Summary

The nearly $540 million that the U.S. Agency for International Development (AID) has spent on economic and political reform projects in the former Soviet Union since 1990 has yielded mixed results. Successful projects, such as those involving coal industry restructuring or housing sector reform, generally had strong backing from the Russian government; used U.S. contractors with a long-term presence in Russia; and had a specific, sustainable objective. AID did not adequately manage some projects it funded. The devolution of management and monitoring responsibility from AID's Washington office to its Moscow office delayed decision-making and created confusion among contractors. Furthermore, AID's management information systems were inadequate, and it did not adequately monitor or coordinate some projects. AID has taken steps to overcome these problems.

GAO found that: (1) some of the projects reviewed fully met or exceeded their objectives, while other projects met few or none of their objectives; (2) three AID projects contributed to fundamental structural changes in Russia because they had sustainability built into their design and they focused on national or regional issues; (3) the successful projects had broad and strong support from all levels of the Russian government, U.S. contractors with long-term physical presence in Russia, a broad scope to maximize benefits, and specific sustainability objectives, and complemented or supported Russian initiatives; (4) Russian officials' commitment to reform in certain sectors was critical to project success; (5) the unsuccessful projects were poorly designed and implemented and often had little or no impact on problems; (6) AID made certain exceptions to its normal procedures and processes in its desire to respond quickly to assist Russia; and (7) AID failed to adequately manage some projects because of problems in delegating management and monitoring responsibility to the Moscow AID office, inadequate staff, and inadequate management information systems.