Order Code RL32866
CRS Report for Congress
Received through the CRS Web
U.S. Assistance to the Former Soviet Union
April 14, 2005
Curt Tarnoff
Specialist in Foreign Affairs
Foreign Affairs, Defense, and Trade Division
Congressional Research Service ˜ The Library of Congress
U.S. Assistance to the Former Soviet Union
Summary
Since 1992, the United States has provided more than $26 billion in assistance
to the 12 states of the former Soviet Union (FSU). It continues to provide nearly $2
billion annually. This report describes the broad framework of U.S. assistance
programs and policies in the region and then focuses on the FREEDOM Support Act
(FSA) account under the foreign operations budget which, encompassing all U.S.
objectives in the region, has often been the means by which Congress has expressed
its views and sought to influence policy.
Three objectives have been most prominent in the U.S. assistance program to
the region — facilitating the transition from authoritarianism to democracy,
promoting the introduction and growth of free market economies, and fostering
security by controlling the proliferation of nuclear, chemical, and biological weapons
and expertise. More recently, a fourth objective, very much encompassing the other
three, has emerged — supporting the war on terror. A fifth objective of U.S.
assistance, humanitarian relief, was mostly applied in the early 1990s in response to
countries experiencing food shortages.
Under the control of the State Department’s Coordinator of U.S. Assistance to
Europe and Eurasia and encompassing all U.S. policy objectives, the FSA account
has been a special interest of Congress since its creation in 1992. About $10.5 billion
of the $26 billion in total U.S. aid provided between 1992 and 2004 has come from
the FSA account. In its FY2006 foreign operations budget, the Administration
requested $482 million for the FSA account, a 13% decrease from the FY2005
appropriation. The request for Department of Defense (DOD) Cooperative Threat
Reduction programs was $415.5 million, and the Department of Energy’s (DOE)
various FSU nonproliferation programs would add up to $525.7 million in FY2006,
both slight increases from the previous year.
Perhaps the most notable feature of the FY2006 Administration foreign
operations request is the proposed cuts in aid. With democracy challenged in Russia,
leadership changes in Georgia, Ukraine, and Kyrgyzstan, that may open the door to
long-delayed economic and political reform, as well as important U.S. interests in
Central Asia, some observers argue for an increase in aid to the region.
The recent rise of democracy in Ukraine and Georgia and its evident decline in
Russia have highlighted the role and possible need for U.S. democratization
assistance. However, even while democracy funding in Russia appeared to grow
proportionately because of a decrease in FSU account funding, absolute levels of
democracy aid to Russia have not increased since 1999 when it reached a level of $64
million.
Aid to the FSU has always come with conditions. The majority of specific
restrictions have been aimed at Russia. As a result, in most years as much as 60%
of planned U.S. assistance to the federal Russian government has been withheld.
Currently, the most difficult conditionality issue arises with respect to human rights
in Central Asia. This report will be updated as events warrant.
Contents
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Objectives and Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Democracy and Economic Reform . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Humanitarian . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Anti-Terrorism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Funding Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
FSA Account Current Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2005 Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
FY2005 Supplemental Appropriations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
FY2006 Appropriations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Cuts in FSA Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Support for Democratization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Conditionality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
List of Figures
Figure 1. Total U.S. Assistance to FSU: FY1992-2004 . . . . . . . . . . . . . . . . . . . . . 2
Figure 2. Total U.S. Assistance to FSU: FY2004 . . . . . . . . . . . . . . . . . . . . . . . . . 2
Figure 3. U.S. Assistance to the FSU: All Spigots 1992-2004 . . . . . . . . . . . . . . . 3
Figure 4. FSA Account by Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Figure 5. FSA Account and Russia Aid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
List of Tables
FSA Account Country Allocations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
U.S. Assistance to the Former Soviet Union
Since 1992, the United States has provided more than $26 billion in assistance
to the 12 states of the former Soviet Union (FSU). It continues to provide nearly $2
billion annually. Over the years, various aspects of the program have drawn strong
congressional interest and sponsorship; some country programs have been the
subject of controversy and debate. At one time or another, these aid programs have
sought to address the range of U.S. foreign policy, strategic, and economic interests
in the region. This report describes the broad framework of U.S. assistance programs
and policies in the former Soviet Union and then focuses on the foreign operations
FREEDOM Support Act (FSA) account which, encompassing all U.S. objectives in
the region, has often been the means by which Congress has expressed its views and
sought to influence policy.
Background
Objectives and Programs
With the demise of the Soviet Union and emergence of a dozen new
independent states at the end of 1991, the United States launched assistance programs
aimed at accomplishing varied foreign policy objectives. Three objectives have been
most prominent — facilitating the transition from authoritarianism to democracy,
promoting the introduction and growth of free market economies, and fostering
security by controlling the proliferation of nuclear, chemical, and biological weapons
and expertise. A fourth objective of U.S. assistance, humanitarian relief, was
especially significant at discrete points in the 1990s when several countries
experienced critical food shortages. More recently, a fifth objective, very much
encompassing the other four, has emerged — supporting the war on terror.
Democracy and Economic Reform. Efforts to boost the objectives of
democratization and economic growth have been supported chiefly through
assistance programs authorized by the FREEDOM Support Act (FSA) of 1992 (P.L.
102-511). The assistance, usually in the form of expert advice and associated
materiel support or grants to indigenous organizations, has sought to affect a range
of sectors.
Among the democratic initiatives are technical assistance to political parties,
parliaments, and independent media and grants to encourage the development of civil
society non-governmental organizations (NGOs). Exchanges, most now funded
under State Department appropriations, contribute to democratization by introducing
FSU leaders and citizens to U.S. institutions and way of life. Roughly 11% of total
U.S. assistance since 1992 has supported democratization.
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Economic and social reform programs include efforts to assist private sector
development — support for privatization of state-owned business; drafting of new
tax, securities, and commercial law; distribution of credit to micro and small
enterprise; equity investments in fledgling business; and provision of expertise to
farmers and businessmen. Assistance has also addressed related health, environment,
energy, and housing concerns, including efforts to combat infectious disease,
promote policy reforms, and introduce innovations such as a mortgage lending
system. About 25% of total aid has been devoted to economic and social
development.
Figure 1. Total U.S.
Humanitarian. Humanitarian programs
Assistance to FSU:
include the PL480 food aid program (roughly
FY1992-2004
80% of humanitarian aid) and airlifts of food and
medical supplies. The latter was of special
importance in the first years of the transition, and
the former was an especially significant part of
the total aid program during discrete periods —
1993 and 1999 — when Russian farmers could
not meet their country’s food requirements and
the United States wished to bolster President
Yeltsin’s position. About 25% of total aid has
been employed to fill humanitarian needs.
Security.1 Security programs mostly focus
on non-proliferation concerns. They have been
Figure 2. Total U.S.
implemented mainly under the so-called “Nunn- Assistance to FSU: FY2004
Lugar” Cooperative Threat Reduction (CTR)
Program legislation (P.L.102-228), much of the
language of which is duplicated in the
FREEDOM Support Act. Several government
departments have been actively engaged in
implementing security programs. Broadly, non-
proliferation programs conducted by the
Department of Defense (DOD) have included
insuring the security of transport and storage and
the elimination of nuclear, chemical, and
biological weapons and materials. The
Department of Energy’s Material Protection,
Control, and Accounting (MPC&A) program
sponsors numerous efforts to protect nuclear sites and thwart smuggling of material.
Both the State Department and DOE have managed programs controlling the spread
of weapons expertise by encouraging scientists to remain in the FSU. State also
supports export control and border security assistance. About 38% of total U.S.
assistance to the FSU since 1992 has focused on security. Almost two-thirds of these
funds were directed at Russia. In recent years, the proportion of aid directed at
1 For detailed discussion of FSU security programs see Non-Proliferation and Threat
Reduction Assistance: U.S. Programs in the Former Soviet Union by Amy Woolf (CRS
Report RL31957).
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security concerns has risen substantially — in FY2004, it represented more than 63%
of total aid.
Anti-Terrorism. While there are discrete anti-terror programs aimed at the
region — such as border security and anti-terrorism training — all other assistance
objectives can be viewed as supporting this one. The securing of nuclear and other
weapons has always been as much to keep them out of the hands of stateless terrorist
groups as other nations. The achievement of economic growth and democracy are
seen as helpful conditions to discourage the sale of weapons and technology and the
eruption of discontent and instability that might offer havens to terrorist operations.
The emergency supplemental that followed September 11, 2001, targeted for special
funding Central Asian countries which provided bases for U.S. troops fighting in
Afghanistan and are themselves viewed as threatened by radical Muslim
organizations.
Funding Accounts
Multiple sources of U.S. funding (“spigots”) make up assistance to the region.
Figure 3. U.S. Assistance to the FSU: All Spigots 1992-2004
Most security-related aid has been funded through Department of Defense (DOD)
appropriations, but major related programs have also been funded under Department
of Energy (DOE) and Foreign Operations appropriations, in the latter case primarily
the FSA, Foreign Military Financing, and NADR (Non-proliferation, Anti-terrorism,
Demining) accounts. DOD, DOE, and Foreign Operations appropriations
respectively account for $4.8 billion, $3.0 billion, and $2.1 billion of total U.S.
security aid to the FSU since 1992.
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Humanitarian programs are predominately composed of the PL480 food aid
program funded from Department of Agriculture (USDA) appropriations. Airlifts of
humanitarian supplies were funded out of both State and DOD appropriations.
Roughly two dozen U.S. government agencies and department offices have
implemented aid programs in the FSU. Among these are the Peace Corps volunteer
program, the State Department’s exchange and non-proliferation programs, and
Environmental Protection Agency, Department of Labor, and Treasury Department
activities. Many of these programs were originally supported largely or entirely by
the FSA account, but as that account has decreased in size, some agencies have
gradually been required to provide their own-agency appropriated funds (included in
the “other” category in the figure above).
Figure 4. FSA Account
by Sector
Most democratization, economic, and social programs, have been funded
annually in the Foreign Operations appropriations bill under the “Independent States
of the Former Soviet Union” account (FSA account). Only the FSA account has
supported the whole range of U.S. policy objectives at one time or another.
FSA Account Current Program. Under the control of the State
Department’s Coordinator of U.S. Assistance to Europe and Eurasia, the FSA
account has been a special interest of Congress since its creation in 1992. About
$10.5 billion of the $26 billion in total U.S. aid provided between 1992 and 2004 has
come from the Foreign Operations-funded FSA account. Unlike DOE or DOD
security programs, funding for which has trended upward in the past dozen years, the
FSA account has fluctuated considerably. Since 2002, however, it has been falling
and, at $555.5 million in FY2005, is at its lowest level since 1993. The decline may
in part be explained by the view that some countries have progressed sufficiently in
their economic and political development that they no longer require U.S. assistance
(see issues below).
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The composition of the account has also changed significantly over 14 years.
In the early 1990s, economic and social reform was the largest component — as
much as two thirds of the account in some years. In 2004 it was nearly half the
account, but still the largest component at $289 million. Hovering near the 15%
mark during the early and mid-1990s, democratization efforts rose to make up 25%
by late in the decade. In 2004, at $158 million, it represented 27%. Security aid was
only 5% of the account in the first part of the program, but rose to a high of 25% in
2000 as a result of the so-called Expanded Threat Reduction Initiative that increased
the State Department role in non-proliferation. As the State Department has steadily
moved non-proliferation program funding to the NADR and other accounts, security
as a component of the FSA account has declined. It was 15% in 2004 at $88 million.
2005 Legislation
FY2005 Supplemental Appropriations
In February 2005, the Administration
submitted an $81.9 billion request for
FSA Account Country Allocations
emergency supplemental appropriations,
(in $ millions)
Country
FY2004 FY2005 FY2006
most of which is intended for military
(est.)
(req.)
operations in Iraq. The request includes
Armenia
74.6
70.0
55.0
$60 million for Ukraine, on top of its
Azerbaijan
38.8
37.4
35.0
regular foreign operations appropriation,
Belarus
8.1
6.5
7.0
to help newly elected President Viktor
Yushchenko pursue political as well as
Georgia
71.7
86.0
67.0
economic reforms. Of this amount, $19.2
Kazakhstan
33.3
26.7
26.0
million is planned for anti-corruption and
Kyrgyzstan 36.2
31.0
30.0
rule of law activities; $3 million for the
Moldova
22.5
17.4
17.0
new president’s administration; $12.7 for
Russia
96.4
85.0
48.0
economic reform; $10.1 million for civic
Tajikistan
24.5
27.0
25.0
organizations in the east and south; $5
Turkmenistan
5.7
6.5
5.5
million to support parliamentary elections;
Ukraine
94.3
79.0
88.0*
$4.5 million for HIV/AIDS; and $5.5
Uzbekistan
35.9
33.5
30.0
million for nuclear safety. On March 8,
Regional
42.6
49.6
48.5
the House Appropriations Committee
reported a bill (H.R. 1268) that would
Total App.
584.5
555.5
482.0
provide a reduced amount of $33.7
*An additional $60 million was requested in the
FY05 emergency supplemental apps.
million for Ukraine focusing solely on the
immediate need to demonstrate U.S.
support and assist upcoming elections. It was approved by the House on March 16.
On April 6, the Senate Appropriations Committee approved its version of the bill,
providing $60 million for Ukraine and an additional $5 million for democratization
activities in Belarus and $5 million for relief and conflict management efforts in
Chechnya and the North Caucasus.
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FY2006 Appropriations
In its FY2006 foreign operations budget, the Administration requested $482
million for the FSA account, a 13% decrease from the FY2005 appropriation. The
request for DOD CTR programs was $415.5 million, and DOE’s various FSU non-
proliferation programs would add up to $525.7 million in FY2006, both slight
increases from the previous year.
Issues
Several concerns have been raised in recent years regarding U.S. assistance for
democracy and economic growth. (For non-proliferation aid issues see footnote 1).
Cuts in FSA Account
Perhaps the most notable feature of the FY2006 Administration foreign
operations request is the proposed cuts in aid. With democracy challenged in Russia,
leadership changes in Georgia, Ukraine, and Kyrgyzstan that possibly open the door
to long-delayed economic and political reform, as well as important U.S. interests in
Central Asia, some observers argue for an increase in aid to the region.
As noted above, the overall account would be cut by 13% from the previous
year. Perspectives differ on the level at which aid would be “appropriate” or on what
programs are necessary. For comparison, the $482 million FY2006 request is 35%
below the most recent 10-year average of $738 million. However, the cuts would fall
mostly on three of the four countries which have perennially been the chief
recipients of FSA aid in the past 14 years. Armenia aid would be decreased by 21%;
Georgia by 22%; and Russia by 44%. Some Members of Congress have expressed
concerns over this development. In its report on S. 600 (S.Rept. 109-35), the
proposed State Department Authorization Act, the Foreign Relations Committee
urged the Administration “to consider the harm its proposed cuts in funding
assistance could have on U.S. interest in stability, democracy and market reform in
the Independent States.” The bill, however, authorizes the requested Administration
level for the FSA account in FY2006.
Russia is the country most threatened by these cuts. Over the years, Armenia
and Georgia have had strong support in Congress; they have consistently been the
largest beneficiaries of aid on a per capita basis, and their aid levels are usually
earmarked in legislation. When cuts have been proposed, Congress has often
rejected them. Cuts to the Russia program, however, are meant to lead to a total
“phase-out” of its aid program in the next several years. Currently at $85 million, aid
for Russia is at its lowest level, and the proposed FY2006 level is $48 million.
Although the Russia program has been the largest recipient on an absolute basis (but
annually only 7th or more in per capita terms), it was often the target of those who
were dissatisfied with former President Yeltsin’s leadership and both his and Putin’s
positions on issues such as the transfer of nuclear reactor expertise to Iran and the
war in Chechnya. Its importance to U.S. foreign policy and the view that aid is
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intended to address the need for democracy and free markets have been the chief
rationales for maintaining the aid program at a higher level.
Although the FSA program was not established with any firm deadline in mind,
most observers assumed that the program was “transitional” and would not run as
long as programs in developing
Figure 5. FSA Account and Russia Aid
countries. A State Department
strategy in 1994 suggested the
Russia program would end around
1998. In 1997, the Partnership for
Freedom initiative, which chiefly
sought to reverse a sharp decline in
Russia aid, made explicit a plan to
wind down large-scale technical
assistance to the whole FSU in
2002, but with smaller grassroots
cooperation programs continuing
beyond then to about 2006. In
2003, the Bush Administration
decided to phase out Russia
programs over several years, beginning with economic sector programs by 2006.
The questions these or any proposed cuts raise is whether they are desirable or
justified in terms of what has been accomplished or remains to be achieved in each
country. In the case of Russia, the Administration argues that economic reform
programs are not required now that Russia is growing economically, and that these
programs will be phased out first while democracy programs will be maintained.
Some might argue that much more remains to be done in the economic and social
development sectors, especially with regard to grassroots private sector activities that
might contribute as well to democratization. The claim that democracy activities will
be maintained at recent levels might be scrutinized more closely. The total proposed
FSA account funding level for Russia in FY2006 is $48 million — in FY2002 and
2003, that account’s democracy programs alone amounted to $63 and $61 million
respectively. However, in FY2004, the account provided only $33 million in
democracy aid to Russia.
The proposed increase in aid to Ukraine — in response to the new government
— would reverse a steady decline in that program since its peak at $225 million in
1997. However, even with the requested $60 million supplemental, the 2006 FSA
account level for Ukraine would be $148 million — the most recent 10-year average
is $170 million.
Support for Democratization
Questioning proposed FSA account cuts at a hearing on February 17, 2005,
Senate Foreign Relations Committee Chairman Richard Lugar specifically cited the
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importance of democracy programs.2 Although from the beginning declared a major
objective, democracy, has never risen above 15% of total all-spigots spending in any
year. In most of the 1990s, democratization represented only 15-18% of the FSA
account, rising to 24% by 1998 and 34% in 2003; it is 27% in 2004. Spending on
democracy activities declined between 2003 and 2004 — in the FSA account, from
$254 million to $158 million, and in total all-spigots spending from $291 million to
$241 million.
The recent rise of democracy in Ukraine and Georgia and its evident decline in
Russia have highlighted the role and possible need for U.S. democratization
assistance. The latter case, in particular, has elicited repeated calls for increased aid
by expert observers during the last five years as Putin has chipped away at democratic
institutions and practices. Congress indicated its concern by passing the Russian
Democracy Act of 2002 (P.L. 107-246) which called for increased aid and
emphasized the role of NGOs and independent media in democratization. However,
even while democracy funding in Russia appeared to grow proportionately because
of a decrease in FSA account funding, absolute levels of FSA democracy aid to
Russia have not increased since 1999 when it reached a level of $64 million. As
noted, in FY2004, the level was $33 million.
It is not possible to say to what degree U.S. assistance is responsible for recent
positive developments in Georgia, Ukraine, and Kyrgyzstan.3 Although the United
States had pumped $807 million in FSA account aid to Georgia, $2.1 billion to
Ukraine, and $408 million to Kyrgyzstan (including $138 million, $453 million, and
$94 million respectively in democracy aid), up to the time of their democratic
revolutions, they remained corrupt, economically stagnant, and authoritarian. U.S.
programs, however, may have planted seeds of change, especially in support for civil
society and political party training, both of which emphasize ways in which advocacy
groups can make their voices heard.
All U.S. democratization support carries the danger of charges of U.S.
interference in a country’s internal affairs. Implementors have been careful,
especially in providing aid to political parties, to be evenhanded and open to all
comers. But, if the government is authoritarian, then democracy aid may be viewed
as inherently subversive.
Conditionality
Aid to the FSU has always come with conditions. Both the FREEDOM Support
Act and annual foreign operations bills contain general and specific conditions that
all the states of the FSU are expected to meet in order to receive assistance.
Conditions left to the broad discretion of the President include whether these
countries are undertaking economic and political reform, are following international
standards of human rights, are adhering to international treaties, and are denying
2 Senate Foreign Relations Committee, Democracy in Retreat in Russia?, Hearing held
February 17, 2005, Federal News Service transcript.
3 Some suggest that the U.S. role was critical to events in Kyrgyzstan. “U.S. Helped To
Prepare the Way for Kyrgyzstan’s Uprising,” New York Times, March 30, 2005.
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support to terrorists. Other conditions established by Congress have been more firm
and specific. Among these is section 907 of the FSA which for a decade prevented,
with some exceptions, policy reform and other direct assistance to the government
of Azerbaijan unless it took steps to cease blockades and other uses of forces against
Armenia and Nagorno-Karabakh. Beginning in 2002 and in each year following, the
President has waived this prohibition.
The majority of specific restrictions have been aimed at Russia. These include
directions that aid be cut or withheld if Russia implemented a law discriminating
against religious minorities, if its troops remained in the Baltics, if it did not provide
NGO access to Chechnya, or if it did not cooperate with war crime investigations in
Chechnya. Since FY1996, direct assistance to the government of Russia has hinged
on its continuing sale of nuclear reactor technology to Iran. As a result, in most years
as much as 60% of planned U.S. assistance to the federal Russian government has
been cut.
Currently, the most difficult conditionality issue arises with respect to human
rights in Central Asia. The authoritarian governments of the so-called “stans” were
not seen as fertile territory for U.S. assistance in the 1990s. Consequently, most
received minimal aid. However, after 9/11, these states became potential targets for
Muslim radicalism as well as front lines in the war on terrorism. In FY2002, they
received an additional $174 million in FSA account funds from anti-terrorism
supplemental appropriations. Although their strategic value has increased, their poor
record in supporting human rights has raised concerns reflected in succeeding
appropriations bills. In the FY2005 foreign operations bill, for example, aid to the
central government of Uzbekistan is conditioned on its making “substantial and
continuing” progress in human rights and democratization. Aid to Kazakhstan
similarly depends on its improvements in protection of human rights, although the
condition can be waived on national security grounds. In 2004, the Secretary of State
was unable to make a determination allowing Uzbek aid to go forward, and $18
million planned for the central government was withheld. In 2004, DOD waived a
human rights requirement under Nunn-Lugar to allow non-proliferation aid to
Uzbekistan.4
There is always a trade off between the hoped for results from imposing an aid
sanction and the results that might come from maintaining aid. An argument against
conditionality is that aid is designed to meet U.S. objectives — usually to change a
country’s political and economic environment. Some might argue that cuts in aid to
Russia in the 1990s because of Iran or some other issue may have undermined U.S.
efforts to bolster the democratic institutions and practices in Russia that are
threatened today.
4 Although it is not unusual for different types (and objectives) of aid to be subject to
different legislative conditions and to be treated differently, the Washington Post reports the
unusual recent circumstance of the Chairman of the Joint Chiefs of Staff, General Myers,
criticizing the State Department’s aid cut-off while praising Uzbekistan’s cooperation with
DOD. “Barriers to Freedom,” Washington Post, April 10, 2005.