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U.S. Department of State

Diplomacy in Action

II. Country Assessments and Performance Measures - Russia


U.S. Government Assistance to and Cooperative Activities with Eurasia
Bureau of European and Eurasian Affairs
January 2007
Report
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Country Overview

Country Facts

  • Map of RussiaArea: 6,592,772 sq mi (17,075,200 sq km), almost two times the size of the U.S. 
  • Population: 143,893,540 (July 2006 est.) 
  • Population Growth Rate: -0.37% (2006 est.) 
  • Life Expectancy: Male 60.45 yrs., Female 74.1 yrs. (2006 est.) 
  • Infant Mortality: 15.13 deaths/1,000 live births (2006 est.) 
  • Gross Domestic Product (GDP): $1,589 trillion (purchasing power parity, 2005 est.) 
  • GDP Per Capita Income: $11,100 (purchasing power parity, 2005 est.) 
  • Real GDP Growth: 6.4% (2005 est.)

Overview of U.S. Government Assistance

In FY 2006, the USG provided an estimated $1178.80 million in assistance to Russia, including:

  • $78.53 million in democratic reform programs; 
  • $7.63 million in economic reform programs; 
  • $13.23 million in humanitarian programs; 
  • $1050.61 million in security, regional stability, and law enforcement programs; 
  • $23.90 million in social reform programs; and 
  • $4.90 million in cross-sector and other programs.

FY 2006 Assistance Overview

U.S. STRATEGIC INTERESTS & FOREIGN POLICY PRIORITIES

Russia matters enormously for U.S. interests and has unique capabilities to help advance U.S. interests, from manned spacecraft for NASA to talent for the U.S. aircraft industry. But the circumstances in which the U.S. government (USG) manages the relationship with Russia are changing. Russia is now the world's largest energy producer and has achieved seven straight years of 7% economic growth. It remains the only nuclear power comparable to the U.S. and a permanent member of the UN Security Council. Despite Russia's potential, it faces some very real concerns including rising corruption, over-centralization of power, a deteriorating climate for civil society, and friction with its neighbors. Russia's political class is more self-assured about Russia's reemergence, but is still burdened by its legacy of the past. The challenge is how to move from Russia's early post-Cold War dependence on the West into a new, mutually beneficial partnership, even as the U.S. deals forthrightly with differences in other areas.

In keeping with this partnership, the U.S. seeks to have Russia invest its income from energy wealth to contribute more to a range of assistance programs, from strengthening control of its nuclear/Weapons of Mass Destruction (WMD) stockpiles to sharing the costs of exchange programs. Russia's agenda for the July G-8 Summit in St. Petersburg embodied areas for balanced cooperation, including energy security and infectious diseases like HIV/AIDS and avian flu. In addition, Russia and the U.S. have signed a bilateral protocol for the World Trade Organization (WTO), which may open up new business opportunities from U.S. stakes in oil/gas projects to sales of liquefied natural gas in the U.S. Russians are scheduled to vote in presidential elections in 2008 and hopefully will experience a peaceful transition to their third post-Communist leader.

FOREIGN ASSISTANCE PRIORITIES

USG foreign assistance efforts in Russia seek to protect and advance critical U.S. interests and to help Russia become a more reliable partner in addressing geopolitical and transnational interests of mutual concern. Assistance can be a key tool for focusing the attention of official and non-official Russians on issues they might otherwise overlook, neglect, or address ineffectively. As the circumstances in which the USG manages its relationship with Russia change, so are USG assistance programs evolving.

USG assistance strategy flows from the broad and complex range of issues in the U.S.-Russia bilateral relationship. In execution, the approach to assistance is one of partnership with Russia on issues that parallel the key points on the bilateral agenda. Combating WMD remains the USG's top goal and is the highest priority for assistance. Addressing Russia's pivotal role in global peace and security, this priority intersects with many USG initiatives in other bilateral relationships and multilateral fora.

Other priority areas of assistance are civil society and health, both of which engage a wide range of critical audiences in the private and public spheres. The health priority offers a means for collaborating with the extensive Russian medical establishment in jointly addressing worldwide health concerns and is the only USG assistance priority where there is appreciable support by other donors, primarily UN agencies. Other priorities for assistance include rule of law and human rights, good governance, and peaceful political competition and consensus-building. They provide further ways of assisting in the development of the Russian polity, particularly in the run up to the 2008 elections.

OPERATING ENVIRONMENT

For all its near-term concerns, from rising corruption, to over-centralization of power and Russia's assertiveness in nearby countries, the U.S. retains a deep stake in reinforcing positive medium-term trends, particularly the gradual emergence of a middle class, Russia's integration into global economic institutions, and its cooperation against terrorism and the spread of weapons of mass destruction. At the same time, the U.S. has an interest in countering more immediate negative trends, including democratic backsliding. How Russia copes with its own demographic crisis, declining life expectancies, a growing threat from infectious diseases such as HIV/AIDS, avian influenza, and TB, will also have implications for U.S. interests.

The slowly growing NATO-Russia relationship, Russian acceptance of the USG's post-war Iraq strategy, and cooperation in addressing the non-proliferation challenges posed by Iran and North Korea have bolstered ties. But Russia has also become increasingly assertive about protecting its perceived interests, especially in Eurasia. Domestically, concerns about Russia's commitment to democratic values have increased, particularly in light of passage of a restrictive new NGO law. Nationalistic and xenophobic tendencies are on the rise. The erosion of accountable governance undercuts Russia's efforts to confront the challenges it faces. If not addressed, the failure to enhance the rule of law and respect for freedom of association and the independent media, combined with corruption, could eventually undermine sustained economic growth.

Cooperation with the West offers Russia its best hope for a stable geo-strategic environment for economic growth. Russia's fundamental national interest lies in fuller integration into the West and the U.S. has a direct interest in expanding cooperation on foreign policy issues and in supporting and encouraging Russia's transformation into a modern market-based democracy governed by the rule of law. The time frame for that transition will extend for many years.

COUNTRY PERFORMANCE MEASURES

Russian Democratic Reform

The "radar" or "spider web" graphs below illustrate Russia's democratic performance during FY 2005. Ratings are based on a 1 to 5 scale, with 5 representing the greatest advancement. These charts provide a disaggregated look at each of the indices and are reported to Congress on a regular basis. The gray shaded area represents 2005 performance levels, while the two dark lines indicate how each country compares in its progress vis-�-vis two standards: (1) the average of Romania's and Bulgaria's performance in each indicator as of 2002 (2002 was the year that Romania and Bulgaria - the "threshold countries" - were invited to join NATO and received favorable indications of future EU membership); and, (2) where the country stood in each indicator in 1999. Together, these charts provide a broad picture of where remaining gaps are in a country's performance, and to what extent these gaps are being filled. For more information, including a detailed explanation of each indicator shown in the graph, see USAID/E&E/PO, "Monitoring Country Progress in Central and Eastern Europe & Eurasia," No. 10 (August 2006). Found online at: http://inside.usaid.gov/EE/po/mcp.html.

Graph shows Russian Democratic Reform:  Average of Romania and Bulgaria-2002, corruption, 1.8; electoral process, 1.7; civil society, 2.5; independent media, 1.7; governance/public admin, 1.8; rule of law, 2.2

The graph above shows Russia's democratic reform scores in 2005* (the gray shaded area) as compared to the average of Romania's and Bulgaria's democratic reform scores in 2002 (the bold line) when they were invited to join NATO and receive favorable indications of future EU membership.

*Actual 2006 scores not yet available.

Graph shows Russian Democratic Reform:  1999, corruption, 1.8; electoral process, 1.7; civil society, 2.5; independent media, 1.7; governance/public admin, 1.8; rule of law, 2.2

The graph above shows Russia's democratic reform scores in 2005* (the gray shaded area) as compared to its democratic reform scores in 1999 (the bold line).

*Actual 2006 scores not yet available.

Russian Economic Reform

The "radar" or "spider web" graphs below illustrate Russia's economic performance during 2005. Ratings are based on a 1 to 5 scale, with 5 representing the greatest advancement. These charts provide a disaggregated look at each of the indices and are reported to Congress on a regular basis. The gray shaded area represents 2005 performance levels, while the two dark line indicates how each country compares in its progress vis-�-vis two standards: (1) the average of Romania's and Bulgaria's performance in each indicator as of 2002 (2002 was the year that Romania and Bulgaria - the "threshold countries" - were invited to join NATO and received favorable indications of future EU membership); and (2) where the country stood in each indicator in 1999. Together, these charts provide a broad picture of where remaining gaps are in a country's performance, and to what extent these gaps are being filled. For more information, including a detailed explanation of each indicator shown in the graph, see USAID/E&E/PO, "Monitoring Country Progress in Central and Eastern Europe & Eurasia," No. 10 (August 2006). Found online at: http://inside.usaid.gov/EE/po/mcp.html.

Graph shows Russian Economic Reform: Average of Romania and Bulgaria-2002, external debt percent GDP, 4.0; private sector share, 3.5; share of employment in SMEs, 1.5; export share of GDP, 1.0; FDI pc cumulative, 0.5; GDP as percent 1989 GDP, 2.5; 3yr avg inflation, 3.0

The graph above shows Russia's economic reform scores in 2005* (the gray shaded area) as compared to the average of Romania's and Bulgaria's economic reform scores in 2002 (the bold line) when they were invited to join NATO and received favorable indications of future EU membership.

*Actual 2006 scores not yet available.

Graph shows Russian Economic Reform: 1999, external debt percent GDP, 4.0; private sector share, 3.5; share of employment in SMEs, 1.5; export share of GDP, 1.0; FDI pc cumulative, 0.5; GDP as percent 1989 GDP, 2.5; 3yr avg inflation, 3.0

The graph above shows Russia's economic reform scores in 2005* (the gray shaded area) as compared to its economic reform scores in 1999 (the bold line).

*Actual 2006 scores not yet available.

FY 2006 Country Program Performance

Governing Justly and Democratically

Democratic freedoms declined in 2006. Intolerance of ethnic minorities increased, as well as attacks on journalists. Nine journalists died during the year under suspicious circumstances, including Anna Politkovskaya, a respected and outspoken journalist who focused on Chechnya and the North Caucasus. There were also increasingly frequent expressions of extreme nationalism. In the fall, Russia's dispute with Georgia led to the round up and deportation of hundreds of Georgian and other nationals. Although Russia's new program to re-register all foreign non-governmental organizations (NGOs) aroused considerable local and international concern, most NGOs were re-registered. During the course of the year, several controversial amendments to federal election laws made their way through the State Duma (lower house of Parliament). Some were signed into law even though experts, including Russia's Central Election Commissioner, criticized them. One positive development was the more frequent collaboration of regional and municipal governments with social services NGOs and increased public participation in hearings on local and regional budgets and projects.

 U.S. ASSISTANCE PRIORITIES

USG-funded democracy assistance addressed a number of priorities in FY 2006. These included: reinforcing NGOs' ability to partner with regional and municipal authorities to address critical local issues and responsibilities; strengthening judicial independence; increasing lawyers' and NGOs' protection of the rights of disadvantaged citizens; promoting the independence of public debate and media coverage of social and political issues; supporting efforts to monitor elections; and improving local audiences' awareness and understanding of human rights, civil society, and representative government.

DESCRIPTION OF PROGRAMS AND ACTIVITIES

In FY 2006, USG assistance in Russia was concentrated in several broad areas: civil society, good governance, media, rule of law, and political process. USG programs gave broad support to regional civic and NGO support centers (in Siberia, Russian Far East, Southern and Volga regions) and enhanced local governments" professionalism, accountability, transparency and cooperation with civic organizations. In addition, USG programs strengthened independent news and social information in electronic and print media; and improved citizens' access to justice through support of human rights groups, lawyers' professional associations, and an efficient and independent judiciary. USG programs also supported political parties' and civic groups' efforts to provide voters with better information on the conduct, regulation, and impact of campaigns and elections to improve awareness of their rights and responsibilities for the federal elections in late 2007 and early 2008. Finally, USG assistance gave long-term support to strengthen political parties, local civic advocacy groups, and other NGOs - with a special emphasis on youth and other under-participating groups - to lay the foundations for and support of the next generation of political leadership.

To strengthen civil society, USG programs: fostered citizen participation in local government's decision-making on issues of importance to the community; strengthened the capacity of civil society organizations to get governments to integrate citizens' interests into policy agendas; supported efforts of social service groups, business associations, and various advocacy groups; promoted a favorable legal environment for civic initiatives and philanthropy; and developed civic competence in youth. Grants to Russian NGOs sought to improve local audiences' awareness and understanding of human rights and civil society issues through educational and networking activities as well as training. Programs to follow up on USG-funded exchange programs allowed alumni to share with their communities the knowledge and experience gained in the U.S. and to reach out to peers through specially-targeted events.

USG-funded trainers worked with independent media outlets to provide instruction to thousands of journalists and media owners in journalistic techniques and business management, and promoted improved programming. USG programs funded a range of support organizations that assist independent media outlets. Hundreds of small and mid-sized regional TV stations participated in the "Time to Act" professional competition that encouraged socially responsible journalism. Additionally, electronic and print journalists and owners participated in USG-financed training, conferences and competitions on professional standards, socially responsible journalism, production best practices, and media business development.

The two leading national human rights networks continued the essential work of monitoring abuses by authorities, providing legal assistance to NGOs and individuals, and advocating for the rights of citizens (especially migrants), refugees and laborers.

OUTPUTS

Regional NGO networks continued competitive grant-making programs with a number of their governors in conjunction with regional governments. These grants supported 500 grassroots civic initiatives in health care, education, ecology, public housing, and child welfare. NGO coalitions ran over 25 public advocacy campaigns on citizen interests in health care, education, ecology, public housing, and child welfare, and proposed amendments to 90 legislative and policy initiatives. A new professional association of NGO lawyers was established. Comprehensive legislative mapping of regional laws regulating NGO-government interaction was undertaken.

With USG assistance, more than 20 government bodies in Siberia introduced competitive grant procedures. Forty-five local governments chose to make governance more transparent by introducing community-based strategic planning. USG assistance supported these local governments by training 2,057 local officials and civil society leaders in public policy development, and by working with the State Duma to promote its adoption of over a dozen policies and procedures that improve the local economic environment. At the request of the Russian government (GOR), USG-funded NGOs worked intensively to develop 14 legal structures for implementing the GOR's National Affordable Housing project. In addition, 6,500 youth volunteers participated in over 100 community service learning projects. School-based community service learning inspired thousands of young people to devise projects to improve their communities.

Forty-four small grants to Russian NGOs supported educational and networking activities and training. Over 850 young Russians from 20 cities were engaged in a series of events on the legislative process culminating in 80 of them from 10 cities attending interactive summer programs.

PROGRAM PERFORMANCE/IMPACT

The collective impact of USG assistance in Russia is large. New and sustainable partnerships and alliances have formed between Russian public and civic organizations and between U.S. and Russian civic and professional groups. After USG assistance ceases, these partnerships will continue to work toward more open, accountable and participatory forms of governance in Russia and to increase the number of channels through which Russians and Americans interact across all walks of civic, commercial, and political life.

Ongoing USG support to human rights groups, independent news, and the media, and organizations for independent policy analysis and debate played a vital role in sustaining independent voices needed to advocating for more open, democratic governance in Russia. Participants in specially-targeted USG summer training programs markedly increased their understanding of U.S. views on issues and now represent a cadre of potential future government leaders from across Russia whose experience interacting with U.S. political structures can help to develop future U.S.-Russian relations.

The combined USG investments to strengthen both local governments and civic service delivery and advocacy groups are now producing measurable increases in funding from and consultations with federal, regional, and municipal authorities. At the federal level, the Federal Public Chamber, which had been created with USG -support, fulfilled its role as a mediator between government and civil society by issuing over $10 million in public grants in its first year to a wide range of groups. These included organizations involved in social service delivery, advocacy, and human rights, signaling initial and concrete beginnings of interaction between federal agencies and civic organizations and movements.

A USG-supported consortium of NGOs responded swiftly and effectively to draft legislation requiring that foreign NGOs register. The consortium developed a compendium of legal issues affecting NGO activities and philanthropy, and suggested legislative changes that were supported by the Ministry of Economy and Trade, and Commission on Philanthropy within Federal Public Chamber, which is a state-established advisory body representing civil society. Eighty percent of the changes suggested by the consortium were adopted before the second reading of the law in the State Duma in late 2005. NGOs networks fulfilled their watchdog role vis-�-vis local legislators and officials, publicizing their actions and monitoring local elections. In one case, monitors in Samara maintained a hotline and gave information to the public about laws against the abuse of administrative resources -- the public ultimately voted out the incumbent mayor.

USG judicial independence and reform programs led to the promulgation of standards of ethical conduct and a GOR commitment to disseminate commercial court decisions. USG-supported policy research institutes prepared 30 analyses that were incorporated into legislation and government policy initiatives. Sixteen coalitions of business associations now unite over 170 associations nationwide; these groups effected some 30 legislative changes in their regions.

MEASURES OF PROGRAM EFFECTIVENESS

In order to determine how USG assistance affects a country, U.S. embassies set targets for improvement called "performance indicators." Data for these indicators are collected by research institutes, embassies and international organizations. By examining data over time, U.S. policymakers can better understand whether or not assistance programs are having the intended impact.

Please find below two important indicators in the area of Governing Justly and Democratically. In the charts, the "Baseline" refers to a starting point from which to measure progress or regression over time. The embassy and its partner organizations then agree on a "Target" figure that they hope to achieve as a result of U.S. assistance programs. The "Rank" figure is the resulting measurement. "FY" stands for "fiscal year," the period of the U.S. budget that runs from October 1 - September 30 of the following year. "CY" stands for "calendar year," or January 1 - December 31.

Performance Indicator: NGO Sustainability Index. Source: USAID. (1=highest; 7=lowest; data based on previous calendar year). Seven different dimensions of the NGO sector are analyzed each year in the NGO Sustainability Index: legal environment, organizational capacity, financial viability, advocacy, service provision, NGO infrastructure and public image. The NGO Sustainability Index uses a seven-point scale, to facilitate comparisons to the Freedom House indices, with 7 indicating a low or poor level of development and 1 indicating a very advanced NGO sector. The data upon which this ranking is based comes from the previous calendar year. Found at: http://www.usaid.gov/locations/europe_eurasia/dem_gov/ngoindex/.

CY 2002 Baseline

CY 2004 Rank

CY 2005 Rank

CY 2006 Target

4.0

4.2

4.3

4.2


Impact of U.S. assistance shown in the above indicator: Legislation regulating registration and reporting of NGOs passed at the beginning of 2006 has placed a significant administrative burden on these organizations and is undermining their ability to operate. In addition, as the Federal Public Chamber launched a public grants program for NGOs, criticism from the government about foreign funding and potential interference in politics is undercutting the image and effectiveness of NGOs.

Performance Indicator: Nations in Transit 2006, Freedom House. The Freedom House rating addresses the current state of press freedom, including libel laws, harassment of journalists, editorial independence, the emergency of a financially viable private press, and Internet access for private citizens. 1=greatest freedom, 7=lowest freedom. Found at: http://www.freedomhouse.hu/pdfdocs/russia2006.pdf.

CY 2002 Baseline

CY 2004 Rank

CY 2005 Rank

CY 2006 Target

5.5

5.75

6

6


Impact of U.S. Assistance on the Above Indicator: While USG programs funded a range of support organizations that assist independent media outlets, Russia's CY 2005 rank on this measure did not improve. It will likely remain constant or worsen in 2006 in large part because of the continuing concentration of national-level media ownership either directly or indirectly in the hands of the state. Although independent private media in the regions outside Moscow still exist and continue to perform stronger than before, media owners there now exercise greater caution in their news reporting because of the fate of their national-level colleagues.

Economic Growth

Russia's economy grew apace in 2006; GDP growth of 6.5% was helped by a consumer boom, with real disposable income in July up 11% year-on-year. Foreign Direct Investment (FDI) was expected to reach $28 billion, compared to $14.6 billion in 2005. The oil and gas sectors received most of FDI, though greater domestic and foreign investment in consumer goods and services reflected increased domestic incomes and demand. In addition, the growth of the Russian stock market led other emerging markets. Capitalization was nearly $1 trillion by August, compared to $346 billion a year before. Natural resource firms led most of this growth, thanks to a favorable ruble exchange rate and global increases in commodities prices.

Russia paid off its Paris Club debt with energy receipts and placed some $70 billion (6.7% of GDP) in a stabilization fund against future oil price fluctuations. The government pursued fiscal conservatism with budget surpluses (a record 7.5% of GDP in 2005), and largely resisted pressure to spend its oil windfall. It implemented reforms, but is postponing new initiatives pending the 2008 elections. Inflation is falling, but still projected to be 9% in 2006. Higher social spending and government salaries are increasing expenditures. Exacerbating this is a labor market shortage due to poor labor mobility and a demographic crisis (438,000 fewer people in the first nine months of 2006 than a year before).

Russia concluded a bilateral WTO agreement with the U.S., a milestone in bilateral economic cooperation and a step towards WTO accession. The GOR made it a priority to increase the state's role in the economy via partnerships with private investors, special economic zones and concession agreements. There was much debate over the role of government and foreign investors in so-called "strategic sectors", which has led to assertions that Russia is on a path toward state capitalism. The murder of the Deputy Central Bank Governor silenced one of the leading voices of continued economic reform.

U.S. ASSISTANCE PRIORITIES

The U.S. assisted Russia to generate economic growth in four main priority areas in FY 2006. The first was to expand micro-finance, small businesses, and credit cooperatives in priority regions such as the Russian Far East and the North Caucasus. The second was to cooperate with the Central Bank of Russia (CBR) and the Russian banking sector on anti-money laundering and support for the Federal Anti-monopoly Service (FAS) on competition policy reform. The third was to support efforts by U.S. companies to explore export and investment opportunities in Russia, implementation of WTO-compliant legislation, and adoption of internationally accepted business and manufacturing practices, including intellectual property rights and corporate governance. Finally, USG assistance promoted the long-term development of sound agricultural policy and competitive marketing and business systems to enable Russia to trade with the U.S. and compete successfully in the global economy.

DESCRIPTION OF PROGRAMS AND ACTIVITIES

USG assistance for economic growth programs under the FREEDOM Support Act phased out in FY 2006. An exception covering new programs for FY 2007 was made in certain areas, including the North Caucasus, Russian Far East and "strategic" cities (research/production sites for weapons of mass destruction).

The USG continued to provide policy development, advocacy, legal reform, and training in the micro-finance sector. Key program goals for 2006 included further institutionalization of the leading micro-finance NGO and technical assistance to a private second-tier fund in sourcing private debt and equity capital. In the Russian Far East, the USG continued institutional development of two micro-finance institutions on Sakhalin Island. In the North Caucasus, the USG extended an agricultural credit cooperatives program into the region. Other programs included supporting the Central Bank of Russia (CBR) to implement a deposit insurance system and upgrading its on-site banking supervision capacity. The USG also created an anti-money laundering program with the CBR and provided advice to the Russian Federal Anti-monopoly Service on legal, institutional, and policy reform.

The USG network of market information centers provided U.S. companies (over 70% of which are small- and medium-sized) with the latest market reports and advice on developments, export, and investment leads, and strategies for doing business with Russia. The USG also supported the Ministry for Economic Development and Trade in its program to communicate with other parts of the government, the parliament, and regional authorities on the implementation of WTO-compliant legislation.

Additionally, USG programs sent delegations of Russian business, government, and society leaders on internships in the U.S., where they received training on topics such as international-accepted industry standards and learned about U.S. accounting practices, corporate governance, small and medium enterprise (SME) development, as well as governing and legal traditions.

USG assistance in agriculture provided short-term exchanges for Russian managers, officials, and educators to experience firsthand U.S. agricultural markets, practices, and structures -- public and private -- and to establish counterpart relationships. Also, Russian agricultural educators went to U.S. universities for half-year periods to improve their knowledge and instruction in modern agricultural economics and agribusiness.

OUTPUTS

The leading Russian micro-finance NGO attained a client level of 1,000 micro-finance institutions, worked with leading Russian financial sector associations through formal agreements of cooperation, created a national association of participants in micro-finance markets, and founded a second-tier debt fund to provide credit to indigenous micro-finance institutions throughout Russia's regions.

On Sakhalin Island in the Russian Far East, micro-finance activity included: disbursing loans totaling some $3 million: establishing two legacy institutions with seven branches: working with 496 active clients (57% of whom are women): introducing credit product innovations (revolving credit lines, variable interest rates, term loans for 12-26 months): engendering changes in commercial banks' policies such as reducing threshold size for SME loans, increasing competition for banking customers, instituting group lending practices, introducing revolving credit lines and partnership/syndicated loans, and offering training in lending to SMEs); graduating more than 500 borrowers to commercial banks; demonstrating a feasible business model to revitalize the non-timber industry; and helping establish a firm to market native agricultural products with the participation of indigenous peoples on the island.

In the North Caucasus, micro-finance activity drew on 75 cooperatives and branches with more than 3,600 farmer-shareholders. The program leveraged $1.79 million from local cooperatives that benefited from previous training. Program operations expanded to six jurisdictions in the region, but residents of all jurisdictions can take advantage of training. Two train-the-trainer courses drew more than 50 credit cooperative managers from various regions, including several from the North Caucasus. Seven special training modules were developed specifically for the North Caucasus and 17 training courses with 446 participants were conducted. Agreements were signed to start an inter-regional consortium for promoting credit cooperative training and cooperation, including curriculum development for young agricultural specialists. Eleven cooperative leaders and agricultural officials toured the U.S.

In the area of financial collaboration, USG assistance facilitated the signing of a multi-year Global Development Alliance partnership with the Central Bank of Russia (CBR) in anti-money laundering. U.S. expert guidance resulted in the completion of the CBR examination manual. With U.S. support, the CBR adopted advanced banking assessment methodology based on risk analysis, real value of assets, internal controls, and ownership transparency.

The USG network of market information centers reached out to thousands of existing and new business clients directly through its presence in Russia, collaboration with U.S. partner organizations (chambers of commerce, trade centers, business councils), and virtually through its use of technology (audiovisual tapings and web-based seminars). A special USG-funded information office maintained a WTO website, which averaged 15,000 user-sessions each month and worked in conjunction with the Ministry of Economic Development and Trade to put on two to three regional WTO Information seminars a quarter. The office also supported a series of workshops to equip Russian and Ukrainian border personnel to stem the flow of counterfeit and pirated intellectual property. The USG business internship program sent 118 Russians on programs on hotel management, franchising, eco-tourism, airports and ground support, road construction, and liquefied natural gas transport and storage. USG agricultural assistance provided short-tern training in the U.S to seven Russian professionals, focusing on food safety, biotechnology, port management, and animal disease. In addition, eight Russian academics improved their knowledge and teaching of agricultural subjects through half-year stays at U.S. universities.

PROGRAM PERFORMANCE/IMPACT

In FY 2006, the U.S. contributed substantially to the development of a national-level resource center for the entire microfinance industry in Russia. The center provides training, consulting, and dissemination of microfinance best practices and standards, legal support, and improvement of the legal environment. A similar contribution was made at the regional level in the Russian Far East, where the USG continued institutional development of two microfinance institutions on Sakhalin Island. The data indicate that loans issued through USG-supported programs created or sustained over 75,000 jobs and allowed SMEs to grow their businesses by 200% to 300% on average.

The USG's partner organizations in the microfinance and banking communities were instrumental in focusing GOR attention on the potential of micro-finance in Russia and on the need to build a constructive reform agenda to ensure the continued development and expansion of this sector. Moreover, the USG assistance helped focus the attention of commercial banks on the economic potential of this market.

USG support to the Central Bank of Russia led to important reforms in banking supervision, implementation of the deposit insurance system, introduction of credit bureaus, and measures to combat money laundering and terrorist finance. It also enhanced long-term contacts between U.S. and Russian financial sector regulators. In addition, USG support helped the banking sector to meet the financial needs of SMEs via loan guarantees so that commercial banks have more financial surety in extending loans to SMEs, which otherwise would find it difficult to secure credit.

USG-supported market information centers helped U.S. companies explore markets in Russia that they would not likely consider otherwise due to lack of information and on-the-ground support. The internships also played a unique matchmaking role by bringing together U.S. and Russian companies and officials to identify shared interests and seek business contracts. The overall effect was to encourage greater trade exchanges and the growth of private entrepreneurship. The USG-supported information office on WTO issues advanced significant bodies of legislation on customs and government procurement. A commissioned survey indicated that the general population accepts the fact that Russian WTO membership is inevitable and that Russians must become more active participants in the accession process.

USG-supported business internship participants used their training experiences in the U.S to expand their businesses, creating increased local employment in the Russian Far East and Siberia, generating additional revenue, and implementing accounting and quality systems. For their part, U.S. exporters gained increased access to the Russian market, resulting in roughly $3 million in additional exports to Russia. In addition, several internship alumni received promotions or moved into positions of greater influence, including one alumnus who was elected mayor of his city in the Russian Far East.

USG assistance in agriculture enabled Russia to develop the knowledge and expertise in agribusiness, marketing, and agrarian law necessary to meet the food needs of the domestic population and to strengthen trade linkages with the U.S. The assistance also helped Russia prepare for WTO accession and integration into the global agricultural trade system.

MEASURES OF PROGRAM EFFECTIVENESS

In order to determine how USG assistance affects a country, U.S. embassies set targets for improvement called "performance indicators." Data for these indicators are collected by research institutes, embassies and international organizations. By examining data over time, U.S. policymakers can better understand whether or not assistance programs are having the intended impact.

Please find below two important indicators in the area of Economic Growth. In the charts, the "Baseline" refers to a starting point from which to measure progress or regression over time. The embassy and its partner organizations then agree on a "Target" figure that they hope to achieve as a result of U.S. assistance programs. The "Rank" figure is the resulting measurement. "FY" stands for "fiscal year," the period of the U.S. budget that runs from October 1 - September 30 of the following year. "CY" stands for "calendar year," or January 1 - December 31.

Performance Indicator: World Trade Organization (WTO) Accession. Source: USTR, www.wto.ru

FY 2002 Baseline

CY 2004 Actual

CY 2005 Actual

CY 2006 Actual

Draft working party report issued.

Version three of working party report issued. Continued progress in passing necessary legislation and some progress on implementation.

Progress was made on the Working Party Report. By year-end, the U.S.-Russia bilateral protocol was near conclusion, with only a few well-defined issues remaining.

Progress made on the Working Party Report. On November 19, 2006, the U.S. and Russia signed a bilateral market access protocol.


Impact of U.S. Assistance on the Above Indicator: After 13 years of negotiations, the United States and Russia signed a bilateral protocol for Russia's WTO accession on November 19, 2006. Russia has concluded bilateral negotiations on market access with nearly all interested WTO members. Much of the legislation necessary to bring Russian law into conformity with WTO requirements has been passed, although a number of key laws remain to be drafted. The USG supported information activities to help the GOR understand and move forward on the legislative and administrative changes needed for successful WTO accession. The USG also worked closely with the private sector to keep it informed of developments in the negotiations. The next step for Russia is to complete multilateral negotiations on a comprehensive Working Party Report.

Performance Indicator: Share of Total Employment from Small and Medium Enterprises (SMEs). Including individual entrepreneurs, farm enterprises, and both registered and non-registered SMEs. Source: World Bank.

CY 2002 Baseline

CY 2004 Percentage

CY 2005 Rank

CY 2006 Target

45%

51%

50.5%

51%


Impact of U.S. Assistance on the Above Indicator: The GOR has been generally supportive of SME development, but the economy's overwhelming dependence on natural resource extraction creates a bias against SMEs. USG efforts to improve the business environment for SMEs concentrated on facilitating business between potential partners, supporting policy reforms, and promoting association-building and advocacy efforts to support civic activism and policy dialogue as the foundation of democracy. Limited access to finance continues to be one of the greatest obstacles to further development of the SME sector.

Investing in People

Russia's demographic implosion could see the population fall 30% by 2050, threatening workforce viability. By 2016, the proportion of people over 45 will increase to 30%. Life expectancy for males continues to drop each year, down from 70 to 60, with alcoholism and substance abuse rising. Russia has one of the fastest growing HIV/AIDS epidemics in the world with the number of HIV-infected persons exceeding 370,000 and growing at 3% to 5% per year. HIV rates among intravenous drug users are as high as 74%, among sex workers as high as 5% to 15%, and among street children as high as 37%. The GOR estimates that the pool of drug users is anywhere from four to six million. Heroin and synthetic opiate use has increased in regions bordering Kazakhstan and China. In one of these drug trafficking areas, HIV prevalence has reached 2% of the population, thus reaching epidemic proportions in this specific region. Russia also has persistently high rates of multi-drug resistant tuberculosis (TB). There have been 12 major outbreaks of H5N1 avian flu in swans, ducks, and other wild and domestic fowl in certain regions.

President Putin has characterized the demographic decline as a national security threat and called for major efforts to encourage larger and healthier families. Along with improving pregnancy outcomes and preventing child abandonment, this has become the core concept in the national priority project in health. The GOR provided leadership in addressing the HIV epidemic by establishing a National AIDS Commission to oversee HIV programs. The Russian military also recognized the challenge its faces from HIV/AIDS. After the G-8 summit in St. Petersburg in July 2006, President Putin increased Russia's political and financial commitment to combating the spread of AIDS with a 20-fold increase in the federal budget (from $6.5 million to $105 million).

U.S. ASSISTANCE PRIORITIES

In FY 2006, USG assistance goals were to build on the momentum of the GOR's decision to craft a comprehensive approach to address HIV/AIDS by: engaging Russian political, business, religious, scientific and military leadership; strengthening the nationwide response to TB and other infectious diseases, including Hepatitis B and C; providing new guidelines for reproductive health services to improve maternal health and reduce abortions; and offering new models for the delivery of a broad range of social services related to child welfare reforms through local NGOs and municipal governments. The USG also expanded its dialogue with the government on the avian flu epidemic in migratory birds.

There is a long history of U.S.-Russian partnerships in the social sector. For nearly a decade, the USG has worked collaboratively with GOR federal-level counterparts to strengthen primary health care systems, focusing on maternal and child health and family planning services through public-sector and non-governmental facilities. Other areas of cooperation have included biomedical research, disease surveillance, and diagnosis and treatment of infectious and chronic diseases. The USG has also worked with local governments to streamline social service administration, improve the targeting of benefits, and shift more service provision to the NGO community through competitive grants and contracting mechanisms. In addition, USG collaboration with ecological and health authorities in the regions, especially in the Russian Far East (RFE), has concentrated on improving the environment. USG-funded efforts also focused on the rights of disabled children to equal access and a healthy lifestyles curriculum that emphasizes reducing demand for drugs.

DESCRIPTION OF PROGRAMS AND ACTIVITIES

In FY 2006, USG assistance provided support for: developing public health and political leadership; increasing access to safe and effective infectious disease prevention, treatment, care, and support; and increasing the number of successful models adapted and replicated in Russia. HIV/AIDS assistance focused on encouraging national and regional leaders to address the epidemic and promote prevention and treatment programs for most at-risk populations identified as primary transmitters of the epidemic such as vulnerable youth, drug users, sex workers, andprisoners. HIV/AIDS treatment, care, and support programs encouraged local leaders to promote collaboration, establish support for people living with HIV/AIDS, strengthen NGOs working in prevention and care, and build the capacity of local health professionals and facilities.

With the rapid growth in the HIV epidemic in Russia over the last five years and the increasing proportion of women infected, the overall incidence of mother-to-child transmission of HIV has increased dramatically. Health authorities estimated that 27,000 babies will be born to HIV-infected mothers in Russia in 2006, up from 10,000 just two years ago. Over the last three years, services to prevent mother to child transmission have rapidly expanded. Given financing from Russia and the Global Fund to Fight AIDS, TB and Malaria, the USG contribution is small and will phase out.

USG TB activities sought to expand treatment and infection control measures, refining guidelines and providing technical assistance from international partners. USG assistance for TB focused on eight Russian regions, working with both civilian and prison populations. The program included: piloting internationally accepted tools for TB diagnosis, treatment and care; establishing an expanded directly observed therapy that will serve as a nationwide model; developing TB legislation, guidelines, and public awareness campaigns; providing technical support for implementation of the World Bank loan and Global Fund TB grant programs; and training 1,000 TB and related specialists in DOTS and laboratory testing and microscopy. Additionally, an internationally recognized committee approved three new USG-supported regions for treatment of multi-drug resistant tuberculosis, advancing monitoring and response capabilities in these regions. While the multi- and extremely drug resistant forms of TB continue to be a growing concern, these and other steps reduce the risk of contracting TB, an issue facing one out of every six Russians today.

In FY 2006, USG assistance worked to improve reproductive health and reduce abortions, and to integrate family planning into women's centers and maternities and most recently in HIV centers, which allows for a concentrated effort to prevent mother to child transmission (PMTCT) of HIV/AIDS. Programs to prevent unwanted pregnancies also promoted reductions of child abandonment. With more than 1.5 million children abandoned or on the streets, USG programs sought to improve the social service and welfare systems to reduce the number of children in institutional care or abandoned. To do this, the USG advised how to create early intervention programs and promote welfare reforms to place children with families or in foster care. Other USG assistance examined the feasibility of establishing a public health center of excellence, funded travel for Russian researchers to participate in local and international conferences on HIV/AIDS and related infections, and organized bioethics training.

In the North Caucasus region, USG assistance included comprehensive socio-psychological care and community involvement to facilitate the rehabilitation of war-affected children and youth, family planning and reproductive health services for youth, and mine risk reduction activities.

OUTPUTS

USG assistance led to impressive results in targeted areas, including reaching youth and at risk populations with HIV prevention messages, increasing health professionals' capacity, and creating model health programs adopted for expansion by the government. The USG supported communication tools and behavior change models that included HIV prevention programs for high-risk youth in schools and peer education activities for youth clubs and technical schools. The in-school programs reached 5,700 children in 60 schools using a curriculum for grades 10 and 11 (ages 15-19) and peer educators reached 15,500 youth in two regions in the Volga and Urals regions. The USG program focused on reaching the most at-risk populations and improving referral systems for care to government institutions and NGOs. The program reached 7,039 sex workers and intravenous drug users and nearly 3,260 individuals at special risk (sex workers' clients, co-dependents, youth at risk). Prevention activities in prisons trained 70 prison staff in HIV prevention, 4,433 prisoners and prison staff in six correctional facilities received community prevention messages, and 551 prisoners received HIV testing and counseling. These activities in the six correctional facilities are now serving as models for the GOR's expanded efforts.

As the proportion of people living with HIV/AIDS in need of treatment continued to increase in Russia, USG-supported assistance focused on building the capacity of health professionals and facilities to provide anti-retroviral treatment services at four regional sites, with a 20-fold increase in the number of patients adhering to anti-retroviral treatment regimens. The USG also helped the GOR design a postgraduate medical HIV/AIDS curriculum offered by the country's leading medical school. The first group of 47 graduates from 13 regions in Russia completed training this year.

As a result of USG assistance in maternal and child health 16 regions successfully integrated internationally recognized practices on reproductive health and family planning, reaching 10 million clients. The GOR adopted these approaches as national models for replication. A new women-run NGO plans to expand services in up to 10 additional regions. Maternal and child health activities produced significant changes, such as a 16% decline in abortion rates, increased family support during labor and delivery, up from 0% to 35%; reduction in unplanned pregnancies from 34% to 20%; and an increase in antenatal care visits up to 33%.

The USG also supported training to prevent the transmission of HIV from mother to child at delivery. Almost 200,000 HIV tests were provided to pregnant women in four regions and 900 women received antiretroviral prophylaxis at delivery to reduce risk of transmission. A total of 538 health care providers were trained on a preventing mother to child transmission curriculum. Also with USG assistance, the U.S. military conducted three conferences with Russian military counterparts to open a dialogue on increasing and improving HIV prevention efforts.

PROGRAM PERFORMANCE/IMPACT

President Putin based the GOR's new national priority project in health on key U.S. models. With an expected increase in GOR budget funding, this massive nationwide project should significantly improve the quality of health care and social welfare conditions in Russia. USG assistance helped targeted areas to witness falling rates of abortion, improved success rates in tracking and treating TB, improved maternal health outcomes, greater municipal funding for health care on HIV/AIDS, decreased numbers of abandoned and vulnerable children, increased commitment to foster care, and greater government attention to AIDS prevention and the treatment, care, and support for people affected with HIV/AIDS. USG assistance also helped Russian scientists pursue civilian research in important areas such as HIV/AIDS and TB, including diagnostics and laboratory capacity building. As a result of the USG assistance, the Russian military created a pilot prevention program to educate soldiers about how to protect themselves from HIV infection.

USG assistance provided child welfare social support services to 25,000 children, including 10,300 children at risk of abandonment who remained in families. A USG program in early cognitive assistance to very young disabled children provided services in the RFE to reduce risks of child abandonment and help abandoned children in baby homes. In one RFE area alone, the program served 350 children and 15 disabled children from a local baby home adopted by Russian families. These services were included into the local health insurance system, which made them sustainable after the end of USG assistance.

MEASURES OF PROGRAM EFFECTIVENESS

In order to determine how U.S. Government assistance affects a country, U.S. embassies set targets for improvement called "performance indicators." Data for these indicators are collected by research institutes, embassies and international organizations. By examining data over time, U.S. policymakers better understand whether specific assistance programs are making their intended impact and, if necessary, how to adjust these programs to improve the impact.

Please find below two important indicators in the area of Investing in People. In the charts, the "Baseline" refers to a starting point from which to measure progress or regression over time. The embassy and its partner organizations then agree on a "Target" figure that they hope to achieve as a result of U.S. assistance programs. The "Rank" figure is the resulting measurement. "FY" stands for "fiscal year," the period of the U.S. budget that runs from October 1 - September 30 of the following year. "CY" stands for "calendar year," or January 1 - December 31.

Performance Indicator: Number of HIV Cases, cumulative. Source: Ministry of Health and Social Development, used for WHO and State Department Global AIDS Coordinator (S/GAC) reporting.

FY 2002 Baseline

FY 2003 Number

FY 2004 Number

FY 2005 Number

220,000

250,000

300,000

370,000


Impact of U.S. Assistance on the Above Indicator: While the number of HIV cases continues to grow in Russia, USG assistance enjoyed significant success in 2006, particularly as the national AIDS program began to roll out activities and the Global Fund to Fight AIDS, TB and Malaria grant program expanded to an additional 9 areas (for a total of 19). The USG has provided substantial assistance to several leading Russian NGOs in this field, which combat the stigma associated with being HIV-positive. To reduce the transmission and impact of HIV/AIDS and other infectious diseases, USG programs have become models that the government and the Global Fund to Fight AIDS, TB and Malaria are adopting to prevent HIV and TB transmission and treat the growing number of patients living with AIDS as the epidemic matures.

Performance Indicator: Number of Tuberculosis/HIV co-infection cases, cumulative. Source: Ministry of Health and Social Development, used for WHO and S/GAC reporting.

CY 2002 Baseline

CY 2003 Number

CY 2004 Number

CY 2005 Number

2,354

7,678

8,665

9,713



Impact of U.S. Assistance on the Above Indicator: The fight against TB is integral to the fight against HIV/AIDS as the co-epidemics fuel each other. In 2005, data showed that TB constituted only 3 percent of all infectious disease cases reported in Russia, but contributed 98 percent of all deaths from infectious diseases. The cost to the GOR of treating TB patients continues to increase. Even more alarming is the appearance of extreme drug resistant TB in Russia. A 2005 USG study found that 3.5 percent of Russian multi-drug resistant patients had developed extreme drug resistance, thus rendering second-line drugs ineffective. However, there has been a constant decrease in the number of cases reported in the prison system from 70,100 in 2003 to 50,915 in 2004. In 2006, a prison in Eastern Siberia where the U.S. combined efforts with international partners brought mortality down to zero. Also, with the DOTS program for TB treatment ready for expansion throughout Russia, treatment adherence may be improved. The federal budget for TB has increased in 2006, up to $90 million.

Peace and Security

As one of the world's largest nuclear powers, Russia has numerous weapons production and storage facilities, civilian and military nuclear reactors, research institutes and other nuclear fuel cycle facilities, as well as large quantities of nuclear materials. In FY 2006, USG nonproliferation cooperation with Russia - to enhance the security of these facilities and materials, to dispose of excess nuclear materials, and to engage scientists with expertise in these areas in non-military activities - demonstrated progress across a number of areas. The USG is on schedule to complete security upgrades at Russian nuclear facilities by 2008. While overall non-proliferation cooperation continued to yield significant results, the U.S. continued to experience challenges getting access to facilities, controlling Russian costs on key construction projects, and reformulating ways to engage Russian weapons scientists in peaceful activities.

Both narcotics and trafficking in persons continued to create serious challenges to Russian law enforcement due to the enormity of the problem. Bumper crops of opium in Afghanistan have meant an increase in narcotics trafficking through Russia. Economic hardships in neighboring countries made Russia a magnet for labor traffickers, while Russian women who sought employment overseas often fell victim to the sex trade or forced labor.

Problems with the transparency, accountability, and independence of the judiciary continued to be seen in juries that ruled for the defense in poorly argued criminal prosecutions. However, in FY 2006, Russia continued to implement criminal procedure reform and addressed professional liability insurance and revisions to the code of ethics for defense attorneys. Russia also made some progress in fighting intellectual property rights (IPR) violations, implementing a witness protection program (to shelter trafficking victims), and beginning to fund anti-TIP NGOs.

U.S. ASSISTANCE PRIORITIES

The USG provided a range of assistance to promote security, stability, and law enforcement in Russia including programs to: safeguard and/or destroy weapons of mass destruction (WMD); secure and safeguard nuclear facilities and materials; and combat terrorism and terrorist financing, trafficking in persons, narcotics, intellectual property crimes, money-laundering, and cyber-crime. The USG also worked to encourage self-sustaining, commercial applications for the technologies developed in Russian scientific institutes, formerly devoted to WMD research, as a way to contribute to global security, create sustainable employment in closed nuclear cities, and promote U.S. investment in the Russian high-tech sector.

USG assistance supported the development of the rule of law through fair and impartial judicial and law enforcement bodies and a national bar association. This assistance helped the legal system to operate independently as a fair and effective arbiter of criminal prosecutions and civil disputes so that Russia would be a responsible and reliable partner to U.S. law enforcement on transnational legal issues such as counter-terrorism, organized crime, narcotics interdiction, human trafficking, and child pornography and sex tourism.

DESCRIPTION OF PROGRAMS AND ACTIVITIES

In FY 2006, USG assistance sought to secure nuclear weapons and weapons-usable material by upgrading security at Russian civilian and military nuclear sites and improving nuclear anti-smuggling capabilities at Russia's borders by installing radiation detection monitors. The USG also worked to permanently close the last three military plutonium production reactors by constructing and refurbishing fossil fuel plants to provide alternative sources of heat and electricity. The USG continued to work with Russia and the International Atomic Energy Agency to repatriate Russian-origin highly enriched uranium (HEU) from Russian-designed research reactors around the world. USG assistance also supported a program whereby Russian HEU from nuclear warheads is blended down into low-enriched uranium for use as fuel in U.S. civilian nuclear reactors.

USG programs that consolidated, secured, or destroyed/dismantled WMDs - the mission's leading policy goal - accounted for a significant share of USG assistance to Russia in 2006. These programs helped dismantle strategic weapons delivery systems and infrastructure; enhance the security and safety of WMD and fissile material storage and transportation; and monitor and consolidate dangerous pathogens that pose risk for theft, diversion, accidental release, or use by terrorists. USG assistance also funded commercially-oriented projects between U.S. companies and Russian organizations to help former WMD scientists commercialize the products of their research. USG assistance to the Russian military included an HIV/AIDS conference, military education and English language courses.

The USG worked to develop Russia's ability to combat narcotics trafficking and secure and protect its borders by providing police training and equipment. Police and prosecutors learned how to investigate and prosecute human trafficking cases, and cooperate with NGOs to ensure trafficking victims receive help and protection. In addition, the USG also worked with the presidential administration, the lower house of Parliament, and federal ministries to implement a witness protection program, assist in the drafting of asset forfeiture legislation, and develop training on money laundering and terrorism financing. USG assistance also sought improvements in the protection of intellectual property rights through support of investigations, a bilateral working group, and media coverage. The U.S. promoted collaboration between U.S. and Russian judges, lawyers, and prosecutors. Finally, the U.S. supported NGOs that advocate for disabled children's access to education, fight intolerance, protect human rights throughout the country, combat human trafficking, and assist labor unions to represent workers effectively.

OUTPUTS

In FY 2006, nuclear security upgrades were carried out at 35 sites in Russia. Approximately 43 kilograms of fresh HEU fuel was repatriated from research reactors in Poland and Libya, and 63 kilograms of Russian-origin HEU spent fuel was repatriated from Uzbekistan. Russia down-blended approximately 30 metric tons of HEU from nuclear warheads into low-enriched uranium for civilian nuclear fuel. USG assistance for the construction and refurbishment of fossil fuel plants to replace the heat and electricity generated by plutonium production reactors resulted in progress on five of 10 boilers and two of three turbines at a plant in Siberia. In addition, the USG installed 67 radiation detection monitors at Russian border crossing sites.

In cooperation with Russian civilian and military agencies, the USG assisted with the destruction of 93 nuclear missiles, 35 launchers (silo-based, mobile and submarine) and related equipment and infrastructure, the construction of a facility for the safe destruction of chemical weapons, the safeguarding of nuclear facilities and material, and the disposal of nuclear materials. Security upgrades were carried out at over 70 nuclear weapons storage sites and four biological research institutes, and dismantlement of two nuclear submarines was completed and begun on another. Work continued toward closing the three remaining weapons-grade plutonium production reactors. USG support to redirecting former-WMD scientists towards peaceful research and technology development led to the creation of sixteen research and education centers at universities across Russia with enhanced ability for scientific research and education.

The USG supplied vehicles to the Russian drug police and border service to improve their ability to interdict narcotics and organized a series of anti-trafficking and child pornography conferences, the former to develop cooperation between police and NGOs on providing protection and assistance to human trafficking victims. The USG also established, in conjunction with private industry, a series of regional training programs in intellectual property rights violations aimed at Russian judges, prosecutors, and law enforcement officials. The USG-supported network of partnerships between the supreme courts and legal communities of a U.S. state with a Russian region expanded from nine to 11. U.S. and Russian NGOs worked with the Interior Ministry to establish a tolerance council for the troubled North Caucasus region, similar to others in five cities already promoting police and prosecutor training and increased police-community coordination. USG assistance to U.S. and Russian non-governmental organizations, especially in the Russian Far East, provided vulnerable women with career counseling to minimize their risk of falling victim to sex trafficking. Other grants supported U.S. law enforcement and judicial officers' visits to work with law schools and police academies to help them respond to acts of ethnic/racial intolerance.

PROGRAM PERFORMANCE/IMPACT

USG assistance had significant impact in 2006 on reducing the threat of WMD. The U.S. and Russia signed a liability protocol to allow the disposition of excess military plutonium to move forward. USG-supported security upgrades at two Russian Navy sites brought the program of 50 sites to completion two years ahead of schedule. Three intercontinental ballistic missile regiments were decommissioned, and Russian authorities accepted 11 nuclear weapons storage sites were after their security upgrades were completed. Dismantlement of a chemical weapons production facility progressed towards a spring 2007 completion. Ongoing upgrades at biological research institutes will allow dangerous pathogens to be consolidated into localized, easily secured areas, minimizing the threat of theft or accidental contamination. Since the beginning of USG-supported efforts to down-blend HEU into low-enriched uranium for civilian nuclear fuel, over 280 metric tons of HEU have been processed, out of a target figure of 500 metric tons.

The USG funded bilateral collaboration to redirect Russian former-WMD scientists towards peaceful scientific research and technology development. This collaboration led to Russian scientists sharing with U.S. counterparts the results of their research on the parameters for calculating cross-sections of nuclear reactions. The results will be entered into an international library. The collaboration also led to the establishment of an astrophysics branch of civilian research at the leading Russian physics research institute. In military cooperation, Russian forces attained improved levels of interoperability with U.S./NATO forces and a better understanding of civilian-government accountability in a democracy, the result of USG-provided training.

USG assistance in law enforcement resulted in the implementation of Russia's witness protection program and anti-trafficking laws, passage of asset forfeiture legislation, and the police's joining the FBI's task force on transnational child pornography. USG assistance furthered the implementation of the 2002 bilateral agreement on law enforcement cooperation as well as the Criminal Procedure Code, the latter which fundamentally changes the criminal justice system by introducing the adversarial system, judicial independence, defense rights, and a right to jury trial in serious criminal cases. Rule of law assistance encouraged the judiciary to strengthen its ethics codes and become more independence of the executive branch. Ties between federal and regional judges, lawyers, prosecutors, law enforcement officials and human rights advocates strengthened significantly. The visit by leading Russian judges to the U.S. Supreme Court for substantive discussions opened new areas for cooperation in court administration and transparency. USG assistance supported the adoption of modern anti-crime techniques against terrorism and terrorist financing, narcotics smuggling, money laundering, IPR violations, cyber-crime, human trafficking, and child pornography. Other USG efforts led to the adoption of community-based policing in the Russian Far East and support for research into crime and corruption issues. Other USG assistance raised public awareness of the rights of disadvantaged groups in society, notably young women in economically depressed regions, disabled children and ethnic minorities. Thousands of Russians from these vulnerable segments of the population have received legal and educational services and advocacy that would not have been available otherwise.

MEASURES OF PROGRAM EFFECTIVENESS

In order to determine how U.S. Government assistance affects a country, U.S. embassies set targets for improvement called "performance indicators." Data for these indicators are collected by research institutes, embassies and international organizations. By examining data over time, U.S. policymakers can better understand whether or not assistance programs are having the intended impact.

Please find below an important indicator in the area of Peace and Security. In the chart, the "Baseline" refers to a starting point from which to measure progress or regression over time. The Embassy and its partner organizations then agree on a "Target" figure that they hope to achieve as a result of U.S. assistance programs. The "Rank" figure is the resulting measurement. "FY" stands for "fiscal year," the period of the U.S. budget that runs from October 1 - September 30 of the following year. "CY" stands for "calendar year," covering events from January 1 - December 31 of the subject year or last calendar year.

Performance Indicator: Rule of Law - Constitutional, Legislative, and Judicial Framework Rating, drawing from Freedom House, Nations in Transit 2006 as adapted by "Monitoring Country Progress (MCP) in Eastern Europe and Eurasia" USAID/E&E/PO, No. 10 (August 2006). 1 = lowest, 5 = highest; data for indicator based on previous calendar year. The Rule of Law rating highlights constitutional reform, human rights protections, criminal code reform, judicial independence, the status of ethnic minority rights, guarantees of equality before the law, treatment of suspects and prisoners, and compliance with judicial decisions. The data upon which this ranking is based comes from the previous calendar year. Found online at http://www.usaid.gov/locations/europe_eurasia/country_progress/index.html.

CY 2002 Baseline

CY 2004 Rank

CY 2005 Rank

CY 2006 Target

2.5

2.5

2.2

1.8


Impact of U.S. Assistance on the Above Indicator: Russian and foreign observers continue to express concern about the GOR's decline of support for democratic development, reduced independence of the judiciary, and the growing incidence of hate crimes and intolerance. Government pressure and harsh sentencing of those defending Yukos Oil founder, Mikhail Khodorkovsky, contributed to the lower Freedom House rating. Nonetheless, Russia has made some progress in the area of rule of law and legal reform. The criminal procedure code, the primary vehicle for legal reform, was enacted and implemented with USG assistance. USG support continues to be instrumental in the successful use of the legal system by civil society organizations, with the overall number of cases filed on behalf of constituencies such as workers, forced migrants, and the disabled growing yearly. In 2006, the judiciary has used ideas showcased by the USG, such as the introduction of specialized court employees to professionalize its operations.

FY 2006 Funds Budgeted for U.S. Government Assistance to Russia [PDF format]



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