I. Introduction

U.S. Government Assistance to and Cooperative Activities with Eurasia
Bureau of European and Eurasian Affairs
January 2006

Events of the past year demonstrated the tenuous nature of democratic transition in the countries of the former Soviet Union. The Governments of Russia, and even more so, Belarus and Uzbekistan, renewed efforts to tighten political control, weaken opposition, and stifle independent civil society. The Government of Ukraine met severe obstacles as it attempted to realize the reform and anti-corruption promises of the Orange Revolution. The Kyrgyz Republic is still grappling with how to leverage the Tulip Revolution into lasting democratic change. Georgia continues to consolidate the gains of its Rose Revolution, but it is hampered by a precarious energy situation and continuing threats to its territorial integrity from separatists in Abkhazia and South Ossetia. November 2005 parliamentary elections in Azerbaijan fell short of international standards according to the Organization for Security and Cooperation in Europe (OSCE). The Government of Azerbaijan has overturned the results in one district and scheduled the elections in ten others to be re-run in May 2006. Most recently, the December 2005 presidential election in Kazakhstan demonstrated some improvements over previous elections, but also fell short of the international standards to which the Government of Kazakhstan has committed itself. For all the progress seen in 2004, circumstances in 2005 demonstrated the need for continued, concerted efforts to support democratic movements in the region.

The economic picture is brighter. Azerbaijan moved closer to realizing the potential of its natural resources and FSA assistance will help diversify economic activity throughout the country, particularly through technical assistance and micro-credit programs for small and medium enterprises in the agribusiness sector. The Government of Kazakhstan is nearly ready to contribute significant financial resources to co-fund FSA economic development programs. Georgia and Armenia both developed compacts under the Millennium Challenge Account (MCA) to facilitate growth through infrastructure and economic development programs. FSA funds will continue to support MCA activities and seek to ensure their success by providing coordinated assistance in the areas of infrastructure rehabilitation, enterprise development and agribusiness. The selection of Armenia and Georgia for MCA Compacts should serve as an incentive for the other countries in the region to improve their performance with respect to the MCA's eligibility criteria, which emphasize the degree to which countries are governed justly, are economically free, and invest in the health and education of their citizens. In November 2005, three additional FSA countries - the Kyrgyz Republic, Moldova and Ukraine - were chosen as MCA "Threshold" countries. These countries will be developing Threshold programs in 2006, with a likely emphasis on addressing their problems with corruption and weak rule of law.

Security and law enforcement assistance, by helping to ensure stability, is key to achieving success in all other sectors. In 2005, Russia turned control of the Tajikistan-Afghanistan border over to the Government of Tajikistan. While this act was an important step in affirming Tajikistan's sovereignty and territorial integrity, border control is presenting serious challenges to the Tajik Border Guards. Under-funded, poorly supplied, and insufficiently paid, the Border Guards need significant assistance in order to control the flow of weapons, narcotics, and people across the border. The Drug Control Agency of Tajikistan is refocusing its efforts after tumultuous leadership changes in 2004, and continues to lead the region in drug seizures. In Ukraine, U.S. law enforcement assistance is helping the Government implement its anti-corruption campaign and promote rule of law by providing training to improve Ukrainian law enforcement agencies' capabilities to combat money laundering, enforce intellectual property rights, combat corruption, and improve border security against transnational criminal activities. Support continues to enhance Georgia's capabilities to monitor and control territorial borders, patrol internal checkpoints, and prosecute criminals and terrorists.

We are seeing some success in education assistance programs. Despite the political upheaval and uncertainty of 2005, the Kyrgyz Republic remains a model of successful education reforms that have given hope to a new generation of youth. FSA assistance helped the government design and implement a nation-wide academic testing procedure, which has significantly reduced corruption in the university entrance and scholarship processes. Basic education programs will continue to benefit hundreds of teachers and thousands of children by training teachers, establishing parent and community groups, and rehabilitating decrepit schools, in order to keep the Kyrgyz Republic from becoming a fertile recruiting ground for extremists.

Infectious diseases threaten not only the health of citizens, but the health of the economy and the ability of governments to respond to needs. Russia continues to face major demographic and public health challenges, including one of the fastest-growing HIV infection rates in the world, which stand as long-term threats to Russian and global security. In 2005, U.S.-funded programs focused on prevention and treatment of infectious diseases and fostered partnerships between the U.S. and Russian medical communities to combat the HIV/AIDS pandemic. Major efforts to combat infectious diseases, especially HIV/AIDS, continued in Ukraine and Central Asia as well.

Criminals who traffic in persons thrive when jobs are hard to find, law-enforcement officials lack information and resources, the legal environment is insufficient, and public awareness is low. The United States and the Government of Moldova signed a Letter of Agreement in FY 2005 to create a Center for Combating Trafficking in Persons, which will open in 2006. U.S. - funded anti-trafficking initiatives in Moldova support trafficking prevention through public awareness campaigns; legal, counseling, job-skill and health assistance to potential and actual victims; and safe learning and living environments for returning victims. U.S. efforts have also focused on legislative and legal reform, training the police anti-trafficking unit, and witness assistance. At least partly as a result of these efforts, convictions for trafficking offenses increased from 34 in 2003 to 95 in 2004, with a further 56 convictions through the first eight months of 2005.

In order to support foreign policy goals in a quick-changing environment, we never stop retooling our strategies, adjusting programs to fit changing realities, and working to ensure that our programs are cost-effective. We are also aware that our ultimate goal is to see FSA assistance phase out completely. The FSA account was conceived as a transitional account, aimed at fostering the emergence of stable democratic states with market economies in the former Soviet Union, and was expected to phase out when this objective was accomplished. Consistent with this original intent, as well as with President Bush's management reforms, which emphasize performance measurement and results-based budgeting, the Coordinator's Office conducted in 2004 a comprehensive interagency review of the transition status of all twelve FSA countries.

The review analyzed progress in the political, economic, social and security/law enforcement sectors, and ultimately recommended phase-out dates for each sector of FSA assistance in each country. These phase-out dates have been identified for planning purposes. They assume a gradual "glidepath" to lower FSA budget levels but do not convey any commitment to funding levels or entitlement to continued assistance until the phase-out date. At the end of four years, FSA economic reform assistance is expected to be phased out in Kazakhstan, Russia and Ukraine. Within nine years, we expect to have fully phased-out FSA assistance for Moldova, Russia and Ukraine. In the other countries of the region, FSA assistance is projected to continue for more than ten years in at least one of the four above-mentioned sectors.

The comparative analysis conducted during the course of the FSA phase-out review made it clear that the post-Soviet transition process in democracy and the social sector has not been as fast as the drafters of the FSA had anticipated. In fact, in both of these sectors there has been considerable backsliding in recent years. There is a long way to go before the original intent of the FSA can be realized. There are sure to be setbacks along the way, and the coming years will require us both to seize such opportunities as are presented and maintain a long-term perspective and to persist in engaging the peoples and governments of the Eurasian countries through technical assistance, training, exchanges and partnership programs.

Economic and Democratic Reforms in 1998

Ratings are based on a 1 to 5 scale, with 5 representing most advanced. USAID, drawing from Freedom House, Nations in Transit 1998, Freedom in the World 1998-1999 and EBRD, Transition Report 1998 (November 2004).

Economic and Democratic Reforms in 2005

Ratings are based on a 1 to 5 scale, with 5 representing most advanced. USAID, Monitoring Country Progress in CEE & Eurasia #10 (2006 forthcoming) drawing from Freedom House, Nations in Transit 2005 (2005), Freedom in the World 2006 (2005) and EBRD, Transition Report 2005 (November 2005).