Note: This document may not always reflect the actual appropriations determined by Congress. Final budget allocations for USAID's programs are not determined until after passage of an appropriations bill and preparation of the Operating Year Budget (OYB).
RUSSIA
FY 1997 FY 1998 FY 1999 Actuals Estimate Request FREEDOM Support Act............... $95,700,000 $129,100,000 $225,400,000
Introduction
Russia's continued evolution toward free-market democracy remains central to the U.S. national security, political and commercial interest. In supporting and hastening that evolution, the U.S. seeks to build and consolidate new relationships with Russia, first as a full partner on a wide array of global issues --ranging from the maintenance of regional and international peace to the reduction of environmental threats-- and second, as an active partner in trade and investment. The Russian Government has pursued a course that has permitted these relationships to take root while U.S. assistance has contributed significantly to the broad agenda of change and innovation, working with public and private Russian partners in virtually every sector.
The Development Challenge
Over the past five years, progress toward reform in Russia has been remarkable. Some examples include: massive privatization efforts; free and fair elections; thousands of new business starts; transparent and legal capital markets; the establishment of tens of thousands of new non-governmental organizations (NGOs); over 500 new, local TV stations and 8,000 independent newspapers; increased efficiency in health care service delivery; new and environmentally friendly industrial processes, new land ownership laws signed by the President, and increased openness of local and city governments. While Russia can look with satisfaction at these achievements, the road ahead continues to pose challenges. For example, although the privatization process progressed much more rapidly than was anticipated in early 1992, restructuring of many of these privatized enterprises has lagged. Because it is such a new concept in Russia, the new laws surrounding private land ownership are controversial and their implementation continues to pose problems. Foreign investment levels are relatively low as potential investors display caution in the face of uncertainties about Russia's poor credit rating, a confusing tax system, and policies governing economic activity and foreign participation. Lessons from the late 1997 Asian economic crisis have underscored in the minds of many leaders the need to adopt more internationally-accepted policies and procedures.
Corruption and organized crime continue to be of concern, reflecting a lack of effective and comprehensive systems to maintain the rule of law under transparent and democratic principles. A vigorous independent media has sprung up across Russia, providing significantly greater citizen access to objective information and alternative points of view, but threats to independence persist. Democratic goals have also been furthered by the impressive growth of Russia's civil society. The growing non-governmental sector, while still in its early stages of development and still not firmly rooted, is becoming more active in providing a voice for people to express their concerns about government policies and programs. Among the challenges facing non-governmental organizations (NGOs) are the need to learn strong management practices and diversify their funding base. Production of greenhouse gases and other environmentally harmful industrial practices continue and an enforceable environmental legal structure has not yet been developed. As could well be predicted in any government and society experiencing such rapid change, the administration is not without the taint of scandal, but more importantly, leading reformers continue to receive prominent positions in the executive branch, confirming President Yeltsin's Government's commitment to push the reform agenda forward.
Fraying of the social fabric continues to threaten reforms. High unemployment, an inadequate housing stock, especially for demobilized military personnel, unpaid salaries, inconsistent pension payments to seniors and people with disabilities, less access to the education system, and health risks from
infectious diseases and environmental factors have the potential to undermine the human resources necessary to sustain the significant progress Russia has made.
Key economic indicators for the Russian economy during 1997 are mixed. Preliminary data suggest 0.5% growth in GDP - the first GDP growth since the collapse of the USSR. These figures probably understate actual performance, particularly in the dynamic informal sector. Foreign investment in the economy reportedly grew in 1997 relative to 1996, but unemployment continues to rise. Russia's fiscal problems have not eased, with tax revenues falling so sharply that International Monetary Fund (IMF) disbursements were suspended before being resumed in January 1998. Two very encouraging indicators are the continued sharp decline in inflation (down to a level found in the U.S. in the early 1980s - 11%) and the success of both the Government of Russia (GOR) and a number of large enterprises in selling stocks and bonds abroad to foreign investors. Still, foreign investment levels are nowhere near those required to revitalize and expand Russia's productive capacity. Domestic investment will not be enough to overcome the investment shortfall - and many Russians now realize how vital foreign investment is. USAID support for tax and legal reform will likely play a role in increasing investor confidence over the medium term.
Other Donors
A key objective of U.S. assistance to Russia is to serve as a catalyst for other assistance providers, both bilateral donors and most importantly, international financial institutions. USAID technical assistance has been crucial to laying the groundwork for large-scale World Bank loans to strengthen key institutions such as the Federal Commission for the Securities Market. USAID technical assistance has also been instrumental in securing over $1 billion in World Bank loans for housing, communal services, legal reform, urban development and local infrastructure development. Improving coordination with other bilateral and multilateral donors remains an important goal of USAID in Russia. USAID works closely with the European Union (EU), and G7 bilateral donors in a wide variety of technical areas, from health care to small business development to rule of law.
FY 1999 Program
In FY 1999, U.S. assistance will continue to shift its support toward the trade and investment needed for Russia's economic growth and strengthening civil society. With the economy substantially in private hands and many new economic and political institutions in place, the Administration's Partnership for Freedom (PFF) and the companion Regional Investment Initiative will emphasize boosting trade between Russia and the U.S., facilitating rapid increases in foreign and domestic investment, fostering cooperative activities to strengthen civil society and democratic rule, and promoting durable ties between U.S. and Russian partners.
Under the goal of economic growth, USAID will focus activities on helping to remove the impediments to trade and investment. Funding is requested for strategic objectives in fiscal reform, private enterprise development, financial reform, and energy. In collaboration with United States Information Service (USIS) and Commerce, USAID will support the Presidential Management Training Initiative to provide training and internships in business skills to some 5,000 Russians per year. The U.S.-Russia Investment Fund will continue to play a critical role in supporting entrepreneurs and small and medium enterprises to energize the economy, create jobs, and build support for implementing reforms at the national level. Under the democracy and governance goal, USAID requests funding for two strategic objectives to increase citizens' participation and improve legal systems. Social stabilization, while alleviating hardship, is a critical element of ensuring that hard-won reforms are supported and sustained. Under the social stabilization goal, USAID will continue to focus on health care finance reform, hospital partnerships to improve the care available to citizens in selected cities, and activities designed to address both the public health and economic dimensions of environmental degradation. Funding is requested for strategic objectives in sustainable social benefits and services and environmental health.
Planned activities under Cross-Cutting and Special Initiatives include targeted training, exchanges and partnerships between American and Russian organizations, program design and evaluation, and the broad program of the Eurasia Foundation. USAID will continue its work to strengthen legal codes and the judiciary, while Department of Justice (DOJ) and the Federal Bureau of Investigation (FBI) will address crime and corruption prevention. Activities of mutual concern undertaken in support of the Gore-Chernomyrdin Commission and the Partnership for Freedom, and under the auspices of the Regional Investment Initiative, are also being funded under this rubric. USAID, in concert with DOE, will continue to help foster privatization, rate-setting and price incentive rationalization in the energy sector, which has benefits for both the economy and the environment. Support is provided in areas such as health, energy, environment, agriculture, and capital markets/business, with activities being carried out on a multi-agency basis, with the relevant U.S. Government agency assuming lead responsibility for implementation. Other U.S. Government entities participating through inter-agency transfers from USAID include EPA, Health and Human Services (HHS), United States Forrest Service (USFS), Treasury, United States Information Agency (USIA), Department of Energy (DOE), Peace Corps, Commerce, USDA, DOJ, and National Science Foundation (NSF).
RUSSIA
FY 1999 PROGRAM SUMMARY*
(in Thousands of Dollars)
Strategic ObjectivesEconomic Restructuring Democratic
TransitionSocial Stabilization Cross-cutting / Special Initiatives Total Privatization -- -- -- -- -- Fiscal Reform 8,500 -- -- -- 8,500 Private Enterprise 53,000 -- -- -- 53,000 Financial Reform 13,650 -- -- -- 13,650 Energy 1,500 -- -- -- 1,500 Environmental Management -- -- -- -- -- Citizens' Participation -- 15,900 -- -- 15,900 Legal Systems -- 5,000 -- -- 5,000 Local Government -- -- -- -- -- Crises -- -- -- -- -- Social Benefits -- -- 2,700 -- 2,700 Environmental Health -- -- 12,000 -- 12,000 Cross-cutting / Special Initiatives -- -- -- 113,150 113,150 TOTAL 76,650 20,900 14,700 113,150 225,400
*Freedom Support Act (FSA) funds
USAID Mission Director: Janet Ballantyne
ACTIVITY DATA SHEET
PROGRAM: RUSSIA
TITLE: Fiscal Reform, 110-S001.2
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 1999: $8,500,000 FREEDOM Support Act
INITIAL OBLIGATION: FY 1992; ESTIMATED COMPLETION DATE: FY 2001
Purpose: Tax system reformed.
To support the development of an efficient fiscal system in Russia which is adapted to the needs and functions of a market economy as well as to the government's need to raise revenues sufficient for public expenditures.
USAID Role and Achievements to Date: Since 1994 USAID has provided a range of technical experts and training opportunities to the Ministry of Finance, the State Tax Service (STS), the Russian Parliament (both the Duma and the Federation Council), and regional oblasts to support primarily initiatives in tax reform. The advisory services have included experts in drafting of tax legislation, administration of tax systems, projecting and monitoring of tax revenues, and analysis of yield and impact of alternative tax rules. USAID has also supported municipal government efforts to introduce local property tax as a major revenue source, and to improve budget and revenue management at the local level.
The Ministry of Finance, assisted by U.S. legal and economic advisors, prepared a comprehensive draft Tax Code during 1994-96, but adoption has been stalled due to strong opposition in the Duma and from some Government of Russia (GOR) factions. In the face of such opposition, the government has set more modest legislative goals, focusing its efforts on tax administration procedures, the VAT, and profits and excise taxes.
USAID has been assisting with the design of efficient, market-based local property taxes in two cities which, with the support of the MOF and Duma, are expected to be pilots for nationwide introduction of the property tax as a primary source of local revenue. With confidence in this revenue source, municipalities will become increasingly willing to privatize municipal property rather than hold onto commercial land and buildings in order to retain the flow of “leasing fees” that are now a major source of local revenue.
Description: USAID supports a variety of program initiatives related to tax policy development and implementation. Under tax legislation, USAID advisors have worked closely with the Russian Government to develop a draft Tax Code. When adopted, the Code will substitute for seven existing tax laws to make the tax system more simple and effective. In the area of intergovernmental relations, advisors are working with the GOR on the separation of fiscal authorities between the federal, regional and local governments. Furthering more rationale approaches to the budgeting process, advisors have developed revenue estimating models for major taxes to be used in forecasting receipts and analyzing revenue impact of alternative tax policies. These models will be used in a newly established department within the Ministry of Finance, whose primary tasks is revenue estimation. Assistance is also provided to the State Tax Service, in establishing improved systems for tax administration, covering such areas as arrears collection, large taxpayer programs, audit procedures, centralized processing of tax declarations, and organizational structures. Lastly, USAID helps train auditors in modern audit techniques.
USAID and U.S. Department of Treasury advisors will continue to help improve tax administration, while legal and economic advisors will continue to assist the MOF and Duma with problem-diagnosis, program design, and legislative action on the GOR tax reform program. That will include assistance in reform of individual income and payroll taxes and tax regimes for selected sectors as well as
continued advice regarding changes to the VAT. USAID will also support continued implementation of the new property tax system in pilot cities.
Host Country and Other Donors: USAID works with the Ministry of Finance, the State Tax Service, and Parliament and coordinates closely with other U.S. agencies (principally Treasury) and other supporters of Russia's reforms, particularly the International Monetary Fund and the World Bank, both of which are also providing technical assistance and training in fiscal issues and tax administration.
Beneficiaries: Business investors, recipients of state payments (pensioners, public employees, suppliers), and the general atmosphere of “financial discipline and fulfillment of payment obligations” will benefit from reform and improved administration of Russia's tax system. The current system imposes high tax burdens on honest taxpayers but suffers from poor tax compliance, excessive exemptions and arrears of major enterprises, and inefficient administration. Dwindling real revenue collection threatens the viability of Russia's macroeconomic stabilization program, erodes the capacity of the government to deliver basic public services, and, through “sequestration of expenditures,” results in state delinquencies to pensioners, state employees, and government suppliers that sets a bad example of payments arrears that permeates much of the economy.
Principal Contractors, Grantees, or Agencies: Fiscal reform activities are implemented under the overall direction of USAID. The Georgia State University (GSU) is now serving as the overall technical coordinator for the U.S. Government's tax reform activities in Russia. The Department of Treasury participates actively in the program through inter-agency transfers. KPMG's Barents Group, the Center for Financial Engineering and Development, the Soros Foundation, and Georgia State University are all deployed in different aspects of the program.
Major Results Indicators: Baseline Target Fixed capital formation increases 17.7% of GDP (1995) 22% (2000) Tax revenue: actual as a percent of planned 79% (1995) 95-105% (2000) Tax code adopted 0 (1995) Adopted (1999)
ACTIVITY DATA SHEET
PROGRAM: RUSSIA
TITLE: Private Enterprise, 110-S001.3
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 1999: $53,000,000 FREEDOM Support Act
INITIAL OBLIGATION: FY 1992; ESTIMATED COMPLETION DATE: FY 2001
Purpose: Accelerated development and growth of private enterprise, based on individual initiative and the operation of market forces.
USAID Role and Achievements to Date: USAID has made direct contributions to developing the policy, legislative and regulatory framework appropriate for private sector growth through the provision of expert technical advisors, training and study tour opportunities, by providing direct technical assistance to small, medium and large firms by volunteer executives, and by financing experimental models which have demonstrated what can work in Russia. Successful models of private ownership and management in firms both large and small have been developed in collaboration with private Russian partners and the relevant lessons have been shared with policy makers at all levels of government.
A primary element of USAID's private enterprise development efforts has been the support for an increasingly viable network of business support institutions rendering services to entrepreneurs and businesses. USAID-supported professional associations, training institutions, consulting firms, business incubators, business centers, and financial institutions are already significantly improving the business skills of thousands of entrepreneurs, contributing to a more favorable business policy climate in the regions, and spurring new enterprise starts. The outreach of this business support network has been significant, providing business skills training and consulting assistance to over 200,000 entrepreneurs. More than 200 institutions from Novgorod to Yekaterinburg to Sakhalin Island make up the network and provide a direct channel for USAID support at the grassroots level for enterprises and businesses. Conservative estimates by USAID's contractors and grantees point to the creation of nearly 50,000 new jobs, and over 5,000 new businesses in Russia through out programs. Surveys of clients indicate that USAID business support services have resulted in business growth and long-term impact, reporting increases in production, sales, customer base, and net profits. Small business clients of USAID programs have been able to secure over $30 million in loans from a variety of financial sources.
Member-institutions of this network have already developed, or are working to solidify, a capacity to widely disseminate, expand, and sustain support for business development well beyond the life of USAID funding. Through this network of institutions and other USAID programs will continue support for the development of new and small business focused on: building entrepreneurial skills through targeted, sector-specific consulting assistance and training; and increasing access to capital -- the flow of finance and investment for micro enterprises, small and medium businesses. This second focus is related to and coordinated with USAID programs under the financial sector development strategic objective.
Description: FY 1999 funding will be concentrated on four major areas. First, USAID will continue work to develop the local training, consulting, and advisory capacity of the business support network. A centerpiece effort for direct assistance to Russian private enterprises will continue to be USAID's cost-effective, targeted consulting provided by 3 U.S. business volunteer organizations -- the International Executive Service Corps (IESC), Citizens' Democracy Corps (CDC), and the Agricultural Cooperative Development Institute/Volunteers in Overseas Cooperative Assistance (ACDI/VOCA). Under these programs, U.S. business experts will continue to provide sector-specific, hands-on consultations and on-the-job training to Russian firms which request assistance in marketing, business planning, financial management, accounting, and in accessing finance and investment. The organizations will work in conjunction with Russian business support institutions conduct training in response to Russian client needs. Other USAID programs like the University of Alaska's American
Russian Center program in the Far East, will continue to work hand-in-hand with Russian partner institutions, and USAID intends to provide direct technical assistance to the most active Russian business support institutions in the network to solidify the development of a sustainable local capacity for business support.
Second, under legal and regulatory reform, USAID will address the design and implementation, at both federal and oblast levels, of cost-effective environmental and economic polices that will foster sustainable development. There is also a training component aimed at enhancing the ability of Novgorod Oblast and municipal officials to develop the Novgorod region as an attractive location for investments. The training also cultivates a corps of local business consultants which will support business development activities. USAID programs in this area are increasingly focused on regions which are particularly reformist, progressive, and have taken steps to attract business and increased investment.
Third, USAID will address the design and implementation of land privatization, titling and registration. It will also deal with land mortgage procedures and systems to provide private land tenure and the ability to monetize land assets. There is a component aimed at disseminating model legislation and procedures developed through pilot projects. Training of local officials in the processes required to establish a private land market also plays an important role.
Fourth, USAID will promote models of private ownership and management largely in the agriculture and agribusiness sector. Activities will include a continuation of the farmer-to-farmer (more accurately, an agribusiness-to-agribusiness) program, continuation of a sustainable agriculture pilot outreach effort, work on collateralized grain storage through use of warehouse receipts and rural credit programs undertaken in collaboration with Russian commercial banks.
Host Country and Other Donors: USAID works with private Russian institutions, the managers and owners of private enterprises and associations of private businesses, and with various Ministries and agencies of the government at both national and local levels. USAID collaborates with other donors seeking to support private sector growth, especially the British Know-How Fund, the European Bank for Reconstruction and Development (EBRD), the International Finance Corporation, and the World Bank. The EU provides complementary support as do both private and public representatives of European governments.
Beneficiaries: Accelerated development and growth of private enterprises in Russia will benefit all stakeholders. GDP and productivity have been declining for years. Official unemployment is growing as large firms, especially those which have been part of Russia's impressive military industry, begin to downsize. More successful businesses will provide new jobs and new incomes, leading to further growth and stability of the Russian economy.
Principal Contractors, Grantees, or Agencies: USAID works with dozens of U.S. nongovernmental organizations as well as for-profit contractors in implementing a broad program of support to private sector growth.
Major Results Indicators: Baseline Target Private sector production as % of GDP 20% (1995) 45% (1999) % of Household income from private sector sources 27.8% (1995) 50% (1999) Number of USAID-assisted firms receiving outside financing 0 (1992) 2000 (1998)
ACTIVITY DATA SHEET
PROGRAM: RUSSIA
TITLE: Financial Reform, 110-S001.4
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 1999: $13,650,000 FREEDOM Support Act
INITIAL OBLIGATION: FY 1992; ESTIMATED COMPLETION DATE: FY 2001
Purpose: A robust and market supportive financial system.
USAID Role and Achievements to Date: As the principal donor to the development of financial markets in Russia, USAID has provided technical assistance in the development of legal frameworks, regulatory mechanisms and operational procedures for both the capital markets and the banking sectors. USAID advisors have been the central players in the establishment of the Federal Commission for the Securities Market, and in developing the institutional infrastructure for trading of shares in a secondary market. The Russian Trading System, which assures transparent operation of the secondary market, was initially funded by USAID, but has developed into a self-sustaining mechanism for over-the-counter trading. USAID's assistance has been crucial in the development of an increasingly well-regulated capital market and to increased confidence among foreign investors in Russia. Advisory services to the Central Bank of Russia (CBR) have led to the establishment in 1993 of a capable bank inspection department. Training since 1994 has increased the capacity of middle- and upper-level managers to manage risks more prudently and boosted their lending skills.
Description: Under the capital markets rubric, assistance will focus on the development of the regional structure for the securities market. This includes support in developing uniform communication systems for real time data, and drafting regulations to establish a legal and organizational basis for regional offices of the Federal Commission on the Securities Market. In addition there is training in administrative and functional areas as well as seminars on enforcement and administrative issues to promote consistence in operation of the securities market country-wide. Continued support will be provided for professional partnerships such as, the Russian Trading System and NASDAQ, The Russian National Association of Professional Market Participants and NASD, and the Russian Depository Clearing Corporation and NSCC. Another important activity is the facilitation of the introduction of International Accounting Standards (IAS).
Under the banking rubric, USAID activities support the creation of a basic financial infrastructure in central banking and commercial banking. Technical services include expert review and commentary on draft legislation and regulations and specialized seminars for financial sector audiences in Russia. The bank supervision activity focuses on developing the capacity to conduct on-site bank examinations; provide technical advice on off-site bank analysis, supervision and issues of rehabilitation; and conduct problem asset management and/or liquidation of failed banks. USAID will assist in the development of a training manual which adapts international standards to the Russian banking industry. USAID-funded assistance will also support the strengthening of regional banks and the dissemination of information to the local business community on the types of banking services available.
Host Country and Other Donors: USAID plays a critical role in the financial sector. Activities are used as practical laboratories for future funding by the World Bank, the EU, and other donors. The World Bank will be providing a two-tranche loan totaling $120 million to the capital markets sector because USAID technical assistance has provided the Russian Commission on the Securities Market with sufficient knowledge to manage the loan and implement policy. USAID works closely with the GOR on developing a regulatory and legal environment conducive to a robust financial sector.
Beneficiaries: Russian business, which creates jobs, Russian citizens, who will be able to count on understandable bank regulations, personal investment vehicles, and Russian banks are the principal
beneficiaries of these activities.
Principal Contractors, Grantees, or Agencies: USAID implementers include: KPMG, Booz Allen, Intrados, HIID, IBTCI, PW, Burson Marstellar and Financial Services Volunteer Corps (FSVC), the latter primarily responsible for the continuing banking supervision work.
Major Results Indicators: Baseline Target Total assets of banking system as % of economic output 40.7% (1993) 75% (2000) Bank licenses revoked by the CBR 85 (1994) 1200 (1999) Regional bank training centers established/licensed 0 (1994) 2 (1998)
ACTIVITY DATA SHEET
PROGRAM: RUSSIA
TITLE: Energy, 110-S001.5
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 1999: $1,500,000 FREEDOM Support Act
INITIAL OBLIGATION: FY 1993; ESTIMATED COMPLETION DATE: FY 2000
Purpose: A more economically and environmentally sustainable energy system.
To improve the efficiency and performance of energy production and consumption in Russia, support electric power sector energy sector privatization and market reform, and reduce safety risks of Soviet designed nuclear power plants.
USAID Role and Achievements to Date: Since program inception in 1993, USAID assistance has addressed the transition of the electric power sector through the establishment of competitive markets, commercialization of selected sector enterprises (regional electricity utilities) through introduction of financial reporting and management systems, and promotion of foreign and domestic investment. USAID has assisted RAO UES and other government entities as appropriate in the development and implementation of the competitive Wholesale Electric Power Market.
In the spring of 1997, major management changes occurred in RAO EES Rossii at the senior management level. USAID and the new management decided to shift the emphasis of USAID assistance from the formulation of the wholesale electric power market to working with the primary implementors, Central Dispatch Administration (CDA) and Unified Dispatch Administrations (UDAs). Under the commercialization program the contractor focussed on two pilot regional electricity utilities, with the intention to spread the experiences to other regions.
Program on Natural Monopolies (PNM) has continued to provide the Federal Energy Commission (FEC), the national regulatory body, with a wide range of legal and economical advice including drafting revised Charter of FEC, and identifying legal issues and deficiencies in the draft legislation “On Federal Energy Systems”. PNM has continued to work on establishment of Regional Energy Commissions as functioning entities and created two model regional commissions in the Republic of Karelia and in Saratov that can be widely replicated in other parts of Russia.
PNM has continued to work with World Bank on restructuring of electric power monopoly RAO EES Rossii including a review of the company's revised 1996 Charter, and advise on matters relating to the Annual Meeting of Shareholders held on May 30, 1997. On behalf of MOE, the PNM is undertaking research to identify international experience of restructuring and introduction of competition in the electric power and natural gas sectors to be eventually disseminated to various interested parties.
Description: The electric power restructuring assistance will continue to focus on two transition tasks for the remainder of the project. First, USAID will support the development and implementation of the competitive Wholesale Electric Power Market that will provide for a more cost effective production, transmission and distribution of electric energy to all consumer groups. This work will contribute to the promotion of investment in the electric power sector and provide opportunities for U.S. entities. The efficiency effort will have a direct positive impact on global climate change (in particular global warming) as electric power generation is one the major contributors to particulate emissions. Second, under the commercialization program, USAID will continue to focus on the two pilot electricity utilities, spreading the results of this effort to other regions.
Assistance to regional energy commissions will also be emphasized, as FEC further delegates responsibilities to that level. Two model regional commissions will be replicated in other parts of Russia. Legal assistance to Russian counterparts intended to develop and implement a market failure-correcting and pro-competitive structure and regulatory system for the country's natural-monopoly of infrastructure service industries will be continued to include such sectors as water supply, sewage and district heating
Beneficiaries: The project will directly benefit energy managers through specific hands-on assistance and development of programs to be implemented in the sector, and will indirectly benefit the ultimate consumers and citizens of Russia who depend on these energy sources. It will also directly address social and economic unrest caused by disruption in the production and distribution of electricity.
Host Country and Other Donors: The project will be coordinated with the World Bank, the Commission of the European Community, the European Bank for Reconstruction and Development (EBRD), the Organization for Economic Cooperation and Development, the International Atomic Energy Agency and other international and bilateral donors to the New Independent States.
Principal Contractors, Grantees or Agencies: Hagler Bailly and Burns and Roe (contractors), U.S. Energy Association and IRIS (Grantees). USAID also works with the U.S. Department of Energy and the U.S. Nuclear Regulatory Commission in implementing the energy program in Russia.
Major Results Indicators: Baseline Target Competitive energy production % of energy provided 0% 25% IAS installed in electricity utilities 0 7 Regional regulatory bodies instituting rate structures on cost of service 0 4
ACTIVITY DATA SHEET
PROGRAM: RUSSIA
TITLE: Citizens' Participation, 110-S002.1
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 1999: $15,900,000 FREEDOM Support Act
INITIAL OBLIGATION: FY 1992; ESTIMATED COMPLETION DATE: FY 2001
Purpose: Increased, better informed citizens' participation in political and economic decision-making.
USAID Role and Achievements to Date: USAID provides grants to U.S. organizations to provide technical assistance to electoral commissions at the national, and increasingly the regional and local levels, to provide training for political parties and civic organizations and to develop outreach and communication strategies for parties and Duma factions. The most recent Parliamentary, Presidential, and regional Gubernatorial elections were judged to be free and fair by both domestic and international observers. Internews, an American NGO dedicated to strengthening independent media around the world, has, with USAID funding, played a key role in Russia through training and facilitating networking among both broadcast and print media. A clear demonstration of success was the direct access and objective reporting provided the Russian people on the events in Chechnya. USAID-funded NGO assistance provides training directly to citizens on how to communicate their concerns and demands to public officials. USAID has established NGO support centers in 27 towns and cities covering almost two-thirds of the Russian federation with the aim of ensuring long-term access to information and training in support of ongoing civic advocacy efforts.
Description: USAID-funded technical assistance, training and partnership programs will continue to target citizens, communities, NGOs, public officials, and various political party officials in order to expand public outreach efforts and to increase participation. The National Democratic Institute (NDI) and the International Republican Institute (IRI) will continue their work in political party building at the national, regional, and local levels and in strengthening political institutions essential to democracy. Major grant programs will be administered directly by USAID (often through umbrella grants to U.S. NGOs), such as the Sustaining Partnerships into the Next Century (SPAN) program, which will provide funding to sustain partnership activities between Russian and American organizations in the areas of civil society, rule of law, tax reform, financial sector, business development, energy, environment, and health. The Eurasia Foundation will continue its role as a major grass-roots grantmaking institution to assist economic and social reform. Twenty media partnerships, plus thirteen Sister Cities regional newspaper partnerships, between American and Russian entities were initiated by the Media Development Program from 1995-1998. At least sixteen of the twenty partnerships and most newspaper partnerships have achieved progress toward self-sustainability. Media partnerships will continue to promote business development of selected media, upgrade professional standards and expand access to independent sources of information. Under the Regional Investment Initiative (RII), NGO, local government, and private sector elements are brought together in selected communities to simultaneously address two principal elements of the Partnership for Freedom: reducing impediments to trade and investment and increasing citizens' participation in civil society. As part of the Partnership For Freedom, funds will be provided to make change permanent by endowing key U.S. and Russian institutions.
Host Country and Other Donors: Russia has dozens of political parties. USAID has emphasized responding to requests for technical advice and training services from those parties generally viewed as "reform-oriented." Work with citizens' groups has generally been carried out through NGOs and in concert with local institutions, including municipal governments. Other donors have been active in electoral process issues; USAID has coordinated regularly with them in all election run-up periods and will continue to do so. USAID also works cooperatively with other bilateral donors providing assistance to the media and, increasingly, to Russian civil society.
Beneficiaries: The entire citizenry stands to gain as a direct result of USAID programs under this strategic objective. The political process activities are of greatest importance to voters and public officials at the national and regional level. Both independent media and NGOs can reach a large portion of the Russian population. Independent media provides more objective news coverage essential for informed debate while NGOs offer an avenue for citizen participation in economic, social and political decision making.
Principal Contractors, Grantees, or Agencies: USAID is working with the following: International Republican Institute (IRI), National Democratic Institute (NDI), International Foundation for Electoral Systems (IFES), ISAR, Save the Children Federation, American Center for International Labor Solidarity (ACILS), United Way International, Internews, National Press Institute (formerly RAPIC), and the Moscow School of Political Studies.
Major Results Indicators: Baseline Target Access to independent TV 12% of viewers (1995) 21% (1998) Increased and strengthened party identification among voters 22% (1994) 25% (1997) Number of media partnerships 0 (1995) 3 (1999) that are fully self-sustaining 7 (2001) Share of assisted NGOs showing increased domestic funding 15% (1995) 40% (1997) Number of social services contracts awarded competitively to NGOs by local governments in three targeted regions 0 (1995) 20 (1997)
ACTIVITY DATA SHEET
PROGRAM: RUSSIA
TITLE: Legal Systems, 110-S002.2
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 1999: $5,000,000 FREEDOM Support Act
INITIAL OBLIGATION: FY 1992; ESTIMATED COMPLETION DATE: FY 2001
Purpose: Legal systems that better support democratic processes and market reforms.
USAID Role and Achievements to Date: USAID's Rule of Law program focuses on three principal aspects of legal reform in Russia: judicial reform (including enforcement of judgments and alternative dispute resolution), legal education and training, and commercial law drafting. Work in the area of commercial law drafting has been particularly successful, with numerous new laws and decrees being adopted in the past year. To complement these achievements in the legislative area, USAID has worked with the Rule of Law Consortium to ensure that all Russian Commercial Court judges are familiar with new legislation, including the Civil Code. USAID support assured that all 1600 commercial court judges in the country received Part 1 and 2 of the new civil code and other laws and that over 40% of these judges received training on substantive, Russian commercial law topics. In 1996, Russia moved to strengthen the independence of its judiciary, creating a Judicial Department to put administration of the courts of general jurisdiction into the hands of judges. USAID has asked the National Judicial College in Reno, Nevada to work with us in ensuring that this department fulfills its role. USAID has started to work on improving enforcement of judgments, and is discussing assistance as Russia sets up a Russian equivalent of the U.S. Marshall's Service, which in addition to handling court security will enforce civil judgments. We will continue to support alternative dispute resolution mechanisms. USAID is also funding the U.S. Department of Justice, which is helping Russia reform its criminal justice system. USAID will also address corruption with new activities promoting judicial ethics and discipline and improved government auditing. Another important USAID-supported effort is the work with many local NGOs to improve advocacy and outreach, helping Russians become more aware of their rights in such areas as housing, property, civil rights, and environmental protection. The Free Trade Union Institute works with local legal groups to provide citizens with the resources and encouragement to seek enforcement of their labor rights and to organize into effective, independent labor unions. We continue to support the Sakharov Center.
Description: USAID will continue its dual focus on creating the requisite legal and regulatory environment to promote trade and investment and the rule of law while combating crime and corruption. Activities will include continuing support for judicial training and reform, the new judicial department, alternative dispute resolution, enforcement of judgments, legal education, and legal rights advocacy by NGOs.
Host country and other donors: The World Bank, the EU, and several bilateral donors are involved in Rule of Law activities for Russia. USAID also works closely with the Russian government, local governments, legal associations, and NGOs such as the Sakharov Center.
Beneficiaries: (1) Investors, both foreign and Russian; (2) Russian citizens desiring an open, transparent civil and commercial legal system; and (3) the legal profession all stand to benefit from activities that increase transparency and the soundness of new laws, and that ensure their even-handed application and enforcement.
Principle Contractors, Grantees, or Agencies: In addition to DOJ technical assistance and training, USAID works with ABA/CEELI, Chemonics and the National Judicial College and the Sakharov Center and Museum.
Major Results Indicators: Baseline Target Percentage of people willing to use courts or alternative mechanisms in order to resolve disputes 10% 25% (1999) Number of people visiting Sakharov Center and learning about their rights 1000(1995) 5000(1997)
ACTIVITY DATA SHEET
PROGRAM: RUSSIA
TITLE: Social Benefits, 110-S003.2
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 1999: $2,700,000 FREEDOM Support Act
INITIAL OBLIGATION: FY 1992; ESTIMATED COMPLETION DATE: FY 2001
Purpose: Improved effectiveness of selected social services and benefits.
USAID Role and Achievement to Date: USAID has provided technical assistance, training, and advice in several sectors, successfully demonstrating the benefits of a restructured, more market-oriented health system. In health working in oblasts and cities in Siberia and central Russia led to develop of sustainable working models for health care finance and service delivery. Fourteen women's reproductive health centers nationwide can serve up to 2.7 million couples. A Code of Ethics for Nurses was developed and approved by the Ministry of Health. An automated drug information database, including international drugs, has been established, and all-Russia drug information center networks will be initiated in the Far East, St. Petersburg, and two other sites. USAID grants to two U.S. pharmaceutical companies for the have led to the establishment commercial production has begun. "White papers" on reform of the national health care program supported the develop of a national vision for health reform approved by the Prime Minister in August 1997.
In support of the Gore-Chernomyrdin Commission Health Committee, over 1200 children have had blood-lead screening; national conferences have been held on micronutrient malnutrition; and seminars on the early detection, prevention and control of major infectious and non-communicable diseases have been held. Reproductive health education activities are being continued with a focus on women and adolescents.
Description: New funding will be used to support (a)women's reproductive health with additional emphasis on maternal and neo-natal health; (b) HIV/AIDS (c) health reform, and (d) infectious diseases.
Host Country and Other Donors: Activities are closely coordinated with the World Bank, UNAIDS, the Soros Foundation, the British Know-How Fund and other donors. USAID normally pilot tests activities which are later embraced and expanded by other donors. The World Bank has made a $64 million loan for the health sector and is considering an additional $500 million over three years. The Soros Foundation is considering a $100 million contribution over three years. The Ministry of Health considers USAID activities to be most important and are working closely with USAID in formulating policy. The Russian Federal Health Budget approved by the Ministry of Finance for 1996 represented 3.2% of GDP.
Beneficiaries: Efforts to assure the sustainability of basic social services and benefits target users of the health care system, low-income populations, and members of recently privatized state farms. Achievement of this SO will result in more efficient and sustainable delivery of quality basic health.
Principal Contractors, Grantees, or Agencies: American International Health Alliance, Boston University, Lutheran Hospital, LaCrosse, American Medical Association, U.S. Department of Health and Human Services, AVSC, and others.
Major Results Indicators: Baseline Target Hospital days per thousand 1,260 (1994) 675 (2000) Hospital mortality rates in pilot oblasts 30 (1994) 13 (2000) Range of abortions/1000 in target areas 65-102 (1993) 58-92 (1998) Use of modern cost accounting and financial systems in pilot oblasts 0 facilities (1994) 40 facilities(2000)
ACTIVITY DATA SHEET
PROGRAM: RUSSIA
TITLE: Environmental Health, 110-S003.3
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 1999: $12,000,000 FREEDOM Support Act
INITIAL OBLIGATION: FY 1992; ESTIMATED COMPLETION DATE: FY 2001
Purpose: Increased capacity to deal with environmental pollution as a threat to public health.
Background: The acuteness of environmental problems in Russia, deepened by the difficult socio-economic conditions, has led to a substantial deterioration in the health of its population and undermines its drive towards economic reform. Environmental degradation and reckless depletion of resources have led to significant losses in economic productivity.
USAID Role and Achievements to Date: USAID has developed an active environmental program to foster economic and social development in an environmentally sound manner and to prevent and reduce environmental threats to human health. During the past years, USAID's technical assistance has been concentrated in six pilot regions which were chosen as model programs. On the urban industrial side, the majority of the regional activities have been completed. On the “green” side, efforts in the Russian Far East will continue through the end of 1998. These programs continue to witness impressive impacts -- impacts that are now being continued and sustained under the newly initiated dissemination and replication project-- Replication of Lessons Learned (ROLL) Project, as well as folded into larger projects being initiated by other donors, the World Bank, and EBRD.
Pilot projects are now being replicated in other regions throughout Russia, and introduced at the national level. For example, the health risk assessment methodology tested in seven pilot cities resulted in the creation of a Federal Working Group which is developing an action plan to utilize this methodology on a national scale. In the fall of 1997, a federal decree was issued requiring the incorporation of risk assessment into environmental protection practices. In the area of lead pollution, USAID's assistance to develop a policy “Lead White Paper,” led Prime Minister Chernomyrdin to commission the “Federally Targeted Program on Environmental and Health Lead Risk Reduction.” Environmental policy and economics advice has led to the development of a Sustainable Development Strategy for the Novgorod Oblast -- this is the first regional Sustainable Development Strategy in Russia. In the area of public participation, USAID's active grants programs for NGOs have led to clean-up projects, including drinking wells and city dumpsites, and public education projects, legal and legislative efforts, and information gathering and monitoring.
Description: USAID is now implementing the second phase of the Russian/American Environmental Cooperation Program, which is designed to ensure program sustainability by providing resources to Russian partners to replicate and disseminate lessons learned. This comprehensive new project will be the principal focus of USAID's future environmental assistance efforts in Russia through the year 2000. Since the recent initiation of the project, replication projects are underway in 32 different regions throughout Russia -- thus greatly extending the impact of foreign assistance in the environment. Replication activities currently extend to one-third of the administrative units in the Russian Federation, or 32 or the 89 oblasts, krais, and republics. USAID will also continue to be an active member of the Gore-Chernomyrdin Commission. To support the Commission's priority focus on the chlorofluorocarbon (CFC) production sector phase-out, USAID will contribute $6 million, over three years, providing grant resources to the World Bank-managed “Special Initiative for Supplementary Funding to Complete Ozone Depleting Substances (ODS) Phase-Out in the Russian Federation.” USAID resources will be used to carry out sub-projects consisting of a number of actions, including the provision of appropriate technical assistance aimed at phasing out the production of ODS in Russia. USAID will also support additional activities in the area of energy policy and forestry reform in support of President Clinton's Global Climate Change Initiative.
Host Country and Other Donors: USAID closely coordinates with host country government, non-government, and private sector counterparts at the national, regional, and local levels. USAID programs work with other donors and international financial institutions, particularly the World Bank and EBRD, to coordinate activities and to leverage additional resources. To date, USAID environmental assistance projects in Russia have leveraged at least $370 million in environmental investments, with the potential for a total of $400-500 million before the assistance program comes to an end.
Beneficiaries: The entire population of Russia will benefit if USAID-supported and other donor programs in this area have their intended impact. Large segments of the Russian citizenry are exposed to air and water pollution, and also live near unsafe nuclear plants. High pollution levels help to explain the marked decline in public health, which in turn has reduced people's ability to contribute to the country's economic and political renovation.
Principal Contractors, Grantees, or Agencies: USAID is working with the following: U.S. Environmental Protection Agency, U.S. Forest Service, U.S. Department of Interior, CH2 M Hill, Harvard Institute for International Development, ISAR, Institute for Sustainable Communities, Ecologically Sustainable Development, World Wildlife Fund/U.S., Center for International Environmental Law, and the Department of Energy.
Major Results Indicators: Baseline Target Number of people using new 0 (1993) 2600 (1997) environmental information networks and data Number of self-sustaining 5 (1993) 25 (1997) environmental NGOs
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