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 You are in: Under Secretary for Political Affairs > Bureau of European and Eurasian Affairs > Bureau of European and Eurasian Affairs Releases > Bureau of European and Eurasian Affairs Remarks > 2003 > March

U.S. Assistance Programs in Europe: An Assessment

Thomas C. Adams, Acting Coordinator of U.S. Assistance to Europe and Eurasia
Statement to the House International Relations Committee, Subcommittee on Europe
Washington, DC
March 27, 2003

(As prepared)

Thank you for inviting me to testify before your Committee today, Mr. Chairman. I am particularly pleased to be here because one of the primary reasons U.S. assistance programs for Europe and Eurasia have achieved such success has been the strong collaboration between the legislative and executive branches in this area.

For over a decade, the Support for East European Democracy (SEED) and FREEDOM Support Act (FSA) programs, as well as security and law enforcement programs such as those begun under the Cooperative Threat Reduction or "Nunn-Lugar" legislation, have enjoyed broad bipartisan support and interest. This support has enabled us to make considerable progress in expediting democracy and economic reform in the countries that emerged from communist rule, and enhancing U.S. and international security by reducing threats from the former Warsaw Pact arsenals. We deeply appreciate this support and interest and ask that it continue, through hearings like this, briefings and trips to the field to see U.S. assistance programs in action.

I am also pleased to have Kent Hill sitting next to me today. A second reason for the success of this program has been the fine work of dozens of U.S. Government agencies. No agency of Government has done more in this regard than USAID. Their mission directors and outstanding staff both in Washington and the field have implemented assistance programs in Europe and Eurasia in a highly professional and innovative manner. They continue to do so today, often under difficult conditions.

In your letter of invitation, you asked that I give you my assessment of the current status of our assistance programs in Europe, particularly those carried out under the Support for East European Democracy Act and the FREEDOM Support Act. These two Acts authorizing U.S. assistance in Europe and Eurasia have been extraordinary tools for helping these nations make a historic transition. Both, in my view, continue to fulfill their legislative purpose - promoting democracy and a transition to a market economy in Central and Eastern Europe and the states of the former Soviet Union. Programs carried out under these Acts were intended and have continued to be "transition" programs.

In Central Europe, eight of the fifteen countries have graduated from large-scale U.S. assistance under the SEED Act, and we have set graduation dates for two more countries: Croatia, and Bulgaria. Romania should not be far behind. This will leave just Albania, Serbia and Montenegro, Kosovo, Macedonia, and Bosnia and Herzegovina as recipients of decreasing amounts of U.S. SEED assistance. All of these societies continue to make progress and yet each one still faces severe economic and democratic challenges. We, and other donors, particularly the European Union and the international financial institutions, will have to stay engaged to make sure that the region does not revert to the strife which characterized too much of the past decade. Our goal is for all of the countries of Central Europe to join Euro-Atlantic institutions such as NATO and the European Union in order to make such strife impossible to repeat. We are getting there, but are not there yet. The recent, tragic assassination of Serbian Prime Minister Djindjic makes it clear that we need to persist and remain deeply engaged. We will.

In the former Soviet Union, the record of the twelve countries is decidedly mixed. Russia has probably made the most progress, and this will allow us to shift some funding away from Russia towards the states of Central Asia. An inter-agency group is taking a first look at when we might be able to cease large-scale FSA programs in Russia.

In the wake of the tragic events of September 11, 2001, the countries of Central Asia assumed a much greater importance for the U.S. There are two reasons for this. The first is that they have and continue to provide the U.S. with strong support as part of Operation Enduring Freedom. The second reason is that we see the same potential for transformation in this region that we are witnessing in Afghanistan. The people of these countries are yearning for economic and political change. By helping them to create more stable, democratic and prosperous societies, we will benefit by having stronger partners to fight terrorism, poverty and intolerance.

The Administration requested and received supplemental funds in FY 2002 for the frontline states to address not only the economic and social conditions which lead to such instability, but also the critical challenges of combating terrorism, weapons proliferation, narcotics and other illicit trafficking. As a result, we have placed an increased importance towards the countries of Central Asia, as reflected in our assistance programs since September 11.

Our security and law enforcement assistance programs across Europe and Eurasia expanded in FY 2003, and the FY 2004 President's Budget Request continues this trend to help meet these new challenges. Counterterrorism, nonproliferation, and law enforcement are global concerns, and remain our highest priorities for assistance in Europe and Eurasia. Our FY 2004 request includes increased funding for Anti-terrorism Training, Export Control and Related Border Security and International Narcotics and Law Enforcement programs in Europe and Eurasia to enhance capabilities to prevent, deter and detect proliferation of weapons of mass destruction, address drug trafficking and counter transnational crime. The request includes funding for programs to prevent proliferation of weapons expertise. We also are seeking increased funding to support regional stability and security concerns through our Foreign Military Financing, International Military Education and Training and Peacekeeping Operations funds. These assistance programs support our critical Georgia Train and Equip (GTEP) efforts, our continuing efforts to build a lasting peace in the Balkans and help enhance interoperability to prepare NATO members and potential members to work together.

This office has placed new emphasis on coordinating security and law enforcement assistance in these countries. We want to make sure that all of the U.S. providers of law enforcement, non-proliferation, anti-human trafficking, anti-terrorism, and customs assistance work together in order to maximize the benefits of U.S. assistance. This requires coordination within the State Department on all foreign operations accounts as well as with other U.S. agencies and, underscores the importance of an overall assistance coordinator for Europe and Eurasia.

Let me now discuss our SEED and FSA programs in greater detail.

Support for East European Democracy

The Support for East European Democracy (SEED) Act of 1989 is the foundation of United States assistance to South Eastern Europe. Since 1989, the United States has built a strong record of assistance in promoting the transformation of the former communist regions of Eastern Europe. Our focus now is on the continuing needs of SEED recipients in South Eastern Europe -- in Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Macedonia, Romania, Serbia and Montenegro, and Kosovo. For FY 2004, our SEED budget request is $435 million. For FY 2003, Congress provided almost $525 million.

Two remarkable events stand out in recent months: First, the historic invitation by NATO last November to seven more countries (Bulgaria, Estonia, Latvia, Lithuania, Romania, Slovakia, and Slovenia), previously part of the Warsaw Pact, to become members; second, eight SEED-recipient countries (the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia, and Slovenia) were invited to join the European Union (EU) and are expected to receive full membership in 2004.

We should all be gratified by the success of these countries in integrating with Euro-Atlantic institutions. American assistance helped substantially, and the commitment of the American people has provided much-needed encouragement along a difficult path.

We want to see the same success for South Eastern Europe. That region is now experiencing steady, if at times slow, progress in efforts to achieve democracy, market reform, overcome the destruction and dislocations of the Balkan wars, and meet the grave challenges of crime and poverty. The good news is all of the governments in South Eastern Europe are democratically elected, are learning the lessons of democratic governance, and are experiencing economic growth. All seek eventual membership in Euro-Atlantic security and economic organizations and are coming to understand what is required to achieve this goal.

Through SEED assistance, we are supporting these transitions to democracy and market economies. We are working to hasten the day when the international military presence in Bosnia and Kosovo can be reduced and ultimately withdrawn.

Much of our focus now is on rule of law -- helping the societies of South Eastern Europe fight global threats of corruption, organized crime, narcotics trafficking, trafficking in persons, and weapons proliferation. There is still more work to be done, especially in creating more effective justice sectors, strengthening law enforcement, and improving export control.

Post-conflict issues remain a necessary priority. This includes refugee returns and developing domestic capacities to put war criminals on trial.

For the long-term health of the region, we also see the need to promote economic growth, led by the private sector. Our assistance to economic reform, small and medium-size enterprise development, and privatization is an important part of this effort.

The Graduate Countries

Eight of the 15 countries covered by the SEED Act have progressed sufficiently in their democratic and free market transitions to graduate from SEED assistance: the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia, and Slovenia. Though graduates, they nevertheless continued to receive support from the SEED regional budget for several years. Now, all eight are either NATO members already or have been invited to join. All are scheduled to become EU members in 2004. Their graduate status now signals an end for SEED assistance and a greater role for the EU. Indeed, all will benefit from substantial and continuing EU support to help make their reforms more stable and their incorporation into Euro-Atlantic structures permanent. While SEED assistance will draw to a close, the U.S. will continue to support these countries by other mechanisms, through programs such as IMET and FMF.

At the request of the Congress, the Baltic States have continued to receive SEED Assistance in recent Fiscal Years. We continue to make good use of this funding for bilateral and regional programs focussing on the rule of law, social integration, anti-trafficking, public health programs, and business development. With the addition of FSA funds, some of these activities also include efforts to foster regional cooperation with northwest Russia and Kaliningrad.

Albania

Albania remains the poorest country in South Eastern Europe, and has not fully recovered from civil strife in 1997 or the effects of the Kosovo crisis in 1999. Its most pressing concerns include trafficking in arms, narcotics and persons, organized crime and corruption, international terrorism, and money laundering. Although the current government is fully cooperating to enact legislation to reform the economy, strengthen democracy, and combat crime, challenges remain in Albania's ability to implement reforms. SEED funding of an anticipated $28 million annually in FY03 and FY04 targets justice sector reform and police professionalization, as well as decentralization and economic development. It will launch the establishment of an Albanian organized crime task force on illicit narcotics, trafficking, terrorism, and financial and economic crimes. Joint programs with the EU are under way to upgrade border control infrastructure in air and seaports and to computerize border guard and customs operations. Subsequent coordination will address the crippling energy shortage, inefficient capital markets, the judicial system, and the poor health care system.

Bosnia and Herzegovina

The SEED program in Bosnia and Herzegovina (BiH) of $44 million in FY 2004 will continue to place heavy emphasis on the rule of law, and economic and democratic reforms. While much work remains to be done and resources are tight, we are seeing some success in these areas. BiH is beginning to turn the corner from focusing on post-war reconstruction to post-communism political and economic reform. State institutions are emerging. The State Court is operational and the State Border Service now controls all of BiH's international border crossings. A key U.S. objective will be to build the capacity of state law enforcement by supporting the State Information and Protection Service. Our support for BiH economic reforms focuses on developing open markets, legal reform of the business sector, and integrating BiH into Europe and the world economy. SEED-sponsored bank restructuring and deposit insurance programs have strengthened the domestic market. Our assistance in preparing BiH for a state-level value added tax and a unified customs service are critical precursors for the country's admission to the European Union and accession to the World Trade Organization. Our programs facilitated the return of a record number of refugees and displaced persons in 2002. Continued assistance is planned to integrate them into the economic life of their communities via grants, loans and training. Our strong focus on reform of the criminal and civil law systems and enhancing indigenous legal standards provides an increasingly effective framework for combating terrorism, organized crime, corruption, and trafficking in persons.

Bulgaria

Despite setbacks in the mid-1990s, Bulgaria's lengthy transition to a market-oriented, democratic society has been remarkably steady, highlighted by the 2002 invitation to join NATO and its anticipated 2007 invitation to join the EU. With SEED funding planned to continue at $28 million in FY 2004, our assistance is projected to strengthen institutions to combat still-pervasive corruption and organized crime, foster market reform, and assist Bulgaria to achieve graduation from U.S. assistance after FY 2006. SEED programs are enabling significant criminal justice sector reform and enhancement of police investigative capabilities. SEED programs are weighted to directly and indirectly improve civil security, strengthen border controls, increase transparency, de-centralize the government, involve civil society in all levels of decision-making, and implement reforms to the justice sector and court systems. Bulgaria has become an important U.S. ally in the war on terrorism and supports the U.S. in the Security Council and on Middle East, Afghanistan, and on other key issues.

Croatia

SEED programs provide essential funding to help Croatia strengthen democratic institutions, and carry out economic reforms in preparation for EU membership and graduation from SEED aid after FY 2006. SEED funds also supported strengthening of the State Attorney General's office, improving the justice sector's capacity to fight corruption, and streamlining criminal procedure. Specifically, planned U.S. assistance of $25 million in FY 2004 focuses on good governance, civil society building and improved law enforcement. SEED-funded law enforcement training in Croatia succeeded in revamping police training and assisting the police internal affairs unit to combat corruption within the police force. SEED funds will also support activities designed to spur private sector growth in key sectors such as tourism, create employment, and reduce the income disparity between Croatia's urban centers and less developed and war-affected areas. Return and reintegration issues will receive continued U.S. attention, as will economic sustainability and community development activities.

Macedonia

SEED funding for FY 2004, projected at $39 million, will continue to promote fulfillment of the 2001 framework peace agreement in order to strengthen stability and promote inter-ethnic reconciliation. The police reform programs are the nucleus of short and longer-term SEED assistance efforts to solidify security gains in a democratic environment, fostering police professionalization and expansion of a multi-ethnic community policing project. An innovative training program was also initiated to bring police investigators, prosecutors, and investigative judges together to aggressively combat trafficking in persons. SEED assistance will also target democratization, economic reform, employment generation, and municipal government reform.

Romania

SEED assistance to Romania of $28 million in FY 2004 will focus on promoting economic reform and growth of the private sector, democratic governance, and improved health and social services. High-priority issues such as corruption, trafficking in persons, border security, and judicial reform receive special attention. SEED assistance has been instrumental in the drafting of numerous key laws, strengthening civil society, achieving extensive banking sector privatization, and improving the deplorable child welfare system. SEED funded programs have played a significant role in helping to turn Romania from one of the region's most politically and economically backward countries into one that has been invited to join NATO and can anticipate becoming an EU member in 2007. Romania has become an important U.S. ally in the war on terrorism and supports the U.S. on the Middle East, Afghanistan, Iraq, and on other key international issues.

Serbia and Montenegro

For Serbia and Montenegro (SAM), FY 2004 SEED assistance of $113 million is designed to help consolidate the democratic and free market transformation launched after the October 2000 overthrow of Milosevic. It will support continued economic reform and foster community development and municipal democratization. In order to move ahead with integration into transatlantic structures, Serbia and Montenegro faces tough political challenges in addressing outstanding ICTY cooperation issues, reforming the military and security services, modernizing the justice sector, and instituting an effective nonproliferation regime. In addition, government reformers face growing popular fatigue in this difficult transition, touched by tragedy with the recent assassination of the Prime Minister, and need robust U.S. support for continued progress on economic and political changes. In conjunction with pressing for full cooperation with ICTY, we are launching efforts to assist Serbia in prosecuting lower-level alleged war criminals through special courts to deal with war criminals and organized crime. Earlier U.S. assistance contributed to the restoration of stability through free elections in violence-racked southern Serbia along the boundary with Kosovo.

With the new union of Serbia and Montenegro, Montenegrin authorities can set aside status questions and focus on implementing needed economic and political reforms and improving the standard of living. SEED-funded training and technical assistance will help Montenegro build the capacity to move toward integration with the European Union. We have successfully expanded into Montenegro several programs already proven in Serbia, such as community development and democratization at the local level.

Kosovo

SEED funds, $79 million for FY 2004, significantly contribute to Kosovo's stability and economic development. Our assistance programs focus on creating conditions that will allow for reduction and ultimately withdrawal of NATO-led (including U.S.) troops. Specifically, we will continue to support the UNMIK International Police Force, and to train and equip the Kosovo Police Service (KPS) and the Kosovo Protection Corps. Over 5500 KPS officers have completed basic training at the Kosovo Police Service School, a significant portion of them women and minorities, and another 1200 will graduate during 2003. In 2002, Kosovo experienced a 50% decrease in the murder rate for the second year in a row, due in large part to the hard work of the international and local police officers. Institution-building and democracy programs will remain critical components of SEED funding and will continue to focus on advancing the rule of law, developing opportunities for women in politics, business, and civil society. Our economic recovery programs have helped Kosovo to implement sound budget and tax policy frameworks that have dramatically increased domestic revenue. We will continue to provide advisory services to Kosovo's self-governing institutions and promote private sector development and increased employment opportunities. Kosovo's security and political climate is improving such that refugee and IDP returns can occur with increasing frequency and greater success. This year we will provide SEED assistance for sustainable return and reintegration activities.

Education and Cultural Affairs

USG-sponsored exchange programs are an integral component of the effort to promote democratization and market reform in the countries of Southeast Europe and Eurasia. Our embassies in the region and many of us here in Washington are convinced that these exchanges have a profoundly positive impact on values and behavior. Exchange programs that promote democratic reform, growth of civil society, expansion of independent media, and accountability to the rule of law will become an increasingly important tool in these countries as SEED funds decline. In FY 2004, the administration plans to shift funding for exchanges in our region from the SEED and FSA accounts to the Educational and Cultural Exchange (ECE) account under the CJS appropriation, in order to achieve better worldwide coordination among ECA activities. Nonetheless, regional coordination among ECA programs and our SEED and FSA program priorities remains important. As we make this transition, our goal is to integrate the strengths of both SEED-funded and traditional programs of the Educational and Cultural Affairs (ECA) Bureau. A key aspect of this approach will be to maintain flexibility and mission responsiveness in programming, and to ensure that the programs match resources and policies in the region. The European and ECA Bureaus are working on a joint strategy to ensure that high-quality exchanges on relevant policy issues for our embassies will continue to be supported in the ECE account.

Stability Pact

The Stability Pact for South Eastern Europe is a multilateral political initiative to encourage and strengthen cooperation among the countries of Southeast Europe (SEE) and to streamline efforts to assist them in preparing for Euro-Atlantic integration. The Stability Pact is based on the principle that conflict prevention and peace building can be successful only if three key sectors are addressed: (I) promotion of sustainable democratic systems, (II) promotion of economic and social well-being, and (III) creation of a secure environment. The Stability Pact has dedicated three "Working Tables" to correspond to these three sectors. With relatively little U.S. funding (approximately $15 million through FY 2003), the U.S. has been able to influence the development and implementation of initiatives funded at an overall level of approximately $3 billion in such areas as redirecting the focus of the Investment Compact Initiative, guiding fundamental principles for the establishment of an independent and private media, pushing forward the Sava River Initiative, and developing European based and funded programs in anti-trafficking and anti-corruption. The Stability Pact has six core areas of activity for 2003-2004: 1) Local Democracy and Cross-Border Cooperation, 2) Media, 3) Infrastructure and Energy, 4) Trade and Investment, 5) Stabilizing Population, and 6) Fighting Organized Crime. In addition, the Stability Pact has identified confidence- and security-building to be an overriding issue. U.S. support for the Stability Pact will focus primarily on initiatives related to the above core areas and enable us to continue influencing policies and financial support in those most important to us. At every opportunity, the U.S. stresses the importance of increased regional ownership of Pact initiatives and the need to focus on concrete results. In addition, the U.S. uses its involvement in the Stability Pact as an avenue for influencing Southeast Europe's eventual transition into the EU through regular interaction with European Commission and EU officials.

In conclusion, SEED assistance has unquestionably played an important role in the dramatic progress achieved in Central and Eastern Europe since 1989. The Congress and the American people can take satisfaction in the fact that this assistance program is doing what it set out to do. With several more years of steady funding, one should be able to say that it has been a job well done.

FREEDOM Support Act

Mr. Chairman, let me now turn to a discussion of the FREEDOM Support Act, under which Congress annually appropriates the bulk of U.S. Government assistance to the independent states that once constituted the Soviet Union. We now use the convenient shorthand term "Eurasia" to refer to this region, though many of the states within it prefer to think of themselves as "European." I recognize that the five Central Asian states fall outside the jurisdiction of this Subcommittee; nevertheless, in my statement I will address our assistance to those countries as well since they constitute an important element of the overall U.S. Government effort under the FREEDOM Support Act.

In the past, we have tended to set up a false dichotomy between "hard" assistance -- military hardware and training -- and "soft" assistance -- promoting democracy and free market economic systems. That distinction is less relevant, particularly since September 11 [2001]. Our FREEDOM Support Act programs work throughout the volatile region of Eurasia to bolster security and stability by opening political systems to independent voices and creating economic opportunity, while cooperating with governments to strengthen border security and interdict the flow of illicit trafficking in humans and narcotics. FREEDOM Support Act assistance is a critical element of U.S. Government efforts to work with the countries of Eurasia, particularly the key front line states in Central Asia, in the global war against terrorism.

I'd like to begin today by recalling the circumstances that led to the enactment of the FREEDOM Support Act (FSA) because I think historical perspective can help give us a deeper understanding of what we have accomplished so far and what choices we have for the future. Just over a decade ago, roughly ten months after the collapse of the Soviet Union, Congress passed the FSA and President George H.W. Bush signed it into law. This was at a time of great uncertainty about the future course in this critical part of the world.

The dissolution of the Soviet Union had been followed by nearly total economic breakdown. Democratic and non-governmental organizations and independent civil society groups were virtually non-existent. The media was an organ of the state. Years of neglect and deterioration under Communism had left an outdated infrastructure and tremendous social and economic needs among the population.

There were dire predictions at that time about widespread starvation and suffering that would result from the economic collapse and the inability of new and inexperienced governments to cope with the crisis. There were equally dire predictions that chaos and violence would accompany the Soviet breakup.

With the perspective of a decade, we can see that these worst case scenarios fortunately did not play out. Thanks to an intensive assistance effort, international in scope but led by the United States, a humanitarian catastrophe was averted.

In the early 1990's there were common assumptions about market and democratic transition for the states of the former Soviet Union. If the independent states could get "over the hump" of the immediate dislocation and avoid civil war, it was thought they would move relatively rapidly toward market democracy -- with a little help and advice from the United States. This optimistic outlook was heavily influenced by the early reform success of countries like Poland, Hungary and the Czech Republic, which were then well along the road to developing democratic political systems and market-based economies. The FREEDOM Support Act was thus assumed to be a short-term, transitional set of programs that would be phased out in five or six years, once these states had been set firmly on the path of reform.

A decade later, we can now see clearly that these initial assumptions were flawed. The Soviet successor states have faced more difficult transitions than initially anticipated both due to their long tenure under Soviet rule and their lack of historical experience with democratic and market systems. Progress on political and economic reform has been uneven across the region, with Russia leading the way in both aspects of reform, although its performance remains mixed and uneven. Some countries have made great initial progress in both democratic and market reform, then backslid as the decade wore on. Corruption is a drag on reform. Across the region, progress was slower and less steady than we had initially expected. So our timelines and programs had to be adjusted accordingly to take this slower, uneven movement into account, while still pushing hard for progress.

Nonetheless, we have seen significant progress over these ten years in all but two countries of the region. And that progress is why we can now begin to contemplate -- and even in one case to make a concrete plan for -- phasing out FSA assistance for the former Soviet states.

I will return to the topic of phasing out FSA assistance when I discuss our FY 2004 plans for specific countries. Before turning to a country by country analysis, however, let me assess in very broad terms what we have accomplished over the past decade, and how the rationale and objectives for our assistance have evolved to meet changing circumstances over that time.

First, with a few glaring exceptions, most of the countries of the region are firmly on the path toward market-oriented economies and greater integration with the world economy. Turkmenistan and Belarus have failed to undertake even the most basic market reforms; Uzbekistan has for the past year been struggling to move forward on economic reform and remains engaged in an active dialogue with the IMF that we hope will lead to further steps in the right direction. The remaining Eurasian states have implemented budget and fiscal reform, privatized state assets, and nurtured private sector development. While progress has been uneven, the likelihood of a return to socialist economics is minimal to non-existent. Market reform has become, in a very real sense, irreversible. This was one of the fundamental goals of the FREEDOM Support Act. I believe it has, broadly speaking, been achieved. We can say that U.S. assistance at both the government and grassroots level has been instrumental in this process.

Our governmental-level assistance has taken various forms in different countries, but has generally included provision of expert advice on fiscal, tax, and banking reform, as well as targeted help in privatizing and restructuring key sectors of the economy, such as energy and agriculture.

This governmental technical assistance has been complemented by programs aimed at fostering the emergence of private small and medium enterprises that simply did not exist under the Soviet system. Such enterprises form the lifeblood of any growing economy and are the best generator of employment and opportunity. In the post-Soviet countries, small and medium enterprise requires extra help. U.S. assistance has taken the form of basic business training in accounting, management and marketing, short-term consulting (often by American business volunteers), and provision of micro and small credit facilities. It should be noted that assistance to post-Soviet entrepreneurs has a political as well as economic significance: business people form the backbone of a nascent middle class in these countries, a group that will be a force for more transparent and accountable governance, as well as a source of social stability.

The picture on democratic reform is decidedly less rosy. Progress in terms of free and fair elections, open and accountable governments, removal of restrictions on free speech and association, and other elements of democracy has been halting and uneven. Noticeable backsliding has occurred in recent years in some countries. While I do not diminish these problems, I believe that we have achieved tremendous accomplishments in this sphere as well over the past decade, and have sown the seeds for future positive change.

One of our best mechanisms to foster fundamental change is our program of professional and educational exchanges. Over the past decade, FREEDOM Support Act exchange programs have brought slightly over 100,000 business people, journalists, students, and professors to the United States to see for themselves how free people prosper and deal with challenges common to all countries. Particularly important are the FLEX and Muskie programs, which bring high school and university students to the U.S. for up to two years to gain an American education and live the American experience. The payoff of these programs is difficult to quantify and lies in the future, but as one Ambassador told me, the young exchange participants are "little revolutionaries" because they are literally change agents in their respective countries.

FREEDOM Support Act funds have supported the development and strengthening of civil society organizations and non-governmental organizations. These too serve as vital change agents through their efforts to mobilize community resources, hold governments accountable to the people, and demonstrate that citizens can make a difference when they group together for the common good. FSA also has supported development of political parties, helped to strengthen legislatures as a counter-weight to powerful executive branches of government, and worked to create or bolster judicial independence -- all key components of effective democracy. We have worked with regional and local governments as well as NGOs and civil society to diversity and decentralize authority and power. Through FSA, we have worked to strengthen the independent media and establish Internet centers for students, journalists and alumni of our exchange programs, thereby ending the official monopoly on news and information.

Turning to our plans for FREEDOM Support Act programs for FY 2004, the largest changes in the FSA budget request are related to our country's intensified engagement with Central Asia as a result of the September 11 attacks on our country and the global war against terrorism. Significant increases over FY 2003 levels for Uzbekistan, Tajikistan, and the Kyrgyz Republic will support economic development in conflict-prone areas, effects to open political space by strengthening democratic institutions and grassroots organizations and programs aimed at improving Central Asia's badly deteriorating social infrastructure, especially in the health and education sectors. Development of small and medium enterprises and efforts to fight infectious diseases, especially HIV/AIDS and tuberculosis, will remain priorities across the region.

The FY 2004 requests for Russia and Ukraine are lower than the FY 2003 funding levels, reflecting in part a shift of resources to the Central Asian states. The lower request level also recognizes, particularly for Russia, progress already achieved on reform, especially economic reform. We are developing a strategy to phase out FSA assistance to Russia over the next several years that will seek to ensure a legacy of sustainable institutions to support civil society and democratic institutions. Our programs in Russia, Ukraine and Armenia have been the subject of intensive interagency reviews over the past two years, and the recommendations resulting from those reviews will help set priorities as we absorb funding reductions. Finally, I would note that the lower overall FY 2004 request for FREEDOM Support Act assistance reflects the shift of roughly $110 million in funding for educational and professional exchanges from FSA to the ECE account in the Commerce, Justice, State [CJS] appropriation. Educational and professional exchanges will continue to be a key element of our assistance programs in Eurasia.

Throughout Eurasia, FSA programs will emphasize three priorities in FY 2004:

* Conflict prevention through community-level projects to improve living conditions in volatile regions;

* diversification and decentralization of power -- by strengthening NGOs, independent media, local governments and the judicial branch; and

* bolstering the rule of law -- by fighting corruption and improving the effectiveness of law enforcement systems.

Armenia

Our request for Armenia is $49.5 million. Congressional earmarks historically have been significantly higher than Administration requests. Nevertheless, given Armenia's size and relative strategic importance, we believe this to be an appropriate level of assistance. Armenia has made significant progress in creating the necessary legal and institutional structure for a market-based democracy. The key now is consistent implementation of reform laws. The requested level will permit us to assist the Armenian government in this process, with a focus on measures to combat corruption. It will allow continuation of efforts to open Armenia to the outside world through exchanges and Internet access, and to support the World Bank-approved Poverty Reduction Strategy

Among the highlights of the FY 2002 FSA program, we note:

Earthquake Zone Recovery Program: which, when completed in 2004, will re-house over 6,000 families in the area impacted by the 1988 earthquake through the issuance of housing certificates and housing improvement grants.

Agricultural reform: USDA's Marketing Assistance Program and USAID's agricultural SME program that provide seed multiplication and micro-credit programs with proceeds from USDA monetization programs

School Connectivity Program: 111 schools with operating sites with computers in schools, and plans to complete a 300 school network.

Azerbaijan

Our request for Azerbaijan is $41.5 million. Following President Bush's waiver of Section 907 in January 2002, the range of potential assistance to Azerbaijan has greatly expanded. As an Islamic country with significant oil reserves, a border with Iran, and a strong propensity to support US interests in the region, Azerbaijan is strategically significant while at the same time small enough for our assistance to really make a difference. While continuing to work with the private sector and NGOs in FY 2004, we expect to be able to continue expanding our technical assistance to law enforcement, support for domestic energy reform, and economic diversification projects, especially in the agricultural sector, to help Azerbaijan avoid over dependence on oil.

Among the highlights of the FY 2002 FSA program, we note:

Post-907 waiver programs: working with prosecutors, judges and government on law enforcement, rule of law, and forensics; IMET and FMF programs; banking and tax reform; and working with Customs and border guards to monitor and stop the transit of dangerous people and materials.

Maritime border support: provided much needed communications and other equipment, maritime patrol vessels, and technical assistance to the Coast Guard.

Belarus

The Administration's FY 2004 request for Belarus is $8 million. As long as President Lukashenko remains in power, there is little hope for genuine economic or political reform in Belarus. Assuming no regime change over the next year, our programs will continue to be aimed at keeping hope alive by supporting embattled civil society and opposition groups and the few remaining sources of independent media (some of which are based across the border in Lithuania and Poland). We will also continue bringing young Belarussians to the U.S. and third countries on exchange and training programs, with the expectation that when regime change occurs, a new, pro-western generation of leaders will assume power.

Among the highlights of the FY 2002 FSA program, we note:

Support for Independent Media Development: Working with print and electronic media, we seek to increase the quality and quantity of information available to citizens, and thus to counteract government control and manipulation of information.

Civil Society Development Programs: Eight rural clubs throughout Belarus provide community members with access to information, technical instruction, and a forum to discuss issues of local importance. The number of rural clubs in Belarus will be expanded in both FY 2003 and FY 2004. Training for the rural clubs focuses on advocacy, legal forms of civic activism, and legal clinic development. In the framework of the Rural Club model, the Rural Talk Show Project also started at three local TV stations - a format completely new for the participating stations.

Georgia

The Administration's FY 2004 request for Georgia is $75 million. The U.S. has important strategic interests in Georgia; given its position as a transit point for Caspian energy and its border with Chechnya, which has attracted Chechen and international terrorist elements into Georgia that the U.S. is assisting Georgia to expel. The nearly level funding requested for FY 2004 will allow us to maintain our two biggest assistance priorities: enhancing the capacity of Georgia's border guards; and bolstering Georgia's energy independence by improving the management and revenue collecting ability of the domestic energy system. Programs supporting small business and the agricultural sector will continue as well. With presidential elections scheduled for 2005 to choose President Shevardnadze's successor, particular emphasis will be given to training and technical assistance to political parties, advocacy NGOs, and electoral commissions.

Among the highlights of the FY 2002 FSA program, we note:

Public policy and educational organizations: In June 2002, the Georgian Foundation for Strategic and International Studies (GFSIS) graduated its first class of 17 mid-level Georgian bureaucrats trained in policy analysis. Each of the graduates was given a promotion in his/her office as a result of the training; GFSIS scholars publish cutting-edge policy papers.

Georgia Border Security and Law Enforcement (GBSLE): GBSLE assistance continues to help Georgia build the capabilities to control its borders, improve proficiency and professionalism of the Customs, Border Guards and other security agencies by providing training and technical assistance and the tools to deter, detect, and interdict illicit trafficking including patrol vessels, aircraft, vehicles, navigation, communication and radar equipment, and infrastructure enhancements. A new Red Bridge border guard station provided with GBSLE assistance opened in March 2003.

Georgia Train and Equip Program (GTEP): GTEP assistance combined a range of assistance sources, including FSA assistance, directed at helping Georgia control its borders and combat terrorism. Under GTEP, U.S. assistance is providing training and equipment to help prepare four combat infantry battalions and one mechanized company team to defend Georgia against potential terrorist threats. GTEP training included Border Guards, Ministry of Defense and other security forces and graduated its first class of trained infantry in December 2002.

Kazakhstan

The Administration's FY 2004 request for Kazakhstan is $32 million. Kazakhstan is set to become by far the richest country in Central Asia due to its oil assets. Because Kazakhstan already has in place -- largely due to past U.S. government technical assistance -- a sophisticated, reform-oriented economic system, current economic reform programs can be phased out over the next several years. At the same time, emphasis will be placed on programs to address recent backsliding on democracy and human rights through support for an open and competitive political system, NGOs and independent media outlets. In addition, an increasing proportion of the budget will go towards expanding cooperative efforts with Kazakh law enforcement and security officials to address proliferation and other security threats at the border.

Among the highlights of the FY 2002 FSA program, we note:

Houston Initiative: The U.S. Government is supporting a variety of economic reform, technical assistance, and microcredit programs to support economic diversification, small and medium enterprise growth, and the expansion of a prosperous middle class.

Nuclear Safety: The U.S. Government is working with Kazakhstan to conduct an irreversible shutdown of the BN-350 nuclear reactor by providing technical assistance and equipment to place it in an environmentally, industrially and radiologically safe condition. The program is now focused on evaluating different options for BN-350 spent fuel transportation and storage.

Corporate Good Governance: In FY 2002, the U.S. Government, in consultation with the Kazakhstani and American public and private sectors, NGOs and the OSCE launched a business ethics program to promote good business practices that led to an agreement to develop basic guidelines for codes of business conduct in Kazakhstan.

Kyrgyz Republic

The Administration's request for the Kyrgyz Republic is $40 million. The relatively large increase being requested reflects the Kyrgyz Republic's strategic importance (it now hosts a U.S. air base), as well as its reform potential. While economic and political reforms are not yet firmly entrenched, the Kyrgyz Republic is further along in many areas than its Central Asian neighbors. Poor economic and social conditions in the Ferghana Valley have contributed to the appeal of extremist Islam. Additional assistance resources funds will be deployed there in several ways: to support community-based infrastructure projects in areas where potential for recruitment by extremist Islamic groups is highest; to expand employment generation efforts in the Ferghana Valley, through marketing assistance and credit for agricultural processors; to maintain a high level of student and professional exchanges; and to further expand highly successful pilot reforms in education (merit-based testing for scholarships -- the first such program in the former Soviet Union) and in health (an insurance co-payment system, and primary care physician training).

Among the highlights of the FY 2002 FSA program, we note:

Democracy Assistance: The Kyrgyz Republic boasts the most vibrant civil society in Central Asia, thanks in part to USG support for civil society advocacy campaigns and institutional development. The U.S. also provides support to the Parliament to help it serve as a counterweight to the executive and increase transparency -- the latter achieved through the institution of public hearings.

Economic Reform and Development: The USG is providing business skills training and conducting Russian market appraisals in support of the Osh Agro-Processing Initiative. Micro-lending programs have helped more than 170,000 clients, primarily poor women, obtain capital to improve their businesses.

American University of Central Asia (AUCA): The USG supports the AUCA as a locus for U.S.-standard higher education based on merit, critical thinking, and open discussion. AUCA enrolls approximately 1000 students from across Eurasia and elsewhere in Asia and offers eleven different undergraduate majors.

Primary Health Care Programs: In collaboration with the World Bank, the U.S. Government is developing models of primary health care across the Kyrgyz Republic, emphasizing community involvement and higher-quality, better-financed care. People are able to select their own doctors and early results from the introduction of hospital co-payments in two regions indicate that people who are hospitalized now pay less in co-payments than they previously paid under-the-table.

Moldova

The Administration's request for Moldova is $23 million. Moldova has an uneven record on democratic reform, although it has made greater strides on economic reform. It remains one of the region's poorest countries. Our assistance in FY 2004 will continue to focus on post-privatization assistance to the agricultural sector. Democracy programs will focus on efforts to expose and deal with corruption, which remains a serious impediment to economic growth. Border security and law enforcement efforts will be increased to address a serious problem of trafficking in persons. Student and professional exchanges will be maintained. FSA funding reductions will be absorbed by starting a phase out of economic reform technical assistance.

Among the highlights of the FY 2002 FSA program, we note:

Private Farmers Assistance (PFAP) and Commercialization Programs (PFCP): The PFAP provides assistance to improve the policy environment for private farmers and helped draft fifty (of which 24 were enacted) laws, regulations and other normative acts on the development of private agricultural enterprises. The PFCP assists private farmers with technical assistance as well as links to credit, essential inputs, and markets.

Local Government Reform Project (LGRP): The LGRP added 23 new local government partners in FY 2002 and helped them develop participatory community management practices, including improving community fiscal management that allowed local governments meet municipal needs identified by citizens.

Russia

The Administration's request for Russia is $73 million. In recognition of the progress Russia has made in its transition towards market-based democracy, the FY 2004 funding request is significantly lower than in previous years. We are developing a strategy to phase out FSA assistance over the next several years. This strategy will seek to ensure a legacy of sustainable institutions to continue support for civil society and democratic development. In FY 2004, we will continue to provide badly needed support to key change agents who are striving to build democracy and a modern market economy in Russia: civil society groups, including independent media; and the entrepreneurial sector. In addition, we plan to continue helping Russia address serious health concerns, such as increased drug use, and infectious diseases like HIV/AIDS and TB that directly threaten U.S. interests due to their cross-border nature. It also should be stressed that assistance to address serious health threats and to support long-term democratic development may continue even after the phase out of FSA assistance is completed.

Among the highlights of the FY 2002 FSA program, we note:

Judicial Reform: With USG assistance, Russia reinstated its criminal jury trial system, which was instituted in the mid-nineteenth century, but came to an abrupt halt after the 1917 Revolution. In so doing, we helped Russia re-balance the criminal justice system, which had been heavily weighted to the prosecution, lessen the chances for political control of criminal judicial matters and encourage the criminal bar to prepare their cases to the high level necessary for presentation to a jury.

Small and Medium Enterprise Development: USG assistance helped create institutions that enabled small-to-medium sized enterprises to obtain business loans and to grow their businesses. The SME sector is now the most vital of the Russian economy, accounting for most new jobs created.

Money Laundering and Counterterrorism: With USG assistance, Russia tightened up its money laundering controls and joined FATF.

Tajikistan

The Administration's request for Tajikistan is $35 million. Tajikistan is a key frontline Islamic supporter of Operation Enduring Freedom, and its stability and success in transitioning to market-based democracy are key to a successful postwar reconstruction in Afghanistan. Tajikistan is the only Central Asian Republic that has integrated an Islamic party into the ruling Government coalition. A deeply impoverished country, still suffering the effects of a five-year civil war in the 1990's, Tajikistan can effectively utilize substantial aid to improve infrastructure and help rebuild its agricultural sector. Additional funds in FY 2004 will support a broadening of conflict prevention programs that include small community-based infrastructure grants. These activities will continue to be targeted in areas where potential for recruitment by extremist Islamic groups is highest. There will also be increased technical assistance to support structural reform efforts by the government, which currently lacks implementation capacity. We will also increase the level of exchanges to help break through the country's isolation. Finally, we will continue supporting drug interdiction efforts through an effective UN program aimed at stopping illicit drugs trafficked from Afghanistan.

FY 2002 assistance highlights include:

Political Party Development: Tajikistan's political environment is the most open in Central Asia. The USG is helping political parties better mobilize their supporters through improved communication, membership development, recruitment strategies, and constituent relations.

Humanitarian Assistance: The USG provides substantial humanitarian assistance to Tajikistan in the form of medical supplies, food aid, seeds, and fertilizers.

Conflict Mitigation Activities: The USG provides assistance to vulnerable and at-risk communities in the Ferghana Valley to overcomes sources of conflict through participation in community development programs aimed largely at ameliorating local infrastructure deficiencies identified by citizens in cooperation with local authorities.

Turkmenistan

The Administration's request for Turkmenistan is $8 million. Given its strategic location bordering Afghanistan and Iran and its support in OEF, Turkmenistan requires sufficient assistance in FY 2004 for us to maintain cooperation on border security and law enforcement. Nevertheless, this country shows no signs of moving down the reform path, nor is it likely to do so until the current President is no longer in office. Funding will support the few, brave elements of civil society (working in service-oriented NGOs), and will keep open the opportunity for young Turkmen to receive an education in the U.S. through our exchange programs, and at the American University of Kyrgyzstan through a scholarship program launched in FY03.

Among the highlights of the FY 2002 FSA program, we note:

Exchange Programs: U.S. Government assistance in Turkmenistan focuses on reaching the next generation of Turkmen leaders. Exchange programs and alumni activities strengthen democracy, tolerance, and the development of civil society.

Civil Society Development: The NGO development program promotes citizen participation in local decision-making and provides much-needed support for the struggling NGO community in the hostile environment of Turkmenistan.

Border Security: The U.S. Government is providing assistance for Turkmenistan to strengthen border security, particularly along the long porous border with Afghanistan. The goal is to help Turkmenistan develop its export control and border security capabilities, to prevent the transit of weapons of mass destruction, weapons technology and other illicit weapons trafficking across its borders.

Ukraine

The Administration's request for Ukraine is $94 million. Ukraine remains a strategically important country in the region. Despite recent conflicts with the Ukrainian government -- especially President Kuchma -- objectively speaking, Ukraine has made substantial, though incomplete, reform progress over the past two years, in such areas as tax policy, treatment of small businesses, judicial reform and land privatization. In recognition of the progress achieved and of the need to devote greater resources to the Central Asian front-line states, the Administration's request for Ukraine is significantly lower than in previous years. There remains much our aid can do in these and other areas, depending on the GOU's commitment. 2004 is also the year of the next presidential election: FSA funding will support an all-out effort to ensure his successor is chosen freely and fairly. The large nuclear safety program will continue to phase down, as hardware installation projects are completed, and the focus moves to training.

Among the highlights of the FY 2002 FSA program, we note:

Independent Media Programs: Ukraine's non-state media continued to face increasing difficulties in FY 2002. USG independent media programs continued to help defend freedom of the press through professional skills and development, business management training, support for trade associations, and legal counsel.

Agricultural Reform Programs: By the end of 2002, through a joint USG effort with the Government of Ukraine, the number of private land titles issued increased to 2.7 million, from 1.5 million in 2001, although 4 million titles have yet to be issued. The Louisiana State University extension program has trained farmers in Vinnystia, Khmelnitsky and Cherkasy in improved production technologies. Significant policy initiatives in 2002, largely developed and encouraged with USG assistance, included passage of enabling legislation for a grain warehouse receipt system, introduction of legislation to establish a national extension service, and adoption of regulations which created a commercial crop insurance program.

Local Government and Municipal Development Programs: With USG assistance, 67 cities have increased the transparency of government operations by using competitive bidding for services and assets. USG assistance has supported the growth of the Association of Ukrainian Cities (AUC), whose membership now numbers 385 municipalities. The AUC successfully lobbied for the passage of a new Budget Code that provides local governments with more revenue stability and fiscal autonomy.

Anti-Trafficking Programs: USG anti-trafficking programs work with Ukrainian Women's NGOs to provide job skills training, legal consulting services, and a public education campaign through Trafficking Prevention Centers, which, together with local NGOs that received grants, assisted 15,743 women through job training in FY 2002. There are currently seven centers in Ukraine, in Dnipropetrovsk, Donetsk, Kherson, Rivne, Chernivtsi and Zhytomyr. Additional activities include support for a hotline for returned victims, a victim assistance fund, and a joint project with the Education Ministry to develop a school curriculum on the trafficking issue.

Uzbekistan

In recognition of Uzbekistan's new strategic importance (with its critical role in Operation Enduring Freedom and the largest American military presence in the region) and its potential impact on the rest of Central Asia, our FY 2004 funding request of $42 million for Uzbekistan represents a significant increase over FY 2003. Its size, population, and military power mean that Uzbekistan's internal developments have a disproportionate impact on the rest of Central Asia. Increased FSA funding will allow us to maintain funding for irrigation and drinking water projects, programs to combat infectious disease and to develop primary health care in rural areas, and other local infrastructure projects begun in 2002. These activities will continue to be targeted in regions where potential for recruitment by extremist Islamic groups is highest. We will also expand support for small business through training and credit programs, and open up Uzbekistan to the outside world by greatly increasing student and professional exchanges, and Internet connectivity through school-based and public access sites. We will continue work to strengthen civil society and the independent media.

Among the highlights of the FY 2002 FSA program, we note:

Security Assistance: U.S. Government programs seek to enhance Uzbekistan's capabilities to prevent proliferation of weapons, weapons technology and expertise, and complement counter-terrorism assistance. This includes programs to continue the demilitarization of the former chemical weapons facility in Nukus and enhance air patrol and interdiction capabilities of Uzbekistan's Ministry of Defense and Border Guards.

Economic Development: The U.S. Government is providing business education and training to SMEs and some microcredit in the Ferghana Valley. TDA grants for feasibility studies help American businesses compete for projects in the rail, information technology, fertilizer, power, and water resources sectors, as well as assistance in small and medium enterprise development. Treasury advisors provide much-needed advice on macro economic policy and reform.

Water Management: The U.S. Government is helping Uzbekistan more effectively manage its water resources. Programs include establishment of water users associations, water saving demonstration models for farmers, improved water district management, procurement of equipment needed to clean the canals and maintain the infrastructure, and potable water in Karakalpakstan near the Aral Sea.

Health Care: U.S. Government programs address tuberculosis control, blood safety, HIV/AIDS surveillance, drug use, care of pregnant women and their newborns and educational programs. The health care reform program seeks to create a higher quality, user-friendly, more cost-effective primary health care system in select regions.

Regional

The Administration is requesting $55 million in regional funds to support activities that involve individual participants or organizations from more than one Eurasian country, who are working together toward a common goal or benefiting from one another's experience. This includes cross-border efforts, such as water resource management projects in Central Asia. Regional funds also support programs, like Trade and Development Agency grants for investment-related feasibility studies, which respond to demand from the private sector that cannot be attributed in advance to a single country. These funds also support confidence building measures and other initiatives aimed at resolving conflicts in the region, such as the Armenian-Azeri dispute over Nagorno-Karabakh.

Security and Law Enforcement

I would now like to turn to Security and Law Enforcement Assistance programs.

Our security and law enforcement assistance to Europe and Eurasia continues to be a significant portion of our total assistance programs, encompassing threat reduction, nonproliferation, anti-terrorism, law enforcement and regional security assistance programs.

Across Europe and Eurasia in the security and law enforcement area, we are working hard to ensure our programs are integrated into a coherent security assistance strategy for each country; to prevent duplication and leverage U.S. assistance program resources regardless of the source of funding. Given the range of authorities, programs and funding sources within the State Department and other U.S. agencies, this coordination effort is a complex process. While the Secretary of State and National Security Council establish overall foreign policy priorities and guidance, my office coordinates and oversees our assistance programs to Europe and Eurasia to ensure our efforts reflect U.S. foreign policy and are provided efficiently and effectively.

Nonproliferation and Threat Reduction

Without question, the Defense Department's Cooperative Threat Reduction (CTR) and the Energy Department's Material Protection, Control and Accounting (MPC&A) programs remain at the core of our security and law enforcement assistance priorities with Russia and the other former Soviet states.

Under CTR, since 1992, we have provided over $4 billion in assistance to these states. In FY 2004, DOD has requested $450.8 million in CTR assistance, a significant increase from the $414.4 million in FY 2003, with the largest increase requested to support construction of the Chemical Weapons destruction facility at Shchuch'ye to destroy nerve agent filled munitions. DOD/CTR's FY 2004 funding request also includes funding for the CTR/Weapons of Mass Destruction Proliferation Prevention Initiative (WMD-PPI) to address border security issues. The State Department is working closely with DOD to ensure this effort complements/supplements other U.S. assistance.

Assistance under the Department of Energy Material Protection Control and Accounting program totals an estimated $1.4 billion since 1992. The MPC&A program continues to address one of the highest priority threats to U.S. and international security -- the threat of nuclear materials proliferation. As such, the FY 2004 request, at $252 million, also reflects an increase from FY 2003 levels.

Another nonproliferation program, the State Department Export Control and Related Border Security Program, also expanded significantly since September 2001. The State Department FY 2004 budget request reflects increased funding in both the FREEDOM Support Act and Nonproliferation, Anti-Terrorism, Demining and Related Programs (NADR) accounts to address the porous borders of Eastern Europe, the Balkans and the former Soviet States, particularly in Central Asia and the Caucasus. This program has provided concrete equipment and training -- including radios to enhance communications, vehicles, patrol boats and helicopters to enhance transport and patrol capabilities, and infrastructure to ensure that border posts have generators, radiation detectors and other critical equipment to stop illicit weapons trafficking.

The State Department's Science Centers, Civilian Research and Development Foundation, and Biological Weapons Redirection nonproliferation programs also will continue in FY 2004 to help redirect the efforts of former Soviet weapons scientists and institutes toward civilian purposes. These programs are increasingly moving toward long-term self-sustainability.

In this past year, however, serious concerns about potential Russian modernization beyond legitimate defense needs, as well as implementation issues including access to facilities and lack of confidence and credibility in Russian program management, delayed or prevented some of these assistance programs from making much progress. Waiver authority provided by Congress for CTR and Title V of the FREEDOM Support Act activities has allowed these programs to continue in FY 2002 and 2003 as their benefits were determined to outweigh the risks in U.S. national security interests. The Administration has requested this waiver authority again for FY 2004 and I urge you to support this request.

In addition, I would urge you to support a return of the CTR certification process to an annual, rather than a fiscal year basis. Under the law revised last year, we may only certify that Eurasian states have met the CTR legislative criteria after the beginning of every new fiscal year on 1 October. Until the Secretary has had the opportunity to review to what extent CTR partner countries have met the legislative criteria during a fiscal year, however, this will entail unnecessary delays in obligating assistance and interrupt multi-year programs. A return to an annual certification process will do much to ensure continuity, and efficiency in CTR assistance obligations.

The scale and urgency of the proliferation threat has been recognized and addressed under these nonproliferation programs, however, the Administration has taken the lead to seek substantially increased nonproliferation assistance for the Eurasian states from other international donors. The President spearheaded the decision by the G-8 Leaders last June to commit up to $20 billion over 10 years for assistance to Eurasia to reduce threats from weapons of mass destruction, weapons materials and expertise. The United States has pledged to provide half that total. This level of assistance will need Congressional support to succeed and again, we urge you to continue to support this effort.

Regional Security: FMF, IMET and PKO

The primary assistance programs used to enhance regional security in Europe and Eurasia are our Foreign Military Financing, International Military Education and Training, and Peacekeeping assistance.

Our continued emphasis on interoperability in our Foreign Military Financing and International Military Education and Training programs for Europe and Eurasia have proved invaluable as we have continued the Global War on Terrorism and undertaken Operation Iraqi Freedom. Our FMF programs across Europe and Eurasia increased from $168 million in FY 2003 to a requested level of $192 million in FY 2004, with the primary increases allocated for Central Asian and Caucasus states. For example, FMF proposed for Tajikistan increased from zero in FY 2003 to $700,000 for FY 2004, reflecting Tajikistan's strong support and cooperation with Coalition forces along its long border with Afghanistan. Likewise, the U.S. has increased security cooperation with Georgia, the Kyrgyz Republic, Uzbekistan and Azerbaijan in light of the Global War on Terrorism. FMF assistance has decreased slightly for some countries, like Ukraine, although FMF will continue in these countries to address military reform, defense needs and enhanced interoperability.

The IMET FY 2004 request for Europe and Eurasia at $36 million also reflects an increase for Europe and Eurasia from FY 2003 levels to continue to foster interoperability and greater respect for and understanding of the principle of civilian control of the military.

Finally, our Peacekeeping assistance continues to advance international support for voluntary multi-national efforts in conflict resolution and other multinational efforts. Our Peacekeeping assistance will continue to support the Organization for Security and Cooperation in Europe [OSCE] peacekeeping activities, including efforts in Bosnia, Croatia, Kosovo, and other European and Eurasian nations.

Law Enforcement and Anti Terrorism Training

Our International Narcotics and Law Enforcement Assistance programs and Anti-Terrorism Training assistance also are critical tools of our foreign policy in Europe and Eurasia.

The law enforcement reform and counter-narcotics assistance -- Anti-Crime Training and Technical Assistance (ACTTA) program -- has taken on new importance in the "post 9/11" world, where the nexus between narcotics trafficking and other forms of organized criminal activity are strongly suspected to be a source of revenues for terrorist organizations or other destabilizing activities.

From the start of the ACTTA program in FY 1995 through FY 2002, almost $145 million has been provided in the Eurasian states to familiarize post-Soviet law enforcement agencies with modern techniques for coping with crime, enhance those agencies' capacities to fight criminal activity, reform the legal underpinnings of law enforcement and judicial entities, and strengthen the rule of law and respect for human rights. Over $20 million is planned for allocation to this important program in FY 2003 and we estimate FY 2004 levels will be about the same.

Ultimately, our overall political and economic reform efforts will suffer if we are unable to reform police and judicial organizations throughout the region. Certainly, rule of law cannot be ensured if police, prosecutors and judges are under-trained, under-equipped, corrupt, or worse, have become ensnared in the highly lucrative and growing drug trade. If the impoverished populations across the region turn to narcotics trafficking to eke out a living, we may see a rise of "narco-economies" that will present a setback for American interests. A rising rate of HIV/AIDS infection from intravenous drug use, which we already see on a large scale in Russia and elsewhere, will present yet another challenge to our efforts to move these nations onto the road to prosperity.

Amidst these conditions, working to ensure reform of the police and judicial organizations, reduce corruption and decrease human rights violations is a critical component to our counterterrorism efforts as well as development of long-term stability.

Fortunately, several factors have led to greater levels of participation from the European and Eurasian states in these programs. First, several states, including Russia, Moldova, Tajikistan and the Kyrgyz Republic, have shown a strong interest to move beyond training programs into projects designed to begin reforming their legal codes, promote transparency and respect for civil society in their police and financial agencies, and to actively fight narcotics trafficking. Their level of commitment was also clear in the aftermath of 9/11, when many of these states joined the United States in efforts to fight terrorism and prevent criminal activities that may support terrorist groups, such as narcotics trafficking and money laundering.

The Congress has responded to the challenge presented by the large flow of heroin coming out of Afghanistan and crossing Central Asia and Russia and entering Europe. The enactment of $22 million in FY 2002 supplemental funds specifically for counter-narcotics and law enforcement reform in Central Asia has given this program the means to begin projects on a comprehensive, long-term scale. Our Embassies, in cooperation with the State Department's Bureau of International Narcotics and Law Enforcement Affairs (INL), are now moving to allocate those funds to projects that will support creation of new drug control agencies; provide counter-narcotics training and equipment; help improve control of passports and other documents; and support creation of counter-narcotics units, initially in Uzbekistan, that are specially "vetted" by our Drug Enforcement Administration (DEA). We are making use of the best expertise available - in some cases specialized USG agencies, the expertise of the UN Office on Drugs and Crime (UNODC), or non-governmental organizations.

One of the centerpieces of USG regional law enforcement efforts in SEE is the Regional Center to Combat Organized Crime (RCCOC) in Bucharest, Romania. A cooperative effort between the USG and twelve countries of SEE, the Center is a subsidiary of SECI, the Southeast European Cooperative Initiative. The Center's mission is to address the destabilizing effects of organized crime and corruption in the region through cooperative law enforcement operations and the exchange of information. In its first full year of operation, the RCCOC exchanged more than 5,000 pieces of law enforcement intelligence, or approximately five times the number Europol has exchanged in its entire history. Task forces at the Center combat such regional problems as narcotics trafficking, human trafficking, money laundering and terrorism. Successes include Operation Mirage, the first regionally coordinated and conducted activity in South Eastern Europe in the area of trafficking in persons. This operation controlled 20,558 sites and identified 1738 women, of whom 237 proved to be trafficked persons or potential victims of trafficking. Proceedings were undertaken against 293 identified traffickers.

Much more will need to be done in these areas, just as more will need to be done to give law enforcement agencies the means to better investigate and prosecute despicable crimes like trafficking in persons in the region. The Congress' support has allowed us to move forward; however, we need to ensure the sustainability of these important programs in FY 2003, FY 2004 and beyond.

Conclusion

Overall, we are proud of what all of our assistance providers have accomplished in Europe and Eurasia. There are problems, but the enthusiasm and dedication they have brought to the process make each of them a "diplomat" in the Europe and Eurasian region. Our efforts need to continue to fulfill the extraordinary vision that created these programs.


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