United States. Congress. House. Committee on Inter.

Effectiveness of U.S. assistance programs in Russia, Ukraine, Armenia, and the other newly independent states : hearing before the Committee on International Relations, House of Representatives, One Hundred Fourth Congress, second session, June 13, 1996 online

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Online LibraryUnited States. Congress. House. Committee on InterEffectiveness of U.S. assistance programs in Russia, Ukraine, Armenia, and the other newly independent states : hearing before the Committee on International Relations, House of Representatives, One Hundred Fourth Congress, second session, June 13, 1996 → online text (page 1 of 26)
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FPECTWENESS OF U.S. ASSISTANCE PROGRAMS
IN RUSSIA, UKRAINE, ARMENIA, AND THE
OTHER NEWLY INDEPENDENT STATES

Y 4. IN 8/16: R 92 ^^^^^^^^^^^



Effectiveness of U.S. Assistance Pr.



V



HEARING

BEFORE THE

COMMITTEE ON

INTERNATIONAL RELATIONS

HOUSE OP REPRESENTATIVES

ONE HUNDRED FOURTH CONGRESS

SECOND SESSION



JUNE 13, 1996



Printed for the use of the Committee c-n International Relations




FEB 1 9 m?

' ' PHP.IiP. ijp^



U.S. GOVERNMENT PRINTING OFFICE
35_276CC WASHINGTON : 1996



For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC 20402
ISBN 0-16-053822-X



FFECTWENESS OF U.S. ASSISTANCE PROGRAMS
IN RUSSIA, UKRAINE, ARMENIA, AND THE
OTHER NEWLY INDEPENDENT STATES

Y 4. IN 8/16: R 92 ^^^^^^^^^^^^^'^^^^



Effectiveness of U.S. Assistance Pr..



HEARING

BEFORE THE

COMMITTEE ON

INTERNATIONAL RELATIONS

HOUSE OP REPRESENTATIVES

ONE HUNDRED FOURTH CONGRESS
SECOND SESSION



JUNE 13, 1996



Printed for the use of the Committee c-n International Relations



"*\l1jiiv>




^=-^>



FEB 1 9 1997



U.S. GOVERNMENT PRINTING OFFICE
35-276 CC WASHINGTON : 1996



For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC 20402
ISBN 0-16-053822-X



COMMITTEE ON INTERNATIONAL RELATIONS
BENJAMIN A. OILMAN, New York, Chairman



WILLIAM F. GOODLING, Pennsylvania

JAMES A. LEACH, Iowa

TOBY ROTH, Wisconsin

HENRY J. HYDE, Illinois

DOUG BEREUTER, Nebraska

CHRISTOPHER H. SMITH, New Jersey

DAN BURTON, Indiana

JAN MEYERS. Kansas

ELTON GALLEGLY, California

ILEANA ROS-LEHTINEN, Florida

CASS BALLENGER, North Carolina

DANA ROHRABACHER, California

DONALD A. MANZULLO, Illinois

EDWARD R. ROYCE, California

PETER T. KING, New York

JAY KIM, California

SAM BROWNBACK, Kansas

DAVID FUNDERBURK, North Carolina

STEV'EN J. CHABOT, Ohio

MARSHALL "MARK" SANFORD, South

Carolina
MATT SALMON. Arizona
AMO HOUGHTON. New York
TOM CAMPBELL, California



LEE H. HAMILTON, Indiana

SAM GEJDENSON, Connecticut

TOM LANTOS, California

ROBERT G. TORRICELLI. New Jersey

HOWARD L BERMAN, California

GARY L. ACKERMAN, New York

HARRY JOHNSTON, Florida

ENl F.H. FALEOMAVAEGA, American

Samoa
MATTHEW G. MARTINEZ, California
DONALD M. PAYNE, New Jersey
ROBERT E. ANDREWS, New Jersey
ROBERT MENENDEZ. xNew Jersey
SHERROD BROWN, Ohio
CYNTHIA A. MCKINTSIEY, Georgia
ALCEE L. HASTINGS, Florida
ALBERT RUSSELL WYNN, Maryland
JAMES P. MORAN, Virginia
VICTOR O. FRAZER. Virgin Islands (Ind.)
CHARLIE ROSE, North Carolina
PAT DANNER. Missouri
EARL HILLIARD, Alabama



Richard J. Garon. Chief of Staff

Michael H. Van Dusen. Democratic Chief of Staff

Mark Gage. Professional Staff Member

Parker H. Brent, Staff Associate



(II)



CONTENTS



WITNESSES



Page

Ambassador Richard Morningstar, Special Advisor to the President and the

Secretary of State on Assistance to the NIS, Department of State 6

The Honorable Thomas Dine, Assistant Administrator for Europe and the
Newly Independent States, Agency for International Development 7

The Honorable John Ruberto, Deputy Assistant to the Secretary of Defense
for Nuclear, Chemical, and Biological Defense Programs for Defense Con-
version, Department of Defense 9

Ms. Joan Rohlfing, Director, Office of Non-Proliferation and National Secu-
rity, Department of Energy 12

Ms. Anne Sigmund, Director, Office of East European and Newly Independent
States Affairs, U.S. Information Agency 13

APPENDIX



Prepared statements:

Ambassador Morningstar 47

The Honorable Thomas Dine 61

The Honorable John Ruberto 89

Ms. Joan Rohlfing lOQ

Ms. Anne Sigmund 114

Article entitled "To Russia with Cash", Reader's Digest, June 1996, sub-
mitted by Congressman Dana Rohrabacher 121

Article entitled "Problems in American Assistance Policy Toward the
Former Soviet Union: The Belarus Prism", Demokratizatsiya, Volume
IV, Number 1, Winter 1996, submitted by Congressman Dana

Rohrabacher 127

Article entitled "Bull in a China Shop: USAID's Post-Soviet Mission",
Demokratizatsiya, Volume IV, Number 2, Spring 1996, submitted by

Congressman Dana Rohrabacher 138

Additional information submitted by the Agency for International Devel-
opment 162

Additional information submitted by the Department of State 166

Responses to additional questions submitted to the Department of State .. 169



(III)



EFFECTIVENESS OF U.S. ASSISTANCE PRO-
GRAMS IN RUSSIA, UKRAINE, ARMENIA,
AND THE OTHER NEWLY INDEPENDENT
STATES



TUESDAY, JUNE 13, 1996

House of Representatives,
Committee on International Relations,

Washington, DC

The coinmittee met, pursuant to call, at 10 a.m. in room 2172,
Raybum House Office Building, Hon. Benjamin A. Oilman (chair-
man of the committee), presiding.

Chairman Oilman. The committee will come to order.

The International Relations Committee today will be taking tes-
timony from a panel of five distinguished witnesses representing,
I think, a good cross-section of those of our government agencies
most actively involved in pursuing American interests in the states
of the former Soviet Union.

The committee has asked this panel to join us today in address-
ing the general status of U.S. assistance programs in Russia,
Ukraine, Armenia and the other Newly Independent States of the
former Soviet Union, but hopefully to address in particular the im-
portant question of how effectively our programs are being imple-
mented in support of American national interests in those coun-
tries.

I would like to take a moment to recognize and welcome our wit-
nesses. First, we have before us once again our State Department
Coordinator for U.S. Assistance in the Newly Independent States
who is to be congratulated on his recent confirmation as Special
Advisor to the President and Secretary of State on Assistance to
the NIS States. We welcome back Ambassador Morningstar.

Mr. Morningstar. Thank vou, Mr. Chairman.

Chairman Oilman. I thank you and I think you are starting to
qualify for the category of old hand at appearing before our com-
mittee now. I do not see any scars, at any rate.

Second witness, the Assistant Administrator for Europe and the
Newly Independent States at the Agency for International Develop-
ment is no stranger to our committee and its hearings. We welcome
you back, Mr. Dine.

Mr. Dine. Thank you, Mr. Chairman.

Chairman Oilman. Also with us today is John Ruberto, Deputy
Assistant to the Secretary of Defense for Nuclear, Chemical and Bi-
ological Defense Programs for Defense Conversion. Our welcome to
you, sir.

(1)



Mr. RUBERTO. Thank you, Mr. Chairman.

Chairman Oilman. Representing our Department of Energy
today is Ms. Joan Rohlfing, Director in the Department of Energy's
Office for Non-ProHferation and National Security, We are pleased
that you could be with us today, Ms. Rohlfing.

Ms. Rohlfing. Thank you.

Chairman Oilman. Your agency has a tough but very important
job to do in trying to make certain that nuclear materials now in
the territory of the former Soviet Union do not leak out into the
hands of those around the world who have terrorist or aggressive
agendas. We certainly look forward to having your thoughts on
what your agency can do to fight this battle against so-called loose
nukes.

And last, but certainly not least, is Ms. Anne Sigmund, Director
of the U.S. Information Agency's Office of East European and
Newly Independent States Affairs who joined Ambassador
Momingstar and Mr. Dine last November 14 in testifying before
our committee.

Welcome back, Ms. Sigmund.

A large panel means a long introduction. I want to keep my re-
marks brief so that our committee members and our witnesses can
begin to address these important issues.

Let me just point out to the members of our committee that to-
day's hearing is intended to focus on our assistance program in the
Newly Independent States. We have not asked that a State Depart-
ment representative appear to address policy issues since we are
hopeful that the committee will find time after the Russian Presi-
dential elections to turn to the issue of our nation's relations with
Russia and the other Newly Independent States. I would, therefore,
ask that members focus their questions as much as possible on our
assistance programs in the former Soviet states.

Obviously, none of our witnesses today will be prepared to ad-
dress questions outside of their sphere, unless they would like to.
Let me just say that it is appropriate to focus at least one hearing
on just our assistance programs. After all, they may well be the
most important instruments in supporting American objectives in
a region as important as that of the former Soviet Union.

I would ask our witnesses to try to limit their statements to
about 5 minutes each and submit their written statements for the
record and we will take that without objection, if you could summa-
rize as much as possible, since there are five witnesses and we
would like to get into the dialog as quickly as possible.

I would also ask our witnesses to do their best to describe for the
committee how they see the programs for which they are respon-
sible serving our nation's national interests in Russia, Ukraine, Ar-
menia and the other nine states of the former Soviet Union.

I would now like to ask our members if they have any opening
statement.

Mr. Bereuter. Mr. Chairman, I just wanted to commend you for
holding this hearing. I think there are few hearings that will be
more important in the nature of the subject being discussed. I just
wanted to explain to our witnesses that I do have a conflict, I am
going to miss parts of it, but will be back as quickly as possible.
Thank you, Mr. Chairman.



Chainnan Oilman. Thank you, Mr. Bereuter.

Mr. Smith.

Mr. Smith. Thank you very much, Mr. Chairman. I appreciate
your scheduHng this very important hearing for the purpose of ex-
amining the effectiveness of U.S. assistance to the Ukraine, Russia,
Armenia and other countries. Recognizing the shrinking pool of for-
eign assistance resources, the effectiveness of each project must be
reviewed and we must ensure that the assistance contributes sig-
nificantly to overall U.S. policies and objectives toward that par-
ticular country.

Mr. Chairman, a disturbing number of analysts have concluded
that the flurry of U.S. assistance to the emerging democracies of
the former Soviet Union and its satellites has seen precious little
fruit. That presents the question: Is it time for a change in the phi-
losophy and nature of our assistance programs in Central and East
European countries? Have we fostered false expectations that can
never be realized and met by technical and financial assistance but
only political and individual will by the individuals themselves?
Are we providing enough of the tools for these countries to turn
from centrally controlled economies, or have we simply provided
the bandage which allows the respective governments to postpone
the hard, painful decisions to cut certain government services?

The U.S. objectives, it seems to me, must be realistic and, in
most cases, pared down to suit the size of the foreign assistance
being extended. The bulk of our aid in the region has been allo-
cated for Bosnia and, Mr. Chairman, that project should be the
subject of a separate hearing as it may have many unique and un-
expected complications attached to it.

Sizable packages have been designated for certain countries in
this region, particularly the Ukraine, Russia and Armenia, which
reflect U.S. strategic and national interests. Now it is time to e-
flect, analyze and critique those programs.

I, like Mr. Bereuter, will be in and out of this hearing because
of another commitment. But I would hope that our distinguished
panel will address some of these issues.

I am also concerned about the diversion of funds that do not get
to Armenia because of the continued blockading by Turkey of our
assistance to Armenia. If you could talk pbout how much, in actual
dollars and potential, has been lost as a direct result of that diver-
sion and siphoning of funds.

I have also recently had a hearing on the ongoing tragedy in
Chernobyl. As you know, I chair the Commission on Security and
Cooperation in Europe, and we heard devastating tales from the
ambassadors of Belarus and the Ukraine about the children getting
cancers and they were most appreciative of our AID efforts and
other efforts. But, if you could please detail some of the expecta-
tions and plans that you have for 1997 and beyond, especially as
those cancers begin to balloon. The expectations were that, by the
year 2005, the number of thyroid and other child cancers would ex-
plode as, unfortunately, the effects of radiation begin to manifest
themselves in those children.

There were also disturbing reports of a number of Ukrainians
moving back to contaminated areas, growing foods on contaminated
soil, and consuming those foods and even selling them in Kiev,



leading to a large number of stomach cancers. Perhaps you might
want to give us some of your insights on that.

So I look forward to your testimony and, again, like Mr. Bereu-
ter, I will be in and out but I will look at the record and I thank
you for your testimony.

Chairman Oilman. Thank you, Mr. Smith.

Mr. Campbell.

Mr. Campbell. Thank you, Mr. Chairman, and I appreciate your
holding the hearing. I will just take a moment to put on the record
that I nave an interest — ^my wife is the director of the University
of California-Berkeley Business School project in Saint Petersburg,
Russia and that program has received assistance from various U.S.
Government sources. I come to this issue, of course, with an open
mind on the basis of my own thinking and strong advice from
home, but I did not wish my participation in this hearing in any
way to fail for lack of disclosure of that fact.

Thank you, Mr. Chairman.

Chairman Oilman. Thank you, Mr. Campbell.

Mr. Moran.

Mr. Moran. Thank you, Mr. Chairman.

I was not going to say anything until I heard my friend, Mr.
Smith, suggest that we are tnrowing money at these independent
states or that we had given them a significant amount of money
and we have to be careful about how it is used. My concern is just
the opposite. We had $2.4 billion initially in Fiscal Year 1994. We
just passed that foreign operations appropriations bill this past
week that brought it down to $590 million. That is about a 75 per-
cent cut. So my concern is how are we possibly going to address
all of the anticipated need for our assistance in the Newly Inde-
pendent States? I think that really needs to be the focus — how we
can possibly be a world player and cut the level of assistance as
dramatically as we have?

Mr. Smith. Will the gentleman yield?

Mr. Moran. Yes. I would be happy to.

Mr. Smith. One of the things that we did in this committee, and
I did it because I offered the amendment and then encouraged the
foreign ops appropriations chairman. Sonny Callahan, to do so and
he did so and that was to provide a childhood and diseases account,
and it is now being funded at $600 million. My concern has always
been that when you are given a vast number of options that chil-
dren often get second-rate or are put on the back burner and this
legislation that we just passed focuses and targets limited re-
sources — and they have gone down, admittedly, but everything is
being pared down. I think our challenge is to see if we can get
those scarce resources and target them in the most effective man-
ner. And I think we are doing it responsibly.

We have done far too little on diseases like guinea worm and a
host of other diseases that are ravaging Africa. I have offered
amendments in this committee that have passed and have gone on
to be passed on the floor, to target those orphaned diseases which
are getting scant attention around the world. We can save thou-
sands of children, millions of children — there are two million dying
in Africa every year from those preventable diseases — if we just put
the money in. So I take back seat to no one on that.



But we do have fewer resources. We just need to use them more
effectively and I think that is the challenge for the executive and
the legislative branch.

Mr. MoRAN. OK, Well, I will reclaim my time.

I do not disagree with funding the programs that you referred to.
I think we ought to fund them more substantially. I do disagree
with cutting the Newly Independent States, these emerging democ-
racies, by 75 percent in a very short period of time. I think that
is far too dramatic a cut and I want you to at least know — good,
we have another Democrat here — ^but at least, for whatever it is
worth, this Democrat thinks we cut assistance to this terribly cru-
cial part of the world by far too much in far too dramatic and pre-
cipitous a way and I want to know, particularly from this hearing,
how these experts think that we can possibly meet the expectations
that we developed in 1993, 1994, and 1995 with such a limited
amount of financial assistance.

So, anyway, I do not have any further statement than that.
Thank you, Mr. Chairman.

Chairman Oilman. Thank you, Mr. Moran.

Mr. Hastings.

Mr. Hastings. Mr. Chairman, thank you for holding this hearing
and I would associate myself with the remarks of my colleague, Mr.
Moran, and the remarks in reply to him of my colleague, Mr.
Smith.

Mr. Chairman, this is an important hearing, I hope that a week
from now, or 2 weeks from now, we will have a similar hearing be-
cause after the elections in Russia on Saturday, all bets are off on
most of the things that we are likely to ask or explore in trying to
have our witnesses help us to focus on the effectiveness of U.S. as-
sistance programs.

Chairman Oilman. Mr. Hastings

Mr. Hastings. Yes.

Chairman Oilman. — as I indicated in my opening remarks, we
intend to hold such a hearing.

Mr. Hastings. I thank you, Mr. Chairman. I just want to make
sure that we are mindful of that because we will be asking them
today to make certain predictions and, week after next, they will
have a little more certainty about a lot of things.

Mr. Chairman, I strongly feel that we have mistakenly gone
about our business in seeking efficiencies with reference to the
Agency for International Development and the rather extraor-
dinary cuts. Equally, I know that consulates and embassies all over
the country and missions all over the world are closing because of
our perceived problems that we are having with financial con-
straints in this country.

This past weekend, I participated in a dialog with Australian
parliamentarians and business persons and to the man and woman
that I spoke with, each one of them said that all of the world is
looking to this country for leadership. There can be no better place
for us to demonstrate that than in dealing with the Newly Inde-
pendent States and I, for one, go on record as saying that I think
our programs have been effective and left to their devices to play
out in the area of democracy will rebound to the benefit of the
United States of America, and. I thank you, Mr. Chairman.



Chairman Oilman. Thank you, Mr. Hastings.
We will now proceed with the testimony. Ambassador
Momingstar.

STATEMENT OF AMBASSADOR RICHARD MORNINGSTAR, SPE-
CIAL ADVISOR TO THE PRESIDENT AND THE SECRETARY OF
STATE ON ASSISTANCE TO THE NIS

Mr. MORNINGSTAR. Thank you, Mr. Chairman and thank you for
your comments and for the comments from the other members of
the committee. And I appreciate the opportunity to appear before
you today to discuss the outlook for U.S. assistance to the Newly
Independent States of the former Soviet Union. My colleagues and
I are eager to give you a status report and to describe our plans
for next year.

We continue to provide assistance to the Newly Independent
States because it is in our national interest. The U.S. assistance ef-
fort has evolved and changed in response to lessons learned, ongo-
ing change in the Newly Independent States, and budgetary con-
straints. But the bottom line test for all of our assistance is how
does the work that we do promote stability and mutual security to
best serve our national interest. We continue to have the oppor-
tunity and the responsibility to support, help and encourage the
many citizens and organizations that are driving economic and po-
litical change in the Newly Independent States. Significant
progress has been made. Nonetheless, in many ways, the most dif-
ficult phase of the transition for the average citizen is now.

I testified before this committee last November and gave an over-
view of the critical changes and new directions that the U.S. assist-
ance program required to improve cost-effectiveness and quality.
We have done many things, which include program consolidations,
better management of the funding pipeline, more leveraging and
coordination with other donors, and greater utilization of more
cost-effective private voluntary organizations. And just one exam-
ple, consolidation of our NIS Rule of Law programs will result in
cost savings of several million dollars. We are also continuing to
support innovative efforts to do more community-based initiatives
and our new Community Connections Exchange Program is still
another example that is already underway.

I would like to say a few words about the three largest FREE-
DOM Support Act recipients, the Ukraine, Russia and Armenia. In
Ukraine, after 4 years of minimal progress on economic restructur-
ing, a committed group of reformers under the leadership of Presi-
dent Kuchma has started to make significant progress. We have
worked intensively with the LTcrainian leadership, the IMF, and
the World Bank to coordinate our objectives and to develop con-
crete targets for privatization and economic restructuring.

The three major thrusts of the program today in Ukraine, and
looking forward to 1997, are economic reform, including privatiza-
tion, small business development and agriculture; the areas of en-
ergy, including, of course, the Chernobyl issues; and also democracy
and anti-crime efforts.

In Russia, as events of the last 6 months and the upcoming Pres-
idential elections command the attention of the entire world, we
are developing a plan for our 1997 assistance program that is prag-



matic and consistent with the practical engagement theme of our
diplomacy and flexible enough to be responsive to the Russians'
level of commitment to reform and the actions of any democrat-
ically elected government. Our assistance program directly sup-
ports those individuals and non-governmental organizations who
are out front in support of reform: independent journalists, dedi-
cated legal reformers, community activists, entrepreneurs, and the
youth that will make up the next generation of Russian leaders.

The revised assistance program for Russia can be summarized as
follows: First, we will continue limited technical assistance focused
on high priority issues, such as tax policy, law enforcement, media,
small business, non-governmental organizations, and those activi-
ties that will be pursued only where committed Russian counter-
parts exist. We will be stressing linkages between Americans and
Russians: stepped up exchanges, training, trade and investment
support, small grant programs, and the leverage with multi-
national and other bilateral donors. And, in the security area, we
will certainly continue in the area of weapons dismantlement, ma-
terials accountability and control, and nuclear reactor safety pro-
grams.

Armenia would receive the third largest portion of our Fiscal
1997 request. This year, more than half of our assistance effort —
in fact, well more than half of our assistance effort to Armenia —
is devoted to humanitarian assistance. The remaining technical as-
sistance is for economic restructuring and the development of a
civil society.

In 1997, we would seek to continue to increase the proportion of
development and economic restructuring assistance relative to
strictly humanitarian aid in order to do the best job that we can
to help Armenia provide for itself. And they are making some sig-
nificant progress.

Mr. Chairman, your support for our assistance programs in the
NIS will demonstrate confidence that the United States can and
should support the historic transition now underway in the former
Soviet Union. This transition can make Americans more secure and
more prosperous.

Thank you for your support and I look forward to answering your



Online LibraryUnited States. Congress. House. Committee on InterEffectiveness of U.S. assistance programs in Russia, Ukraine, Armenia, and the other newly independent states : hearing before the Committee on International Relations, House of Representatives, One Hundred Fourth Congress, second session, June 13, 1996 → online text (page 1 of 26)