to provide suppjort for environmental clean-up. trade and investment, and exchange
programs. An important part of this expanded package would be creation of a G-7
privatization fund of which the U.S. share would be $500 million, if met by
corresponding contributions, by other G-7 members.
The subcommittee urges the Administration to expeditiously address important
questions on sjjecific comp>onents of this expanded package, particularly how these
additional spending requests will be funded. The subcommittee strongly urges the
Administration to consult closely with Congress on these issues before moving forward
with specific requests.
5. The subcommittee believes that the U.S. Congress should respond to President
Yeltsin's request to remove remaining Cold War provisions in U.S. legislation. The
subcommittee notes that there are some legitimate, although minor, security
considerations for the U.S. in lifting Cold War-era high-technology trade restrictions on
Russia and that these must be taken into account. .Nevertheless, it is the subcommittees
assessment that not allowing Russia to participate fully in the world economy and the
community of nations poses even greater risks to international peace and security. We
should moN'e cautiously, but deliberately and expeditiously, to facilitate the full
integration of Russia into the world economy at the earliest possible occasion.
The subcommittee believes that the U.S. should consider the current status of the
Jackson-Vanik immigration provisions and repealing Captive Nations legislation. The
subcommittee also supports:
o allowing Russians to act as commercial agents in the U.S. without
registering w ith U.S. authorities:
o removing special review procedures on e.xports of DOD-financed goods
and technology:
o allowing Russia to participate in the international satellite launch
market: and
o progressively lifting the applicability of COCOM to Russia as it
improves its export controls.
6. The subcommittee strongly believes that the United States should restructure the
organization and management of its assistance programs in Russia and Ukraine. The
subcommittee urges that the traditional approach of concentrating program decisions in
Washington should be discarded and replaced with a more field-oriented approach. More
personnel, with greater design and decision-making authority, should be based in Russia,
the Ukraine and area offices for Central Asia and the Caucasus. The subcommittee
acknowledges that the "Washington Mission" approach may have made sense at the
beginning of the assistance program when the desire was to fund those in the U.S. with
projects ready to go or to fund those in Russia already on the ground. Now, AID officials
m the field are in a better position to assess individual needs of these states and respond
to problems and changing circumstances.
The subcommittee strongly believes that Ukraine should have its own separate
country strategy and field presence for AID assistance programs and that Central Asia,
the Caucasus and, possibly, eastern Russia, would merit a more area-specific focus on the
priorities and requirements of economic and political transformation of these areas.
7. The subcommittee strongly believes that U.S. assistance for Russia must be
delivered expeditiously to maximize the impact on the reform movement. The
subcommittee is deeply concerned at the slow pace 3t which funds already appropriated
by Congress have been expended in Russia and the other NIS states. Only a small portion
of the $650 million appropriated in FY 92 and FY 93 in foreign assistance funds has been
spent. In this regard, the subcommittee welcomes President Clinton's announcement at
the Vancouver Summit of a $1.6 billion package made up of existing authorized and
appropriated resources to be delivered by or near the end of the calendar year. This is an
important step in breaking the bottleneck on delivery of these funds and a helpful signal
that future funds will be provided to the NIS states in an expeditious fashion.
The subcommittee warns that the slow expenditure of funds risks making U.S.
assistance to the region irrelevant. If the pace does not increase dramatically, U.S. efforts
could be too late to help reform. The subcommittee further believes that failure to
expend appropriations from previous years will make it more difficult to secure
congressional approval of additional funds for Russia and the .NIS. despite the critical
important of U.S. programs to assist the pxjlitical and economic transformation in the
former Soviet Union.
The subcommittee believes it is essential that the Ambassador-at-Large for NIS
affairs and the administration's coordinator for assistance to the NIS have adequate
authority to cut through interagency red tape and move assistance flexibly and rapidly, as
required by the Freedom Support Act. A strong and effective coordinator is critical to
expeditious and optimal provision of U.S. assistance. The subcommittee hopes to work
closely with the newly designated NIS Coordinator. Ambassador Tom Simons, to promote
common objectives in this area.
8. The Freedom Support Act explicitly states that a criteria for aid to the Newly
Independent States is the extent to which they terminate support for the communist
regime in Cuba, including the removal of troops, closing of military facilities and ceasing
trade subsidies and economic, nuclear and other assistance. The subcommittee supports
Russian efforts to reduce military and economic subsidies to Cuba and withdraw the
combat infantry brigade. Further, the subcommittee urges Russia to continue its
disengagement from Cuba by discontinuing its oil shipments to Cuba.
8
9. The Subcommittee notes that the Freedom Support Act contains important
criteria for assistance to Governments of the Independent States, inter alia, the extent to
which these states are implementing responsible security policies, including restraining
conventional arms transfers. In addition, the Freedom Support Act provides that no
assistance should go to any NIS state that has transferred missiles or missile technology to
any other state or any nuclear equipment or technology that would contribute
significantly to the ability of any country to manufacture any weapon of mass
destruction, including nuclear, chemical and biological weapons.
In light of this language, the subcommittee considers that assistance to any NIS state
should be terminated if the President finds it has transferred weapxjns of mass
destruction, related technologies or related scientific expertise to Iran. Consistent with
the Freedom Support Act, the subcommittee strongly urges the governments of the NIS
states to cease the export of military and military-related goods, services and technology
to Iran. Continued exjjort of such goods to Iran could lead to the susp)ension or
termination of U.S. assistance under the terms of the Freedom Support Act.
Beginning 120 days after the date of enactment of this Act and very 120 days
thereafter, the President shall submit a report to the appropriate congressional
committees with respect to the indep)endent states of the former Soviet Union. Each such
report shall describe the numbers and typjes of any military or military-related goods,
services or technology exported or otherwise transferred by the independent states to
Iran.
The term "military or military-related goods, services or technology" includes (a)
weapons of mass destruction and related technology and scientific expertise, as well as
civilian nuclear material, equipment and technology; (b) sophisticated and destabilizing
conventional weapons; and (c) conventional weapons that are subject to the reporting
requirements of the United Nations Conventional Arms Transfer Registry.
10. The subcommittee wishes to underscore the importance of U.S. efforts to assist
disarmament and non-proliferation activities in the NIS states. The subcommittee
supports the Administration's fiscal year 1994 request for another $400 million of EX)D
funds for these purposes in fiscal year 1994. Nevertheless, the subcommittee strongly
believes that the U.S. must do a better job of implementing already existing assistance
programs to dismantle and destroy weapons of mass destruction in the former Soviet
Union.
The subcommittee is concerned that very little of the $800 million in FY 92 and 93
funds appropriated for the destruction of nuclear, chemical and other weapons of mass
destruction has been expended to date. The subcommittee notes that, while the focus of
U.S. exp)enditures to dale has been on safe transportation and storage of weapons, very
little has been done yet actually to destroy and dismantle such weapons. The
subcommittee believes that the U.S. should place higher priority on the actual destruction
of weapons.
11. The subcommittee supports an active, well-targeted U.S. assistance effort to the
new nations of Central Asia. These nations are in the early stages of democratic and
economic institution-building and require a well-focused assistance strategy. They must
not be treated as appendages of the former Soviet Union.
The subcommittee cautions that the nations of Central Asia are not implementing
political and economic reform at the same pace. The subcommittee notes that, according
to criteria set forth in the Freedom Support .Act. those nations which are making
significant progress in implementing these criteria should be rewarded and targeted for
larger shares of assistance.
The subcommittee notes that a shortage of specialists with linguistic and cultural
experience of the nations in the region could hamper the development of U.S. relations
and the efficiency of U.S. assistance projects unless expeditious steps are taken to remedy
this deficiency.
12. The subcommittee supports the continuing authorization of the Soviet-Eastern
European Research and Training Program as authorized by Section 105(3) of Public Law
101-246. The subcommittee feels the training of American scholars and the development
of expertise about this region is of such compelling importance to warrant its contmued
fundmg. The subcommittee believes the emphasis of the program should be support for
training in East European and non-Russian languages and cultures of the former Soviet
Union. The subcommittee understands that the administration intends to fund this
program at its previous level of $10 million in fiscal year 1994 and that these funds will
come from the State Department budget.
13. The subcommittee welcomes continued emergency humanitarian assistance to
Armenia, including food, medicine and energy supplies, in view of the ongoing blockage
of Armenia by its neighbors. Since this blockade is a direct result of the confUct in
Nagorno-Karabakh, the subcommittee urges all parties in the conflict to settle this issue
peacefully through direct negotiations.
The subcommittee supf)orts the new CSCE-sponsored peace plan for
Nagorno-Karabakh, drawn up by the U.S., Russia and Turkey and submitted to the
Armenian and Azerbaijan governments and the Nagorno-Karabakh representatives for
their endorsement. The subcommittee urges all parties to reach a ceasefire on the basis of
this peace document which will open the way for continuation of the CSCE-spwnsored
peace negotiations in Geneva and Rome.
14. The subcommittee notes that, as part of AID's special initiati%es program in the
NIS, two cooperative programs have been established to initiate pilot programs in the
Central Asia region. In the U.S.-Israel Cooperative Program, technical assistance and
training, particularly in water management and irrigation, is provided to senior
government officials, farm planners and managers throughout Central .Asia. In the
U.S. -Turkey Cooperative program, the U.S. and Turkey are to work on a bank training
and maternal-child health program in Central Asia.
The subcommittee finds that the U.S.-Israel Cooperative program has been warmly
welcomed in Central Asia where it has brought much needed expertise. The
subcommittee expects that this program will continue to help build goodwill between the
peoples of the U.S. and Israel and of Central Asia.
15. The subcommittee notes that the Freedom Support Act contains criteria that
shall be taken into account in providing assistance to independent states of the former
Soviet Union, including cooperation with U.S. government efforts to uncover evidence
regarding Americans listed as prisoners of war, who were detained in the former Soviet
Union during the cold war.
The need for greater cooperation of the Russian government in this area was
evident in the recent discovery in Russian archives of potential critical evidence bearing
on possible American P0\\7\ilAs from the Viet Nam War. The U.S. government should
not have to be dependent merely upon historians locating such critical evidence, but it
should be forthcoming voluntarily from the Russian government itself. The recent report
of the Select Committee on POW/MIA Affairs of the U.S. Senate in January 1993. noted
that: "Unfortunately, the level of cooperation from within the Russian military and
intelligence bureaucracy has been less extensive and has. at times, seemed intentionally
obstructive."
10
The subcommittee notes that the language in the Freedom Support Act has not
produced the full and complete cooperation that the U.S. government requires and needs
to fully account for all these American prisoners of war. who may have been held in the
former Soviet Union, or which the former Soviet Union has evidence on such prisoners'
possible fate from the Viet Nam conflict and others, the Russian government must be
more forthcoming. The Russian Federation, particularly the military and intelligence
bureaucracies, must completely cooperate with all U.S. goverrunent efforts to help
provide a full accounting of all U.S. POW/MIAs.
The subcommittee strongly believes that at all levels of the Russian government, the
total cooperation of the Russian Federation must be forthcoming to provide the full
accounting of all these American POW/MIAs that the Congress, the American people and
the members of the families of the POW/MIAs deserve and expect in this new and
developing cooperative relationship between our two governments.
11
EASTERN EUROPE REGIONAL
(In millions of dollars)
Fiscal Year
Subcommittee
Recommendation
1991
1992
1993
1994
Request
1994
ShN) Programs
Development Assistance
(Grant)
ESF-G
Special Assistance
Initiative
P.L. 480-Tiae I
P.L. 480-Title II
Peace Corps
7.0
11.0
369.7
.0
.5
5.0
13.5
.0
363.7
57.5
2.5
7.6
15.5
.0
398.2
80.0
.0
8.7
.0
.0
409.0
•
55.9
12.1
.0
.0
409.0
55.9
12.1
TOTAL
393.2
444.8
502.4
476.0
476.0
Military Assistance:
FMF-G (Poland. Hungary)
IMET
IMET (Yugoslavia)
.1
1.0
.1
.0
2.7
.0
.0
2.37
.0
.0
2.8
.0
.0
2.8
.0
TOTAL
LI
2.7
Z87
2.8
Z8
• Figure for P.L. 480-TitIe I
currently
not available.
1. The subcommittee recommends that $409 million be provided in fiscal year 1994
for programs of the type authorized under the Supfx)rt for East European Democracy Act
(SEED). This is the same amount contained in the Administration's request and is
approximately the same amount appropriated in FY 93. The subcommittee has not yet
received FY 1994 request for P. L. 480-Title 1 funding for countries in Eastern and
Central Europe. The subcommittee looks forward to receiving this figure in the near
future.
FY 94 will be the fifth year of the SEED program and total amounts for the region
appear to have stabilized. The subcommittee notes that while the number of countries
eligible for assistance under SEED has multiplied since 1989. the funding available has
not. The subcommittee expects that U.S. assistance to the region will concentrate limited
available resources on key sectors where U.S. assistance can be most helpful. The
subcommittee notes that the U.S. program of energizing assistance to Russia and the NIS
states must not come at the e.xpense of Central and Eastern Europe.
12
2. The subcommittee notes that it has not yet received a Congressional Presentation
Document on the breakdown of the overall authorization request for SEED funds in FY
1994. The subcommittee expects that, while overall outlays for the region have stabilized,
the country-by-country differences will change in keeping with individual country
progress on reform. The subcommittee expects that Poland, as the largest country in the
region, will continue to receive significant amounts of assistance. But as Poland, together
with the Czech Republic and Hungary, continue to make progress in their transition to
democracy and free-markets, other countries in the region, at an earlier stage in their
transition and hence with greater basic needs should begin to receive larger shares of
assistance. For example, the subcommittee notes that assistance to Albania in FY 93 will
decrease from FY 92 levels despite enormous developmental needs. The subcommittee
recommends that FY 94 funding levels for Albania adequately reflect the country's
pressing needs in democracy-buUding and economic reform.
The subcommittee views with concern the reduction in overall funding levels for
Albania from FY 1992 to FY 1993. Albania's emerging democracy is confronting critical
problems in a variety of areas. The subcommittee believes that greater support for the
current democratic Albanian government will assist in deef)ening Albanian democratic
practices, stabilizing a turbulent region, and enforcing the goodwill towards the United
States currently prevalent in Albania.
Because of the poverty in Albania, relatively small amounts of assistance can be
very effective in achieving these goals. The subcommittee is concerned that the
downward trend in aid levels will be detrimental not only to the stability of Albania but
to U.S. interests as well. The subcommittee urges the Administration to make aid to
Albania a higher priority in its allotment of United States foreign aid resources.
3. The subcommittee continues to believe that original expectations of a short-term
U.S. and western assistance program for Central and Eastern Europe were excessively
optimistic. Substantial assistance to the region will be required for several more years
and likely well into the 21st century. Certain countries in the region, notably Albania, are
true developing countries and will require a long-term commitment of assistance.
Likewise, the war in the Balkans has created such destruction, dislocation and human
misery that dealing with the humanitarian dimension of the war. as well as providing
traditional development assistance for reconstruction and rebuilding, will require
substantial and sustained commitments of assistance in future years.
4. The subcommittee welcomes the report of AID that U.S. programs in the region
are increasingly de-emphasizing high visibility operations conducted by U.S.-based groups
in favor of democratic and economic institution-building and the creation of indigenous
PVOs in these countries. The subcommittee expects that increased attention will be
devoted to key sections including financial sector reform, privatization and housing.
5. The subcommittee welcomes the statement of Assistant Secretary Oxman, in
hearings before the subcommittee on .May 11, 1993. that U.S. management of the SEED
program is shifting to a more field-based rather than Washington-based focus. Currently,
about half of the AID personnel working on implementation are now field-based. The
subcommittee expects that this trend should continue as the SEED program addresses the
specific needs of each country. The subcommittee also welcomes Secretary Oxman's
statement that the regional focus of the SEED program is now being adjusted to include
greater emphasis on country-specific programs. The regional focus to the U.S. assistance
effort has provided necessary flexibility and ability to address key regional issues,
particularly the environment. .Nevertheless, over the last three years countries in the
region have progressed at very different paces toward greater democracy and free marke'
systems and their specific needs have diverged more. Each country in the region has its
13
own specific and unique requirements. The subcommittee believes that a more
country-specific approach to assistance in this region is now merited. This approach would
significantly enhance the effectiveness of the SEED program at this stage.
6. The subcommittee notes that the focal point of U.S. assistance efforts in Central
and Eastern Europe has been the Enterprise Funds. These Funds account for nearly 36%
of all U.S. economic restructuring assistance to the region. The subcommittee has teen
supportive of the Enterprise Funds and has viewed them as generally positive and
successful experiments m how to provide foreign assistance for developing the private
sector.
The first Enterprise Funds established in Poland and Hungary are nearing the end
of their three-year capitalization period. Basic questions about the future nature and
continuity of the Funds must be addressed. These include the issue of the public
accountability of the Funds and the lack of U.S. government control over ultimate
liquidation of the Funds. The Subcommittee supports the need for independence of the
Enterprise Funds, and the importance of not havmg them hamstrung by government
bureaucracy, but underscores the importance of full accountability of the Enterprise
Funds to the Administration and to the Congress for public funds.
Recently, several problems with the functioning of certain of the Enterprise Funds,
particularly the Hungarian-American Enterprise Fund, have emerged. The subcommittee
expects that these problems will be satisfactorily resolved in the shortest possible time, in
order for the remaining U.S. government funding to proceed without delay. Concerns
persist in the following areas:
o excessively high salaries for Fund executives:
o the establishment of wide-ranging subsidiary entities beyond the
control of the Administration and Congressional oversight:
o inadequate book-keeping: and
o the hasty reappointment of members of the Boards of Directors for
new, three-year terms immediately prior to the new .Administration
taking office.
The subcommittee regrets deeply that these problems have emerged and expresses its
concern that they will be addressed expeditiously and not be permitted to jeopardize
otherwise meritorious programs in Eastern Europe.
7. The subcommittee also has some concerns with the functioning of the European
Bank for Reconstruction and Development (ERBD). The United States is the single largest
contributor to the Bank, having contributed $70 million in FY 91 and $68 million in FY 92.
As such, the U.S. has a strong interest in the efficiency and direction of this Bank which is
supposed to play a major role in multilateral efforts to assist private enterprise in the
region. The subcommittee's concerns arise from confirmed reports that, in the first 20
months of the Bank's existence, it has engaged in an excessive level of spending on the
physical infrastructure of the Bank itself as well as on administrative and operating
expenses. These expenses have exceeded $300 million, which is twice the rate of the Bank's
investment in Central and Eastern Europe during that time.
The subcommittee expects that the United States will take a firm stand in support ot
budgetary prudence and accountability in the ERBD's future operations. The
subcommittee e.xpects that the First Vice President of the Bank, a position which
14
institutionally is occupied by a U.S. official, will in the future take active steps to help cut
administrative and operating expenses and in informing the relevant bodies of Congress
about developments m this area.
The subcommittee considers that increased assistance and lending to Central and
Eastern Europe and the former Soviet Union through multilateral institutions such as the
EBRD will be difficult to sustain in the Congress in the absence of concrete assurances that
the expenditure of funds is properly scrutinized and fuUy justified.
8. The subcommittee expects that international assistance to Central and Eastern
Europe will continue to be coordinated through the Group of 24 (G-24) which is comprised
of all members of the Organization for Economic Cooperation and Development (OECD).
The subcommittee is concerned that EC coordination of this western assistance has not been