Focus on the emerging democracies - U.S. aid to Russia

Overview

US assistance efforts to Russia originated at the International Coordinating Conference in Washington, DC, in January 1992. At that time, the US announced a program to deliver emergency humanitarian assistance and that it would participate in several working groups in an international assistance effort to combine humanitarian aid with technical assistance.

Since then, the assistance effort to Russia has been composed of three general categories (humanitarian assistance, technical assistance, and credit guarantees and economic agreements), each with different types of programs, and often with interrelationships that link humanitarian assistance to technical assistance. This interrelationship is exemplified in the health sector, where providing equipment and supplies is considered to be humanitarian assistance and building reliable health sector practices is technical assistance. Agriculture and food system efforts have similar aspects: provision of commodities and transportation are considered humanitarian assistance; assistance to support private farming and other elements of a free market agricultural system is technical assistance.

This summary explains both types of assistance as well as government credits and other financial guarantees.

Humanitarian Assistance

Humanitarian assistance supports Russia's "social safety net" by providing basic, emergency commodities or support to stave off sickness, hunger, and threats to human life.

Government Assistance. Much of the US Government's humanitarian assistance effort has been under Operation Provide Hope, which was officially launched in January 1992. Provide Hope was divided into three phases involving the delivery of Department of Defense (DOD) excess food, medicines, and medical supplies to Russia and other destinations using DOD transportation assets (including contracts with private shipping entities). Under the three phases of Operation Provide Hope, the US has delivered an estimated $48.8 million worth of food and $32.9 million worth of medicines and medical supplies to Russia.

The Emergency Medicines Initiative of the US Agency for International Development (USAID) draws upon a $10 million appropriation to purchase emergency medicines for the new independent states. For Russia, this fund has been used to purchase $15,000 worth of pharmaceuticals, primarily leukemia drugs, that were delivered to Khabarovsk in November 1992.

Public Health Surveillance-The Atlanta-based Centers for Disease Control (CDC) has been working with the Russian Ministry of Health departments and other organizations since October 1992 to study the availability of health care resources and to identify early warning indicators of disease. CDC helped assess the reported diphtheria outbreak in certain places in Russia during the 1992-93 winter and sponsored a trip to Atlanta by Russian health officials in February 1993 to learn the principles of publications dealing with epidemiology.

Food Assistance--Separate from the food deliveries made under Operation Provide Hope, the US Department of Agriculture (USDA) has three supply initiatives (see Commodity Credit Corporation credit program on page 181) to provide food assistance to Russia. USDA has allocated $165 million of a $250 million grant food commitment to Russia. Commodities now available under this initiative include: rice ($24 million), corn ($20 million), baby food ($16 million), wheat and wheat products ($78 million), whole dry milk ($8 million), and peanuts and peanut products ($4 million). A total of $15 million is reserved for transportation. These commodities are made available through Food for Progress or surplus donation programs.

Under a special Food for Progress program, USDA has purchased 300,000 metric tons of corn ($28.5 million) in fiscal year (FY) 1993. Food for Progress purchases in FY 1992 totaled $52.5 million for 63,500 metric tons of agricultural commodities. Section 416(b) availability in FY 1992 was 39,400 metric tons of food worth about $75 million.

Under Section 416(b) (surplus donation) of the Agriculture Act of 1949 as amended, USDA has made available 125,000 metric tons of feed wheat worth $18.1 million in FY 1993.

In both the Food for Progress and Section 416(b) programs, the dollar amounts also include cost of transportation of all commodities.

Special Commodities--Under separate programs, the US Government purchased $13 million worth of dry whole milk and non-fat dry milk distributed by CARE USA in Moscow, St. Petersburg, Perm, and Yekaterinburg. A second program, authorized by an earmark in the Freedom for Russia and Emerging Eurasian Democracies (FREEDOM) Support Act, allows the US to allocate about $10 million of the $30 million earmark to the Russian Far East for the purchase of nutritionally enriched food products for women and children. Deliveries should begin in the spring of 1993.

Private Sector Assistance. A second component of the US humanitarian assistance effort has been donations by the private sector. Under the Medical Assistance Initiative (MAI)--originally called the Presidential Medical Initiative the non-profit organization Project HOPE was authorized to solicit, collect, and distribute medicines and medical supplies within the new independent states. Since the announcement of this initiative in February 1991, Project Hope has shipped $50 million worth of medical items to 29 locations in Russia.

Working through non-profit contractors (Volunteers in Technical Assistance and the Fund for Democracy and Development), private voluntary organizations throughout the US are able to have their donated humanitarian assistance items transported by DOD. In 1992, about 8,700 tons of food, medicines and medical supplies, and clothing were delivered to more than 48 locations in Russia. In January 1993, two airlifts to St. Petersburg of 113,000 pounds of medicines and medical supplies were valued at $6 million.

Private sector assistance includes individual packs of medical supplies, personal hygiene products, and toys collected by the Girl Scouts of America and shipped to children in hospitals and long-term care institutions in St. Petersburg in January 1993.

Technical Assistance

Technical assistance helps recipients understand and develop the capability to build a free market economy and a functioning democratic system. Technical assistance may consist of advisers and consultants; learning materials, seminars, workshops; equipment and supplies necessary to begin operations; information resource centers and libraries; exchanges of professional groups; technology transfer; and the publication or broadcast of mass media to educate the population in general.

One of the largest areas of technical assistance has been agriculture and related agribusiness projects. USDA supports a demonstration farm outside St. Petersburg with two volunteer American farm couples working alongside farmers and ex-military personnel. Russia will receive 50 grain storage facilities, each consisting of four grain storage bins and grain moving equipment. About 800 US volunteers in the Farmer to Farmer Program are being placed in Russia from 1992 to 1994. (To date, 61 volunteers have completed their service.) A USDA policy adviser is working with the Russian Ministry of Agriculture and, under the Loaned Executive Program, two American agribusiness executives will be working with newly privatized food industries. Study programs of agricultural marketing under the USDA Cochran Fellowship Program have included 19 Russians; 11 are in the US study program now, and more than 20 will be trained. A $66-million Food Systems Restructuring project funded by USAID is expected to have a significant Russian focus.

Under a $645,000 grant, the University of Idaho is training Russian and Ukrainian farmers to harvest, store, process, and market perishable foods. The US Government also has supported two private agribusiness centers (managed by the Center for Agricultural and Rural Development) in Russia and Ukraine and provided assistance in transporting seed, inoculant, special planting equipment, and harvesting and storage equipment.

Another major area of emphasis is the health sector. The US Government has helped establish five hospital partnerships (between US consortia and specific institutions) in Moscow, Dubna, and Murmansk, with new partnerships approved for Vladivostok and Stavropol. Under a $300,000 grant, the Children's Health System and Children's Hospital of the Kings Daughters of Norfolk, the state of Virginia is setting up a mother and child health program for the Rostropovich Foundation in Moscow. A similar program is being established in St. Petersburg.

The Trade and Development Agency has approved five feasibility studies for investment in the health sector, with emphasis on the need for modernizing pharmaceutical distribution. The Commerce Department.sent a health care mission to Russia in October 1992 and has conducted USbased seminars for private industry. The Commerce Department also conducted two major conferences for American health industry firms in 1993, and the Overseas Private Investment Corporation has approved two health sector pre-investment studies.

In addition, three agreements have been signed to aid pharmaceutical production and to restore the Russian childhood vaccine industry. The Food and Drug Administration dispatched a team to plan training activities at the Tarasavich Institute in January 1993. The US Government will provide equipment and training to three Russian vaccine producers. Merck and Lederie (two major US pharmaceutical firms) are working on this project as well as seeking joint venture partners.

Privatization. The US Government has funded three programs through the International Finance Corporation of the World Bank: an auction of the trucking sector in Nizhny Novgorod in October 1992; auctions to sell retail enterprises in Volgograd oblast and Tomsk; and printing and distribution of "how to" manuals for small privatization auctions. The US Government also provides funding to the Russian State Committee on the Management of State Property (GK/) for the implementation of mass privatization and voucher programs. In addition, the US Government has funded the purchase and installation of computers for the GKI.

Defense Conversion. Through grants to the International Executive Service Corps, the US Government has sent defense conversion advisers to Nizhny Novgorod and Yekaterinburg and plans to send advisers to Tomsk. Short-term projects have been completed in Saratov and St. Petersburg, and the latter city may receive a longterm adviser. A recently announced Enterprise Fund for Russia will encourage equity or other financial participation in defense conversion: for example, the fund may provide loans for new small businesses or equity investments for spin-off projects at existing defense conversion facilities. A US-Russia defense conversion subcommittee, under the auspices of the Department of Commerce, was established in June 1992.

Energy. US energy technical assistance programs aim to increase safety of nuclear reactors and energy efficiency, to reduce wasteful consumption of energy resources, and to develop more efficient energy reserves. Under the nuclear reactor safety program, the Department of Energy and the Nuclear Regulatory Commission are setting up a training center to improve operational safety. An energy efficiency team (sent to Kostroma and Yekaterinburg) and coal mine safety teams (Kuzbas and Vorkuta regions) have been sent to various locations to provide advice and install energysaving equipment. A program is underway to strengthen the ability of the Moscow commodity market to trade petroleum products. A number of seminars on oil and gas operations and electric power have been held under US Government auspices in Russia and in the US. A Center for Energy Efficiency has been established in Moscow.

Democratic Institution-Building. These programs provide knowledge on the principles of government in a democratic society. The main areas for this aspoct of technical assistance are programs in rule of law, public administration, strengthening political parties and elections, and encouraging independent media.

Under US rule of law programs, eight Russian parliamentarians visited the US in 1992 under the US Information Agency's (USIA) Parliamentary Exchange Program. A leadership delegation of Russian Supreme Soviet Deputies spent 1 week in Washington in early 1993 under the "Lawmaking for Democracy" project organized under a USIA grant by the Lawyers Alliance for World Security. An American Bar Association (ABA) legal adviser is in Moscow to coordinate ABA activities in constitution and legislative drafting, judicial restructuring, and criminal law reform. The ABA held several workshops in Washington, DC, on constitutional reform and the draft Russian constitution in January 1993. Among other programs, a judicial education program is underway at the Legal Academy of the Russian Ministry of Justice.

Under the public administration programs, USIA sponsors training programs for senior local and municipal officials from Russia and has provided a grant to Sister Cities International to establish municipal training programs among partner cities. USIA is also publishing materials on public policy and administration. The mayor of Nizhny Novgorod attended a 3-week study program in the US on city management, business involvement in city government, federalism, and US economics. An adviser from the National Forum Foundation worked with the St. Petersburg City Council on zoning laws and regulations. Two US experts on local government have conducted regional training programs in Novosibirsk and are developing programs for Nizhny Novgorod, Yekaterinburg, and Saratov.

Under programs to strengthen political parties and elections, the National Democratic Institute (NDI) and the International Republican Institute (IRI) have opened offices in Moscow to conduct political training and civic education activities. NDI brought 15 Russian political party organizers to the US to observe the US electoral process. The International Foundation for Electoral Systems is working with three Russian oblasts (provinces) to study the upcoming referendum and prepare programs of assistance for subsequent elections.

Under programs to build independent media, a variety of activities and organizations are involved. Internews, an American non-profit organization, conducts journalism training and helps recommend ways to establish an independent TV news distribution system. USIA and the Soros Foundation sponsored a 2-week seminar organized by Internews in December 1992 in the US on American television operations, especially independent stations in major American markets. Internews organized the first video teleconference for an audience of about 100 million people to view discussions by the parliaments of Russia and the Ukraine.

Business Principles and Small Business Training. A variety of programs are underway to provide advice on business principles. The Peace Corps has sent more than 90 volunteers to teach the principles of small business in Vladivostok and the Volga River region.

The Commerce Department is setting up an American Business Center to disseminate business training information, and 110 Russians have been selected to participate in Commerce's Special American Business Internship Training (SABIT). Commerce has formed a US-Russia Business Development Committee.

USIA is establishing an America House in Vladivostok as a central information resource on various aspects of free market business principles.

USIA has a wide variety of publications in translation and distribution to provide examples of free market economics. USIA also is providing several television programs and broadcast productions that show aspects of a free market economy.

Credit Guarantees And Economic Agreements

In September 1992, USDA announced $900 million in new Commodity Credit Corporation (CCC) loan guarantees for Russia. Once averages are corrected, Russia can draw on an additional $275 million during the first quarter of 1993. A prior CCC Credit Guarantee of $600 million was announced in April 1992, and before that, the US provided nearly $4 billion in credits to the former Soviet Union since 1991, the bulk of which went to Russia.

* The Export-Import Bank has approved $125.7 million in loan guarantees and insurance for six transactions in Russia.

* Under an agreement ratified in June 1992, the Overseas Private Investment Corporation can provide insurance and other guarantee programs for American businesses in Russia.

* In June 1992, a bilateral trade agreement granting most-favorednation status was ratified. Bilateral investment and tax treaties were signed and are awaiting ratification.

* The Trade and Development Agency has funded feasibility studies and other related programs for 17 commercial projects, totaling more than $6 million.

Other Programs

Other programs also are underway.

* The US Government has agreed to help fund an International Science and Technology Center in Russia.

* USIA is publishing a pamphlet in Russian on "Civilian Control of the Military," and the Atlantic Council of the US is working with the Russian Government to develop civilian oversight procedures for military and national security affairs.

* Resident housing advisers are stationed in Moscow, St. Petersburg, Novosibirsk, and Yekaterinburg to work on legal reform in the housing sector, develop a housing privatization law, and advise on municipal management. The University of Maryland has been sponsored to set up an exchange program for housing development managers. USIA funded an advanced housing seminar on the US housing sector in February 1993.

* Under the FREEDOM Support Act, secondary school students from Russia have begun exchange programs in US high schools. The Soros Foundation announced its intention to provide $10 million to higher education reform in Russia, to include the "Transformation of the Humanities and Social Sciences" project.

* The Treasury Department is sending three resident advisers to the Ministry of Finance and the Central Bank. Four short-term tax policy missions have been sent to Russia since May 1992. KPMG Peat Marwick, a US accounting firm, has received funds to expand its East Europen training program to Russis,

* Citizen's Democracy Corps, a non-profit organization, has opened an office in Moscow and is focusing on business development, information exchange between the Russian public and private sector, and advising the Moscow Human Rights Center.

* A World Bank team, with USAID and Environmental Protection Agency members, is preparing an agreement on a $3-4 million environment and energy loan package to establish a mechanism to attract more assistance.

* Five private voluntary organizations in the US have received grants to upgrade the capabilities of indigenous non-governmental organizations and foster volunteerism. Total funding of the Russian program is $2.1 million.

COPYRIGHT 1993 U.S. Government Printing Office
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