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FY 1995 Annual Report on "U.S. Government Assistance to and Cooperative Activities with the New Independent States of the Former Soviet Union," published April 1996. Prepared by the Office of the Coordinator of U.S. Assistance to the NIS Submitted Pursuant to Section 104 of the FREEDOM Support Act (Public Law 102-511).
The following country assessments provide an overview of the U.S. Government assistance programs in each of the twelve New Independent States in FY 1995, as well as an evaluation of the effectiveness of the various types of programs. These assessments are based on information provided by our embassies and by the U.S.-based representatives of the various governmental and non-governmental agencies providing assistance to the NIS. Additional information on specific developments in our assistance programs during FY 1995 appears in the January-March, April-June and July-September 1995 Quarterly Reports. Countries
The U.S. Government provided over $138 million in all forms of assistance to Armenia in FY 1995. (This includes appropriated funds, as well as almost $28 million in donated humanitarian goods transported by the U.S. Government.) Humanitarian aid accounted for 85 percent of this total, reflecting the economic devastation caused by Turkish-Azerbaijani blockades, severe earthquake damage in Northern Armenia, and the virtual paralysis of most of the country's factories. Although Armenia's need for humanitarian assistance is gradually decreasing as the country's economic stabilization proceeds, it will continue to be a sizable need until there is substantial progress in resolving the Nagorno-Karabakh conflict. Successful resolution of the conflict will allow Armenia to reopen its main historic trade routes--railways, in particular--to the east through Azerbaijan and to the west through Turkey. The Government of Armenia and the international donor community have agreed on the need to move increasingly towards development assistance and away from humanitarian assistance, so as to promote Armenia's transition to a democratic, free-market system. U.S. Government assistance will continue be critical to the success of this transition.
Despite political and economic hardships, Armenia made significant progress in FY 1995: inflation fell sharply, the exchange rate of the dram (Armenia's national currency) stabilized, and the country's economy grew at a rate of approximately five percent. Important systemic reforms included the elimination of bread subsidies and an increase in electricity tariffs. In mid-1995, bankruptcy and collateral laws were enacted, and broad-scale privatization got under way. Work on new criminal and civil codes was in progress.
In FY 1995, our assistance programs in Armenia were multifaceted and closely coordinated among the State Department, USAID, USIA, USDA and the Treasury Department, as well as with other donors and the Government of Armenia. With outside help, the Government of Armenia succeeded in stabilizing the country's economy, and began moving steadily to privatize state-owned enterprises and create a legal framework for competitive, private sector growth. The Armenian Government's able economic team, led by Prime Minister Bagratyan, continued to work closely with our embassy and USAID, as well as other bilateral and multilateral donors, in planning and implementing Armenia's transition to a free-market economy. The Government of Armenia also stepped up its efforts to create a base for trade and investment. For example, the Armenian Government used $118 million in proceeds from the monetization of wheat and other humanitarian sales to offset its balance-of-payments gap in order to be able to work out structural adjustment programs with the International Monetary Fund (IMF) and the World Bank.
Given Armenia's increased emphasis on economic development, trade and investment, our non-humanitarian assistance programs in Armenia have three strategic objectives: (1) to help create a legal, regulatory and policy framework for broad-based competition and economic growth in energy, agriculture, housing and other sectors, (2) to promote fiscal reform, and (3) to develop a competitive and efficient private financial sector.
Humanitarian Assistance: In FY 1995, the U.S. Government, through close coordination among the Coordinator's Office, USAID and the Department of Agriculture (USDA), shipped 138,000 tons of wheat and 20,000 tons of soybean to Armenia--the bulk of U.S. food aid to Armenia. To date, U.S. Government-funded food assistance has reached over 1.5 million out of Armenia's total population of 3 million people. The U.S. Government also provided 25,000 metric tons of kerosene and 81,000 tons of mazout (low-grade fuel oil) to help Armenia through the cold winter months, when electricity is available for only two to four hours a day in the cities and is virtually unavailable elsewhere. The U.S. Government Kerosene Program, which targets 210,000 of the most poverty-stricken families in Armenia under a countrywide USAID-sponsored assessment program, as well as 1,100 schools, has literally saved lives, especially in the earthquake-ravaged city of Gyumri. In FY 1995, the U.S. Government, in collaboration with U.S.-based private voluntary organizations (PVOs), organized a total of nine airlifts and 202 surface shipments of food, clothing and medicines valued at $33 million to Armenia. Increasingly, Armenian nongovernmental organizations (NGOs) and the Government of Armenia are developing the capacity to identify vulnerable groups and to develop and manage humanitarian assistance programs on their own.
Economic Development Programs: USAID-funded advisors helped the Government of Armenia to develop reform-oriented laws and enabling legislation, including drafts of a civil-commercial code, mortgage law and condominium law. The USAID-funded Center for Policy Research and Analysis helped the Government of Armenia prepare for negotiations on joining the World Trade Organization, establish a public investment program, and improve its methodology for measuring national economic performance. In addition, a U.S. Treasury Department resident budget advisor helped draft a national budget law based on Western standards; training in national budget formulation and implementation will be provided in 1996. A. U.S. Treasury Department resident advisor for government securities began to develop a government-debt securities program, and public auctions of short-term, zero-coupon bonds began in September. Armenian high-school students proved exceptionally receptive to Junior Achievement's USAID-funded program on free enterprise and market economics. Junior Achievement's high-school economics curriculum was adopted as a nationwide requirement.
Financial-Sector Reform Programs: In order to facilitate the development of a competitive and efficient private financial sector, USAID, TACIS (the European Union's technical assistance program for the NIS), and the IMF funded the establishment of a modern electronic payment system in Armenia. In addition, to help mobilize capital, the Eurasia Foundation's Small and Medium Loan Fund opened the country's first market-oriented credit facility, under which the Eurasia Foundation plans to make 25 loans to small-and medium-sized enterprises, with an expected loan exposure of $600,000 by April 1996. Several USAID-funded U.S. private voluntary organizations (PVOs) helped Armenian private enterprises gain access to the Eurasia Foundation's line of credit.
Energy-Sector Programs: USAID's Energy-Sector Reform Project funded technical assistance and training (implemented by a resident energy advisor), several feasibility studies and technical studies which will leverage significant additional resources from international financial institutions, and the procurement of critically needed equipment and commodities to support the Armenian energy sector's transition to a market economy. While these commodities were urgently needed during the past two winters, USAID is now focusing on providing equipment tied to projects which emphasize institutional reform in the energy sector.
Agricultural-Sector Programs: USDA's FREEDOM Support Act-funded Extension Program provided advisory services and support to private farmers in 24 of Armenia's 37 regions, facilitated the formation of six farmer associations and six marketing initiatives, and laid the groundwork for several agribusiness associations. USDA's Cochran Fellowship Program provided training to six Armenian agriculturists. In FY 1996, USDA will launch a large effort to revive the production and export of Armenia's world-class vegetables and fruits.
Democracy Programs: Due to the large amount of resources required for our humanitarian assistance efforts in Armenia, only limited resources were available for democracy-related programs in FY 1995--only $500,000, or less than one percent of the entire budget for assistance to Armenia. Our embassy in Armenia is spearheading the expansion of democracy-related assistance to Armenia in FY 1996, including support for the development of a civil society, parliamentary and political-party development, the holding of free and fair elections, and the development of an independent judiciary and independent media.
Training and Exchange Programs: The U.S. Government funded a large number of exchanges throughout FY 1995. Some 140 Armenians participated in USIA-sponsored exchange programs, including some 90 secondary-school students. Six lawyers and judges, and six political party representatives traveled to the United States for three weeks under USIA's FREEDOM Support Grants Program to study the U.S. judicial and political systems, respectively. In addition, five Armenians came to the United States for one month under USIA's International Visitor Program on programs in journalism, privatization and civil society. Meanwhile, USAID's NIS Exchanges and Training (NET) Project brought 85 Armenians to the United States for training, including eleven senior Armenian Government officials who participated in a program on legislative theory and drafting. USIA and USAID also targeted some of their exchange programs at the promotion of free and fair parliamentary elections in July 1995, which were nevertheless judged by international observers to be "free but not fair."
Trade and Investment Programs: While the rate of investment remained low, it is expected to increase as economic development proceeds in Armenia. The first contract with a U.S. energy firm--to develop a privately owned and managed five-megawatt power station--was recently signed, and. U.S. investors were active in the telecommunications sector as well. There is considerable potential for more U.S. investment in the high-technology, power and agribusiness sectors as economic growth accelerates. Our embassy is monitoring investment opportunities and coordinating with the Government of Armenia, the Department of Commerce and the Department of State in order to help U.S. firms take advantage of these opportunities.
In FY 1995, the U.S. Government provided over $25 million in assistance to Azerbaijan. (This includes appropriated funds, as well as roughly $2.5 million in donated humanitarian goods transported by the U.S. Government.) Humanitarian assistance accounted for 92 percent of this total ($23 million). U.S. Government assistance to Azerbaijan was distributed as follows: roughly 34 percent through the U.S. private voluntary organization Save the Children, 44 percent through USDA, 17 percent through United Nations agencies and 5 percent through U.S. Government-funded training and exchange programs. Section 907 of the FREEDOM Support Act, which prohibits U.S. Government assistance to the Government of Azerbaijan, continued to limit our assistance efforts and precluded much-needed assistance in the areas of health care, education, political and economic reform, and environmental clean-up.
Azerbaijan made dramatic progress in the area of macro-economic stabilization in FY 1995. Working closely with the International Monetary Fund (IMF), the Azerbaijani Government tightened its monetary policy and enacted a restrictive budget for 1995. In 1996, the Government will begin implementing a privatization program.
Humanitarian Assistance: Several U.S. private voluntary organizations (PVOs) distributed U.S. Government-funded humanitarian assistance--primarily food, clothing and shelter--to 700,000 refugees and internally displaced persons (IDPs) and tens of thousands of vulnerable people throughout Azerbaijan. The main U.S. PVOs operating in Azerbaijan are CARE, ADRA, World Vision, International Rescue Committee (IRC), Relief International, the American Red Cross, and the "Save the Children" Federation. Working conditions for PVOs in Azerbaijan remained difficult in FY 1995. Corrupt local officials continued to sell fraudulent documents to ineligible people who want access to free food. Although the PVOs worked to minimize this problem by using alternative documentation, abuses persisted. To make matters worse, border problems and transport bottlenecks (such as strikes in the Turkish shipping industry) delayed food-aid shipments.
Over $8 million in U.S. Government humanitarian assistance was distributed through a USAID umbrella grant to Save the Children, which supported the following programs in FY 1995: (1) CARE distributed 219 metric tons of food to 47,000 beneficiaries in IDP camps and adjacent districts in Southern Azerbaijan; (2) IRC distributed clothing to 25,000 needy people and successfully launched a cost-effective self-built mud-brick shelter and sanitation project for 7,500 beneficiaries in six regions; (3) Relief International's mobile health units provided basic medical services to 25,000 people per month and distributed other humanitarian assistance to 200,000 people in ten provinces; (4) World Vision provided food to 126,000 people, constructed basic sanitation facilities for 27,000 people and distributed winter clothing to 10,000 people; and (5) the American Red Cross distributed food and shelter materials to 20,000 vulnerable people in Azerbaijan and started a new border-zone relief program in conjunction with the International Committee of the Red Cross (ICRC).
Under a separate program, the State Department's Bureau of Population, Refugees and Migration (PRM) funded a cost-effective American Red Cross project in Azerbaijan's southern IDP camps, which now provides water and sanitation to 47,000 IDPs. PRM also financially supported the activities of the United Nations World Food Program and U.N. High Commission on Refugees in Azerbaijan.
USAID also contributed $1.3 million to the United Nations World Food Program's humanitarian activities in Azerbaijan and $1.2 million to UNICEF to help control Azerbaijan's diphtheria epidemic.
USDA Food Assistance: In FY 1995, USDA provided $11 million in food aid to Azerbaijan. The food aid, which consisted mainly of wheat flour, rice and vegetable oil, was distributed by CARE and ADRA. CARE, which has the largest program of any PVO in Azerbaijan, distributed USDA food aid to 468,000 people in several regions, while ADRA provided USDA food aid to 207,000 needy people, including 25 percent of the population of the province of Naxcivan, which is cut off from the rest of Azerbaijan and faces severe economic dislocation as a result of the Nagorno-Karabakh conflict.
Training and Exchange Programs: USIA's year-long Secondary School Exchange Program brought 50 Azerbaijani high school students to the United States in FY 1995, and an additional 53 Azerbaijanis came to the United States on other USIA programs. USDA's Cochran Fellowship Program, which was successfully launched in Azerbaijan in July, brought four Azerbaijani agriculturists to the United States to learn how U.S. farms produce and market crops. The Cochran Program can have a major impact on Azerbaijan's agricultural sector, particularly if farm privatization proceeds. A total of 48 Azerbaijanis received U.S.-based training under USAID's NIS Exchanges and Training (NET) Project, including eight Azerbaijani commercial lawyers, and twelve young political leaders, who came to the United States prior to the November parliamentary elections in Azerbaijan to study campaign strategies, press relations and polling practices. Also in FY 1995, 14 private-sector Azerbaijanis came to the United States under USIA's International Visitor (IV) Program to familiarize themselves with electronic media and democratic processes. USIA also brought a Fulbright professor and an English-language teaching fellow to two of the new private universities in Baku (which are on the cutting edge of change in Azerbaijan), sent two Azerbaijani scholars to the United States, and funded a UCLA-Khazar University partnership involving reciprocal faculty exchange visits.
Section 907 Restrictions: In FY 1995, Section 907 of the FREEDOM Support Act continued to preclude bilateral U.S. Government assistance to all Azerbaijan Government institutions, including schools and hospitals. Meanwhile, health care and public education continued to deteriorate for the vast majority of the country's population. Although U.S. PVOs provided a large amount of humanitarian assistance, Section 907 prevented them from upgrading medical care and helping schools, even among the refugee and IDP population. Similarly, the U.S. Government was unable to help Azerbaijan clean up its ecologically devastated Apsheron Peninsula, which is home to more than 3 million Azerbaijanis. Section 907 also continued to limit the U.S. Government's ability to help build democracy and promote economic reform in Azerbaijan. For example, during the run-up period for the November parliamentary elections and constitutional referendum, Section 907 prohibited the U.S. Government from working with the Government of Azerbaijan to make the elections and referendum more democratic; U.S. Government democracy-related assistance was limited to a minimal effort in the area of political party building.
In FY 1995, the U.S. Government provided over $46 million in assistance to Belarus. (This includes appropriated funds, as well as $17.5 million in donated humanitarian goods transported by the U.S. Government.) The goal of our assistance to Belarus is to help the country develop into an independent, non-nuclear, market-oriented, democratic state. In FY 1995, however, Belarus continued to lag behind its neighbors in terms of progress toward reform; consequently, U.S. technical assistance to Belarus remained extremely modest. Our assistance programs were sharply focused on areas where reform shows the most promise of taking hold and where U.S. interests are most clearly defined--the three priority areas were economic restructuring, democratization (broadly defined), and humanitarian assistance. Our embassy in Belarus reported that the overall effectiveness of most U.S. Government assistance programs in Belarus was quite high, especially our programs in support of economic restructuring and democratization.
In FY 1995, the general trend of U.S. Government assistance to Belarus was to move away from humanitarian assistance towards programs which support the building of democratic and free-market institutions. At the same time, however, the lingering effects of the Chornobyl disaster prolonged the country's need for humanitarian assistance, and will do so for years to come. The U.S. Government continued to demonstrate its commitment to stay engaged with Belarus on this painful issue: USAID funded a hospital partnership and a program with the Belarusian Children's Fund, both of which were focused on health issues relating to the Chornobyl disaster. Even though they did not receive as much funding as the Cooperative Threat Reduction (Nunn-Lugar) programs, USAID and USIA programs had a strong impact because they were focused on specific areas where assistance can be most effective. For example, programs that target the up-and-coming generation of Belarusian reformers are most likely to have a significant long-term impact; in FY 1995, U.S. Government assistance programs brought some 150 students and young professionals to the United States.
Training and Exchange Programs: USIA-sponsored exchange programs, the American Bar Association's Central and Eastern European Law Initiative (ABA/CEELI), and a few other FREEDOM Support Act-funded programs were the highlights of our efforts to build support for democratic institutions in Belarus in FY 1995. Some 650 Belarusians came to the United States on USIA-sponsored exchange programs, including 550 secondary-school students. The most successful exchange program was a three-week USIA International Visitor Program for eight members of the Belarusian Constitutional Court, who returned from their U.S. study tour with a new understanding of their role in the Belarusian political system and a real appreciation for the rule of law and judicial review. In FY 1995, 39 Belarusians came to the United States for short-term training under USAID's NIS Exchanges and Training (NET) Project in the following areas: business development, economic restructuring and nongovernmental organization (NGO) development.
Rule-of-Law Programs: The American Bar Association's USAID-funded Central and East European Law Initiative (ABA/CEELI), which has a permanent office in Minsk, continued to facilitate the development of the legal profession in Belarus by offering seminars on managing a private law practice and on legal ethics, by setting up a law library in collaboration with the Soros Foundation, and by actively supporting the Belarusian Lawyers' Association. After Belarus's first post-Soviet legislature was finally elected in late 1995, a special effort was made to pool the limited resources of the ABA/CEELI program, USAID's NET Project, and USIA's Academic Specialist Program in order to sponsor a series of legislative drafting seminars for new legislators and parliamentary staffers, which began in late 1995 and is to be completed in early 1996.
NGO Development Programs: Government assistance to the struggling nongovernmental sector in Belarus continued to be hamstrung by the lack of legislation that would grant special tax status to non-profit organizations in Belarus. In the absence of such legislation, the scope of activity of most of the country's nongovernmental organizations (NGOs) has been severely limited. United Way International (a Eurasia Foundation grantee) and the Counterpart Consortium (a USAID grantee) nevertheless continued to provide support and training to Belarusian NGOs.
Anti-Crime Programs: After a slow start in FY 1995, the interagency Anti-Crime Training and Technical Assistance (ACTTA) Program enabled U.S. federal law enforcement officials to share with their Belarusian counterparts their experience in fighting organized crime, white-collar crime and drug trafficking. Although it is still to early to judge the effectiveness of these programs, they have been welcomed by Belarusian law enforcement officials as a useful form of cooperation.
Security Programs: The Defense Department's Cooperative Threat Reduction (CTR or Nunn-Lugar) Program was very active in Belarus in FY 1995, having made considerable progress in designing and implementing projects. The negative image these programs had in Belarus in 1994 was effectively erased, as CTR programs came to be almost universally perceived there as a welcome show of support for continued adherence to international arms control agreements and defense conversion. In FY 1995, the CTR Program completed deliveries of export-control, environmental-cleanup, and emergency-response equipment to Belarus.
Privatization Programs: Since late 1993, USAID has been funding the International Finance Corporation's (IFC) small-scale privatization program in Belarus, which has been hailed as a success despite a very difficult working environment. In FY 1995, the Belarusian Government continued to lack the political will to implement broad-based structural economic reform--a fact which has hampered the success of programs in support of large-scale privatization (most notably, a voucher-privatization project sponsored by TACIS, the European Union's technical assistance program for the NIS). The IFC has nevertheless managed to gain support at all levels of the Belarusian Government for the privatization of small businesses, and has expanded its program beyond the cities of Brest, Grodno, and Orsha to four new cities, including the capital city of Minsk. At the end of FY 1995, however, the number of privatized businesses was significantly under the target level, although developing the capability of municipalities to pursue privatization should speed up the privatization process in FY 1996.
Agricultural-Sector Reform Programs: In Belarus, the only U.S. Government assistance program in the agricultural sector has been implemented by Volunteers in Overseas Cooperative Assistance (VOCA). VOCA's program has been successful in bypassing governmental structures and reaching out to individual entrepreneurs at the local level. Unfortunately, due to funding reductions, the resident U.S. advisor position in Belarus was cut, sharply reducing the program's visibility.
Trade and Investment Programs: Although the Western NIS Enterprise Fund (WNISEF) did not have an active presence in Belarus in FY 1995--due in part to Belarus's lack of progress in economic reform--WNISEF plans to open an office in Minsk by mid-1996 and expects to approve its first investments in Belarus by early 1997. The WNISEF also plans to establish a small- and micro-lending program in Belarus which will make loans to individuals and small businesses in amounts ranging from $5,000 to $100,000.
In FY 1995, the U.S. Government provided over $118 million in assistance to Georgia. (This includes appropriated funds, as well as $19 million in donated humanitarian goods transported by the U.S. Government.) This past year, Georgia not only overcame civil war and separatist conflict, it also made impressive gains: the country slashed inflation, met all of its International Monetary Fund (IMF) targets, introduced a stable national currency (the lari), held the fairest elections in all of the Caucasus and Central Asia, and reduced lawlessness. At the same time, however, Georgia remained a fragile state. Corrupt regional and ministerial "barons" retained control over a wide range of activities. Georgia continued to bear a debt burden of over one billion dollars, mainly attributable to purchases of natural gas from abroad, and most of the country's economy remained devastated by a combination of war, state control and mismanagement, and rampant crime. Had the August 1995 assassination attempt against President Shevardnadze been successful, Georgia could easily have plunged back into instability or internal conflict.
U.S. interests in Georgia are growing--one important reason for this is that much of the Caspian region's vast oil resources are likely to be exported through Georgia. If Georgia relapses into conflict, Caspian oil exports may be restricted to Russian routes for some time. The goal of U.S. Government assistance to Georgia, as well as to the other NIS, is to promote democratic and free-market reform. Georgia can serve as a model for other states recovering from devastation and war. After a late start, macro-economic stabilization and small-scale privatization made great strides in FY 1995. On the political side, the newly elected Georgian Parliament has the potential to become the most reformist in the NIS; the parliament's ardent, young reformist leaders are likely to accelerate reform even further. Moreover, President Shevardnadze is one of the most reformist leaders and respected statesmen in the NIS. Shevardnadze has set an example not only by leading his country out of civil war, discouraging strident nationalism, and preventing an economic catastrophe, but also by developing and maintaining good ties with all of Georgia's neighbors--Russia, Turkey, Armenia and Azerbaijan--despite the fierce Russian-Turkish and Armenian-Azerbaijani rivalries.
U.S. assistance has had a real and immediate impact in Georgia. While aid to promote economic and democratic reform will be an increasing U.S. priority, humanitarian aid will continue to be vital to Georgia for a few more years, as it will save countless lives among vulnerable groups. Moreover, because grain aid is monetized by the Georgian Government, it plays a critical role in helping the government finance its budget deficit until the country's economic reforms take hold.
More than 30 U.S. Government-funded grantees and contractors have offices in Tbilisi. In FY 1995, U.S. Government funds also directly enabled the U.N. World Food Program, U.N. High Commission on Refugees, U.N. Department of Humanitarian Affairs, UNICEF, the International Organization on Migration (IOM), and the International Federation of the Red Cross (IFRC) to conduct humanitarian operations in Georgia. In addition, the U.S. Government closely collaborated with the International Monetary Fund (IMF), European Bank for Reconstruction and Development (EBRD), and the International Bank for Reconstruction and Development (IBRD) to assist Georgia with economic reform, particularly in the energy and health sectors.
In FY 1995, U.S. Government assistance directly enhanced the environment for both domestic and foreign private investment in Georgia. In addition, U.S. Government-funded efforts in democracy-building, which included technical assistance with the drafting of Georgia's new constitution, helped build the confidence of the Georgian people in the value of democracy.
Business Development Programs: The Center for Financial Engineering in Development (CFED), a USAID grantee, trained Georgian business students and faculty, and owners and managers, in finance and management at the Tbilisi Business School. The International Executive Service Corps (IESC) fielded seven U.S. volunteer-executives in various sectors, including pharmaceutical manufacturing, tourism, poultry marketing, plastic-container manufacturing, airport management, and faculty development for the Tbilisi Business School.
Agribusiness Programs: USAID grantee Tri-Valley Growers (TVA) helped launch a U.S.-Georgian joint-venture winery. Under TVG's Farmer-to-Farmer Exchange Program, nine U.S. volunteer farmers made eleven visits to Georgia to work with private farmers on the revitalization of the country's seed multiplication industry and the development of farmers' cooperatives--TVG provided 122 metric tons of maize seed and 265 metric tons of wheat seed to private farmers in Georgia. TVG also provided a resident advisor to help the Union of Private Farmers develop a wholesale seed and fertilizer distribution network. USAID grantee Agricultural Cooperative Development International (ACDI) taught 33 Georgian students how to develop business plans for functioning agribusinesses, and provided a short-term advisor to help the Union of Private Farmers review existing laws and regulations related to farmers' unions.
USIA Exchange Programs: In FY 1995, some 180 Georgians came to the United States on USIA-sponsored academic and professional exchange programs, including eight Muskie Fellows (two of whom now chair important parliamentary committees), eight FREEDOM Support Fellows, three Fulbright Senior Scholars, three Senior Research Fellows, and 22 Georgian professionals. USIA also carried out a modest but sharply focused book-translation program, which produced translations of a high school/ university-level civics book, several books and pamphlets on journalism, and a small-business administration publication on starting one's own business. In addition, USIA planned and implemented several English-as-a-second-language (ESL) workshops, bringing four U.S. English-language teaching specialists to work with their Georgian counterparts and distributing English-language texts and American-studies texts to Georgian teachers and schools--our embassy reports that these programs have Georgian teachers to modernize their teaching methodology and to develop new materials to meet the vastly growing demand for English-language instruction at all levels.
Training Programs: In FY 1995, USAID's NIS Exchanges and Training (NET) Project brought 42 Georgians to the United States for short-term training in areas including agriculture, municipal management, independent media, political party development, electronic (television/radio) journalism, privatization, and power-sector management. In addition, the NET Project's Follow-On Program organized a series of eight seminars in Georgia for senior and mid-level economists on subjects such as taxation, stabilization, privatization, and banking systems--the seminars were given by International Monetary Fund, World Bank, and European Union/TACIS advisors. The Eurasia Foundation funded ten young Georgian commercial bankers to attend a four-week training course in the United States. Six commercial banks in Northern California provided the on-site training.
Economic Development Programs: Two resident advisors fielded by USAID contractor KPMG Barents Group provided training on macro-economic reform and stabilization for Georgia's senior economists, and laid the groundwork for the eventual arrival of an International Monetary Fund resident representative. Twenty-five Georgians representing the Ministry of Finance, National Bank, Ministry of Economy, Parliament, Ministry of State Property, and Union of Young Economists participated in two-week USAID-sponsored seminars at the Economics Institute of Boulder, Colorado.
Democracy Programs: The National Democratic Institute (NDI), a USAID grantee, conducted in-country seminars on political party development, the distribution of power between the executive and legislative branches of government, and the role of the media. The USAID-supported Parliamentary Human Rights Foundation (PHRF) installed Internet hook-ups for the Georgian Parliament, presidential offices, the Ministry of Internal Affairs, and local nongovernmental organizations (NGOs). Internews, a USAID media program grantee, established a regional office for the Caucasus in Tbilisi--Internews began preliminary work on building journalism and management skills among Georgia's sixteen independent television stations and supporting the formation of a national news exchange. A total of five Georgians participated in NIS regional civil-code drafting conferences in St. Petersburg, Russia, and Leiden, Netherlands.
USIA supported the newly created Institute for Public Administration (IPA) in Tbilisi, which provided master's-level training in public administration to 27 Georgians in FY 1995. IPA also hosted a number of senior-level U.S. consultants who worked with the Georgian parliament and executive branch to help develop a system of government compatible with the country's new Western-style constitution. Even though this was only the first year of its activity, IPA has already become a highly visible and prestigious institution; President Shevardnadze attended the IPA's opening ceremonies in July. In addition, USIA opened an American Center for Information Resources (ACIR) on the main campus of Tbilisi State University to provide Internet and other database access through two U.S.-trained Georgian librarians, who in turn provide the information to Georgian journalists, nongovernmental organizations (NGOs), faculty and students.
Energy-Sector Programs: In FY 1995, USAID contractor Burns and Roe procured and installed energy efficiency equipment worth a total of approximately $2 million in Georgia; sites included Tbilisi's principal power plant and a geothermal plant in Zugdidi, a city in western Georgia with a large population of internally displaced persons (IDPs). USAID also supported several feasibility studies conducted in conjunction with World Bank and European Bank for Reconstruction and Development (EBRD) projects. USAID contractor Hagler Bailly began a feasibility study for the privatization of Georgia's state energy company, Sakenergo, and began working towards the establishment of an independent regulatory commission; Hagler Bailly also worked with the World Bank to facilitate a proposed $30 million World Bank energy-sector credit to be executed in early 1996. The USAID-supported United States Energy Association, in cooperation with Georgia (USA) Power and the Tennessee Valley Authority, provided training to Georgia's energy-sector managers.
Environmental Programs: ISAR, a USAID-supported U.S. nongovernmental organization (NGO), funded 40 projects in Georgia totaling $55,000. The projects, which are being executed by Georgian NGOs, include such activities as developing the capacity of one local NGO to train other environmental NGOs in the use of e-mail, reforesting chestnut and walnut trees in the agricultural region of Mingrelia, and monitoring the impact of manganese mining on the health of nearby residents.
Health-Sector Programs: Under a Tbilisi-Atlanta medical partnership, technical assistance and technology transfers were provided in several areas, including maternal and child health, nursing, health-sector reform, and preventive medicine; multiple reciprocal exchange visits took place between the U.S. and Georgian partners. The U.S. partners also helped the World Bank design a $12 million World Bank health-sector credit proposed for Georgia in 1996. USAID also made a $1 million grant to UNICEF for the procurement of diphtheria vaccine for Georgia's national immunization campaign in response to the country's nationwide diphtheria epidemic. The USAID-supported U.S. Centers for Disease Control and Prevention (CDC) provided long- and short-term technical assistance focused on six of Georgia's priority health concerns, including tuberculosis; CDC is working with the Ministry of Health to develop an epidemiological bulletin in 1996. USAID grantee Wellstart International provided training in lactation management to 293 health professionals throughout Georgia.
Humanitarian Assistance: In FY 1995, U.S. Government humanitarian assistance to Georgia totaled $106.2 million, including $26.1 million from USAID, $57 million from USDA, and $23.1 million for humanitarian commodities transported by the Coordinator's Office. Over 92,727 metric tons of mazout (low-grade fuel oil) was in the process of being provided to Georgia in order to help it meet its 1995-96 emergency winter fuel requirements; the electricity produced with this fuel will assist hospitals, bakeries and Georgia's railway system
USAID grantee "Save the Children" Federation (SCF) continued to provide emergency humanitarian assistance to vulnerable groups, and initiated four transition-oriented programs for local communities suffering from widespread unemployment. The United Methodist Committee on Relief (UMCOR) provided essential pharmaceuticals and training to twelve pharmacies in Tbilisi serving forty children's polyclinics and women's health facilities, thus reaching more than 80,000 women and children. UMCOR also trained ten Georgian and Abkhazian medical professionals in the counseling of female victims of brutalities related to the conflict in Abkhazia.
With USAID support, CARE, the International Rescue Committee (IRC), and the International Orthodox Christian Charities (IOCC) distributed food and agricultural inputs to some 400,000 Georgians. USDA provided food aid (including infant formula) totaling 186,460 metric tons to the Georgian Government, three U.S. NGOs, and the International Federation of the Red Cross and Red Crescent. CARE, the Salvation Army, and UMCOR assured food delivery to single-mother households, internally displaced persons (IDPs), pensioners and the handicapped. Infant formula was provided to orphanages and state pharmacies. A total of 29,066 metric tons of USAID-funded wheat was delivered to a dozen flour mills in Georgia, and then to the country's bakeries. IRC provided emergency relief, including bedding, stoves, and kitchen sets, to 2,100 IDP families in Senaki (in western Georgia), and improved the water supply and sanitation for some 3,000 people in Senaki.
In FY 1995, the U.S. Government provided over $115 million in assistance to Kazakstan. (This includes appropriated funds, as well as some $30 million in donated humanitarian goods transported by the U.S. Government.) FY 1995 was perhaps the high-water mark of U.S. Government technical assistance and cooperative activities in Kazakstan. At year's end, more than forty U.S. Government contractors and grantees had offices in Almaty; at times, there were several hundred U.S. Government-funded advisors and specialists on the ground in Kazakstan. Despite the inevitable problems in implementing an assistance effort of this size, the effort has given the U.S. Government a leading role in many areas related to Kazakstan's economic transition, often allowing the U.S. Government to leverage additional resources from other bilateral and multilateral donors.
This past year, President Nazarbayev took several steps to consolidate his power. In addition to extending his term of office until the year 2000 by means of a referendum in April 1995, he promulgated a new constitution--approved by referendum in August 1995--which strengthened the president's powers and reduced the role of the legislature and the judiciary. Elections for the new bicameral parliament established by the new constitution were held in December 1995; it remains to be seen to what extent the new legislature will conduct open debate, propose legislation, or exercise oversight of the executive branch.
At the same time, however, the Government of Kazakstan remained broadly supportive of economic reform, and made progress in a number of areas, although problems often occurred at a lower level, especially in terms of understanding new policies and procedures, and having the technical competence and political will needed to implement them. Lack of transparency and complicated registration procedures continued to cause enormous frustration, reduce investor confidence, and contribute to corruption. On the other hand, macro-economic indicators showed improvement. For example, in FY 1995, Kazakstan's national currency, the tenge, remained relatively stable, and the country's inflation rates were the lowest since September 1991 and well within the official target of four percent per month, compared to 46 percent as recently as June 1994. The budget deficit was reduced from approximately seven percent of gross domestic product (GDP) in 1994 to around four percent by the end of FY 1995.
Economic Development Programs: USAID-funded advisors helped Kazakstani officials develop a new tax code, introduced in July 1995, which minimizes economic distortions and is being used as a model tax code for other NIS countries. USAID-funded advisors also helped to establish and open the Central Asian Stock Exchange (CASE) in Almaty in April 1995. By the end of FY 1995, some 3,500 small businesses and 1,270 medium-sized businesses had been auctioned off under Kazakstan's nationwide privatization program. In FY 1996, USAID's direct involvement in privatization will come to an end, and will be replaced by a new initiative focusing on legal and regulatory impediments to private-sector growth. Already in FY 1995, USAID-funded advisors worked with Kazakstani officials on anti-monopoly measures which reduced the number of companies subject to pricing and profitability controls, forced the break-up of a number of major holding companies, and created an insurance/regulatory framework promoting competition and foreign participation. Assistance to the Kazakstani Central Bank was effective in helping to assure a tight monetary policy and the bank's independence. As a result of these efforts, some fifty under-capitalized banks were closed, resulting in a more viable banking sector in Kazakstan.
Energy and Environmental Programs: USAID advisors helped Kazakstani officials with the analysis and drafting of legislation relating to the electricity and coal industries, with a focus on independent regulation to protect the public interest and attract investment. USAID's environmental efforts focused mainly on the Aral Sea region, where USAID is the first donor with a visible field presence in some of the areas most affected by this environmental disaster. Another focus of USAID's efforts was on the creation of offshore oil regulations--which had not existed previously--to guide the commercial and environmental performance of domestic and international companies developing offshore oil resources. In addition to USAID's efforts, the Peace Corps fielded 18 environmental volunteers serving in 10 different cities throughout Kazakstan.
Trade and Investment Programs: The Central Asian - American Enterprise Fund (CAAEF) mobilized relatively quickly in FY 1995. By the end of the fiscal year, the CAAEF had made some $12.5 million in equity and loan investments in Kazakstan. USAID-funded "people-to-people" grantees such as the International Executive Service Corps (IESC), Volunteers in Overseas Cooperative Assistance (VOCA) and Winrock effectively helped local firms and entrepreneurs prepare financially sound proposals for consideration by the CAAEF as well as by other lending agencies--the Peace Corps' small-business volunteers stationed in Kazakstan also helped with the process of preparing such proposals. Commerce Department programs were also useful in enhancing trade and investment. For example, the Commerce Department's Business Information Service for the NIS (BISNIS) continued to provide timely information to potential U.S. exporters on an ongoing basis, while the Department's Special American Business Internship Training (SABIT) Program brought 18 Kazakstani managers and entrepreneurs to the United States for internships with U.S. companies.
Democracy Programs: Given the increased centralization of power in the executive branch of the Kazakstani Government in FY 1995, USAID's democracy-building efforts focused increasingly on local nongovernmental organizations (NGOs), which the U.S. Government views as an essential building block for establishing and sustaining a civil society in Kazakstan. More than 75 small grants have been awarded to Kazakstani NGOs thus far--64 of them in FY 1995--covering a wide spectrum of NGO activity, ranging from environmental concerns to human-rights issues. USAID programs also promoted judicial reform, provided training to Kazakstan's judges, and supported the development of an independent media in Kazakstan. USIA programs also played an important role in the promotion of democratic institution-building--upon returning home, participants in USIA exchange programs founded a conflict resolution center and a public education center--several Kazakstani law students received a small grant to teach legal concepts in their country's high schools.
Training and Exchange Programs: In FY 1995, a major focus of USAID's training efforts in Kazakstan was economic restructuring. Some 334 Kazakstanis received short-term, U.S.-based training under USAID's NIS Exchanges and Training (NET) Project, bringing the total number of Kazakstani NET participants to more than 700. USIA's exchange programs played a similarly useful role: some 860 Kazakstanis came to the United States on USIA-sponsored programs in FY 1995, including some 760 secondary-school students. Approximately 60 Kazakstanis participated in USIA International Visitor and FREEDOM Support Grant programs in FY 1995, including some 20 journalists. The training of local-government officials continued for a third year through grants to the International Executive Service Corps (IESC) and the University of Kentucky, which exposed the officials to democratic and free-market principles. Two participating local-government officials were subsequently appointed to senior government positions--one become minister of ecology and the other, minister of justice.
Security Programs: Under the Defense Department's Cooperative Threat Reduction (CTR or Nunn-Lugar) Program, four defense conversion awards in support of U.S.-Kazakstani joint ventures were announced by Secretary Perry in April 1995. Using U.S. capital and technology, these joint-venture enterprises will reduce weapons production capability and produce much-needed consumer and industrial products, including pharmaceuticals, circuit boards, and pressure vessels. In October 1995, the Department of Defense announced the signing of a CTR agreement with Kazakstan to permanently close and seal the nuclear-testing tunnel complex near Semipalatinsk. In addition, a silo dismantlement project will also begin in Kazakstan in FY 1996. U.S. Government assistance was also an essential element in reaching agreement on compensation under Project Sapphire, which involved the transfer of nearly 600 kilograms of highly enriched uranium from Kazakstan to safe storage in the United States; related assistance includes humanitarian assistance, medical equipment and computer equipment.
Social-Sector and Humanitarian Programs: In FY 1995, USAID's main long-term social-sector initiative in Kazakstan focused on health. Effective assistance was provided in a number of areas, including the privatization of the state monopoly on the supply and distribution of pharmaceuticals. In addition, a USAID-funded group from the Centers for Disease Control and Prevention (CDC) in Atlanta helped Kazakstani public health officials eliminate a costly, inefficient and outdated tuberculosis-detection program for children, resulting in an annual savings of $2.4 million. Meanwhile, through the Coordinator's Office, over $28.7 million in U.S. Government and privately donated humanitarian commodities, the majority of which were medical, were delivered to Kazakstan at a cost to the U.S. Government of $4.1 million.
In FY 1995, the U.S. Government provided over $50 million in assistance to Kyrgyzstan (including appropriated funds, as well as $2.25 million in donated humanitarian goods transported by the U.S. Government). U.S. assistance mainly targeted the following areas: democratic institution-building, the transition to a market economy, education and training, reforming the country's health and housing sectors, law enforcement, and military cooperation. In FY 1995, the Government of Kyrgyzstan improved its capacity to manage technical assistance. As a result, the U.S. Government began working more closely with the Kyrgyzstani Government in determining assistance priorities, and an annual bilateral review process is being instituted to ensure that U.S. Government programs are addressing these priorities. This past year, as USAID's privatization program neared its final stages, the focus of our economic assistance programs in Kyrgyzstan began to shift from stabilization and privatization towards post-privatization private sector support. Our private-sector support programs focused on making Kyrgyzstan a more attractive place for U.S. trade and investment. Meanwhile, our humanitarian food assistance efforts continued: for example, the Department of Agriculture (USDA) provided 55,000 tons of wheat to Kyrgyzstan. U.S. Government-funded exchange and training programs helped support both democratic institution-building and Kyrgyzstan's transition to a market economy. In FY 1995, USAID established a full-time presence in Kyrgyzstan with the posting of an in-country representative to Bishkek, allowing USAID to resolve past difficulties in coordinating its large number of programs in Kyrgyzstan.
Trade and Investment Programs: In FY 1995, the Overseas Private Investment Corporation (OPIC) provided guarantees to two investments in Kyrgyzstan, and USAID-funded advisors helped facilitate the country's first international share auction as a means of attracting foreign investment under Kyrgyzstan's privatization program. In FY 1996, Kyrgyzstan's trade environment, currently the most liberal in the NIS, with an average tariff rate of ten percent, will benefit from a new USAID program to improve the country's trade and investment climate--the program includes technical assistance to help Kyrgyzstan become a member of the World Trade Organization.
Business Development Programs: With the help of USAID-funded advisors, the shares of 735 enterprises were sold in coupon auctions, and the shares of 345 enterprises were sold in cash auctions under Kyrgyzstan's privatization program--323 enterprises were completely privatized. The advisors established six auction centers in Kyrgyzstan, and transferred management of the centers to Kyrgyzstani staff. USAID's de-monopolization program helped divide and privatize state-owned transport and distribution combines, thus creating over 500 new private enterprises. In addition, a market-based private financial sector was being established. Also with the help of USAID-funded advisors, a stock exchange and coupon-trading board were opened--six companies were listed, with another thirteen in the process of being listed. USAID's Farmer-to-Farmer Program fielded volunteers to assist private farmers and agribusinesses in Kyrgyzstan, provided assistance to Kyrgyzstan's wool industry and also focused on improving the country's agricultural credit system. The Central Asian - American Enterprise Fund (CAAEF) approved its first three loans in Kyrgyzstan under the CAAEF's Small-Enterprise Program. Small local banks were being developed throughout the Bishkek and Osh regions as part of a USAID-funded micro-enterprise program, which has a 100-percent repayment record so far on the loans it has made--in FY 1996, the first equity investments will be approved. Now that Kyrgyzstan's privatization program has made substantial progress, our FY 1996 business development programs will support the country's emerging private sector by addressing such priority areas as accounting, commercial-law development, enterprise restructuring, commercial-bank training, land registration, and corporate governance, thus improving the climate for the growth of a market-based private sector and of foreign investment.
Economic Development Programs: The U.S. Treasury Department, and KPMG, a USAID contractor, provided budget, fiscal, and tax advisors who helped Kyrgyzstani officials draft new tax legislation and implementation procedures, and adopt international corporate accounting standards. U.S. Government-funded assistance to Kyrgyzstan's central bank was particularly effective: the bank is now an important guarantor of the country's economic stability. A U.S. Government-funded macro-economic advisor at Kyrgyzstan's Ministry of the Economy helped ministry officials develop their economic forecasting and national statistics systems, providing a better basis for economic planning.
Training and Exchange Programs: In FY 1995, nearly all USAID programs in Kyrgyzstan included an in-country training component for the staff of the recipient institutions and private-sector entities--in-country training was provided to several hundred Kyrgyzstanis. Under USAID's NIS Exchanges and Training (NET) Project, 238 Kyrgyzstanis received U.S.-based training in FY 1995, over half of them (142) in business or economics. Some 120 Kyrgyzstanis came to the United States on USIA-sponsored exchange programs, including 55 secondary-school students, ten undergraduates and nine graduate students. An additional 48 Kyrgyzstanis--including judges, journalists and members of parliament--participated in USIA-sponsored professional exchange programs. USIA also sponsored the participation of thirteen Kyrgyzstanis in professional conferences in Europe and the NIS, and brought U.S. professors from four institutions to Kyrgyzstan. Twenty-four Kyrgyzstanis participated in law enforcement training programs under the State Department's Anti-Crime Training and Technical Assistance (ACTTA) Program. Nineteen Kyrgyzstanis participated in U.S. military training programs, and an additional 51 Kyrgyzstani soldiers participated in NATO Partnership for Peace exercises sponsored by the Department of Defense.
Democracy Programs: In FY 1995, our democracy-building programs in Kyrgyzstan focused on five areas: voter education, strengthening nongovernmental organizations (NGOs), building links between NGOs and the Kyrgyzstani Parliament, promoting free and fair parliamentary elections, and strengthening independent media. USAID and USIA sponsored a number of seminars and conferences--attended by a total of over 1,200 Kyrgyzstanis--on topics such as human rights, NGO development, elections, housing, local government finance, and judicial reform. In FY 1996, the Defense Department's Marshall Center plans to hold a regional conference in Kyrgyzstan on civil-military relations in a democracy.
Energy-Sector and Environmental Programs: In FY 1995, USAID-funded advisors completed an analysis of Kyrgyzstan's district heating system and its electricity distribution system, laying the groundwork for a $66 million World Bank/Asian Development Bank loan to rehabilitate these systems. As a condition of this loan, the Government of Kyrgyzstan was required to pass an electricity law which created an independent regulatory body; USAID-funded advisors helped draft the law and helped reform-minded officials overcome opposition to the new regulatory body. In addition, the U.S. Geological Survey carried out an assessment of Kyrgyzstan's coal resources. The assessment, which USAID forwarded to the Kyrgyzstani Government for review, made policy recommendations to improve the performance of the country's coal sector. USAID-funded advisors also organized a regional conference on water pricing, which laid the groundwork for cooperation among all five Central Asian countries on these vital regional water-management issues.
Social-Sector And Humanitarian Programs: In FY 1995, USDA provided 55,000 tons of wheat under a $19.5 million government-to-government program, and $5 million in commodities distributed by private voluntary organizations (PVOs) to Kyrgyzstan under USDA's "Food for Progress" program. The Coordinator's Office delivered over $2.25 million in humanitarian commodities to Kyrgyzstan at a cost to the U.S. Government of approximately $430,000. Meanwhile, a pilot project under USAID's Health-Care Reform Program helped Kyrgyzstani health officials introduce important reforms in service delivery and health financing, improve its fiscal management, and reduce excess bed capacity by 40 percent in the pilot region. The World Bank will be supporting the expansion of this successful program in at least two other regions in Kyrgyzstan. In addition, 110 doctors and nurses received neonatal training, and $2 million worth of medical equipment and supplies were provided to Kyrgyzstani hospitals by their U.S. partners under USAID's Health-Care Partnership Program. USAID transferred $100,000 to UNICEF for winter-relief programs to help provide food and fuel for Kyrgyzstan's children and pensioners through the winter of 1995-96.
In FY 1995, the U.S. Government provided over $45 million in assistance to Moldova (including appropriated funds, as well over $6 million in donated humanitarian goods transported by the U.S. Government). U.S. assistance was focused primarily on privatization, the development of private capital and government-securities markets, and commercial-bank improvement, and was supplemented by assistance in the areas of agribusiness and small-enterprise development, capacity-building for nongovernmental organizations (NGOs), and the promotion of democracy and environmental protection. Over the past year, U.S. Government assistance helped Moldova make significant progress in the area of economic reform: highlights included the opening of a stock exchange, the establishment of a Moldovan State Commission on Security Markets, and the completion of a series of privatization auctions.
Trade and Investment Programs: USDA employed the Agricultural Management Group to identify and profile the 24 best agribusinesses in Moldova with the highest potential for successful collaboration with U.S. agribusinesses; in early 1996, a team of U.S. firms will explore opportunities for trade and/or investment relationships with these businesses. USAID grantee Tri-Valley Growers (TVG) had only limited success in promoting agricultural trade and investment, but did facilitate a successful joint venture between California-based Peto Seed and local Moldovan growers that will produce and export tomato seeds.
Business Development Programs: USAID, Peace Corps and Eurasia Foundation programs helped Moldova's private-sector firms, primarily agribusinesses, to become more competitive by employing improved management techniques and new technology, and finding sources of private and/or public financing and trade opportunities. To this end, USAID opened three Business Service Centers in Moldova in FY 1995. The above programs were supplemented by the East-West Management Institute, a USAID grantee which will train Moldovan consultants to help newly privatized enterprises restructure their operations to conform to international standards.
Economic Development Programs: USAID contractor Price Waterhouse helped the Moldovan Government complete a series of 15 mass-privatization auctions begun in 1994, as a result of which 1,162 medium- and large-sized enterprises and 818 small shops were privatized, representing an estimated two-thirds of all non-agricultural property. Notably, nearly 90 percent of the population exchanged their privatization certificates (so-called "patrimonial bonds") for privatized housing and/or enterprise shares--some 80 percent of the housing stock and 1,980 state enterprises were privatized. Price Waterhouse advisors also facilitated the June 1995 opening of the privately owned Moldovan Stock Exchange (MSE), which now trades 11 issues, primarily in the banking and food processing sectors, with weekly trading volumes exceeding $100,000. The simultaneously created Moldovan State Commission on Securities Markets now monitors the activities of 43 investment funds, 53 brokers and dealers and 23 independent share registrars. In addition, Price Waterhouse trained the managers of 730 privatized enterprises in methods of corporate governance that conform to Moldovan law as well as Western practice. Meanwhile, USAID contractor KPMG-Barents helped the Ministry of Finance simplify Moldova's 16 income-tax laws into a consolidated draft tax code, helped Moldova's central bank with a pilot project to convert three of the country's commercial banks to international accounting standards, and helped the Moldovan Bankers' Association Training School train over 1,000 banking officials.
Training and Exchange Programs: Our embassy in Moldova attributes the country's significant FY 1995 accomplishments in the areas of mass privatization and capital markets to the fact that our FY 1994 training and exchange programs focused heavily on economic restructuring. USAID's NIS Exchanges and Training (NET) Project brought 43 Moldovans to the United States in FY 1995, bringing the total number of Moldovan NET participants to 93. USIA placed 80 Moldovan high school students with U.S. families for one year of study, thirteen Moldovan college students at U.S. universities for up to a year, sixteen Moldovan graduate students at U.S. universities for two years of study through the Muskie Fellowship Program, and six Moldovan professors and researchers in U.S. universities for post-graduate study through the Fulbright Program.
Democracy Programs: The International Foundation for Electoral Systems (IFES), a USAID grantee, worked to promote the fairness and transparency of Moldova's first-ever local elections in April 1995. In addition to working with Moldova's Central Election Commission, IFES trained 122 members of two Moldovan nongovernmental organizations (NGOs) to serve as election monitors and conducted four training seminars on electoral laws and systems for 100 mayors and chief executives from all 40 of Moldova's districts. Assistance provided by the American Bar Association's Central and East European Law Initiative (ABA/CEELI) under USAID's Rule-of-Law Program was a vital factor in the June 1995 acceptance of Moldova as the first NIS country to join the Council of Europe, and helped diminish the traditionally dominant role of Moldova's general prosecutor's office, thus allowing the Moldovan judicial system to move towards an adversarial model more likely to ensure the rights of the accused.
Energy and Environment Programs: In FY 1995, USAID's Environmental Policy and Technology (EPT) Program provided 25 computers to 20 nongovernmental organizations (NGOs) and research institutions in the environmental, health-care and agricultural sectors--as a result, Moldova's Department of Environmental Protection is now linked to Library of the Medical Foundation of Moldova and from there to the U.S. National Medical Library, providing access to information on environment-related health issues, and leveraging over $500,000 in new technical assistance and grant funding from other donors. Social and Humanitarian Programs: In FY 1995, USAID's NGO Support Program, implemented by Counterpart, helped build the managerial capacity of Moldovan NGOs and linked them with U.S. NGOs active in the distribution of surplus U.S. Government property from military bases being closed in Europe and the United States. As a result, for example, furniture and appliances for Moldova's Society for the Deaf benefited over 2,000 persons. Counterpart also used $1.6 million of excess goods to establish a modern medical information center in Moldova, and organized 12 management-training seminars for 182 local leaders from 163 NGOs. When a shortage of needles and syringes threatened to delay the launching of a nationwide diphtheria immunization program in 1995, the staff of the USAID-funded Basic Support for Child Survival (BASICS) Project worked with the U.S. and Moldovan governments and with international agencies to airlift 4.9 million needles and syringes in order to keep the immunization program on schedule. (Unfortunately, out of these 4.9 million needles and syringes, 600,000 which had been delivered to and were under the control of UNICEF were subsequently stolen from a Moldovan Government warehouse.) The Coordinator's Office funded the emergency shipment of these needles, and delivered over $6.17 million in humanitarian commodities to Moldova in FY 1995 at a cost to the U.S. Government of approximately $620,000.
In FY 1995, the U.S. Government provided over $450 million in assistance to Russia. (This includes appropriated funds, as well as over $77 million in donated humanitarian goods transported by the U.S. Government.) This past year was an eventful one for Russia; political attention was focused first and foremost on the December parliamentary elections. The Duma elections were competitive and democratic and went off well, with most observers concluding that the election process was free and transparent. As expected, the Communist Party won a plurality of the seats. The Communists and their allies represent about half of the Duma deputies--not enough for a constitutional majority, but certainly enough to be influential. In the wake of the elections, the Yeltsin Administration replaced some of its more visible reformers and pro-Western leaders in order to appease some of the hardline critics of the Administration. Although Yeltsin has stated that he and his government are committed to following through with reforms, most observers believe the pace of the reform process will proceed more cautiously and slowly in 1996.
The Government of Russia stuck to its stringent expenditure targets in FY 1995, capping the budget deficit at 4.1 percent of GDP for the year. The debt was financed without resorting to inflationary "concessional" Central Bank lending. In April, the ruble fell to an all-time low of 5,130 rubles to the dollar; however, in July, the Russian Government introduced a "currency corridor"--the ruble exchange rate would be allowed to fluctuate between 4,300 and 4,900 rubles to the dollar. Despite a slight depreciation in nominal terms, the ruble appreciated by 65 percent in real terms since the end of 1994.
By the second half of the year, it appeared the Russian Government's stabilization policies had taken root: inflation declined, the budget deficit decreased, and the ruble exchange rate was kept within its predetermined corridor. Monthly inflation averaged more than seven percent for the year, with the monthly inflation rate starting at a peak of 18 percent in January and falling to just below five percent in the second half. For the year, the inflation rate was 131 percent--down from 215 percent in 1994, and 840 percent in 1993.
Further signs of stabilization could also be seen in the Russian economy: after four successive years of massive declines, real GDP began to reverse itself. Although preliminary data indicate real GDP dropped four percent from 1994 to 1995--compared to a 13 percent decrease from 1993 to 1994--by the second half of the year, the fall in real GDP had leveled off. Aggregate industrial production declined modestly--an improvement over previous years--with production actually growing slightly in the last quarter, with strong performances in the steel and chemical sectors. For the first time since the late 1980s, the real price of a basket of essential foodstuffs declined in August and September. Although Russia appeared to have reached an economic turnaround point, some disturbing indicators persisted. First and foremost, roughly one fourth of its population continued to live below the minimum subsistence income level, although this figure is down somewhat from last year and is somewhat distorted by those who operate in the informal sector, outside of the official economy. Official unemployment increased slowly in 1995, reaching 8.2 percent of the workforce (using ILO standards). In the agriculture sector, preliminary production statistics suggest a sharp drop for 1995 output, especially in grain production.
Even though it is estimated that almost half of Russia's workers were employed by private firms in FY 1995--three times as many as in 1992--the legal, regulatory and institutional frameworks necessary for attracting investment were still in the early stages of development. Centralized credits to state-owned enterprises and subsidies to the agriculture sector were reduced substantially: agricultural subsidies alone were cut from 3.2 percent of GDP in 1994 to an estimated 1.8 percent in 1995. Although forty-one percent of the Russians who took part in a recent survey said they would like to open their own small business, limited availability of capital and a lack of entrepreneurial knowledge continued to be major obstacles to small-business development in Russia in FY 1995. On the other hand, however, the Russian Government adopted two significant business-development policies: it created the State Committee for Small-Business Development and Promotion, which will advocate on behalf of policies favorable to small businesses and will administer an investment fund and a loan-guarantee fund, and subsequently issued a decree which will serve as the basis for the development of Russia's leasing industry--an industry vital to small-business growth.
In FY 1995, Russia's profound economic and political changes were influenced to a significant degree by the combined assistance programs of the United States, other bilateral donors, and multilateral institutions. Russia entered into an agreement with the International Monetary Fund (IMF) in April 1995.
Our embassy in Moscow reported that coordination among assistance providers in the field improved significantly over the past year, although there is still much room for improvement. The complex web of U.S. Government contractors and grantees operating throughout Russia--predominantly outside of Moscow--continued to make coordination particularly challenging. However, our consulates in St. Petersburg, Vladivostok and Yekaterinburg began to play active roles in the assistance-coordination effort by holding regularly scheduled meetings with assistance providers operating in their respective consular regions. Our consulate general in Vladivostok reported that although coordination in its district had improved, many of the assistance providers were not maintaining adequate communication with the consulate.
Business Development Programs: By the end of FY 1995, USAID's eight business centers had assisted more than 19,000 Russian entrepreneurs and business managers, and had developed working relationships with Russian training institutions and business associations. USAID's Business Development Program assisted the newly formed State Committee for Small-Business Development and Promotion with the drafting, reviewing, and revising of draft legislation and policies. Four USAID pilot projects targeting Russia's fledgling leasing industry were under way, including a project in Nizhniy Novgorod which has already issued 36 loans to entrepreneurs who will use the loans to purchase more than $260,000 of equipment on a lease-to-own basis. In FY 1995, 600 Russian entrepreneurs interned with U.S. small businesses through USIA's "Business for Russia" Program--bringing the total number of participants since the program's inception to 1,000--and an additional 320 were selected for the FY 1996 program. "Business for Russia" alumni associations have been established in St. Petersburg, Moscow Oblast (Region), Samara and Nizhniy Novgorod. USIA also facilitated the introduction of six videotaped business-management courses into the business curricula of several Russian universities, bringing the total number of participating business departments to twenty throughout Russia. With the help of these efforts, growth in Russia's small-business sector was particularly strong in FY 1995.
Economic Development Programs: In FY 1995, USAID continued to provide major support for the process of privatization in Russia. After eleven months of assistance to officials in St. Petersburg, the titles to 120 parcels of land had been transferred to private industrial firms in St. Petersburg, and more than 800 additional applications were pending. USAID's pilot privatization program in St. Petersburg has provided the regulatory and administrative basis for replicating such programs in other parts of Russia. USAID's Housing-Sector Reform Program supported the transfer of 32 percent of Russia's entire housing stock to private ownership, and facilitated a $400 million World Bank loan to Russia in mid-1995 for the expansion of housing reform throughout the country. USAID also played a significant role in supporting the International Monetary Fund's program to transform Russia's fiscal system. By the end of FY 1995, fifteen percent of the senior-level officials of the Ministry of Finance leaders had participated in USAID-funded training programs on the principles of a market economy. In the field of tax reform, Treasury Department and USAID specialists assisted with the drafting of a new tax code now being considered by the State Duma--the code will help make Russia's tax system transparent and more predictable. To lay the groundwork for these efforts, USIA sent a group of nine parliamentarians and government specialists to the United States to examine tax and investment issues.
Trade and Investment Programs: The volume of U.S.-Russian trade has increased by about 70 percent since 1992, but in FY 1995 remained relatively small, with an estimated total turnover of roughly $6 billion, of which U.S. exports to Russia accounted for $2 billion. U.S. investment in Russia was also about $2 billion. Our trade and investment programs continued to be hampered by a lack of investment-encouraging policies and legal recourse for resolving commercial disputes, unpredictable taxation, and rampant crime and corruption, but nevertheless accomplished a great deal in FY 1995.
The Department of Commerce opened four more American Business Centers (ABCs), bringing the total number of ABCs operating in Russia to ten. These ten ABCs served over 700 clients in FY 1995. Also in FY 1995, the Commerce Department's Special American Business Internship Training (SABIT) Program sent 222 interns to the United States; more than 60 percent of participating U.S. companies report ongoing ties with their former SABIT interns. Although exact figures for FY 1995 are not yet available, to date, more than $17 million in export revenues is attributable to U.S.-Russian business relationships forged through the SABIT Program. The Commerce Department's Consortia of American Businesses in the NIS (CABNIS) assisted an average of more than 100 U.S. and 110 Russian companies per month, and helped create more than $11 million in U.S. exports to Russia in FY 1995. Other U.S. & Foreign Commercial Service-managed business-development programs helped U.S. companies export over $20 million in goods and services this past year.
In recognition of the high priority which both the U.S. and Russian Governments have assigned to Russia's accession to the World Trade Organization (WTO), and at the Russian Government's request, the U.S. Government placed a resident advisor in Russia's Ministry of Foreign Economic Relations. Throughout the year, the U.S. advisor provided guidance to the Russian Government as it prepared for its first and second WTO working party meetings, and also organized targeted exchange visits in areas important to the accession process, such as intellectual property rights, subsidies, customs and telecommunications. With the help of the U.S. advisor, the Russian Government met all of its WTO milestones and was on-track with regard to the accession process.
USDA and USAID programs involving Russian animal-, plant- and food-safety authorities facilitated the signing of several memoranda of understanding between the U.S. and Russian Governments intended to help ensure better market access for U.S. food products. These efforts also helped Russian officials prepare for their country's accession to the World Trade Organization.
Energy and Environmental Programs: Although USAID's earlier efforts in Russia's gas and oil sectors--with a few exceptions--had not been as effective as had been expected, USAID-funded advisors laid the groundwork for a $500 million World Bank loan for improving the social and safety aspects of Russia's coal sector, expected to be signed in early 1996. USAID-funded efforts to restructure Russia's electric power industry were targeted at independent power-generating companies and regional distribution companies, with the goal of establishing a competitive wholesale market for electricity in Russia. Under the Department of Energy's Government-to-Government Program in materials protection, control, and accounting, five high-priority sites using weapons-grade nuclear material were identified, work plans for the installation of monitoring and inventory systems were being developed; this is the first time that the U.S. Government has had access to these sensitive Russian facilities. The Department of Energy's Nuclear Safety Program funded a study outlining conversion options for plutonium production reactors in Tomsk and Krasnoyarsk. In the forestry sector, USAID facilitated the establishment of the Baikal-American Forestry Company, a U.S.-Russian joint venture which will develop and implement technological improvements for harvesting and processing. Four other U.S. forestry companies also invested in the Baikal region, and are expected to increase efficiency and minimize timber-waste in Russia's forestry sector. In addition, an environmental management program was implemented in the Russian Far East and was complemented by the USAID-funded efforts of environmentally oriented nongovernmental organizations (NGOs) to increase public awareness of Russia's environmental problems.
Agribusiness Programs: In the area of farm reorganization, the efforts of USAID and other donors began to have an impact in FY 1995 and were supported by local and regional government officials who were under pressure to take steps to reverse declining production in Russia's agricultural sector. U.S. Government coordination with the International Finance Corporation, the British Know-How Fund, and the International Bank for Reconstruction and Development (IBRD) was intensified. The U.S. Agribusiness Partnerships Program, implemented by the USAID-funded Citizens' Network for Foreign Affairs, had considerable success in attracting U.S. investment in Russia's agribusiness sector. For example, in FY 1995, the Heinz Company and its Russian partner, GAIC, invested $20 million in a joint venture in the Stavropol Region which will produce much-needed baby food. Under the recently completed Agriculture Commodity Exchange Program, whose goal was to develop a more competitive grain market in Russia, USDA funded training for several hundred agricultural merchandisers in the operations of cash markets and exchanges. Although there are still monopolistic tendencies in Russia's agricultural sector, program organizers found more than 3,000 companies operating in the country's grain market.
Democracy Programs: USAID grantees provided technical assistance to political organizations, civic groups and local government officials. For example, the International Foundation for Electoral Systems helped Russia's Central Election Commission develop methods for ensuring the transparency, accuracy, and accountability of the country's electoral processes. USAID grantees also provided assistance in conjunction with the first-ever democratic elections of a governor of one of Russia's 89 regions, held in the Sverdlovsk Oblast (Region) in August. USAID-funded experts participated in the drafting of the first part of Russia's new civil code, which went into effect on January 1, 1995, and establishes the fundamental principles of civil and commercial law. In conjunction with this drafting assistance, USAID grantees also provided training seminars to Russia's commercial court judges, prosecutors, and lawyers. In addition, USAID funded the publication and distribution of a legal manual for Russian nongovernmental organizations (NGOs). As the result of a USIA pilot program on civic education in Nizhniy Novgorod, regional education officials decided to make civic issues the number-one priority in curriculum reform and issued a directive supporting experimental courses throughout the region. USIA also sponsored a number of seminars on federalism, and helped establish a Center for Federalist Studies in Novosibirsk--these programs directly influenced the development and adoption of the Tomsk Oblast's charter, a model of democratic power-sharing.
USIA Exchange Programs: USIA's Secondary School Initiative brought 887 high-school students from 263 cities and all 89 of Russia's regions to the United States on one-year study programs, and an additional 1,000 high-school students participated in short-term exchange programs. USIA placed some 158 undergraduates in programs at U.S. universities in the humanities, social sciences, agriculture, and business, and funded the participation of 63 university instructors in summer institutes for American studies. In the area of professional exchanges, USIA brought a total of 134 deputies and staff members from Russia's State Duma and Federation Council, as well as political leaders from 46 regions, to the United States on programs focusing on legislative, economic, security, and bilateral issues. Though anecdotal evidence indicated a relatively high impact on participants from the State Duma, difficulty in arranging congressional appointments and a lack of corresponding visits to Moscow by U.S. counterparts did not go unnoticed by the Russian participants and somewhat diminished the overall effectiveness of the programs. Some 287 regional governors, speakers of regional legislatures, and members of President Yeltsin's administration came to the United States on USIA study tours focusing on legislative and legal reform issues--two-thirds of the participants in these programs were from regions other than Moscow. USIA also brought 200 professionals in the fields of law, business, economics, public administration, education and media to the United States. USIA began developing an organized alumni network for program participants, many of whom were already engaged in various private- and public-sector U.S.-Russian activities.
USAID Training Programs: In FY 1995, more than 3,300 Russians received U.S.-based training under USAID's NIS Exchanges and Training (NET) Project, of whom 710 received training in business development and 467 in health-care issues--other program topics included agriculture, democratization, economic restructuring, energy-sector reform, environmental issues, housing-sector reform and the development of nongovernmental organizations (NGOs). NET training courses were developed in response to specific needs identified by other USAID-funded assistance providers. In addition to those receiving U.S.-based training, several thousand Russians received in-country training through USAID's various sectoral programs.
Russian Officer Resettlement Program: In October 1995, the certificate program was completed. Russian officers purchased 2,291 units through the voucher program. Nearly 700 units were completed under the construction program. The Russian Officer Resettlement Program will end in FY 1996, ahead of schedule. (See USAID Housing-Sector Programs.)
Anti-Crime Programs: The first year of assistance under the State Department's Anti-Crime Training and Technical Assistance (ACTTA) Program produced significant results. In FY 1995, U.S. law enforcement agencies (including the FBI; Drug Enforcement Administration (DEA); U.S. Customs Service; Internal Revenue Service (IRS); Secret Service; Bureau of Alcohol, Tobacco and Firearms (ATF); and the Federal Law-Enforcement Training Center) trained more than 1,000 Russian law enforcement officials through a total of 40 courses--most of them held in Russia--on topics including organized crime, financial crime (e.g., money-laundering and counterfeiting) and narcotics trafficking. Although it is difficult to determine to what extent these programs have improved Russian capabilities to fight crime, the programs have helped U.S. and Russian law-enforcement officials to establish close contacts at all levels, which have resulted in increased information-sharing and an increased number of arrests in national and international organized crime and financial crime cases both in Russia and the United States. The two U.S. Justice Department prosecutors stationed in Moscow also made a strong contribution in providing anti-crime assistance to Russia: they prepared analyses of key Russian legislation on criminal-law reform, including an organized-crime bill, money-laundering bill, and a bill on corruption. Key recommendations from their analyses were incorporated into the pending legislation. In FY 1995, more than 500 Russian prosecutors, judges and investigators received training in the investigation and prosecution of organized and economic crime.
Security Programs: In FY 1995, the Defense Department's Cooperative Threat Reduction (CTR or Nunn-Lugar) Program continued to be among our most effective assistance programs in Russia, despite some growing pains and continuing problems with Russian customs and tax officials. CTR contractors continued to encounter problems with value-added taxes (VAT) on several occasions. Overall, however, the CTR Program made significant progress in terms of its ability to ship equipment into the country without needing to pay customs duties or taxes, and customs problems were generally worked out on a case-by-case basis. Significant progress was also made in the CTR Program's destruction and dismantlement efforts, with the awarding of a contract to assist Russia with the disposition of up to 30,000 metric tons of rocket propellant. In addition, shipments of U.S.-provided equipment for the elimination of strategic offensive arms continued to arrive at Russian bases such as the submarine-launched ballistic missile (SLBM) factory at Severodvinsk, which is now actively using this equipment to dismantle ballistic-missile submarines. Progress was also made on the design and construction of the fissile-material storage facility at Mayak, which upon completion will store fissile materials from dismantled nuclear weapons.
Social-Sector and Humanitarian Programs: In FY 1995, USDA provided over 90,000 metric tons of donated commodities, valued at approximately $32 million, to U.S. private voluntary organizations (PVOs) through the "Food for Progress" and Section 416 programs. The U.S. PVOs used the monetized proceeds from these commodities to implement a variety of technical and humanitarian assistance projects. For example, in Khabarovsk, Catholic Relief Services trained 48,000 students in dental care, Feed The Children supported forty soup-kitchens serving affordable meals to pensioners and children in the Moscow area, and other PVOs helped to strengthen small businesses by providing business services and equity/loan funds. Although the monetization process still has ample room for improvement, significant cost-savings were achieved by using PVOs as implementors, and cooperation with local governments improved greatly; cost-sharing arrangements with the latter are now being explored. In FY 1995, the Coordinator's Office transported $77.1 million in humanitarian commodities to Russia by means of 26 airlifts and some 890 surface shipments at a cost to the U.S. Government of $6.9 million. A significant portion of these commodities went to assist people experiencing severe hardships as a result of the conflict in Chechnya.
In FY 1995, the U.S. Government provided over $43 million in assistance to Tajikistan. (This includes appropriated funds, as well as $3.3 million in donated humanitarian goods transported by the U.S. Government.) The bulk of this assistance, as in previous years, was aimed at alleviating humanitarian assistance needs stemming from the ongoing civil conflict, and was channeled largely through private voluntary organizations (PVOs). Modest assistance was provided through programs promoting economic reform, democratization, and trade and business development. As Tajikistan's need for humanitarian assistance decreases, a greater proportion of our diminishing assistance resources for Tajikistan will be devoted to these areas.
In FY 1995, United Nations-led efforts to bring about a peaceful resolution to the conflict continued, but made little concrete progress. The ongoing inter-Tajik peace process and the elections of late 1994 and early 1995 kept interest in democratization and the rule of law high among individuals both inside and outside the government. Tajikistan's new parliament (Majlisi Oli) began to show an interest in redrafting the country's Soviet-era laws on the press, public organizations and other topics, and welcomed U.S. technical assistance in this area. Overall, however, Tajikistan did not make much progress in the area of democratic reform in FY 1995: the February 1995 parliamentary elections were flawed in many respects. On the economic side, the Government of Tajikistan took several significant steps toward economic reform in FY 1995, including the introduction of the Tajik ruble and the freeing of price controls on several key items. As a result, Tajikistan is close to concluding its first-ever standby agreement with the International Monetary Fund (IMF).
Trade and Investment / Business Development Programs: In FY 1995, the Central Asian - American Enterprise Fund (CAAEF) began operations in Tajikistan and signed a $380,000 investment/equity agreement in support of a joint venture between Dusti-Amirkhan and Pepsi Cola. Several USAID-funded U.S. nongovernmental organizations (NGOs) worked to promote small-business development in Tajikistan. These activities included a small-business credit pilot program and training in essential bookkeeping and business skills. Our embassy in Tajikistan and USAID's NIS Exchanges and Training (NET) Project grantee, the Agency for Educational Development (AED), oversaw the opening of a business facilitation center in Dushanbe, combining the embassy's commercial library with capacity to organize focused follow-on activities for alumni of business-related NET programs and other Tajik entrepreneurs. In addition to providing workspace and a base of operations for U.S. entrepreneurs, the center is providing information to Tajik entrepreneurs on doing business with the United States, and is holding seminars on privatization and other economic-related topics for key Tajik Government officials.
Economic Development Programs: At the request of the Government of Tajikistan, USAID provided a macro-economic advisor to the Office of the Prime Minister. Although the Tajik Government's lack of experience in working with foreign advisors prevented it from making fully effective use of the advisor, the advisor helped produce several useful documents on international trade regimes and privatization, which were later included in the Government's platform on economic reform and the privatization program ratified in November 1995.
Training and Exchange Programs: Given Tajikistan's extreme isolation, training and exchange programs continued to be the single most important tool for introducing the new generation of Tajik reformers to new ideas and policy-making approaches.
In FY 1995, USAID's NIS Exchanges and Training (NET) Project, whose programs for Tajikistan were focused on economic reform, brought 84 Tajiks to the United States to observe the functioning of our democratic, market-based system firsthand, and received enthusiastic support from the Prime Minister and other senior officials. Upon his return, one NET participant drafted a presidential resolution on privatization, while another developed a proposal for privatizing Tajikistan's telecommunications sector. Based on requests from program alumni, the NET Project developed follow-on seminars which attracted other interested citizens as well.
USDA's Cochran Fellowship Program brought three Tajik agriculturists to the United States in FY 1995 for training in cattle breeding and agribusiness management, and encouraged program alumni to form small private enterprises. One of the first Cochran participants is now a close advisor to the Prime Minister and is developing a program to expand the process of agricultural reform in Tajikistan.
In FY 1995, some 100 Tajiks came to the United States on USIA-sponsored exchange programs. USIA's exchange programs for Tajikistan focused largely on political reform, the formation of a civil society, and independent media. For example, three representatives of Tajikistan's newly registered independent political parties traveled to the United States to observe grassroots political activity--afterwards, one of the participants ran a successful campaign for a seat in the Tajik Parliament. A group of seven Tajik journalists came to the United States to observe how political activity is covered by the press, and subsequently put their experience to good use while covering their country's parliamentary elections. Five Tajik prosecutors from regions affected most by the country's civil conflict spent three weeks in the United States learning about due process and returned home to apply their new knowledge on behalf of refugees and returnees. These group projects tapped and encouraged newly evolving interest in the rule of law, grassroots political activity, and the role of independent media. After participating in a session of USIA's Salzburg Seminar, 22 Tajiks registered their nongovernmental organization (NGO) and began advocating the resumption of the international ties ruptured as a result of the country's civil war--the NGO is now holding roundtable discussions, teaching English classes at its tuition-based school (the first organized fee-for-service school in Dushanbe), and organizing film festivals promoting Tajik culture.
Democracy Programs: USIA supported the development of civic education in Tajikistan by sponsoring the attendance of two leading Tajik NGO-sector representatives at the Civitas Conference on Civic Education in Prague this past summer. Follow-on activities included a Soros Foundation-funded professorial exchange with the law faculty at Tajik State University. After attending a USIA-sponsored civic-education conference in Bishkek, Kyrgyzstan, a Tajik educator who recently drafted an alternative constitution implemented several reforms in Tajikistan's education program. The USAID-sponsored Law and Democracy Center in Dushanbe, which opened its doors in May 1995, began providing Tajik scholars and legislators with desperately needed information and model laws. The center will be a vital resource as the Tajik Parliament (Majlisi Oli) continues to draft new laws in accordance with the country's constitution, adopted in November 1994. For example, an analysis of the Tajik Government's repressive draft law on independent television prompted its complete redrafting with the support of the center's resources; the revised draft includes 60 percent of the recommended changes and is on the agenda of the next session of parliament. In addition, the American Legal Consortium, a USAID grantee, held seminars on the legal status of NGOs, the Tajik Constitution, and privatization.
Social-Sector and Humanitarian Programs: In FY 1995, the large-scale U.S. humanitarian effort launched immediately following the civil war in Tajikistan continued to make visible improvements in the lives of countless Tajiks. Programs supported either directly or indirectly by USAID, the Department of State, and USDA reached hundreds of thousands of people affected by the war. For example, one USAID-funded NGO organized food-for-work programs which rebuilt more than 12,000 houses and another 6,000 outbuildings, directly benefiting more than 60,000 displaced Tajiks and employing some 18,000 others. Another such NGO installed or repaired more than 2,700 handpumps, directly benefiting more than 40,000 former refugees, and a third provided medical services to over 260,000 Tajiks. In FY 1995, a hospital partnership was established between Dushanbe and Boulder, Colorado, which will provide more sustainable assistance to Tajikistan's health-care sector. USDA-funded NGOs organized the distribution of food to vulnerable groups and institutionalized persons, saving thousands of lives while the Tajik Government's social-safety system continued to deteriorate. In addition to distributing food, one USDA-funded NGO developed a credit program funded by monetized USDA P.L. 416 commodities, which has already provided start-up capital to 169 NGOs in the areas of small-business development, democratization and freedom of the press; the NGOs are subsequently required to make payments-in-kind to vulnerable groups, thus increasing community awareness. Under its Food For Progress program, USDA also shipped 25,000 tons of desperately needed wheat to Tajikistan in FY 1995, which arrived just when the dismal fall-harvest stocks had just about been depleted. This food assistance enabled the Government of Tajikistan to use more of its scarce currency reserves to support the country's national currency (the Tajik ruble, introduced in May 1995), and thus helped it meet the conditions for an International Monetary Fund (IMF) standby credit agreement. Under its FY 1995 Food for Progress program, USDA purchased and delivered to Tajikistan over $7 million in government-to-government commodities and over $22.6 million in commodities distributed by U.S. private voluntary organizations (PVOs). In addition, the Coordinator's Office delivered over $3.9 million in humanitarian commodities at a cost to the U.S. Government of approximately $630,000.
In FY 1995, the U.S. Government provided over $24 million in assistance to Turkmenistan. (This includes appropriated funds, as well as $3.8 million in donated humanitarian goods transported by the U.S. Government.) Even though the Government of Turkmenistan continued to state its commitment to introduce reforms at a measured pace, Turkmenistan made little progress in political and economic reform in FY 1995. In late December 1995, the Government of Turkmenistan did, however, announce an ambitious economic reform program prepared with the assistance of the International Monetary Fund (IMF). U.S. Government assistance to Turkmenistan focused on supporting the development of a cadre of reform-oriented individuals who will help shape current and future government policies. Our technical training and exchange programs focused on our assistance priorities in Turkmenistan: economic restructuring, the promotion of legal reform and the rule of law, social sector development, and environmental clean-up--these will continue to be our priorities in FY 1996 as well.
Our most effective assistance programs in Turkmenistan have been those which address priority areas identified by the Government of Turkmenistan. In FY 1995, candidates for all training and exchange programs continued to be vetted at the highest levels of the Turkmenistani Government, and were in some cases denied permission to participate. Since many of the existing regional programs did not meet Turkmenistan's specific needs, our embassy in Turkmenistan designed several country-specific programs, such as a USIA exchange program on the role of religion in a democratic society. For FY 1996, our embassy has developed a USIA exchange program for the country's mayors, focusing on urban development and infrastructure.
Although during follow-up training, some Turkmenistani exchange-program participants voiced frustration at their inability to effect change after completing their initial programs, as exposure continued and a core group of reform-oriented officials was being established, the situation slowly began to improve. Leading officials in Turkmenistan's economic and banking sectors began pushing for economic reforms; and academics, such as the heads of the Pedagogical Institute and the Turkish-Turkmen University, began making an effort to change the country's educational standards. Alumni of our training and exchange programs are now working in the Turkmenistani Government and many other areas--as their numbers and responsibilities increase, so will their ability to effect change.
Trade and Investment Programs: Since Turkmenistan's transition to a market-based economy was quite slow in FY 1995, U.S. efforts to promote trade and investment were less effective than other, more rudimentary economic programs, such as our business-development and economic-restructuring programs. Nevertheless, a group of Turkmenistanis received U.S.-based training in portfolio management and appraisal under USAID's NIS Exchanges and Training (NET) Project, and two Turkmenistani participated in USIA programs on international trade and economic development.
Business Development Programs: Similarly, because privatization and entrepreneurship remained in very early stages of development in FY 1995, our business development programs simply served as a vehicle for educating Turkmenistani officials in the functioning of a market economy. Since the Government of Turkmenistan has made agricultural privatization a priority, USAID's NET Project continued to introduce Turkmenistani agricultural officials to agribusiness concepts. In addition, volunteers under the year-old Farmer-to-Farmer Program in Turkmenistan provided training to individual private producers, developed and implemented a farm-management course, and provided training in agribusiness processing and association-building. (In FY 1996, the Farmer-to-Farmer is shifting its focus from individual producer training to agriculture cooperative- and association-building.) The NET Project also provided training in market principles to senior Turkmenistani Government officials.
Economic Development Programs: During the past few years, Turkmenistan's banking sector and the Ministry of Economics and Finance have introduced broad-reaching reforms, which have in turn been supported by U.S. Government assistance efforts. Turkmenistani officials received training in two areas--economic restructuring and private-sector development, and national budgeting and monetary policy--under two very effective programs organized by the NET Project. In addition, two USIA-sponsored U.S. speakers, working closely with the Turkmenistani Ministry of Foreign Economic Relations, held well-received seminars in these same areas. The economic training that we have provided to Turkmenistani Government officials has significantly increased the likelihood that their proposed economic reforms, which have been recommended by the International Monetary Fund (IMF) and are strongly supported by international banking and finance officials, will actually be implemented.
Training and Exchange Programs: In FY 1995, USAID's NIS Exchanges and Training (NET) Project brought 109 Turkmenistanis to the United States for short-term training in topics including economic restructuring, democratization and environmental issues. The Government of Turkmenistan has called NET the "most successful assistance program operating in Turkmenistan," because it addresses Turkmenistan's need for practical rather than theoretical training. Western officials have also noted the success of our specialized training and exchange programs in promoting the formation of a cadre of reform-minded policy-makers. English-language teaching was a high priority in FY 1995--a language lab funded by the Defense Department's International Military Education and Training (IMET) Program opened at Turkmenistan's national military academy, and USIA provided English-teaching materials to Peace Corps volunteers and established a research and advising center at the country's main university. Meanwhile, some 57 Turkmenistanis came to the United States on USIA-sponsored exchange programs. In particular, U.S. and Turkmenistani Fulbright Scholars were exchanged, an English-teaching specialist conducted methodology workshops and, for the first time, an English-teaching fellow began working outside the capital city of Ashgabat, at the Charjou Pedagogical Institute.
Democracy Programs: Ever since Turkmenistan gained independence in 1991, the Government of Turkmenistan has resisted introducing political reforms, considering stability "the most important priority until the year 2002." Nevertheless, in FY 1995, Turkmenistani Government officials were receptive to democracy programs focusing on legislative and judicial reform, such as NET programs which sent members of the Turkmenistani Parliament (Mejlis) and members of the judiciary to the United States. In addition, USAID-funded legal advisors worked with the Mejlis and the Ministry of Justice, and USIA civic-education programs effectively introduced Turkmenistani youth to civic responsibility.
Energy and Environmental Programs: In FY 1995, the USAID-funded Aral Sea Initiative continued to provide assistance in the vital area of water management. Under the Initiative, a reverse-osmosis water-treatment facility which Turkmenistani officials are considering as a model to be used nationwide was built and opened outside of Dashowuz. In addition, Turkmenistani water-management officials received plant-specific training under the NET Project, the Aral Sea Initiative's contractor, CH2M Hill, organized a regional water-management seminar in Ashgabat, and USDA's Cochran Fellowship Program, in cooperation with TACIS (the European Union's technical assistance program for the NIS) sent Turkmenistani irrigation specialists to the United States for training.
Security Programs: In FY 1995, six Turkmenistani military delegations traveled to various security- and democracy-related programs sponsored by NATO's "Partnership for Peace" Program, the Defense Department's IMET Program, and the Marshall Center in Garmisch, Germany. The Government of Turkmenistan nevertheless remained reluctant to become a full participant in "Partnership for Peace." Our embassy is working on several proposals for the Defense Department's Cooperative Threat Reduction (Nunn-Lugar) Program which would benefit U.S.-Turkmenistani relations.
Social-Sector Programs: Turkmenistani health officials received training in health-care financing under a USAID health-care reform program, and in pension- and welfare-management and epidemiology under USAID's NET Project. Under a USAID-supported hospital partnership with the Niyazov Medical Center, the Cleveland Clinic organized training and exchange programs and provided equipment for its Turkmenistani partners.
The United States Government provided over $300 million in assistance to Ukraine in FY 1995. (This includes appropriated funds, as well as over $60 million in donated humanitarian goods transported by the U.S. Government.) This assistance was centered around the development of a market economy, the provision of an adequate social safety net and the continuing evolution of democratic institutions. Cooperative Threat Reduction (Nunn-Lugar) Program assistance contributed to the early deactivation of all SS-24 intercontinental ballistic missiles (ICBMs) and over half of the SS-19 ICBMs in Ukraine and has helped Ukrainian defense enterprises convert to civilian production. Among the principal U.S. programs in Ukraine were those promoting privatization, energy-sector restructuring, the development of financial markets, the provision of targeted subsidies for housing and energy, and business development.
Trade and Investment Programs: Under the Commerce Department's Special American Business Internship Training (SABIT) Program, 56 Ukrainians participated in one- to three-month U.S.-based programs in areas including middle-management training, defense conversion, technical standards and the sciences; participant and U.S. host-company feedback was very positive. The Commerce Department's Business Information Service for the NIS (BISNIS) yielded over 400 specific trade-and-investment leads from Ukrainian enterprises; this information was made available to U.S. companies through the Commerce Department's national trade-data bank and its economic bulletin board. BISNIS also produced some 15 market-insight reports on Ukrainian commercial and investment conditions; these reports were also made available to U.S. businesses. Construction of a Commerce Department American Business Center (ABC) was completed late in the year. The ABC began functioning as both a business information resource and a workspace with logistical support for U.S. companies entering the Ukrainian market.
Business Development Programs: In FY 1995, the focus of USAID's business development programs in Ukraine was on small- and large-scale privatization, agricultural-sector restructuring, and post-privatization support. Due to the fact that the pace of medium- and large-scale privatization was slower than expected, the United States and other donors began working with the Government of Ukraine to streamline and accelerate the country's privatization process. By the end of FY 1995, the infrastructure for certificate-privatization had been established and half of the 48 million privatization certificates printed had been distributed--auction centers for small-scale privatization were operating in 13 oblasts (regions). The Government of Ukraine hopes to complete small-scale privatization by mid-1996. Three farm-service centers established with strong U.S. private-sector participation supplied U.S. technology and inputs to Ukraine's agricultural sector. Self-sustaining Business Support Centers were opened in three of the largest cities outside of Kiev--Lviv, Kharkiv and Odesa--and began providing training, information and small-business loans. The Western NIS Enterprise Fund began providing lending and equity investments to promote the growth of small- and medium-sized businesses in Ukraine.
Economic Development Programs: USAID capital-markets development and economic restructuring programs provided training and technical assistance to the Government of Ukraine, private investment funds, trust companies and other businesses. To date, over 1,750 bankers have received training in Western banking practices. The National Bank's USAID-supported interbank payment system became fully functional. USAID-funded advisors to the Ministry of Finance helped improve tax administration and collection, and developed budget-preparation,-analysis and -monitoring tools. U.S. Government-funded technical assistance is also helping Ukraine meet the wide range of prerequisites for accession to the World Trade Organization.
Training and Exchange Programs: In FY 1995, 632 Ukrainians came to the United States under USAID's NIS Exchanges and Training (NET) Project for training designed to equip professionals and policy-makers with the skills needed to operate in a free-market democracy. Meanwhile, some 1,900 Ukrainians came to the United States on USIA-sponsored exchange programs, including 1,650 secondary-school students. USIA also helped establish sister-city programs in 13 Ukrainian cities.
Democracy Programs: In FY 1995, U.S. Government-funded democracy programs strongly supported the development and expansion of local efforts to further democratization and legal reform in Ukraine. U.S. technical assistance and support to the Central Election Commission, various non-partisan citizens' groups and political parties helped create the conditions that enabled free and fair elections to be held and democratically elected officials to hold public office at all levels of government. With the help of USAID-funded advisors, a new, improved election law was drafted and was being considered by the Ukrainian Parliament (Supreme Rada) and a new constitution and civil code were drafted. U.S. Government-funded technical assistance also supported Ukraine's new minister of justice in his efforts to reform the Ministry of Justice and overhaul the country's legal system. New course materials created with in-house publishing equipment provided by USAID were introduced in Ukraine's five largest law schools, benefiting 80 percent of the country's law students. With the help of technical assistance under a USAID media program, Ukraine's independent media provided high-quality news and documentary programming to the Ukrainian public.
Energy and Environmental Programs: With U.S. Government-funded technical assistance, the Ukrainian energy sector began to undergo a complete restructuring in FY 1995, with four generating companies competing for the wholesale market and 27 local electric companies distributing electricity to consumers. USAID-funded advisors facilitated the establishment of a National Electricity Regulatory Commission which will ensure fair competition and reasonable rates. USAID-funded technical assistance and equipment continued to help improve efficiency at Ukraine's eight largest fossil-fuel plants at a rate of three to five percent per year. U.S. Government-funded assistance also helped strengthen environmental institutions within the Ukrainian Government and private sector, as well as environmentally oriented nongovernmental organizations (NGOs). In Crimea, U.S. assistance provided water pipes which helped double the region's water-supply capacity and now provide water to some 82,000 residents, including repatriated Crimean Tatars.
Security Programs: Assistance provided under the Defense Department's Cooperative Threat Reduction (CTR or Nunn-Lugar) Program continued to make significant progress in FY 1995, although different elements moved at different speeds, according to schedules mutually agreed upon by the United States and Ukraine. CTR activities in Ukraine included the following: strategic nuclear arms elimination; fissile-material protection, control and accounting; export control; support for the internationally funded Science and Technology Center in Ukraine (STCU); the maintenance of government-to-government communications links between the United States and Ukraine; and defense conversion. Under the CTR Defense Conversion Program, assistance has been provided in construction of housing for demobilizing strategic-rocket-force officers, and industrial partnerships provided funds to support the development of joint ventures between U.S. firms and Ukrainian defense enterprises so that the latter may shift to civilian commercial production.
Social-Sector and Humanitarian Programs: In FY 1995, a key objective of U.S. assistance to Ukraine was to help the Ukrainian Government alleviate the deprivations experienced by the most vulnerable members of society during the country's transition to a market economy. To that end, 1.1 million Ukrainian families were helped by a USAID targeted housing and communal-services subsidy program that is replacing costly universal benefits. In addition, USAID provided 20 million doses of vaccine to help combat diphtheria outbreaks, as well as chlorine and educational materials on public health to mitigate the consequences of a sewage spill in Kharkhiv. Health-care providers in Odesa and Donetsk received USAID-funded contraceptive supplies and training in order to improve the quality of and access to reproductive health services and to help lower the abortion rate. USAID also provided medication, hospital supplies and training for physicians in Kiev and Lviv under a program to facilitate the treatment of thyroid cancer and leukemia among children who were victims of the Chornobyl accident. USDA's FY 1995 "Food for Progress" program for Ukraine consisted of $25 million in government-to-government commodities and $6.1 million in commodities distributed by U.S. private voluntary organizations (PVOs). Meanwhile, the Coordinator's Office delivered over $60.3 million in humanitarian commodities to Ukraine in FY 1995 at a cost to the U.S. Government of $6.4 million.
In FY 1995, the U.S. Government provided over $14 million in assistance to Uzbekistan. (This includes appropriated funds, as well as almost $2.4 million in donated humanitarian goods transported by the U.S. Government.) Relations between the United States and Uzbekistan broadened and deepened in every area; this was clearly reflected in the Uzbekistani Government's receptivity to U.S. assistance activities in support of political and economic reform. This receptivity, in turn, increased the impact of our assistance. Training and Exchange Programs: U.S. Government-funded exchanges and training programs exposed Uzbekistanis to the outside world and provided them with skills vital to political and economic reform process. Moreover, these programs continued to garner praise at the highest levels of the Uzbekistani Government, including President Karimov, who indicated a willingness to consider cost-sharing. In FY 1995, 159 Uzbekistanis received U.S.-based training under USAID's NIS Exchanges and Training (NET) Project in such areas as judicial reform, epidemiology, water-quality monitoring, tax administration, business associations and business development. Seven Uzbekistanis participated in the Commerce Department's Special American Business Internship Training (SABIT) Program. A total of 250 Uzbekistanis came to the United States on various USIA-sponsored exchange programs, including 200 under the Secondary School Initiative, four under the Fulbright Program and eight under the International Visitor Program--participants included staffers from the Ministries of Foreign Affairs and Foreign Economic Relations and journalists. Nine members of parliament visited the United States under USIA's Parliamentary Exchanges Program, and USIA also organized four group projects on trade and investment in the cotton industry, the media, the national archives, and finance and taxation. Peace Corps English-language teachers enabled 1,214 Uzbekistani secondary school students to improve their English language skills, and 439 students participated in English-language-oriented extracurricular activities organized by Peace Corps volunteers. More than 350 Uzbekistani English-language teachers noticeably improved their teaching skills after participating in Peace Corps-facilitated workshops and practice sessions. In FY 1995, 33 Uzbekistani students received in-country training by the U.S. Customs Service, and another nine attended Customs Service and Drug Enforcement Administration (DEA) conferences focusing on drug interdiction. Five Uzbekistani students participated in the Defense Department's International Military Education and Training (IMET) program, and nine attended courses at the Marshall Center in Germany.
Trade and Investment Programs: In FY 1995, 40 U.S. companies participated in four trade missions in such sectors as computers and medical equipment, and another 15 U.S. companies participated in a defense conversion delegation in early FY 1996. The U.S. Export-Import Bank (Eximbank), the Overseas Private Investment Corporation (OPIC), the U.S. Trade and Development Agency (TDA), and USDA GSM-102 programs were indispensable in promoting U.S. exports to and investment in Uzbekistan. In FY 1995, Eximbank provided a $55 million loan guarantee, and made a preliminary commitment for an additional $50 million project. OPIC offered additional insurance for one project, and TDA provided $250,000 in funding for a feasibility study. The Government of Uzbekistan did not use $20 million of the GSM-102 offered by the U.S. Government in FY 1995.
Business Development Programs: During its first year of operation in Uzbekistan, the Central Asian - American Enterprise Fund (CAAEF) approved six investments in Uzbekistan worth a total value of $10.5 million, of which $2.78 million had been disbursed by the end of the fiscal year. Two additional investments valued at a total of $5.5 million were approved by the CAAEF in early FY 1996. The International Executive Service Corps (IESC) provided 13 volunteers to work with Uzbekistan's private-sector and the CAAEF--the volunteers who worked directly with the CAAEF provided assistance that helped it start-up its Uzbekistani operations quickly, while other IESC volunteers worked with Uzbekistani entrepreneurs and were able to identify sound investments for the CAAEF. Peace Corps volunteers also helped prepare small-loan proposals for submission to the CAAEF. In addition, Peace Corps volunteers were instrumental in organizing Uzbekistan's Junior Achievement (JA) Program, teaching classes and training local teachers to teach Junior Achievement courses, and they helped establish a number of business associations and business-information and -consulting centers. Volunteers under USAID's Farmer-to-Farmer Program made significant contributions to the development of agribusiness in Uzbekistan by identifying potential growth areas with strong market potential, such as honey, fruit and vegetables, wool and cheese, and providing technical assistance in raising quality standards and locating international buyers.
Economic Development Programs: USAID's Fiscal Reform Project, which is supporting Uzbekistan's successful macro-economic stabilization program, ended its first year with major breakthroughs. A draft tax code developed by USAID-funded advisors will form the basis for the legislation which the Government of Uzbekistan expects to submit to parliament in the spring. The emphasis of the project is now shifting to tax administration. A USAID-funded advisor is also working with the Ministry of Finance to develop a law regularizing government budget procedures. Uzbekistan's Deputy Prime Minister/Finance Minister has demonstrated his full support for the project by meeting regularly with USAID and project advisors.
Democracy Programs: In the area of democracy and governance, programs to strengthen indigenous nongovernmental organizations (NGOs) and promote legislative reform helped make Uzbekistan's society more open. The combined efforts of two U.S. NGOs resulted in the formation of an NGO initiative group which is taking the lead in working for changes in the legal environment. In the five months since his arrival in Tashkent, the American Bar Association's Central and East European Law Initiative (ABA/CEELI) liaison was inundated with requests for legislative drafting assistance from various Uzbekistani ministries, the Cabinet of Ministers and members of parliament. The ABA/CEELI liaison reviewed or was in the process of reviewing six major pieces of legislation and government decrees, and provided information on legal education in the United States to Uzbekistani law school officials planning to reorganize their school. Five U.S. Government-funded grant-making organizations--the Eurasia Foundation, Mercy Corps International, the Counterpart Consortium, the American Legal Consortium, and ISAR--made 162 grants/credits worth a total of almost $1.6 million to Uzbekistani nongovernmental organizations (NGOs). The Counterpart Consortium developed contacts with 110 Uzbekistani NGOs, of which 52 sent their leaders to a 2-day basic NGO training seminar; the leaders of 27 of these NGOs completed a 5-day project-design training seminar. As part of their effort to prepare an Uzbekistani delegation for a regional workshop on NGOs and the law, the Counterpart Consortium and the American Legal Consortium supported the formation of an NGO initiative group which will take responsibility for working with the Government of Uzbekistan to improve the legal environment for NGOs in Uzbekistan.
Energy and Environmental Programs: Under the USAID-funded Aral Sea Initiative, water-quality monitoring equipment was installed in a regional sanitation laboratory and two water-treatment plants. Chlorination equipment was also installed at the two water-treatment plants; this equipment, along with technical assistance and training in the operation of the equipment, has measurably improved the quality of drinking water for the 400,000 people living in the ecological disaster area served by these plant