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Diplomacy in Action

FY 2007 U.S. Assistance to Eurasia


Bureau of European and Eurasian Affairs
FY 2007 U.S. Government Assistance to and Cooperative Activities with Eurasia
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Regional Overview

U.S. FOREIGN POLICY AND FOREIGN ASSISTANCE OBJECTIVES & PRIORITIES

The U.S. Government (USG) seeks to assist the countries of Eurasia to become stable, prospering, free-market, pluralistic democracies. The USG focuses most of this effort bilaterally, endeavoring to support countries to advance complex reforms area by area and sector by sector.

USG regional assistance in FY 2007 supported U.S. regional policy interests. These included: strengthening partnerships and responsibility for regional security, including multilateral organizations such as the Organization for Security and Cooperation on Europe (OSCE) and the Georgia-Ukraine-Azerbaijan-Moldova (GUAM) group; creating or restoring beneficial economic linkages; developing common democratic practices to protect countries’ transition to market-based democracies; involving countries in finding common solutions to conflicts, cross border water management, and corruption;

OPERATING ENVIRONMENT

There are issues in Eurasia that can only be advanced by working across the countries of the region. These issues include transnational threats and security, energy, infectious diseases, and trade barriers. Over seventy years of shared experience as part of the Soviet Union, and the common infrastructure that was developed as a result, provide a basis for regional cooperation for the 12 countries of Eurasia. However, this legacy brings with it complicated problems, including frozen conflicts, divided ethnic groups, irrational economic systems, and weak democratic institutions.

FY 2007 Program Performance

PEACE AND SECURITY

Borders throughout the Eurasian region are porous and regional law enforcement cooperation is still weak. In FY 2007 the U.S. (United States) worked to improve security capabilities, foster regional cooperation, as well as cooperation with U.S. law enforcement agencies to combat organized crime, terrorism, illicit trafficking of goods and people, and money-laundering. The U.S. also addressed the threat of weapons of mass destruction (WMD), helping former weapons scientists find civilian employment.

Organization for Security and Cooperation on Europe - Twenty-one percent of the OSCE’s budget in FY 2007 supported OSCE field missions and related costs in the countries of Eurasia. The U.S. share of this portion of OSCE’s budget was 14 percent, or approximately $6 million. The USG also provided U.S. experts to assume policy and decision-making positions within the OSCE, and financed U.S. citizen monitors in OSCE election observation missions. These included election observation missions in Armenia, Kazakhstan, Moldova and Ukraine.

With U.S. and other financing, the OSCE field missions conducted programs in FY 2007 covering a wide variety of regional challenges including conflict prevention, post-conflict rehabilitation and reconciliation, transnational threats, counterterrorism, criminal justice, legislative reform, TIP, elections, and civil society. With U.S. support, OSCE negotiators continued to work to break deadlocks over Transnistria in Moldova, South Ossetia in Georgia, and between Azerbaijan and Armenia over the Nagorno-Karabakh enclave.

Specifically, the OSCE Mission to Moldova continued to participate as an official mediator in Transnistrian settlement talks, assisted the Moldovan Government to build public accountability, improve trade regimes, and combat corruption and TIP. In Ukraine, the OSCE promoted economic and social reform, protected media freedom, and strengthened internal and border security. The OSCE Mission in Armenia worked to help the Government of Armenia to put into place the necessary laws to hold free and fair parliamentary elections in FY 2007 – albeit with mixed success. In Georgia, the USG continued to support an OSCE-led economic redevelopment plan intended to build confidence between Georgia and South Ossetia by focusing on water, health, education, agriculture, and small business development projects.

The individual OSCE missions in Central Asia continued to focus on activities designed to address regional security. In 2007, the OSCE brought together the Central Asian states to discuss water management and transportation. The OSCE Center in Tajikistan successfully concluded the first phase of its Small Arms/Light Weapons and de-mining program; the OSCE’s Conflict Prevention Center completed a border assessment in Tajikistan that will serve as the basis for new OSCE projects aimed at strengthening the Tajik border. In the Kyrgyz Republic the OSCE Academy’s Masters Program graduated 25 students from all five Central Asian states. The Center in Bishkek also worked to promote conflict prevention where border incidents involving border communities and authorities occurred, and has worked to strengthen independent media and civil society. Although the Government of Uzbekistan did not welcome outside influence, the OSCE maintained its presence and was engaged in a few small projects. The OSCE mission in Turkmenistan significantly increased its cooperation with the new government. During FY 2007, the OSCE Center in Kazakhstan also worked to develop a free and independent media by training media professionals.

The U.S. also funded several OSCE extra-budgetary activities designed to promote human rights and democracy, develop vibrant civil societies to improve good governance and rule of law, and strengthen the cooperation of OSCE countries to counter terrorism. Notable projects included mélange rocket fuel destruction and a project to strengthen Ukraine’s electoral system. In the former project, the USG supported a successful mélange rocket fuel destruction program in Armenia that ended on time and under-budget. The project included a technology transfer component that benefited the Armenian Ministry of Defense, which was closely involved in the work. The OSCE hopes to use the Armenia model in many other countries that have outmoded and dangerously stored mélange stocks. In the Ukraine project, the USG continued to fund the OSCE’s extensive work to support the creation of a single, centralized voter registration system in Ukraine to reduce voter fraud and enhance the reliability of the electoral process. Ukraine’s parliamentary elections in FY 2007 received commendation for their transparency and fairness, in part because of the voter registration program.

Security Sector Reform - Law Enforcement Restructuring, Reform and Operations - The member states of the Organization for Democracy and Economic Development (GUAM) established itself as an official international organization at its 2007 Baku Summit, where it appointed a Secretary General (member states include Georgia, Ukraine, Azerbaijan and Moldova). The U.S. helped to establish GUAM’s new Secretariat in Kyiv and bolster its Secretariat’s capacity to coordinate missions for member countries. GUAM member states formed law enforcement task forces and working groups to combat domestic and transnational crime, including money laundering, terrorist financing, corruption, trafficking in persons (TIP) and narcotics trafficking.

The U.S. funded international law enforcement academies in Budapest, which began to train officers from GUAM countries as a way of promoting cooperation and information exchange. The USG also encouraged inter-country coordination by its continued assistance to GUAM’s Virtual Law Enforcement Center (VLEC). The VLEC links national law enforcement centers in the four member states with secure voice, video, and data transmission. In 2007 the USG trained VLEC’s network administrators to expand their use of the VLEC’s video and audio capacity, and trained VLEC task forces on TIP and narcotics trafficking.

Additionally, the U.S. supported two regional interdiction operations: Operation NARCOSTOP 2007 in October and Operation INTERCEPT 2007 in November. Both were containment-style joint operations where the countries simultaneously increased police checks on their shared borders to determine trafficking patterns. The TIP operation revealed legal, administrative, and technical barriers to multilateral operations between GUAM member states’ law enforcement agencies. After the joint exercises, GUAM member states under the coordination of the Secretariat began discussing improvements to legislation, administrative structures, and technical standards to bring their law enforcement activities into line with European norms and standards. Ukraine proposed that the Secretariat develop a training accreditation process for the border guard services of GUAM member states as a further way to promote the adoption of the EU/Schengen standards.

Combating Weapons of Mass Destruction (WMD) - USG supported research projects that engaged Eurasian scientists in civilian research and provided alternatives to defense work or emigration to countries seeking WMD capabilities. The U.S. program exposed participating researchers to transparent, competitive, merit-based review processes, fostered collaboration with U.S. researchers, and assisted the program participants to obtain host government and international funding for their research. A USG-funded proposal development workshop in FY 2007 improved the skills of scientists from Central Asia to write better proposals to enable them to compete for funds internationally. At present, it is too early to report on measures such as the value of funding secured for civilian research.

Stabilization Operations - Explosive Remnants of War - The U.S. funded mine clearing activities in the Nagorno-Karabakh (NK) area as it has done in the past. Currently, 80 percent of minefields in NK have been cleared; 11 percent of these were cleared in FY 2007. As a result, three million square meters of land containing anti-tank and anti-personnel mines can now return to agricultural and other civilian purposes. Out of the 68 percent of land cleared since 2001, 5.5 percent, or eight million square meters, was cleared in FY 2007. Along with mine-clearing project, the U.S. funded mine risk education in 116 villages and four towns, which benefited 20,743 people. As a result of mine clearance efforts, accident rates fell in 2007; there were only two accidents in 2007 compared to 11 in 2006. The two casualties in 2007 involved one child and one adult, compared to 14 casualties in 2006 involving eight children and six adults. Only one of the accidents in 2007 involved unexploded ordnance, compared to nine in 2006.

Counter-Narcotics - In FY 2007 the U.S. supported a variety of projects that increased regional cooperation in law enforcement and counter narcotics operations, primarily through the United Nations Office on Drugs and Crime (UNODC). The centerpiece of the USG’s work in counter-narcotics is the Central Asia Regional Information Coordination Center (CARICC), which serves as a clearinghouse for information on counter-narcotics for Azerbaijan, Kazakhstan, the Kyrgyz Republic, Russia, Uzbekistan, Tajikistan, and Turkmenistan. The USG assisted member states to develop legal instruments, agreements, and action plans for the establishment and organizational structure of CARICC, as well as drafting CARICC rules and regulations, including procedures related to the competitive selection, vetting, contracting and retention of personnel (based on the models of Europol, Interpol and other international organizations). As a result of U.S. and other support, the CARICC agreement was signed by the presidents of all seven member countries in FY 2007, and it began operations with assistance from the International Criminal Police Organization (Interpol), the European Police Office (Europol), and the World Customs Organization (WCO).

The USG also supported drug law enforcement systems for criminal intelligence, information and data collection, analysis and exchange. In FY 2007 all five Central Asia countries received identical Criminal Intelligence System Software to facilitate the monitoring of illegal software use on both national and regional levels. The U.S. also trained nine analysts from the Uzbek Ministry of Interior and the National Center for Drug Control in the use of the telephone analysis and Oracle Discovery Software tools. Similar training was organized for ten law enforcement officers in Tajikistan and 20 law enforcement officers in Turkmenistan. The U.S. held regional training seminars on operational criminal intelligence analysis, which were attended by 12 law enforcement officers from Turkmenistan and 15 law enforcement officers from Uzbekistan.

Additionally, the USG also supported policy engagement and various other activities through the UNODC Paris Pact, which provides a forum for international discussion of counter-narcotics priorities in Central Asia. The USG partially financed the May 2007 Paris Pact Expert Round Table that brought together 94 participants from 27 countries and 10 international organizations, including Interpol, the North Atlantic Treaty Organization (NATO), the OSCE, and the George C. Marshall Center. All of the participants supported the UNODC action plan and agreed to launch a time-bound operation targeting acetic anhydride in the second half of 2007.

With U.S. assistance, the UNODC Regional Office for Central Asia improved the functionality of its website databases for donors. An on-line forum now allows drug liaison officers and other officials to discuss drug- and crime-related topics and share their experiences and expertise. The U.S. financed the on-line publication of over 30 updated statistical tables and digital maps covering the last five years of seizures, HIV/AIDS patients, drug users, and crime and population figures. UNODC also used USG funds to prepare a Compendium of Drug-Related statistics for the Central Asia region to update donors on drug trends in 2006.

The USG also supported extensive activities in the area of precursor chemical control in Central Asia. All five Central Asian countries adopted national laws on precursor control based on UN conventions. A Computer-Based Training Center was established in the State Customs Committee of Uzbekistan and precursor control modules were installed to conduct precursor and drug interdiction training for operational-level customs officers. The USG also funded a precursor-training course in Dushanbe for 40 law enforcement officers from Afghanistan and Tajikistan. In addition, the U.S. organized Operation Transshipment, a regional precursor chemical control operation at 20 strategic border checkpoints in the five Central Asian countries. Officers from the selected border checkpoints underwent computer-based and on-site training. During the operation, expert mentors at each checkpoint provided training on preventing the diversion of precursor chemicals. Operation Transshipment resulted in seizures of drugs and precursors, including three tons of sulfuric acid.

Transnational Crime - Financial Crimes and Money Laundering - The USG funded an advisor for the Eurasian Group on Money Laundering (EAG), a Financial Action Task Force-style regional body comprised of Russia, China, Uzbekistan, Kazakhstan, the Kyrgyz Republic, Belarus, and Tajikistan. The United States is one of approximately twenty-five national and international observers to EAG. Most EAG members have nascent financial intelligence units. By developing and then implementing common operational standards, EAG members will be able to collect, competently and predictably analyze, and exchange consistent and high-quality information on money laundering in a timely and efficient manner. In FY 2007, the advisor helped the EAG consultative group create a standards framework and agree on a process to develop standards. The advisor assisted in the EAG’s formation of an expert subgroup to develop analysis standards. This subgroup, comprised of EAG members and observers, academia, and industry, drafted an initial set of 25 analysis standards covering knowledge and skills of analysts. The advisor also provided technical assistance to Uzbekistan and Kazakhstan.

GOVERNING JUSTLY AND DEMOCRATICALLY

Regional assistance funding for democracy programs in FY 2007 sought to bolster democratic reforms, to assist NGOs to become self-sustaining, and to build ties across borders between communities torn apart by war.

Governing Justly and Democratically – Analytical Tools - The USG used regional assistance in FY 2007 to fund the compilation and publication of three key analytical reports, which permit the USG to evaluate the progress towards democracy that countries in Europe and Eurasia are making. The Nations in Transit report is the USG’s most comprehensive and in-depth annual evaluation of the progress made by each of the 27 transition countries of Europe and Eurasia over the past year; 2007 was the report’s eleventh year of publication. The second report, the NGO Sustainability Index, is the USG’s most inclusive tool tracking the strength and viability of NGOs in Europe and Eurasia. It measures seven different dimensions of NGO sustainability such as legal environment, organizational capacity, advocacy, financial viability, service provision, infrastructure, and public image; 2007 was its eleventh year of publication. Finally, the Media Sustainability Index is the USG’s most reliable measurement of media sector development throughout Europe and Eurasia.

These three tools are published electronically, though Nations in Transit is also published in bound volumes. All are used by USG officials and numerous host governments, donors, and public and private organizations in the United States and overseas. The USG and other donors use the indices to monitor country progress, guide strategic planning and program design, and shape assessments. The region’s political activists, journalists, and governments also use the analysis to foster and inform debates on democratic development. Both the NGO Sustainability Index and the Media Sustainability Index are regarded as models of sector analysis. The Media Sustainability Index was replicated in North Africa and the Middle East, with planning underway for a similar product for Africa.

Governing Justly and Democratically – Research Tools - The USG funded advanced policy research in FY 2007 related to democratic governance. Seven organizations received grants to carry out national, merit-based competitions to distribute funds to individual scholars and institutions, with a focus on cross-border research and critical current issues. In FY 2007 other USG agencies increased their use of the research products and hosted the scholars under the program to strengthen and expand their Open Source research pools. The program began developing a new open source research data system and some of its scholars were employed by the USG as analysts. Post-doctoral research carried out under the program in 2007 include the following publications: Regional Policy Symposium Briefing: The Former Soviet Republics of Central Asia and the Contemporary Silk Road; Policing the Post-Soviet Frontier: Militaries and Paramilitaries after the Fall of Communism; Group Allegiance and State Institutions in Kyrgyz Identity; Russia's Epidemic Generalizes: HIV/AIDS Among Women and Problems of Access to HIV Services in the Russian Regions; and Islamic Revivalism and Political Attitudes in Uzbekistan.

Rule of Law and Human Rights - In FY 2007 the USG improved the trial advocacy and client-interviewing skills of defense bar attorneys in Central Asia through training for criminal defense attorneys from Uzbekistan, Kazakhstan, and the Kyrgyz Republic. Objectives of the training included promoting the use of national commitments under international law to press for criminal law reforms and leveraging major changes in criminal law and procedure. In FY 2007 roundtables of attorneys from Uzbekistan, Kazakhstan, and the Kyrgyz Republic discussed jury trial legislation and the transfer of the power of arrest from the prosecution to the judiciary. In addition, 65 attorneys participated in three two-day trainings on strategic litigation, motion practice, client interviewing skills, and protection strategies. Networking and roundtable meetings on positive criminal law reforms increased cross-border links between attorneys, who exchanged tactics on advancing legislative reforms. the Kyrgyz Republic, for example, will refine its pending jury trial legislation in light of the developing system in Kazakhstan.

ECONOMIC GROWTH

In the economic growth sector the USG assistance priority in FY 2007 was to help the countries of Eurasia to advance market-oriented reforms while increasing regional economic, business, and trade links necessary to advancing and sustaining individual states’ economic reforms and growth.

Macroeconomic Foundation for Growth - Fiscal Policy - The U.S. targeted key preconditions for fiscal transparency and accountability within the Eurasia region in FY 2007. These preconditions included states’ compliance with international accounting and auditing standards, the development of more competent and ethical professional accountants, and internal and external auditors supported by reputable professional associations that serve the public interest.

As part of the U.S. program in the region, the U.S. piloted new quantitative and qualitative analytic tools in order to close compliance gaps with the international standards of financial transparency and accountability issued by the International Accounting Standards Board and the International Federation of Accountants (the two worldwide standard setters in the fields of public and private sector accounting, auditing, and ethics).

The USG began a pilot project in Moldova to introduce an integrated set of model compliance tools in FY 2007, including twinning alliances (partnerships), compliance action plans, monitoring and evaluation frameworks, and benchmarking methodologies. The twinning alliances leveraged USG resources because they allow local Moldovan associations to partner with more advanced European professional associations and multi-national audit firms as development mentors.

Trade and Investment - The U.S. financed the Central and South Asia Regional Telecom Policy and Regulatory Forum, which enabled 76 individuals, including 26 government telecommunications officials from seven countries, to discuss telecommunications policy and regulatory frameworks. At the close of the Forum, participants praised its usefulness, particularly the discussions on fiber optic cable connectivity. In Georgia, the U.S. gave technical assistance in tourism to the Government of Georgia, enabling the government to create a sound investment policy for public and private tourism infrastructure.

Financial Sector – Financial Sector Enabling Environment - In FY 2007 the U.S. worked with states Eurasia to harmonize their respective financial markets and related laws, regulations, policies and practices through a regional approach. The program involved the adoption of international standards in actuarial sciences and investment fund asset management, and it involved cost-sharing with private and public financial sector institutions. The USG paid for specialists from Ukraine (the first country in the region to adopt Global Investment Performance Standardsin investment fund asset management) to work with their Kazakhstan counterparts, who are currently reviewing the process of adopting these standards in Kazakhstan. Also, three representatives of the Association of Actuaries in Kazakhstan participated in a study tour to Poland to learn about certification programs, and develop a concept for a regional actuary school in Central Asia. Addtionally, the U.S. trained seven regulators from Kazakhstan and Ukraine in international standards related to accounting as applied to investment fund performance measures.

Financial Sector – Financial Services - Congress established Enterprise Funds as unique “public-private partnerships” to invest USG funds the nascent market economies of Eurasia. There are currently three Enterprise Funds in the countries of the former Soviet Union, into which new capital is flowing from investors seeking to expand their markets.

Enterprise funds provide capital, loans and technical advice in situations where financial markets are still evolving and the legal, regulatory, and institutional environments are not fully developed. Each Enterprise Fund operates as an independent, autonomous organization, and is directed by a Board of Directors with the appropriate legal structure and authority to manage its resources. The SEED and FSA Acts provide considerable autonomy to the Funds, with the USG having oversight responsibility for their operations. The majority of the Enterprise Funds have privatized their management companies in order to attract new private investment capital and provide future incentives for their employees. The Funds have also introduced home mortgage lending, mortgage securitization, credit cards, pension funds, mezzanine financing, leasing, and investment banking. In addition, each Fund has become a resource to which other investors turn for information on the business climate in the countries of operation.

The final chapter of the Enterprise Fund program is now being written as the Central Asia, Russian and Western NIS Funds establish non-profit foundations. These “legacies” are being designed to further support growth of the private sector in each respective country. The Funds make available the profits that they have earned, plus 50% of the original grant. The following table shows the funding status of the three FSA-funded Enterprise Funds as of the end of FY 2007.

Enterprise Funds in Eurasia:

Enterprise Funds

Funds Authorized

Funds Obligated

Funds Expended

The U.S.-Russia Investment Fund (TUSRIF)

$440m

$328.87m

$328.87m

Western NIS Enterprise Fund (WNISEF)

$150m

$150.00m

$147.44m

Central Asian-American Enterprise Fund (CAAEF)

$150m

$106.00m

$106.00m

Total

$740m

$584.87m

$582.31m

As of September 30 2007 TUSRIF had invested $324 of its $328.9 million grant in 46 SMEs, and had provided over $55 million in loan capital through 60 branches of 33 private Russian bank partners in support of 6,000 small companies. In addition to the $328 million invested by the USG, TUSRIF has mobilized an additional $1.2 billion in financing from international financial institutions, private investors, and the four financial services companies created by TUSRIF. TUSRIF has ended its active investment phase and only invests USG grant resources for subsequent investments in the existing portfolio.

TUSRIF has liquidated the majority of its investments and expects to make profitable exits from the six remaining investments in its portfolio over the next 12 to 18 months. The Fund estimates that proceeds from the liquidation of the Funds investment portfolio will exceed the original grant of $328 million by 10 to 20%. The TUSRIF Board has submitted a plan for the Fund’s termination and liquidation, proposing that TUSRIF use a portion of the liquidation proceeds to establish the U.S. Russia Foundation for Economic Advancement and the Rule of Law. This Foundation would be a perpetual entity to promote private sector development policies and practices, as well as the rule of law, in Russia.

The WNISEF supports the development of SMEs in Ukraine, Moldova, and Belarus through the infusion of capital and technical assistance to SMEs. All of the $150 million originally authorized has been obligated. WNISEF monitors Moldova through its Kyiv office in Ukraine and has studied opportunities for investing in Belarus.

WNISEF has devoted significant investment to meet the rising demand for home mortgages as well as business and consumer lending. The WNISEF management team has a steady pipeline of potential deals as a variety of foreign investors are generating new interest in Ukraine and Moldova. By December 2007 Horizon Capital hopes to finalize funding for a new $300 million private equity fund. In FY 2007 WNISEF and the Emerging Europe Growth Fund (EEGF) received interest from international investors as the Ukrainian and Moldova economies enjoyed a surge of attention. These enquiries have resulted in the sale of Shostka Dairy in Ukraine to a French dairy producer, and a management buyout of ECOPROD, a large, diversified Ukraine agricultural company. AKV Confectionary Company expanded its business, opening a wholly owned subsidiary in Russia. WNISEF and EEGF co-invested in a brick manufacturer to produce a high-quality bricks that will target the Polish marketplace beginning in January 2008.

CAAEF promotes the creation of SMEs in Central Asia. Between 1994 and 2002 CAAEF made 35 direct equity investments totaling $69 million, 365 SME loans totaling $38 million, and 3,180 micro-credit loans totaling $10.4 million. In addition, CAAEF leveraged additional investments and loans from joint venture partners and banks totaling $69 million. The Fund has liquidated its investments; proceeds amount to approximately $16 million. The liquidation proceeds are being used to fund the CAAEF’s legacy foundation. In FY 2007 the Foundation provided its first cycle of scholarships, 66 in all, and conducted its first faculty development training.

Infrastructure - Modern Energy Services - The U.S. assisted five senior Turkmenistani Government officials in the oil and gas sector to travel to the U.S. to learn about American technology, oil and gas exploration and production. While there, the officials met with U.S. oil and gas sector companies and government officials. In FY 2007 the USG also funded a feasibility study on the modernization of Russia’s Dubrovskaya Power Plant to determine the technical and economic feasibility of adding 500 megawatts of new capacity. The plant’s owner will use the feasibility study to determine whether to add the new capacity, to prepare a conceptual design of the additional power units, and to obtain financing.

The U.S. also financed a combined heat and power plant modernization feasibility study near the city of Dnipropetrovsk in Ukraine. The study now only determined the economic and technical feasibility of modernizing the plant, but also produced a preliminary design and cost estimate, identified financing options, and prepared tender. The plant will use the feasibility study to obtain financing and will then hire a contractor to construct the plant. Once it is modernized, the plant will supply more heat to residential district heating systems in Dnipropetrovsk that have been experiencing heat shortages in the coldest months. In addition, the modernized plant will produce more electricity, improve the economics of aerospace manufacturing, and have a positive environmental impact.

The USG supported transmission investment analysis in 2007 among Black Sea power grid operators from Armenia, Bulgaria, Georgia, Moldova, Romania, Ukraine, Russia, and Turkey. They identified critical gaps in the Caucasus and Moldova-Ukraine-Romania networks, which will require high priority investments to remove network congestion and build transmission corridors for intra- and inter-regional trade, grid stability, security, and efficient operations. Participants agreed to share extensive proprietary data and collaborative models and regional analysis.

Private Sector Competitiveness - The USG funded an annual multi-country competitiveness event in FY 2007, which focused on economic growth and competitiveness projects. All participant countries agreed to share best practices and cooperate regionally in agriculture, information technology (IT), and cross-border trade. The U.S. also developed a regional database of agricultural production companies to facilitate the ability of individual firms to find partners in other countries.

USG resources also provided firm-level training to Armenian firms on international performance standards to improve their efficiency and profitability. Surveys of a sample of companies indicated that those that adopted these performance standards realized almost immediate productivity improvements of 60% or more. These trainings were conducted in collaboration with country-specific IT associations, which recently created a regional association to promote its member to the European Union as attractive locations for software development.

INVESTING IN PEOPLE

The inability of Eurasian governments to deliver essential health, education, and other social services undermines citizens’ confidence in their governments, and accounts for the dramatic increase in premature adult death and disability since the breakup of the Soviet Union. Regional health programs address critical region-wide health issues, making U.S. bilateral health sector assistance more cost effective by analyzing trends, identifying best practices, and sharing experience within the region. This sharing of regional expertise and experience has been particularly effective in securing policy change, spurring host country action and leveraging outside resources.

Health - HIV/AIDS - USG regionally funded HIV/AIDS activities in FY 2007 included a three-week, five-country implementation assessment of a USG project in Central Asia, which resulted in recommendations for changes in programmatic structure and implementation. In addition, work began on the design of a regional substitution therapy policy project that will assist advocates and policy makers in the region in making incremental policy changes to support the effective implementation of substitution therapy. U.S. regional funding also paid for the planning of the Virtual Leadership Development Program, which will address HIV/TB co-infection by strengthening national leadership capacity to address the lack of coordination of TB and HIV/AIDS programs. The U.S. also provided regional HIV/AIDS advisor to provide assistance to such programs in the region.

Health – Tuberculosis - Regional funds provided by the U.S. enabled the World Health Organization to provide its Directly Observed Treatment Short course (DOTS) training to 18 national TB program managers, and to print and distribute WHO Guidelines for the Programmatic Management of Drug Resistant Tuberculosis. The U.S. established the Russian/English TB website within the existing Eurasia Health Knowledge Network. An online forum about multi-drug resistant TB drew over 50,000 hits, originating from 54 different countries, including Russia, Ukraine, Georgia and Kazakhstan. The USG also funded drug resistance surveys and second-line drug susceptibility testing to measure drug resistant TB in Russia. With U.S. financing, the WHO organized a high-level forum in October 2007 that brought together ministers of health, justice, finance, and education together with TB experts to discuss the social and economic impact of TB in the region, and to strengthen political support for the WHO’s Stop TB Strategy.

Health - Maternal and Child Health - In FY 2007 the USG funded UNICEF to double the use of iodized salt in the countries of the former Soviet Union from 28% in 2000 to almost 50% in 2007. Georgia, Armenia, Kazakhstan, Turkmenistan, Belarus, Uzbekistan and Krygystan have now eliminated iodine deficiency.

HUMANITARIAN ASSISTANCE

The USG provided humanitarian assistance throughout Eurasia. In FY 2007 they delivered and distributed nearly $172 million in humanitarian commodities. Regional funds supported specific infrastructure development programs, too, including a hospital upgrade project in Georgia, a medical training project in Tajikistan, and a humanitarian cargo staging facility that provides pre-staged disaster assistance packages. The packages are held at the staging facility in Germany and in three Eurasian countries for use. In FY 2007 these packages assisted victims of earthquakes in Tajikistan.

The USG provided subsistence-level humanitarian assistance to victims of the Nagorno-Karabakh conflict to meet basic health, water and shelter needs. Close to 150 villages and towns in Nagorno-Karabakh were damaged, and more than 60% of all pre-conflict housing was completely or partially destroyed. Clinics, first-aid stations, educational institutions, theaters, museums, cultural centers and other social or economic facilities were also destroyed. The U.S. fund renovated 83 shelters for 440 beneficiaries in two regions. Four water systems were also renovated. A total of 85 medical personnel countrywide received clinical training on the integrated management of childhood illnesses. Finally, the U.S. gave medical equipment and supplies to 20 rural health posts in Askeran, nine in Mardakert, and five in Hadrut.

FY 2007 Measures of Regional Performance


The following data are based on the Monitoring Country Progress in Europe and Eurasia system developed by the United States Agency for International Development (USAID) to measure and track progress in the region. The system uses four different indices to monitor progress, drawing on readily available standardized country-level data on economic reform, economic structure and performance, democratic reform, and human capital. The primary data sources are the European Bank for Reconstruction and Development (EBRD), the World Bank, the United Nations Children’s Fund (UNICEF), and Freedom House. The data for each of the four indices are converted and standardized to a 1-to-5 scale, with a “5” representing the best performance of the Eastern Europe and Eurasia region, and a “1” the least advancement of the region.

More detailed information on the progress of each country in Eurasia can be found in the country reports that follow.

Democratic Reform in Eurasia

Date: 01/01/2008 Description: Democratic Reform in Eurasia.  Chart shows Democratic Reform for FSA Countries.  State Dept Photo


Economic Performance in Eurasia

Date: 01/01/2008 Description: Economic Performance in Eurasia. Chart shows Economic Performance Index for FSA Countries.  State Dept Photo


Economic Reform in Eurasia

Date: 01/01/2008 Description: Economic Reform in Eurasia. Chart shows Economic Reform for FSA countries. State Dept Photo


Human Capital Progress in Eurasia

Date: 01/01/2008 Description: Human Capital Progress in Eurasia. Chart shows Human Capital Index for FSA countries.  State Dept Photo



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