REGIONAL ACTIVITIES IN THE NEW INDEPENDENT STATES

	FY 1998 Actual	FY 1999 Estimate	FY 2000 Request
FREEDOM Support Act	$46,853,000	$102,990,000	$84,500,000

Introduction.

Since its inception in 1992, USAID assistance to the NIS has progressed from a regional program to a country-specific one. While initially the regional approach gave the United States the flexibility to respond quickly to varying needs across countries in a rapidly transforming environment, the program has matured. USAID now has more field representation which has provided improved knowledge of a country's transition environment and enabled development of country-specific strategies. Nevertheless, some activities are appropriately funded regionally because several countries are benefitted.

Described below are activities that still operate regionally, across countries, including: regional enterprise funds; performance funds; contract personnel who provide technical services to more than one country; and regional conferences, working groups and courses that benefit participants from a number of countries. Activities of other U.S. agencies which receive funds through transfers from FSA accounts are in some cases applied regionally.

FY 2000 Program.

USAID is pursuing the following strategic goals with regionally designated funds in the NIS:

Strategic Goal: Economic Restructuring

USAID seeks to foster the emergence of a competitive, market-oriented economy in which the majority of economic resources is privately owned and managed.

Privatization, Financial Sector, Fiscal Reform: Regional funds are requested to support special economic restructuring needs across the region. More recent initiatives emphasize commercial law and anti-corruption concerns. Funds are allocated to: Washington-based technical advisors who support field missions in activity design and implementation; service contracts that assist USAID with a variety of non-technical support functions; inter-agency service agreements, such as those with the Securities and Exchange Commission and the Department of the Treasury, and contracts, such as that with the National Securities Clearing Corporation, which help in performance monitoring, assessment and rapid response to needs across the region; and collaboration with other donors on anti-corruption initiatives in targeted countries. Funds will also be used for workshops to share lessons learned among countries in topics such as bank supervision, accounting reform and privatization.

Enterprise Funds: The Central Asian Republics and West NIS Enterprise funds continue to foster private sector development by providing investment capital to small and medium-scale businesses in Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, Uzbekistan and in Ukraine, Belarus and Moldova, respectively. Under the FY 1996 and 1997 Trans-Caucasus Enterprise Fund earmarks, the private investment fund partially guaranteed by the Overseas Private Investment Corporation and the small enterprise lending program, managed by USAID, are fully funded and operational. An evaluation of ENI enterprise funds is planned to assess impact of the overall program in promoting private sector development in the region.

Energy: Given the international character of energy supply systems, USAID's program in this area facilitates regional energy cooperation and trade/investment. Activities in FY 1999 will focus on three major areas: (1) development of cooperation among the newly-formed energy regulatory agencies in areas of licensing, tariff development, market and grid code regulations and organizational development and public participation; (2) regional activities to support cooperation among Caspian states in legal, economic/financial and environmental aspects of oil and gas development and pipelines; (3) training, analysis and technical assistance related energy efficiency and environmental issues and mutually-beneficial options for reducing emissions in key countries in the NIS region.

Environmental Management: USAID has broadened its environmental focus beyond reducing health risks, placing greater emphasis on developing environmental management capacity to support sustainable economic growth. This shift reflects growing evidence that environmental policy initiatives and reforms need to be fully integrated into the economic reform and restructuring process at an early point to ensure that the transition takes full account of long-term environmental costs and benefits in a market environment. USAID encourages reliance on market mechanisms to the maximum extent possible in promoting higher environmental quality, while also recognizing that environmental costs and benefits are never fully internalized in a market system, and governmental agencies at both national and local levels have important regulatory roles to play. To implement this approach, USAID has developed a new Environmental Partnership Program (EPP) that will be fully operational early in FY 1999. The EPP will foster partnerships between U.S. and regional entities aimed at finding market solutions to environmental problems and promoting application of U.S.-based environmental expertise, best practices, goods and services as part of those solutions. To maximize the impact of USAID's investment throughout the region, support will be provided to identify and apply cross-border lessons in the environment sector and to encourage regional networks.

Strategic Goal: Democratic Transition

Under this goal, USAID funds support the transition to transparent and accountable governance and the empowerment of citizens through democratic political processes.

Rule of Law: Funds are provided for technical assistance programs and seminars addressing topics such as Civil Code drafting which are common to multiple countries, and expanding activities of the Sakharov Center Human Rights Institute. Funds are also provided for regional anti-crime and corruption programs being implemented by various U.S. government law enforcement agencies, including Treasury and the Criminal Justice Division of the Department of Justice.

Local Government: Regional funding supports the creation of a regional network which will provide experience-based information to local government officials, municipal association members and relevant national officials for solving municipal problems and will improve their responsiveness to citizens' needs. USAID will support the full array of technical areas integral to the effective, transparent functioning of local governments and the continued enhancement of decentralization. These include municipal credit, local environmental planning, citizen participation, urban service delivery and infrastructure, local economic development, municipal budget and finance, condominium formation and maintenance, property and asset management, housing policy and finance.

Strategic Goal: Social Stabilization

Humanitarian: USAID assistance responds to humanitarian crises and strengthens the capacity to manage the human dimension of the transition to democracy. Technical assistance places a strong focus on vulnerable groups feeding; strengthening local, social service NGOs; and leveraging multilateral assistance. In addition, some food aid and kerosene for winter heating are allocated on a contingency basis for most vulnerable groups in crisis situations

Health: USAID uses regional health funds, when not clearly attributable to individual country programs, to provide technical assistance and special initiatives for women's and children's health programs, control of infectious diseases, vaccine procurement and health partnerships between American health care institutions and their NIS counterparts.

Cross-cutting and Special Initiatives.

Funds for programs which cut across a number of strategic objectives or which are not directly related to the achievement of USAID objectives.

Performance Funds: In a changing political environment, U.S. interests are best served by having a modest level of Performance Funds available for support of new or accelerating macroeconomic reform or superior performance in key economic sectors, such as with the Central Asian Republics Energy Initiative.

Southern Caucasus Regional: USAID funds humanitarian assistance, reconstruction and remedial activities for refugees, displaced persons, and needy civilians affected by the conflicts throughout the Southern Caucasus region.

Regional Training: USAID supports the New Independent States Training and Exchanges Project. Training programs funded under this project are directly linked to the USAID strategic objectives for each country. In order to maintain the project, there are functions which are carried out regionally because of the economies of scale inherent in combining process functions. For example, regional training funds support maintenance of health coverage and data collection. In addition, regional funds are used for impact analysis, project monitoring and report preparation. Since there is a substantial amount of training that is done in the U.S., there is more U.S. based monitoring in this project than in most USAID financed activities.

Other Agencies: Similarly funds are provided to other U.S. agencies such as the Departments of Treasury, Commerce, Justice, U.S. Information Agency, the Trade and Development Agency, and to the State Department for Science Centers and for transport of humanitarian assistance commodities.

NIS REGIONAL

FY 2000 PROGRAM SUMMARY*
(in Thousands of Dollars)

Deputy Assistant Administrator for the NIS: George Ingram

Strategic Objectives	Economic Restructuring	Democratic Transition	Social Stabilization	Cross-cutting / Special Initiatives	Total
Privatization	790	--	--	--	790
Fiscal Reform	135	--	--	--	135
Private Enterprise	1,100	--	--	--	1,100
Financial Reform	1,420	--	--	--	1,420
Energy	650	--	--	--	650
Environmental Management	3,475	--	--	--	3,475
Citizens' Participation	--	420	--	--	420
Legal Systems	--	340	--	--	340
Local Government	--	607	--	--	607
Crises	--	--	15,330	--	15,330
Social Benefits	--	--	3,125	--	3,125
Environmental Health	--	--	--	--	--
Cross-cutting / Special Initiatives	--	--	--	57,108	57,108
TOTAL	7,570	1,367	18,455	57,108	84,500
* FREEDOM Support Act (FSA) funds

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