The well-intentioned effort to use United States tax dollars to influence significantly the course of events in Russia and Ukraine died a quiet death over the past few months. Born in 1991 as a $400 million bipartisan congressional initiative to reduce the threat from excess Soviet weapons of mass destruction, by 1993 aid to Russia and Ukraine had become a $3 billion hobby shop. When Presidents Clinton and Yeltsin met in September 1994, with few concrete results to show for the time and money invested in aid, the two frustrated leaders quietly agreed to focus on trade and investment. The Russians, badly cast as supplicants, were relieved.
This is not to say that the winding up of grant aid programs will end claims by the former Soviet Union on the United States Treasury. The disturbing Russian and Ukrainian habit of ignoring bills due could result in future claims against federal export credit and investment agencies that far exceed the $4 billion already disbursed in grant aid between 1991 and 1994. This year alone, $900 million in agricultural loans have been rescheduled. Moreover, massive disbursements from the International Monetary Fund and the World Bank could lead to future losses by their largest shareholder, the United States. No doubt pundits will seek again to attribute setbacks in Moscow to a lack of support from Washington. It may therefore be useful to provide a brief draft history, before it is revised, of recent American aid to Russia and Ukraine.
In particular, during the hectic transition following the November 1994 mid-term elections, it may be useful to recall that Senators Bob Dole and Jesse Helms joined Sam Nunn and Richard Lugar in backing the original 1991 legislation to fund cooperative efforts with what was still the Soviet Union. The goal of the Nunn-Lugar law was to dismantle Soviet nuclear weapons and safeguard nuclear know-how, and especially to prevent Soviet nuclear scientists from seeking employment in rogue states. A month before the 1992 presidential election, another bipartisan coalition secured passage of the Freedom Support Act, authorizing $425 million in assistance to the former Soviet Union. The bill also created a precedent by largely exempting such aid from the restrictions applied to other aid programs. With all three major presidential candidates publicly backing them, these measures reflected wide support for helping the Russians. This broad-based, bilateral support continued, and even grew, after the election.
The desire to aid the Russians has overcome normal differences in Congress. In the Senate, for example, deficit-hawk Pete Domenici and long-time opponent of foreign aid Robert Byrd joined together in September 1993 to bend rigid budget rules, in order to enable President Clinton to meet his rash commitments to find more than $2.5 billion for Russia and Ukraine. And in the House, even as late as the spring of 1994, Minority Leader Newt Gingrich and Majority Leader Dick Gephardt agreed in a confidential report on their joint delegation to Russia that, despite problems, the aid effort should continue.
Following the Vancouver and Tokyo summit meetings in the spring of 1993, the aid effort reached its peak: $1.7 billion in civilian aid and $1.3 billion in defense funds were appropriated later that year. Though the amounts of aid have since fallen, they remain substantial. In the current fiscal year, President Clinton's overall request of $1.3 billion was finally funded at $1.25 billion. Increases up to $1.6 billion have been considered within the administration for next year, but the final appropriation may not reach half that amount. And much of what is eventually appropriated will be directed toward support for private American trade and investment in Russia and Ukraine.
Original Intent, Original Sins
What was the intent of those undertaking this short-lived effort? Although advocates of helping Russia and Ukraine have consistently maintained that external assistance could merely supplement internal changes, they also believed that supporting aid might secure them a small but favorable place in history. Most public officials could empathize with the new leaders of Russia and Ukraine as they faced the daunting task of encouraging democracy and implementing effective reform, and most preferred to risk wasting several billion dollars rather than see them fail and have that failure attributed to lack of American support. In retrospect, it is apparent that few Washington officials had a clear or deep understanding of the situation in Russia and Ukraine, and many were influenced by academic experts who promoted simplistic solutions with the enthusiasm of door-to-door salesmen.
There were reasons for Americans of all political persuasions to be supportive. Conservatives had already established personal contacts with Russian leaders during the last years of the Soviet Union. Dole, for example, met Boris Yeltsin at the airport on his first visit to Washington, at a time when Yeltsin was being demonized by the Bush administration. The Heritage Foundation provided a hospitable refuge for Russian officials while the executive branch clung to the Soviet illusion. Moderates such as Librarian of Congress James Billington and Senator Bill Bradley saw the key to successful transformation to be vastly expanded exchange programs that would expose young Russians and Ukrainians to the American way. At times there would be more visitors than qualified hosts. Many liberals believed that beyond transforming Russia, investments in the former Soviet Union would be more than offset by defense cuts. Indeed the success of those investments would justify even greater reductions in Pentagon spending. Some estimated a peace dividend of $230 billion, and urged that the savings go toward domestic programs. This effort faltered in the face of federal budget deficits and a more realistic appraisal of defense reductions, as well as costly new missions assigned the Pentagon.
Between the hopes of Washington and the reality of Russia and Ukraine lay a huge gulf. From the perspective of Moscow and Kiev, the main local beneficiaries of American aid were luxury hotels billing an endless stream of visiting delegations at the rate of $300 per night. By deliberate intent, Russia and Ukraine didn't see a single dollar--the money went to foreign consultants and contractors. From ordinary citizens of Russia and Ukraine, questions about aid from the United States most often elicited the resigned shrug of those used to unmet promises. Some former Soviet officials in the defense and energy sectors came to view the effort as a conspiracy to undermine them, and to cause their defense and nuclear industries to degenerate. Technocrat managers in both countries asked why so many of their American counterparts appeared to lack the stature and competence to bring efforts to closure.
Nonetheless, the aid effort has contributed to some real progress. The central focus of the civilian program has been support for market reform in Russia. According to data compiled by the Agency for International Development, American-assisted privatization in Russia has put about eighty thousand small enterprises and fourteen thousand medium and large industrial enterprises in private hands. Over 40 percent of the industrial labor force now works in the private sector. On the other hand, while assertions that many of these privatized companies are controlled by criminal elements cannot be verified, many Russians believe that private managers are stripping company assets and removing corporate capital to foreign bank accounts, rather than paying salaries.
Perhaps because reform in Ukraine didn't begin in earnest until late 1994, Americans have been slow to react to the situation in that country. During his November 1994 state visit to Washington, Ukraine President Leonid Kuchma obtained from President Clinton a precedent-making balance of payments grant of $72 million to help guarantee supplies of natural gas from Russia as he undertakes a drastic reform effort. Together with the January 1994 Trilateral Agreement, under which Russia will provide nuclear fuel rods to civilian reactors in Ukraine, there is at last some evidence that the United States is turning its attention to the particular problems of Ukraine.
The record of defense-related aid is dismal. The Nunn-Lugar program has departed from its original objectives: Not a single nuclear warhead nor a single chemical weapon has been dismantled in Russia under the American aid program. Little if any increase in control over weapons-grade fissile material has resulted from American aid. There is reluctance in Russia to move on these matters until the United States is ready to follow suit.
Some secondary objectives are being met. Delivery systems for weapons of mass destruction, such as strategic missiles and bombers, are beginning to be scrapped with funds from the Nunn-Lugar program. Nearly fifteen hundred nuclear warheads from Soviet missiles remaining in Ukraine, Kazakhstan, and Belarus have been deactivated, and American aid has been instrumental in moving these countries towards compliance with the Non-Proliferation Treaty. But the resulting concentration of nuclear warheads and fissile material in Russia has been ignored, and the joint effort to phase out plutonium production in reactors capable of making weapons-grade material faces an uncertain future.
Finally, and as a result of both Russian and American delays, the original plans to secure Soviet nuclear weapons expertise and to prevent it from going to dangerous locations matured slowly, and may in any case have been misdirected. Since 1991, it has become evident that covert exports of weapons-grade fissile material may prove a greater proliferation danger than nuclear scientists emigrating to rogue states. Indeed, several hundred Russian scientists and engineers formerly associated with nuclear and chemical weapons are now working on peaceful, civilian projects under bilateral and multilateral programs, thanks to $60 million of American taxpayers' money. Efforts to commercialize civilian technologies developed by nuclear weapons institutes in Ukraine and Russia are hampered by lack of funding and agency sponsorship in Washington.
Bureaucracy is Destiny
Why have Washington's lofty goals yielded such mixed results in Russia? Despite a genuine desire to streamline and reform the aid process, the bureaucracy continued to assert its traditional prerogatives and institutional biases. While harassed and overworked mid-level officials in the executive branch might initially have welcomed the absence of Congress' customary micromanagement, they soon found that they were unable to get prompt, effective guidance from their own senior managers. Then, when congressional appropriations committees reviewed the results, they often balked at the proposed projects, further delaying the program. Throughout, turf fights among agencies, weak mediation by the president's staff, and interventions and visits to Russia by senior officials in other agencies distracted the action officers.
No agency has been immune. Like President Bush before him, President Clinton hesitated to offend his secretary of state by designating a single individual responsible to him for the coordination and management of all federal efforts to assist Russia and Ukraine. Strobe Talbott's promotion to deputy secretary of state in early 1994 left a vacuum--though if the truth be told and contrary to widespread impression, he never filled such a role effectively. While from time to time he has intervened to support reform and denuclearization in Ukraine, Talbott's appetite for the details of management has been limited.
The Agency for International Development (aid), relegated to the background during the Bush-Baker era, maneuvered during the first year of the Clinton administration to seize operational control of the aid effort in Russia and Ukraine. Predictably, the impact of aid, an agency more accustomed to promoting development in Rwanda than to creating democracy and capitalism in a superpower has been stifling, as it has attempted to impose its Byzantine practices on often bewildered Russian officials. Some of them however, have adjusted readily to aid procedures; Russian privatization minister Anatoly Chubais quickly found ways to attract almost $200 million to support his voucher privatization program. In an effort to deal with the problem, aid has imported one of Washington's most skilled foreign policy operatives, Tom Dine, to energize and focus its program. Surrounded by aid careerists, and charged with management of programs in Central Europe, the Caucasus, and Central Asia, as well as Ukraine and Russia, his energy was sapped by extensive travel, and the promised new focus didn't begin to emerge until late 1994. Outside Foggy Bottom, a joint U.S.-Russian commission under Vice President Gore and Prime Minister Chernomyrdin has tried to coordinate policy and negotiations between the two countries; but Gore has never allocated funds, which remains the prerogative of the state and defense departments.
The Department of Defense, unable to move beyond providing air transportation for humanitarian emergency aid during the Bush Administration, received authority to spend up to $400 million for the Nunn-Lugar program each fiscal year between 1992 and 1995, although its deliveries and disbursements have not yet totaled $100 million. Dr. William Perry, first as deputy secretary and then as secretary of defense, brought knowledge and enthusiasm to the task of helping Russia. Prior to his going to the Pentagon, Perry held a professorship at Stanford University, where his special interest was defense conversion. This has now come to supersede the original narrow objectives of nuclear dismantlement and non-proliferation called for in the Nunn-Lugar legislation. Ashton Carter, a Harvard professor who had helped Nunn sell the bill to skeptical colleagues in 1991, was appointed by Perry to head the policymaking element of the Nunn-Lugar program. Carter and Perry recruited a number of young associates without Pentagon experience to run the program.
By the time in early 1994 that the new policy team secured the bilateral agreements needed to undertake actual work in Russia and Ukraine, they had managed to lose $318 million of the initial $800 million provided for 1992-93. The lost authority technically expired after two years, to the surprise of top officials who were unaware of the problem because Carter and his policy team had neglected to establish close relations with other parts of the executive branch and the defense committees of Congress. As a result, quiet opposition from other elements of the defense establishment frequently delayed the effort. The appointment of an experienced official to oversee the Defense Nuclear Agency's implementation of the program did not come until the summer of 1994; his effectiveness in implementing the Nunn-Lugar program has been restricted by the continuing influence the now discredited policy shop has on Perry.
Until recently, few probing questions have been raised about the aid programs within the executive branch or by Congress. With responsible officials struggling to show results without breaking any of the complex federal procurement laws, few staff members undertook rigorous oversight of a program backed by the president and the bipartisan congressional leadership. Little was heard from the General Accounting Office or the Office of Management and Budget. Hearings before the congressional appropriations committees identified a number of problems, but received little further attention. More time was devoted by the Senate to the allocation of funds between Russia and Ukraine than to program content. In the House, however, objections have been raised to the Pentagon's move away from nuclear issues toward broader defense conversion efforts, and to rapid expansion of semi-private enterprise funds to promote joint investments.
In retrospect, it is evident that all American leaders simply assumed that conditions in Russia and Ukraine were ripe for peaceful intervention by the United States. They also assumed that somewhere in the vast federal complex there were men and women who knew with some precision what to do and how to do it. Although schemes to help the former Soviet Union were based on massive amounts of direct financial assistance, both the Nunn-Lugar programs and the aid technical assistance efforts largely excluded qualified Russian and Ukrainian institutions and firms from contracting and procurement efforts. The resulting "Made in America" effort to import everything (except housing) unnecessarily antagonized some of the Russians and Ukrainians who were most ready and able to work with American counterparts.
Recently, the aid effort has begun enlisting the for-profit private sector, often on a cost-share basis. The five enterprise funds, and the transfers of funds to government agencies that support foreign trade and investment (the Export-Import Bank, Overseas Private Investment Corporation, and the Trade and Development Agency), show some possibility of greater positive impact on Russia and Ukraine than does the massive influx of technical assistance consultants. While the latter may help, Haid. already recognizes the negative impact of continuing to contract for the bulk of its technical assistance though a small group of international consulting firms whose annual cost per advisor (including housing, travel, security and corporate overhead) can exceed $400,000, and is moving to attract bids from a more diverse group.
The Clinton administration's decision to cut back on grant aid to Russia as it begins to engage seriously with Ukraine's new reformers demonstrates more skill and realism than the administration has shown in other regions. The Nunn-Lugar Threat Reduction program needs to be placed under effective policy management and returned to its original narrow focus on nuclear proliferation concerns, and failure to do so will alienate defense appropriators. Too few details are presently known about the much larger technical assistance effort and exchange programs to characterize them as a success or failure, but the ongoing reduction in their size and scope will almost certainly continue, if only because fewer and fewer senior officials in the countries involved are willing to make the effort to sustain them. The perception exists that aid to Russia and Ukraine has not met expectations. Looking back, it is increasingly evident that there was no way the program could have done so.
Although future United States economic cooperation with Russia and Ukraine will depend mostly on the extent of commercial trade and investment links, a smaller (less than $1 billion per annum) grant aid program could serve the national interests of all three countries for the rest of the decade. For such a proposal to survive in Washington's radically changed environment, it would need to meet three criteria. First, it would have to meet shorter-term, concrete objectives identified by the assisted country (such as assuring energy supplies during Ukraine's adjustment to reform). Second, it would have to meet high priority American national security interests (such as returning the Nunn-Lugar program to its original narrow focus on the actual dismantlement of Russian nuclear and chemical weapons, as well as prudent disposition of their contents). And third, it would have to offer solid value for the money invested (which means no more American development and nuclear tourists whose U.S.-funded expenses amount to more per week than members of the Russian Academy of Sciences make in a year).Essay Types: Essay