Summary

Since the Soviet Union was dissolved in late 1991, the newly independent successor states have been trying to develop more efficient, market-based economies and establish democratic governments. The United States has strongly supported this transition, both diplomatically and financially. The structure that the executive branch established to coordinate, manage, and implement U.S. programs to help with this enormous undertaking is both unique and complex. This report (1) identifies the size, scope, and status of the various U.S. bilateral programs for the former Soviet Union; (2) describes the structures established for coordinating and managing these programs; and (3) describes some of the coordination and structural problems the executive branch has faced.

GAO noted that: (1) the coordination process has not always worked smoothly, and disputes have arisen between the FSU Coordinator, the Agency for International Development (AID), and other federal agencies over the appropriateness of various projects; (2) for fiscal years 1990 through 1993, 19 U.S. government agencies committed a total of $10.1 billion for bilateral grants, donations, and credit programs to the FSU; (3) the structure for coordinating and managing U.S. bilateral programs for the FSU starts with the National Security Council's Policy Steering Group; (4) pursuant to the Freedom Support Act, the President designated a Coordinator within the Department of State and charged him with: (a) designing an overall assistance and economic cooperation strategy; (b) ensuring program and policy coordination among agencies; (c) pursuing coordination with other countries and international organizations; (d) ensuring proper management, implementation, and oversight by agencies responsible for assistance programs; and (e) resolving policy and assistance program disputes among U.S. agencies; (5) while the Freedom Support Act gives the Coordinator broad responsibility for U.S. bilateral programs, and calls on him to coordinate with other countries and international organizations, in practice, the Coordinator's role is much more limited; (6) the only bilateral program wholly within the Coordinator's purview is the program funded by the Freedom Support Act; (7) strategy papers issued by the Coordinator focus primarily on technical assistance and do not develop a clearly articulated strategy for achieving the overarching goals of the Freedom Support Act or for helping the countries of the FSU achieve their reform objectives; (8) other participants involved with U.S. assistance to the FSU have at times resisted, hindered, or overruled the Coordinator's efforts to develop a coherent and comprehensive assistance program for the FSU; (9) agencies complained that AID often attempted to hinder their participation despite the Coordinator's instructions, would not cooperate with them, and often ignored or overlooked experience other government agencies had; (10) AID officials disagreed with this characterization, saying that other agencies often want to use Freedom Support Act assistance funds for purposes that are not consistent with priorities AID believes are appropriate; and (11) according to an official at the Coordinator's Office, disputes between AID and other agencies have required the Coordinator's Office to spend an excessive amount of time dealing with high-level political battles over small amounts of money instead of spending time developing program goals and objectives.