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02 April 2003

U.S. Foreign Assistance to Eurasia Has Increased Anti-terror Focus

(Charles Ries testimony to Senate Foreign Relations Committee) (4330)

The U.S. has important interests in Europe and Eurasia "that go beyond
supporting the transition of the formerly Communist countries" -- such
as combating terrorism, weapons proliferation, and drug and other
illicit trafficking -- and these global interests became more pressing
after the terrorist attacks of September 11, says a State Department
official.

Charles Ries, principal deputy assistant secretary in the Bureau of
European and Eurasian Affairs, provided the Senate Foreign Relations
Committee April 2 with the Bush Administration's perspective on U.S.
foreign assistance programs to the region and explained the
administration's budget request for Fiscal Year (FY) 2004.

He noted that for FY2004, "counterterrorism has become a more
prominent element of our assistance, cutting across a number of
programs." The FY2004 budget request, for example, seeks increased
funding for export control and border security programs in Europe and
Eurasia, as well as technical assistance aimed at blocking terrorist
financial flows and money laundering.

The two largest regional programs are the Support for East European
Democracy (SEED) Act and the FREEDOM Support Act (FSA), Ries said.

Eight of the 15 countries covered by the SEED Act have "progressed
sufficiently in their transitions to 'graduate' from SEED assistance,"
he said -- Estonia, Latvia, Lithuania, the Czech Republic, Hungary,
Poland, Slovakia and Slovenia. The State Department also intends to
"graduate" Poland, Hungary and the Czech Republic from the export
control and border security assistance programs.

The FY04 budget request "maintains strong funding" for Serbia and
Montenegro, Kosovo, Bosnia and Albania under SEED, while Croatia and
Bulgaria will be graduated in FY07. The United States is also
"currently looking at the possibility of setting a graduation date for
Romania."

"All of these countries continue to make progress, and yet each faces
severe economic and political challenges," Ries said. "We and other
donors, particularly the EU, will have to stay engaged to make certain
the region does not revert to the strife which characterized too much
of the past decade." SEED programs will increasingly focus on civil
security and rule of law, "while we continue to work on promoting good
governance and private sector-led economic growth."

"Our SEED and FSA assistance is having a positive impact," Ries said.
"Southeastern Europe is now experiencing steady progress in efforts to
overcome the destruction and dislocation of the Balkan wars, meet the
grave challenges of crime and poverty, and open the area to business
and investment."

The former Soviet states, on the other hand, "lag further behind in
making the transition," he said, although Russia "has probably moved
the furthest both economically and politically."

The administration's request for FSA funding "is significantly
reduced, with most of the reduction coming from Russia and Ukraine,"
Ries said. This reflects not only difficult decisions among foreign
assistance priorities, but also "recognition of the progress these
countries have made - particularly Russia - toward market and
democratic reform."

"We are currently developing a strategy to phase out FSA assistance to
Russia over the next several years," Ries added. However, "assistance
to address serious health threats, like HIV/AIDS, and to support civil
society groups, including human rights monitors, may continue in
Russia through other foreign assistance accounts even after the phase
out of FSA assistance is completed."

Some FSA funding is being shifted to the five Central Asian states,
Ries pointed out. "These are the front-line states in the ongoing
effort in Afghanistan, and expanded assistance there will bolster
stability and attack the root causes of extremism."

FSA programs in FY 2004 will "increasingly emphasize three themes," he
told the committee: conflict prevention; decentralization of power;
and anti-corruption efforts.

Following is the text of Ries' prepared testimony:

(begin text)

STATEMENT OF PRINCIPAL DEPUTY ASSISTANT SECRETARY CHARLES RIES 
Bureau of European and Eurasian Affairs 
Us Department of State 

HEARING OF THE SENATE FOREIGN RELATIONS COMMITTEE 
OVERSIGHT OF FOREIGN ASSISTANCE PROGRAMS 
APRIL 2, 2003

Chairman Lugar, Senator Biden and other distinguished Committee
members, I am very pleased to participate today in your examination of
U.S. foreign assistance programs. I commend you for focusing on this
crucial tool of U.S. foreign policy, and I look forward to an ongoing
dialogue with the Committee about our assistance budgets and
activities.

Like my counterparts in the Department's other regional bureaus, I
approach assistance programs with a basic question in mind: how can
these programs best advance U.S. interests in Europe and Eurasia? In
the Bureau of European and Eurasian Affairs, we are fortunate to have
a unique structure, the Office of the Coordinator of U.S. Assistance.
Created by Congress under the Support for East European Democracy
(SEED) Act of 1989 and the FREEDOM Support Act of 1992, the Assistance
Coordinator helps to ensure the tightest possible integration between
our assistance programs and our foreign policy goals. Acting
Coordinator Tom Adams is with me here today, and I talk to Tom
literally every day about how assistance can best support policy.

In large part because of the structures created under the SEED and
FREEDOM Support Acts, we are also fortunate to have a unique
relationship with our colleagues at the U.S. Agency for International
Development, with whom we work very closely to develop effective
programs. Kent Hill, USAID's Assistant Administrator for Europe and
Eurasia, is also here today and will give his perspective on
assistance in our region and on the State-USAID partnership.

Mr. Chairman, in recent months much of the world's attention has
understandably been focused on the trans-Atlantic relationship, and
the differences that emerged with some of our European friends and
allies over Iraq. What has received relatively less attention has been
the steadfast support the U.S. has received from a number of countries
in the formerly Communist parts of Europe. Clearly, one of the reasons
we enjoy such a close and supportive relationship with these countries
is the intense engagement we have practiced -- through foreign
assistance and diplomacy -- during their difficult transition from
Communism to market economies and democratic political systems. Some
of these countries have essentially completed the transition; some are
still struggling in the middle of it. But over the past nearly 15
years, the U.S. has sought to foster movement toward market-based
democracy and to integrate these states into Euro-Atlantic and
international economic and political structures. And this persistent,
long-term effort has earned us credibility and created a reservoir of
trust that is paying off in the current situation.

The U.S. has important interests in Europe and Eurasia that go beyond
supporting the transition of the formerly Communist countries and,
particularly after September 11th, these global interests - such as
combating terrorism, weapons proliferation, and drug and other illicit
trafficking -- have come to the fore. I want to highlight how our
assistance directly supports these U.S. national interests, and give
examples of how this works in practice. Then I will explain what has
changed in terms of assistance priorities since September 11th, and
how that change is reflected in the President's fiscal year 2004
budget request, both in terms of programmatic priorities and country
budgets.

Finally, I know that the Committee is interested in our views
regarding legislative authorities and current restrictions on our
ability to carry out assistance programs, so I will share some
thoughts on that subject.

How Assistance Supports U.S. Foreign Policy Interests

We have an interest in cooperating with European and Eurasian
countries in counterterrorism and in stopping a variety of things from
moving across borders, including members of terrorists groups, weapons
of mass destruction, illegal drugs, and trafficked persons. We have an
interest in resolving and, where possible, preventing violent
conflicts that threaten regional stability. And we also have an
interest in seeing all countries of the region become democratic,
market-oriented states: this is the best long-term guarantee of
regional stability and of positive, mutually beneficial relations.

There are also specific characteristics of the region that give rise
to specific U.S. national interests. The large group of formerly
Communist nations in Central and Eastern Europe and the former Soviet
Union are gradually becoming integrated into European, Euro-Atlantic
and international political and economic institutions. We should not
forget that we fought and won a 50-year Cold War against Soviet
Communism, and that the Soviet legacy is still reflected in many of
the region's persistent problems. To see this process through - to
"win the peace" - we have a compelling interest in promoting this
integration and helping it become broader and deeper.

Finally, the Soviet legacy of weapons of mass destruction (WMD) -- an
issue the Chairman has been particularly engaged with for many years
now -- remains a critical U.S. security interest in the region. Our
assistance efforts have and continue to be targeted at the detection,
deterrence, interdiction, control and reduction of the vast Soviet
military arsenal, with its widely dispersed sources of WMD and WMD
expertise. The bulk of assistance dealing with this challenge is
funded through programs managed by the Departments of Defense and
Energy. Nevertheless, the State Department manages important
non-proliferation programs, provides diplomatic support for DoD and
DOE efforts, and helps coordinate interagency approaches to
nonproliferation and threat reduction assistance. My bureau devotes
particular attention to nonproliferation efforts since so much of the
weapons and weapons expertise originates in our region.

Mr. Chairman, our interest in stopping a variety of cross-border
threats -- whether they be in the form of weapons of mass destruction,
other lethal weapons, illegal narcotics, or individuals belonging to
terrorist groups - is not new, but clearly has shot to the top of the
priority list in the wake of 9/11. We cooperate with nearly all
European and Eurasian countries on counterterrorism,
non-proliferation, transnational crime, and border security, and a
number of countries also receive significant U.S. assistance directly
aimed at these problems through programs funded under the FREEDOM
Support Act, the SEED Act, and other Foreign Operations accounts, such
as the Nonproliferation, Anti-Terrorism, De-mining, and Related
Programs (NADR) account. These assistance programs have greatly
enhanced the ability of states in the region to deal with the
challenge of cross-border threats, and have led to some notable
successes.

For example, assistance provided to Uzbekistan under the Export
Control and Related Border Security programs funded by the FREEDOM
Support Act and NADR helped the Uzbeks to interdict several shipments
of WMD material transiting their border. Similarly, through our
Anti-Crime Training and Technical Assistance (ACTTA) Program,
substantial U.S. support for a UN drug control program in Tajikistan
has enabled authorities in Tajikistan to seize record quantities of
Afghan heroin on its way to Russia and Western Europe and additional
support has made it possible for our U.S. Drug Enforcement
Administration to set up the first "vetted" counter-narcotics unit in
Central Asia, in Uzbekistan. Day by day, month by month, the countries
of Europe and Eurasia are becoming better equipped, better trained and
better coordinated with one another to deal with transnational
threats. And our assistance has played a critical role in catalyzing
and now sustaining that process.

I should point out here that enhancements of border security and law
enforcement capabilities aid in responding to many threats and
challenges, including the major problem of trafficking in persons.
This Administration is deeply committed to addressing this human
tragedy. Several European and Eurasian states are "source countries"
for trafficking, and over the past several years we have directed SEED
and FSA resources to confront the problem at every point: in the
communities where former and potential future victims need job
opportunities and other kinds of support; in schools and the media
where public awareness of the problem can be increased; in the legal
system where specific laws and mechanisms are needed; and of course,
at the borders, where the traffickers must be stopped.

A second major U.S. interest in the region concerns conflict
resolution and prevention. Here is perhaps the clearest example where
our diplomacy and assistance programs need to work hand in glove. From
the Balkans, where U.S. support for training civilian police forces
has been crucial to post-war stabilization, to Central Asia, where we
seek to head off future conflict in the volatile Fergana Valley by
improving infrastructure and creating employment opportunities, we are
devoting substantial assistance resources in this area. While
admittedly foreign aid can never substitute for the genuine desire of
the parties involved to find peaceful solutions to their conflicts, we
can do a great deal to support countries recovering from conflict and
to address the social, economic, and political conditions that sow the
seeds of conflict. Most importantly, we need to stay vigorously
engaged with these countries through our diplomacy and our assistance.
We do not need more Afghanistans.

We also have a strong interest in the successful transition of the
formerly Communist states of the region to democratic political
systems and market-based economies, and their integration into
Euro-Atlantic and international institutions. This is clearly a
long-term process, and progress has been slower and more uneven than
many expected when Congress passed the SEED and FREEDOM Support Acts.

The good news is that eight of the 15 countries covered by the SEED
Act have progressed sufficiently in their transitions to "graduate"
from SEED assistance: the Czech Republic, Estonia, Hungary, Latvia,
Lithuania, Poland, Slovakia, and Slovenia. All eight are either NATO
members already or have been invited to join. All are scheduled to
become EU members in 2004. We should all be gratified by their
success, and proud of the continued role played by our assistance and
political support. The Department also intends to graduate Poland,
Hungary and the Czech Republic from our export control and border
security assistance programs in 2004, as these countries have
registered solid progress in these areas.

The unfinished news is in Southeastern Europe and the former Soviet
Union. But many - not all - of these countries are on the right track;
our SEED and FSA assistance is having a positive impact. Southeastern
Europe is now experiencing steady progress in efforts to overcome the
destruction and dislocation of the Balkan wars, meet the grave
challenges of crime and poverty, and open the area to business and
investment. In Kosovo, for example, we are particularly proud of
participation by American police officers in the UN Police Force, and
equally proud of our leading role in training up a new multi-ethnic
Kosovo Police Service - including women officers. These efforts have
helped to cut the crime rate in Kosovo in half. In Croatia, in a
recent positive development on court reform, the U.S., the EU and
other donors obtained the government's agreement to implement a
standardized court and case management system that would unblock the
one million case backlog, expediting the long awaited commercial court
due process.

The former Soviet states lag further behind in making the transition.
Across the region, corruption is a drag on reform. Some countries that
made initial progress in both democratic and market change have
backslid on democracy in recent years. Still, there have been notable
achievements over the past ten years, thanks to U.S. assistance. In
Russia, for example, which has probably moved the furthest both
economically and politically, major reforms have been adopted over the
past three years, including a complete overhaul of the Soviet-era
judiciary and criminal justice system, a new simplified and
investor-friendly tax code, and the right to private land ownership.
All were adopted with the help of U.S. technical assistance. Again
with substantial U.S. help, Ukraine has privatized land and given
titles to roughly two million farmers, helping it become a net food
exporter again for the first time in nearly a century.

In every former Soviet state, we are also helping carve out a role for
thousands of non-governmental organizations, independent media
outlets, and democratic political parties - where none existed ten
years ago. Under repressive conditions - such as those existing in
Belarus and Turkmenistan - these efforts are mostly aimed at keeping
alive hope for long-term change. In other countries though, civil
society is increasingly able to act as a real counterweight to
arbitrary government behavior. We saw examples of this in the past
year in Ukraine, where the opposition won a majority in parliamentary
elections due to substantial involvement of NGOs in monitoring the
vote count; in Kyrgyzstan, where NGO pressure led to revocation of a
presidential decree limiting freedom of the press; and in Tajikistan,
where a sustained campaign by NGOs led to the registration of that
country's first independent radio station.

With respect to integration into Euro-Atlantic and international
institutions, our assistance is supporting WTO accession in several of
the former Soviet states; Georgia, Armenia, Moldova, and Kyrgyzstan
have already acceded, and several others, including Russia and
Kazakhstan, are getting close. Our security assistance is aimed at
enhancing interoperability with NATO and U.S. forces. This has proven
invaluable as we continue the global war on terrorism and undertake
Operation Iraqi Freedom.

FY 2004 Budget Request

Mr. Chairman, I would like to turn to the President's fiscal year 2004
budget request, and what has changed in it from previous years. The
first and most important shift relates to the challenge of
international terrorism. Counterterrorism has become a more prominent
element of our assistance, cutting across a number of programs. Our
FY2004 request for global Anti-Terrorism Training (ATA) assistance
increased significantly over previous years. We are putting more
resources into counter-narcotics and law enforcement cooperation
across the region, but particularly in Central Asia and the Caucasus,
where porous borders and weak law enforcement entities have created
significant opportunities for terrorists and those trafficking in
illicit weapons and drugs to operate. The FY2004 budget request
reflects continued support for our Anti-Crime Training and Technical
Assistance Programs across Eurasia specifically for law enforcement
and counter-narcotics assistance programs in Central Asia creating a
foundation of new programs in that region initiated after September
11. The FY2004 budget request also reflects increased funding in both
the FREEDOM Support and NADR accounts for Export Control and Related
Border Security programs in Europe and Eurasia. This program provides
assistance to help establish infrastructure to control the movement of
weapons and dangerous material across borders. It also provides
equipment and training -- including radios, vehicles, patrol boats and
helicopters -- to enforce such controls.

We have also energized efforts to address terrorist financial flows
and money laundering by providing assistance in drafting the necessary
laws and regulations, and by giving technical advice to financial
intelligence units and bank regulators throughout the region. These
programs do not cost a large amount but have a potentially huge
pay-off, and we fund them in the FY 2004 budget request.

Accompanying the increased emphasis on counterterrorism is a shift in
regional focus towards Central Asia. While the overall request for
FREEDOM Support Act countries is well below the appropriated FY 2003
level, the five Central Asian states are slotted for an increase of
around $14 million in FSA and exchanges funding. These are the
front-line states in the ongoing effort in Afghanistan, and expanded
assistance there will bolster stability and attack the root causes of
extremism: economic desperation, political frustration, social
degradation, and isolation.

Our request for FY2004 funding to support regional security programs
such as Foreign Military Financing, International Military Education
and Training, and peacekeeping operations also increases
significantly. Especially in light of Operation Iraqi Freedom, these
programs are critical foreign policy tools to enhance
interoperability, promote defense reforms, and enhance peacekeeping
abilities.

Now let me briefly highlight the most significant features of the
President's budget with respect to specific country requests. The
declining SEED budget reflects continued stabilization in the region
and a shift towards more regular assistance funding. This allows us to
achieve savings for other high-priority foreign assistance needs,
while maintaining our sharp focus on the transitional states of
Southeastern Europe. The FY04 request maintains strong funding for
Serbia and Montenegro, Kosovo, Bosnia and Albania. Graduation from
SEED funding is planned for Croatia and Bulgaria in FY 2007, after
final bilateral funding in fiscal year 2006, and we are currently
looking at the possibility of setting a graduation date for Romania.
All of these countries continue to make progress, and yet each faces
severe economic and political challenges. We and other donors,
particularly the EU, will have to stay engaged to make certain the
region does not revert to the strife which characterized too much of
the past decade. The emphasis of SEED programs in FY2004 will
increasingly be in the area of civil security and rule of law, while
we continue to work on promoting good governance and private
sector-led economic growth.

Regarding the FREEDOM Support Act, I should first note that while we
are requesting a significant reduction ($179 million below the FY03
appropriated level), it is not as dramatic a drop as it seems. Due to
a decision to shift exchange programs in both SEED and FSA countries
from those accounts into the Educational and Cultural Exchanges (ECE)
account, the FSA request is approximately $90 million lower than it
would have been otherwise; the SEED request is approximately $10
million lower. The Department expects to fund these exchange programs
-- which we consider to be a vital component of our effort to change
attitudes and mindsets in these former Communist societies -- for
European and Eurasian countries at the $100 million level in FY 2004.
I am working very closely with my colleague Patricia Harrison,
Assistant Secretary for Educational and Cultural Affairs, to make sure
we secure these funds for programs in Southeastern Europe and Eurasia
and that coordination between SEED and FSA and ECA programs continues
at a high level.

Even taking the shift of exchange programs into consideration, the FSA
account is significantly reduced, with most of the reduction coming
from Russia and Ukraine. This reduced request is first a reflection of
difficult decisions that had to be made among a large number of
foreign assistance priorities. Beyond that, it is recognition of the
progress these countries have made - particularly Russia - toward
market and democratic reform. We are currently developing a strategy
to phase out FSA assistance to Russia over the next several years.
This strategy will seek to ensure a legacy of sustainable institutions
in Russia that will continue support for democratic development and
entrepreneurship. It should be stressed that assistance to address
serious health threats, like HIV/AIDS, and to support civil society
groups, including human rights monitors, may continue in Russia
through other foreign assistance accounts even after the phase out of
FSA assistance is completed. We want to implement this phase out
carefully, without jeopardizing the gains of the past decade, and we
would be happy to consult closely with the Committee as we proceed.

In general, FSA programs in FY 2004 will increasingly emphasize three
themes:

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

2. Decentralization of power by strengthening NGOs, independent media,
local governments, and where relevant, the judicial branch; and

3. Anti-corruption efforts by promoting rule of law and transparency
and accountability in governance.

Authorities/Restrictions

Finally, Mr. Chairman, in your invitation letter for this hearing, you
asked if I believed that additional legislative authorities or a
modification of restrictions currently in place were necessary to help
us achieve our assistance goals. Rather than getting into specific
provisions at this time, allow me to make two general comments on this
subject. I will be glad to follow up at a later time, working through
our Bureau for Legislative Affairs.

First, many of our interests in Europe and Eurasia come together in
our programs that work at borders - trying to stop harmful things from
getting through, while also trying to facilitate helpful trade and
commerce across them. A variety of anti-terrorism, security, law
enforcement, and economic growth programs are all working on
border-related issues. The authorities that govern these programs may
be preventing productive interaction among them. For example, under
our Export Control and Related Border Security assistance programs, we
can provide equipment, training, or infrastructure assistance to help
secure borders to prevent weapons trafficking; but to combat drug
trafficking at the same border site, we would have to provide the
equipment or training under our International Narcotics and Law
Enforcement assistance program. In each case, we are trying to train
the same customs, border guards and immigration officials, and often
the equipment is identical, but it must be provided under different
funding sources and authorities. We will be reviewing these
authorities within the Administration to see how to make their
interaction more productive.

Second, we believe that Congressionally mandated reporting
requirements are excessive; a reduction could actually enhance
Executive-Legislative branch communication on important foreign policy
issues. The Department spends a great deal of time and effort
producing reports that spark little interest on the Hill or elsewhere
and often have long outlived whatever usefulness they once had. We
suggest that more frequent briefings and other contacts between
representatives of the State Department and Committee members and
staff would be a more productive use of time, and result in more
useful give and take. Again, the Bureau for European and Eurasian
Affairs, together with our Legislative Affairs colleagues, would be
glad to follow up on this issue with more detail.

In closing, Mr. Chairman, let me thank you and the other members of
this Committee for your strong interest in our region, and for your
renewed focus on foreign assistance. We look forward to more
interaction between the Department and your Committee on these
critical issues, and stand ready to work with you toward our common
goal of advancing U.S. national interests in Europe and Eurasia.

(end text)

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