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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 EURASIA FOUNDATION
By the end of FY 1995, USAID had obligated a total of $37 million, including $11 million in FY 1995, and expended a total of $34 million for an NIS small-grants programs administered by the Eurasia Foundation. The Foundation is a nongovernmental organization established to complement U.S. Government-funded direct assistance to the NIS by providing a rapid-response, flexible, on-the-ground mechanism for making a large number of small grants in support of political and economic reform in the NIS. The Eurasia Foundation's small-grants programs are designed to reach a wide range of groups with timely, targeted assistance, and to increase the number and diversity of groups receiving U.S. Government and private assistance funds, particularly in the areas of private-sector development, public-sector reform, and independent media. To facilitate outreach to NIS organizations and provide for easier monitoring and evaluation of grants, the Eurasia Foundation has field offices staffed by Americans and local staff in Moscow, the Russian Far East, and Saratov, Russia; Kiev, Ukraine; Yerevan, Armenia; and Tashkent, Uzbekistan.
In FY 1995, the Eurasia Foundation awarded over 581 grants for technical assistance, training, educational activities and policy research, both to U.S. organizations with NIS partners (30 percent) and directly to NIS organizations (70 percent). The Foundation made an average of 48 grants per month worth an average total of $1.23 million. The Foundation's diverse list of grantees includes the Armenian Real Estate Association, Iowa State University, Dnipropetrovsk State University (Ukraine), the Arinada Foundation (Russia), the Society for the Promotion of Women's Initiatives (Kazakstan), and the International Telecommunications and Information Center (Georgia).
In addition to awarding grants, the Eurasia Foundation also makes "program-related investments" (PRIs), which are recoverable grants or loans to further the development of small businesses. The PRI requires the recipient business to be fiscally responsible with its funds, because terms for repayment must be met. Additionally, the PRI mechanism allows the Foundation to make reform-oriented grants to commercial organizations in cases where a profit might be made but local credit is not accessible, usually because highly conservative local banks do not want to make loans to small businesses. In FY 1995, the Foundation approved nine such loans in Ukraine totaling $370,000, as well as two loans in Armenia totaling $25,000. The number of PRI loans made by the Foundation is expected to increase substantially in FY 1996.
In FY 1995, the Peace Corps had programs in eight NIS countries: Armenia, Kazakstan, Kyrgyzstan, Moldova, Russia, Turkmenistan, Ukraine and Uzbekistan. The Peace Corps' primary objective in the NIS is to work directly with people and local institutions at the grassroots level to help them make the transition from a centrally controlled authoritarian regime to a democratic, free-market system. By living in the communities they serve, learning the local language and dealing with local problems, Peace Corps volunteers build close working relationships with their host communities. In FY 1995, the Peace Corps' growing NIS programs continued to focus on English language education, economic development programs and expanded environmental programs.
Armenia: In FY 1995, there were 47 Peace Corps volunteers in Armenia working in the areas of small-business and agribusiness development and the teaching of English as a foreign language. Small-business volunteers focused on developing the institutional capacity of business centers and other institutions providing services to entrepreneurs. Volunteers also supported regional and municipal government officials charged with providing assistance to small businesses. Through increased access to information, management training and technical assistance, volunteers helped local firms increase their income, employment and efficiency. Volunteers worked with the Yeghegnadzor Orchard Rehabilitation Project, the Arney Wine Producers' Association, Armenia's first independent radio station and bakeries throughout Armenia. An English-language project was expanded in order to improve the language skills of additional students in secondary schools and institutions of higher learning in Armenia--sixteen new schools were added to the project in FY 1995, and the first nationwide English teachers' conference was held in June with the assistance and participation of Peace Corps volunteers.
Kazakstan: The Peace Corps' largest program in Central Asia is in Kazakstan. In FY 1995, 87 volunteers were working in the areas of economic development, English language education and the environment. In the first two years of education programs, Peace Corps volunteers taught 4,650 high-school students and 1,400 college students. Volunteers in the economic development sector conducted seminars on business principles, helped local entrepreneurs obtain grants, and trained business-center personnel. Ten Peace Corps-supported business centers participated in the start-up of a $1 million revolving loan fund for farmers, and served approximately 4,680 clients in FY 1995. Environmental volunteers worked to strengthen Kazakstani nongovernmental organizations (NGOs) by introducing them to networking and computer skills. Volunteers developed and introduced environmental-education curricula while helping to obtain and leverage grants for the local NGOs.
Kyrgyzstan: In FY 1995, 57 Peace Corps volunteers were placed in Kyrgyzstan, where they focused on one of two education projects. The first project is designed to develop the English-language competency of students and teachers, and to train English-language teachers. The second project, English for Professional Purposes, aims to develop the English language skills of medical, business and government professionals. To date, these two projects have reached 745 medical and professional staff, 5,080 high-school students and 1,080 undergraduates, while also providing 230 English-language teachers with training in technical and methodological skills.
Moldova: In FY 1995, there were 43 Peace Corps volunteers working in Moldova on two projects: economic development (11) and English-language education (32). Some 3,000 primary, secondary school and university students were taught English using communicative methods which incorporate problem-solving, critical thinking and environmental awareness. In addition, 35 peer-training workshops were held in an effort to promote the use of communicative techniques, critical thinking and group problem-solving. Peace Corps volunteers established resource centers which give students access to a variety of English-language materials, ranging from books, magazines and newspapers to visual aids and audio cassettes created by the volunteers. Meanwhile, the 11 economic development volunteers worked in business centers and taught in business schools during this first year of the project.
Russia: In FY 1995, there were 59 Peace Corps volunteers in Western Russia and 47 in Eastern Russia working in the areas of small-business development, education and the environment. In Western Russia, volunteers were assigned to four new oblasts (regions), bringing the total number of oblasts covered to 13. Business volunteers worked in nine business centers, collaborating closely with government agencies, nongovernmental organizations (NGOs) and universities. Two business centers were established, two others were registered as non-profit organizations, three business libraries were established, 10,000 requests for various information were filled in FY 1995. English-language volunteers taught over 2,000 students and teachers, and helped form two English Language Teachers' Associations. One of these two new associations has already sponsored its first international conference, which attracted over 400 attendees. In the Russian Far East, two new projects in English-language teaching and the environment were begun with the arrival of 35 additional volunteers. Volunteers were placed in the Primorskiy, Khabarovskiy and Sakhalin Oblasts (Regions). Business volunteers continued to help Russian companies to increase their efficiency and Russian individuals to increase their earning potential through the direct transfer of market-oriented skills. Business training was conducted in the areas of accounting, marketing, time management, IRM systems, debit/credit systems and tourism development, and a Junior Achievement program was implemented.
Turkmenistan: In FY 1995, 77 Peace Corps volunteers were placed throughout Turkmenistan, where they focused on two sectors: education and health (a new sector). Education projects focused on developing the English-language competency of students and teachers, training teachers, and developing the English skills of medical students and professionals. Peace Corps volunteers helped over 430 medical students and professionals improve their ability to communicate in English--one volunteer also assisted her Turkmenistani counterpart in obtaining funds to open a National Diabetes Center. In addition, 2,045 high-school students and 650 prospective English teachers/majors improved their English-language abilities, while 260 teachers attended Peace Corps teacher enhancement workshops.
Ukraine: In FY 1995, 120 Peace Corps volunteers were working in Ukraine in the areas of business development and English-language teaching. Business development volunteers provided training in business skills to Ukrainians in public and private institutions and businesses who are committed to economic reform. A total of 31 business-training institutions received assistance from Peace Corps volunteers. Many volunteers also worked with government officials, especially those responsible for privatization and economic reform, including the heads of economic committees. Meanwhile, the English-language project helped Ukraine integrate itself into the global marketplace by expanding and improving the quality of English-language instruction in the country's secondary schools and pedagogical institutes. Peace Corps volunteers not only taught, but also provided the colleagues with opportunities to improve their fluency while gaining exposure to Western teaching techniques and classroom activities. Volunteers also designed and developed resource manuals for English-language teachers, along with English-language tapes, materials and textbooks.
Uzbekistan: In FY 1995, 17 Peace Corps volunteers were placed throughout Uzbekistan, with another 36 arriving in December 1995. Volunteers worked in two sectors: education and enterprise development. Education volunteers concentrated on developing the English-language competency while increasing the local teachers' access to new teaching approaches and techniques. Over 1,200 students in Uzbekistani high schools, universities and institutes improved their English-language communications skills. Since 1993, over 800 local teachers have participated in 35 Peace Corps-sponsored seminars and workshops. Enterprise development volunteers taught business principles, established six business information and language centers, provided consulting services to entrepreneurs and facilitated new business ventures. Peace Corps volunteers also worked with USAID contractor Price Waterhouse to organize and conduct the first cash auctions for the privatization of state property.
In addition to bilateral assistance from the United States and other donors, the NIS countries continued to draw upon the support of international financial institutions, which with the strong support of the United States and its G-7 partners, responded innovatively to the special circumstances of post-Soviet economic transition. The three international financial institutions most active in the region--the International Monetary Fund (IMF), the World Bank, and the European Bank for Reconstruction and Development (EBRD)--increased their level of activity in the NIS in FY 1995. Similarly, in the Halifax Communiqué of June 1995, the G-7 countries pledged to continue G-7 support for economic reform in the NIS and for integration of these countries into the global trade and financial systems.
The International Monetary Fund (IMF)
Since the break-up of the Soviet Union in 1991, the International Monetary Fund (IMF), as part of its mission of promoting an open and growth-oriented world economy, has been helping the NIS countries stabilize their economies and undertake the structural changes needed for these countries to maintain sustainable balances of payments and to participate in the international financial system.
The IMF does this by working with the NIS governments to design ambitious economic reform programs and by extending financial support for program implementation. Financial support comes from the IMF's general resources, which are made available through loans. Disbursement is divided into tranches and conditioned on satisfactory country progress toward implementing the negotiated programs. The IMF also provides extensive technical assistance, in particular for monetary and fiscal management. IMF programs in the NIS complement efforts by the World Bank and European Bank for Reconstruction and Development.
FY 1995 was an active and successful year for the IMF in the NIS. The number of countries implementing IMF-backed programs doubled from five to ten (all but Tajikistan and Turkmenistan), and the reform programs under way were more ambitious than previously. Most of the participating countries made substantial progress in lowering inflation, introducing or already stabilizing their national currencies, liberalizing prices, lowering their budget deficits and improving their current-account balances.
The IMF's new FY 1995 NIS commitments of approximately $9.8 billion and disbursements of $5.2 billion represented about half of its total cumulative activity in the region through FY 1995. Russia--the region's economic giant--accounted for nearly two thirds of this financial support and successfully undertook a reform program backed by a $6.4 billion IMF standby arrangement.
The International Bank for Reconstruction and Development (IBRD) and International Development Association (IDA)
The International Bank for Reconstruction and Development (IBRD) provides project or adjustment lending at near-commercial rates, technical advice to support specific policy changes and institutional reforms, and financing of critical investment needs in developing countries. The IBRD's top priority is to reduce poverty. The International Development Association (IDA) lends to the poorest countries at concessional rates. Of the NIS countries, Armenia, Azerbaijan, Georgia, Kazakstan, Kyrgyzstan, Moldova and Turkmenistan are eligible to receive IDA terms.
The IBRD and IDA approved nearly $3.4 billion in loans to the NIS during the Bank's 1995 fiscal year, which runs from July 1 to June 30. Russia was the leading NIS recipient: nine projects worth more than $1.7 billion were approved. Azerbaijan, Georgia and Turkmenistan were able to take advantage of IBRD lending for the first time in 1995. In general, the IBRD's lending operations supported economic adjustment programs, infrastructure development, private-sector growth, and social protection--all in the context of sustainable development. Since 1990, the IBRD has approved more than $7.2 billion in loans for the region and, together with the IMF, is the single largest official source of external financing for the NIS governments.
IBRD and IDA Commitments in FY 1995 (July 1 - June 30)
(in millions of dollars)
Armenia $ 116.7
Azerbaijan 81.8
Georgia 103.1
Kazakstan 283.1
Kyrgyzstan 77.0
Moldova 90.0
Russia 1,741.3
Tajikistan 0.0
Turkmenistan 25.0
Ukraine 646.0
Uzbekistan 226.0
TOTAL $3,390
The European Bank for Reconstruction and Development (EBRD)
The EBRD was formally established in March 1991--it was created to support market-oriented economic reform and democratic pluralism in Central and Eastern Europe. All of the NIS countries are members of the EBRD. The EBRD is unique among multilateral development banks in its private-sector focus and inclusion of political conditionality requiring beneficiaries to be committed to democracy and the rule of law. By its charter, the EBRD is required to devote 60 percent of its total resources to private-sector projects within five years of its start-up. As of September 30, 1995, 69 percent by value and 78 percent by volume of the EBRD's commitments were to the private sector. The EBRD must also meet a 60 percent activity threshold in each individual country of operation within five years of beginning operations in the country. Among the NIS countries, over 60 percent of the EBRD's commitments are to the private sector in Kazakstan, Russia, Turkmenistan, Ukraine and Uzbekistan.
Through the end of FY 1995, the EBRD had made cumulative commitments to individual NIS countries of approximately ECU 2.2 billion ($2.9 billion) out of the EBRD's total country-specific commitments of about ECU 6.4 billion ($8.3 billion). The total figure does not include approximately ECU 328 billion ($426 billion) in regional projects such as venture funds which the EBRD has financed, some of which benefit NIS recipients (see Enterprise Funds section). In FY 1995, Russia was the primary beneficiary of EBRD commitments, garnering 19.5 percent of total EBRD lending. Ukraine was the next largest NIS recipient, ranking eighth with 3 percent of total EBRD commitments. The EBRD is working to accelerate geographic diversity of its portfolio, but relatively slower rates of economic reform in several NIS countries make the goal more of a challenge. Tajikistan, the only NIS country with no EBRD commitments, has also received some technical assistance, and the EBRD hopes to develop lending projects in Tajikistan soon.
After considerable internal turmoil in 1993, the EBRD was reorganized in 1994 and has now reclaimed the well-deserved support of the international community. In 1995, the EBRD continued to move forward with revised operational priorities that accompanied the EBRD's administrative reorganization. These priorities included increasing geographic diversity of lending; increasing support for local private sectors; building on the EBRD's comparative advantages such as expertise in financial-sector development; and strengthening the EBRD's local presence. The EBRD has local offices in a number of NIS countries: Moscow; St. Petersburg, Vladivostok, and Volgograd, Russia; Kiev, Ukraine; Tashkent, Uzbekistan; Almaty, Kazakstan; Dushanbe, Tajikistan; and Bishkek, Kyrgyzstan.
U.S. contributions to the EBRD were to be paid in five annual installments of $70 million. Except for FY 1991, appropriations have fallen short of the $70 million, leaving the U.S. Government with arrears of more than $80 million after the five-year period. The Clinton Administration will clear the bulk of the arrears in FY 1996.
U.S. Contributions to the EBRD
1991 $70 million
1992 $69 million
1993 $60 million
1994 0
1995 $69 million
1996 $70 million (authorized, but not yet disbursed)
TOTAL $338 million
EBRD Commitments to the NIS as of September 30, 1995
(millions of ECU*)
Country Value Number Percentage to Private Sector
Armenia 61.4 2 0
Azerbaijan 58.4 2 0
Belarus 159.8 6 28
Georgia 22.3 2 0
Kazakstan 105.2 2 100
Kyrgyzstan 82.1 5 56
Moldova 67.1 5 36
Russia 1301.8 52 79
Tajikistan 0 0
Turkmenistan 4.5 2 100
Ukraine 202.5 12 72
Uzbekistan 125.7 4 100
TOTAL 2,220.8 94
*ECU 1 = approximately $1.30.
In 1983, the U.S. Congress passed the Research and Training for Eastern Europe and the Independent States of the Former Soviet Union Act (Title VIII), which was designed to reverse the decline in the number of U.S. experts on these regions by providing stable, long-term financing on a national level for advanced research; graduate area studies and language training (both U.S.-based and in-country); public dissemination of research data, methods and findings; and contact and collaboration among governmental and nongovernmental specialists.
The Title VIII program operates under the guidance of an advisory committee chaired by the State Department and consisting of representatives of the Secretaries of Defense and Education, the Librarian of Congress, and the Presidents of the American Association for the Advancement of Slavic Studies (AAASS) and the Association of American Universities. Under the program's two-stage award process, the Department of State conducts an annual open competition among national organizations with interest and expertise in administering research and training programs in the Russian, Eurasian and East European fields. The U.S. Congress appropriated about $4.6 million annually for Title VIII activities from FY 1985 to FY 1990, and in light of the dramatic changes in the region, about $10 million annually from FY 1991 to FY 1994. In FY 1995, the Title VIII program was funded at $7.5 million, with $5 million from the FREEDOM Support Act for projects on the NIS and $2.5 million from the Support for East European Democracy (SEED) Act for projects on Central Europe (CE), including the Baltic countries. The following is a list of FY 1995 Title VIII grant recipients for NIS-related projects, including the amounts and purposes of their awards:
American Council of Teachers of Russian / American Council for Collaboration in Education and Language Study (ACTR/ACCELS)
Grant: $237,000 ($200,000 NIS; $37,000 CE/Baltics)
Purpose: To provide fellowships for in-country language training through academic-year and semester-long programs, and a combined research and language-training program in NIS and Central European languages.
Council on International Educational Exchange (CIEE)
Grant: $120,000
Purpose: To support semester- and year-long language fellowships in Russia.
Institute on International Education (IIE)
Grant: $120,000 ($30,000 NIS; $90,000 CE/Baltics)
Purpose: To support year-long professional-development fellowships for graduate students, junior faculty and specialists conducting policy analyses on the NIS and Central Europe.
International Research and Exchanges Board (IREX)
Grant: $1,740,000 ($1,120,000 NIS; $620,000 CE/Baltics)
Purpose: To support a variety of programs facilitating U.S. scholarly access to Russia, Eurasia and Central Europe, including individual field-research grants, pre-departure orientation programs, short-term travel grants, special collaborative projects in the social sciences and humanities, one-year research residencies for U.S. postdoctoral scholars to pursue independent research and assist other U.S. scholars on-site, and dissemination of research findings to U.S. policy-makers and opinion leaders through policy forums, books and other publications.
Joint Committee on the Soviet Union and its Successor States (JCSSS)
Grant: $1,300,000 ($1,230,000 NIS; $70,000 CE/Baltics)
Purpose: To support a national fellowship program for graduate training, dissertation completion and postdoctoral research, including a professional development and retraining program; an annual workshop in under-represented NIS/CE/Baltics-related fields; institutional grants for intensive training in languages of the former Soviet Union; a workshop for organizers of Central Asian language institutes and teachers; a research and development program; and partial support for the American Bibliography for Slavic and East European Studies (ABSEES).
National Academy of Sciences (NAS)
Grant: $85,000 ($57,000 NIS; $28,000 CE/Baltics)
Purpose: To support a postdoctoral fellowship program for collaborative research between U.S. specialists and their NIS/Central European/Baltic colleagues in the area of science-related public policy.
National Council for Soviet and East European Research (NCSEER)
Grant: $1,709,000 ($1,245,000 NIS; $464,900 CE/Baltics)
Purpose: To conduct a national competition among U.S. institutions of higher education and non-profit corporations in support of advanced research projects on Russia, Eurasia and East-Central Europe.
Stanford University - Hoover Institution on War, Revolution and Peace
Grant: $200,000 ($163,000 NIS; $37,000 CE/Baltics)
Purpose: To support 6- to 12-month postdoctoral fellowships and summer grants for individual research projects on Russia, Eurasia and Central Europe.
University of Hawaii
Grant: $50,000
Purpose: To support postdoctoral research fellowships at the university's Center for Russia in Asia, and to enhance the Center's capability to disseminate information nationally on the Russian Far East and on Russia's activities in Asia.
University of Illinois at Urbana-Champaign
Grant: $150,000 ($120,000 NIS; $30,000 CE/Baltics)
Purpose: To provide partial funding for the university's Summer Research Laboratory and the Slavic Reference Service.
Woodrow Wilson Center for International Scholars
Grant: $950,000 ($665,000 NIS; $285,000 CE/Baltics)
Purpose: To support the fellowships, meetings and publications of the Kennan Institute for Advanced Russian Studies and the Central Europe/Baltics-related activities of the East and West European Program, including an annual Junior Scholars' Training Program. These programs allow U.S. scholars to take advantage of the resources found in the Washington, D.C., area.
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