GOB held a controversial referendum removing presidential term limits concurrent with the October 2004 parliamentary elections. These elections were marred by significant use of administrative resources, de-registration of opposition candidates for insignificant technical reasons, and fraudulent vote counting to increase support for government candidates and the referendum. No opposition candidate reached parliament. The greater use of outreach techniques and issue-oriented campaigning at the local level was a positive result of the political-process training program and related exchanges, although much of the opposition campaign focused on the referendum. Putting into practice door-to-door outreach and message development training enabled many pro-democracy candidates to gather more than enough signatures for registration and provided a means to spread their message. A civic observation network gathered information for election-related databases and, in the process, its members talked to thousands of ordinary citizens about non-partisan civic activism. Democratic political parties and organizations implemented political process training. A group of democratic parties built a coalition with a common platform, agreed on a list of candidates, and developed a unified strategy in the run-up to the 2004 parliamentary elections.

In FY 2004, USG assistance to independent media focused on professional training and other equipment needs. USG assistance has increased the quality of reporting on national and regional economic topics, as well as issues of local interest. Despite harassment, a number of papers managed to develop alternative distribution systems. Recognizing the vital importance of education for the next generation in the functioning of a democratic, market-oriented society, the USG maintained exchange programs in 2004, ranging from academic exchanges for high school students and Fulbright scholars to short-term visits for professional groups and International Visitor programs. The USG also provided scholarship support for students at EHU before the government closed it in July, and assisted EHU students with emergency scholarship placements in the U.S., Russia and Belarus after the university was shut down.

In FY 2004, Belarus experienced growth of around six percent; however, this growth was largely funded by the issuance of government-ordered bank loans to troubled state enterprises, the increase in oil prices and related increased demand for Belarusian products from the booming Russian economy. Inflation remained high, at 15 percent, but slowed from the previous year. The Belarusian ruble was de facto tied to the dollar during the year, depreciating less than one percent. While technically convertible, the Belarusian ruble remains unavailable in currency markets outside Belarus, attesting to its weakness. Both imports and exports increased dramatically in 2004, with imports outpacing exports, leading to a growing trade deficit. In 2004, the budget deficit was over two percent of GDP for the second straight year.

The GOB continued to hold tightly to the socialist command economy model, with around eighty percent of business still under government control. Taxes on small businesses and individual entrepreneurs continued to increase in FY 2004. Official estimates showed that around thirty-five percent of state businesses were unprofitable. The GOB remained reluctant to privatize large state enterprises, and, when it did open up such companies for investment, it insisted on maintaining a controlling share.

Belarus spends about two-thirds of its budget on social benefits, but still has not passed legislation to modernize its health sector or to reform the pension system. Pensions and wages are paid on time. The GOB has continued to order wage and pension increases, which provide short-term improvements in standards of living, though at the cost of worsening the fiscal imbalance. Pensions remain below the government-estimated poverty line. HIV/AIDS infection rates continue to rise, though the disease is still largely confined to high-risk groups.

Ongoing discussions on currency union and economic integration with Russia resulted in little concrete action, with Belarus again postponing its planned move to peg the Belarusian ruble to the Russian ruble. Belarus and Russia concluded a year-long dispute over gas prices in June 2004, which lead to a thirty percent increase in natural gas prices in 2004. A similar increase is likely for 2005.

Policy and resource constraints limited USG assistance in the economic and social sectors in FY 2004. Various small grants supported the development of a favorable business environment for sustainable eco-tourism by drafting laws and regulations to remove impediments to the development of this sector. A continuing farmer-to-farmer program aimed to improve the incomes of private farmers’ associations, develop private agribusinesses, and stimulate entrepreneurial initiatives in the agricultural sector.

Addressing the USG’s high priority of combating trafficking in persons, the USG funded two programs in 2004 – one through the International Organization for Migration (IOM) and one through a USAID implementing partner –to support an anti-trafficking public education campaign, provide victim assistance, and develop job-market skills and economic opportunities for at-risk women.

After the collapse of the Soviet Union, Belarus agreed to become a non-nuclear state. However, it is a supplier of conventional armaments and spare parts in the world market. Belarus is a member of the International Science and Technology Center (ISTC), a multilateral organization devoted to redirecting former Soviet weapons-of-mass-destruction (WMD) scientists to peaceful employment. Due to concerns about human rights and democracy, the USG did not fund assistance projects for Belarusian former WMD scientists in FY 2004. A National Cancer Institute program to support studies on the long-term health effects of exposure to radiation from the 1986 explosion at the Chornobyl nuclear power plant was moved from ISTC auspices at the GOB’s insistence.

Because of current USG policy, the USG also did not provide bilateral security or law enforcement assistance to Belarus in FY 2004. Belarus participated in some NATO Partnership for Peace programs, and 42 military officers and civilians attended Marshall Center programs and conferences to promote military reform and civilian control of the military. These programs will continue at about the same level in 2005.

In FY 2004, the Departments of Defense and State continued to provide humanitarian assistance to Belarus, largely in the health sector. The Department of State delivered $9.21 million in privately donated pharmaceuticals and humanitarian supplies and Department of Defense excess commodities, at a cost to the USG of around $410,000. The Defense Department completed a hospital renovation project, valued at $174,000, and provided an additional $426,000 in other humanitarian assistance. Similar types of humanitarian assistance will be provided in 2005 to support Belarus’ inadequate health-sector facilities.

At the macro-level, Belarus did not progress in overall economic policy and democratic reforms in FY 2004. Government repression of NGOs and independent media increased. Parliamentary elections and a referendum on abolishing presidential term limits were seriously flawed and judged as neither free nor fair by OSCE observers. Some positive signs of democratic political process development were observed at the local level.

Data are drawn from EBRD, Transition Report (November 2004) & Freedom House, Nations in Transit 2004 & Freedom in the World 2004. Ratings are based on a 1-to-5 scale with 5 representing the most advanced.

Latest-year observation refers to 2004 economic reform data and 2003 democratic reform data; i.e., 2004 data for democratic reforms are not yet available.

World Bank, World Development Indicators 2004 (2004); UNICEF, Social Monitor 2004 (2004); EBRD, Transition Report (November 2004); and UNDP, Human Development Report (2004).

Performance Indicator: NGO Development/Civil Society Rating, Drawing from Freedom House, Nations in Transit 2004 as modified by, "Monitoring Country Progress in Eastern Europe and Eurasia" USAID/E&E/PO, #9 January 6, 2005. (1-lowest, 5-highest; data based on previous calendar year)

FY 2002 Baseline	FY 2003 Actual	FY 2004 Target	FY 2004 Actual
1.5	1.33	1.4	1.17

FY 2004 Results: FY 2004, an election year, saw increased difficulties for NGO development in Belarus. Dozens of civil society groups, NGO resource centers, and human rights organizations were subjected to fines and closure on flimsy legal grounds and minor technicalities. Despite some instances of productive cooperation between local civil society groups and local government, the overall situation led to further deterioration in the ratings.

Performance Indicator: Independent Media Rating, Drawing from Freedom House, Nations in Transit 2004 as modified by, "Monitoring Country Progress in Eastern Europe and Eurasia" USAID/E&E/PO, #9 January 6, 2005. (1-lowest, 5-highest; data based on previous calendar year)

FY 2002 Baseline	FY 2003 Actual	FY 2004 Target	FY 2004 Actual
1.17	1.17	1.27	1.17

FY 2004 Results: State-controlled print and broadcast media do not offer a plurality of views. Independent media cautiously attempt more balanced reporting, but in FY 2004 the government closed or suspended some 20 non-state newspapers and seized equipment from private regional television stations.

Performance Indicator: Private Sector Share of GDP, Drawing from European Bank for Reconstruction and Development, Transition Report 2004 as found in, "Monitoring Country Progress in Eastern Europe and Eurasia" USAID/E&E/PO, #9 January 6, 2005. (data based on previous calendar year)

FY 2002 Baseline	FY 2003 Actual	FY 2004 Target	FY 2004 Actual
25%	25%	25%	25%

FY 2003 Results: The government did not pursue significant privatization in FY 2004. Major industries remained in government hands. Foreign direct investment in Belarus was among the lowest in the region. The regulatory and tax environment was not conducive to expanding the private sector.

Performance Indicator: Employment in small and medium-sized enterprises (SMEs) as a percentage of total employment (Source: World Bank, August 2003)

FY 2002 Baseline	FY 2003 Actual	FY 2004 Target	FY 2004 Actual
4.59%	Data not Available	7.0%	N/A

FY 2003 Results: Despite government rhetoric that small and medium-sized businesses should be encouraged, the conditions for SME development have not improved. The regulatory and tax burden remain heavy.

Performance Indicator: Human Capital Index (Source: World Bank and UNICEF, 2004) (5=highest, 1=lowest)

FY 2002 Baseline	FY 2003 Actual	FY 2004 Target	FY 2004 Actual
3.6	3.6	3.6	N/A

FY 2004 Results: Freedom House characterized Belarus as a country of contradictions. Belarus has a highly educated and skilled workforce, but much of the population lives below the poverty line. The birth rate has declined, and annual mortality has increased. HIV/AIDS is on the rise. There was real wage and pension growth in FY 2004.

Performance Indicator: U.S. State Department Global Trafficking in Persons Annual Report country ranking
(1 = highest, 3 = lowest)

FY 2002 Baseline	FY 2003 Actual	FY 2004 Target	FY 2004 Actual
2	2	2	2

FY 2003 Results: The Belarusian authorities and internationally supported Belarusian NGOs took positive steps in FY 2004 to combat trafficking in persons. They implemented programs for prevention and victim protection, and law enforcement showed increasing seriousness in efforts to strengthen prosecution. As a result, Belarus qualified as a country taking concrete action to reduce trafficking from and through the country.

TOTAL USG FUNDS BUDGETED:	$12.21 m
VALUE OF DONATED HUMANITARIAN COMMODITIES	$9.21 m

TOTAL FY 2004 USG ASSISTANCE:	$21.42 m

FSA Total:$8.06 m
Agency for Internat'l. Dev. (USAID)
Democratic Reform	$5.14
x Community Exchanges	$0.20
x Eurasia Foundation	$0.25
x Parking Fine Withholding	$0.01

Total USAID: $5.60
Dept. of State
EUR Democracy Programs (incl. Dem. Comms. & NED)	$1.79
Humanitarian Transport	$0.50
International Information Programs (IIP)	$0.07

Total State: $2.36
Dept. of Commerce
Business Info. Service for the NIS (BISNIS)	$0.02
Special American Business Internship Training (SABIT)	$0.08

Total Commerce: $0.10

non-FSA Total:$4.16 m
Agency for Internat'l. Dev. (USAID)
Anti-Trafficking in Persons	$0.30

Dept. of State
Anti-Trafficking in Persons	$0.14
Human Rights & Democracy Fund (HRDF)	$0.58
International Information Programs (IIP)	$0.03
Public Diplomacy Exchanges	$2.44

Total State: $3.20
Dept. of Defense
Warsaw Initiative	$0.06

Dept. of Energy
Material Protection, Control & Accounting (MPC&A)	$0.60