II. Country Assessments - Russia

U.S. Government Assistance to and Cooperative Activities with Eurasia
Bureau of European and Eurasian Affairs
January 2003
Report

RUSSIA

Political and Economic Overview

The 1993 Constitution of the Russian Federation confers vast powers on the President. In effect, the President stands as a fourth "super-branch" of government over the bicameral legislature (the State Duma and Federation Council), executive branch (the Council of Ministers headed by the Prime Minister) and the judiciary. Vladimir Putin, who was elected President in March 2000, has taken advantage of his constitutional prerogatives to make the Presidency the dominant institution in the Russian political system. President Putin has also benefited from strong public support, which many observers attribute to his ability to instill in the Russian public a sense of stability and renewed national pride. The President's strong constitutional position and public support have allowed him and Prime Minister Mikhail Kasyanov great latitude in pursuing their political and economic agenda. President Putin has also moved to strengthen the power of the central federal government. He stripped regional leaders of their seats in the Federation Council (the upper house of parliament) and appointed presidential representatives charged with ensuring the primacy of federal law and the Constitution to seven newly created districts.

Non-state media organizations continued to encounter pressure from the Kremlin and regional governments to alter their editorial policies. The leadership of NTV, Russia's largest non-state television station, experienced what it considered to be unprecedented pressure to follow a pro-Kremlin editorial line. NTV corporate chief and news director Boris Jordan, an American citizen of Russian ancestry, was fired in January 2003. In August 2002, NTV was refinanced in a deal between GazProm and a Russian bank, Eurofinance Bank, which has murky ties to oligarchs and government officials. TVS, formerly TV-6 and currently Russia's fourth largest media entity, was also taken over by the government in 2002 soon after NTV's former staff took over management of TV-6 and made it more popular. The State Duma (lower house of parliament) took up comprehensive legislation concerning the press several times in 2002, but the year ended without any changes to the press law when in December President Putin vetoed amendments that would have given the government greater control of the press in its coverage of terrorism and anti-terrorist operations. However, some Duma members and media observers forecast continued pressure in 2003 for legal changes that would give the government greater control over the media, thereby allowing it to exert a far higher level of influence on the issues of Chechnya, terrorism and the 2003 and 2004 elections. The protracted separatist insurgency in Chechnya continued, claiming dozens of Russian casualties per month. The conflict has caused widespread civilian casualties and destruction, displaced hundreds of thousands of people, and has been characterized by human-rights abuses by both Russian troops and Chechen rebels, some of whom have been linked to international terrorism. A Moscow-sponsored referendum on a new constitution for Chechnya is scheduled for March 2003, to be followed by presidential and parliamentary elections. Proposals for talks to reach a political settlement of the conflict have never borne fruit.

On the economic front, the Putin government continued its efforts to restructure and reform, thereby strengthening Russia's market economy and attracting foreign and domestic investment. The Minister of Economic Development and Trade, German Gref, proposed sweeping changes in the areas of budget, pension and social welfare, deregulation, judicial reform, reduction of subsidies, restructuring natural monopolies and protection of property rights. In its spring 2002 session, the Duma tackled a number of key legislative pieces of the reform program and passed a new agricultural land code, tax relief for small and medium enterprise, and legislation on investment of pension funds. However, reform legislation seemed to have slowed as the Duma struggled with the politically sensitive areas of restructuring the electricity and rail monopolies and communal housing services reform. Banking sector reform is finally moving, albeit at a deliberate pace. The Duma is expected to take up a proposal for deposit insurance in spring 2003. Daunting challenges to effective reform remain, however, including high levels of crime and corruption, poor corporate governance and arbitrary actions by government officials. The Russian Government also lacks the institutional capacity to implement fully its ambitious reform program, especially in sensitive and highly complicated areas, such as restructuring the pension system.

Russia continued to make economic progress in FY 2002. Fueled by the exporting of oil and gas at high world prices, Russia's gross domestic product (GDP) increased by 4.0 percent in 2002, the fourth consecutive year of economic growth. Russia's trade balance was in surplus, though declining as the ruble appreciated in real terms and imports of consumer good rose. Inflation gradually declined to about 14 percent in FY 2002. Official unemployment fell to around 7 percent or 5 million in October 2002, but the inclusion of hidden unemployment would have pushed the figure up to the 15- to 25-percent range. In June 2002, real incomes finally exceeded the August 1998 pre-crisis level of 5.4 percent. Real wages were also 18.7 percent above 1998 levels, and wage arrears continued to fall. However, much of the economic growth, was concentrated in Moscow and St. Petersburg and a few other urban areas, leaving large swaths of the Russian countryside in dire poverty.

Overview of U.S. Government Assistance

In FY 2002, the U.S. Government provided an estimated $1.022 billion in assistance to Russia:

  • $166.44 million in FREEDOM Support Act (FSA) assistance, including $160.94 in FY 2002 funds and $5.50 million in prior-year funds;
  • $476.60 million in U.S. Energy Department (DOE) assistance;
  • $266.29 million in U.S. Defense Department (DoD) assistance;
  • $75.57 million in U.S. State Department assistance;
  • $8.24 million in U.S. Department of Agriculture (USDA) food assistance and technical assistance;
  • $16.06 million in other U.S. Government assistance; and
  • DoD excess and privately donated humanitarian commodities valued at $12.76 million.

U.S. Government assistance and partnership programs continued to promote Russia's economic, political and social transformation. In FY 2002 as in previous years, some FSA-funded assistance programs to the Russian Government were subject to a 60-percent cut mandated by the U.S. Congress in connection with Russian transfers of nuclear technology to Iran.

Russia remained the largest Eurasian recipient of U.S. security-related assistance in FY 2002, primarily through the DoD Cooperative Threat Reduction (CTR) Program and the nonproliferation assistance programs of the Departments of State and Energy. Since FY 1992, the U.S. Government has provided approximately $4.93 billion in total security-related assistance to Russia, including about $817 million in FY 2002.

A interagency review of non-security-related U.S. Government-funded assistance programs to Russia, held in the summer of 2001, set three priority areas for assistance to Russia: strengthening small and medium-sized enterprises; strengthening civil society and independent media; and addressing health problems. Of the approximately $160 million in FY 2002 FSA funds budgeted for assistance to Russia, USAID programs accounted for over $93 million, State Department Public Diplomacy programs for approximately $32 million, and threat reduction programs accounted for approximately $16 million. USAID assistance included approximately $18 million for private-sector development and economic restructuring, over $20.5 million for democratic reform, $14.6 million for health (including $3.54 million in prior-year Child Survival and Disease (CSD) funds), $6.8 million for environmental programs, and $4.2 million for exchanges, training and cross-cutting activities. The Eurasia Foundation received $9.5 million in USAID funding, and the U.S. Russia Investment Fund (TUSRIF) received $20 million in USAID funding.

In FY 2002, the U.S. Government's FSA-funded programs continued to support the Regional Initiatives in Tomsk, Samara and the Russian Far East. In each of these areas, an American citizen coordinator worked closely with local reform-minded officials and civil society groups to focus and coordinate U.S. Government-funded assistance programs, help establish and support partnerships between U.S. and Russian groups and disseminate to other areas of Russia the good practices developed through these activities.

Implementation Problems

Preserving the tax-free status of U.S. Government-funded assistance to Russia remained a challenge in FY 2002. The Russian Ministry of Foreign Affairs (MFA) has acknowledged that the 1992 bilateral agreement between the United States and the Russian Federation that exempts all U.S. Government-funded assistance from taxation is valid as a matter of international law. Nevertheless, Russian Government representatives periodically suggest that the agreement is defective and unenforceable as a matter of Russian domestic law. Local tax authorities sometimes attempt to collect taxes from assistance implementers and their programs. U.S. Government efforts have resulted in Russian Government pledges to address aspects of the issue and in some solutions to individual problems, but the overall problem remains unresolved. Moreover, some changes in the Russian Tax Code, which brought positive results on a policy level and in revenue collection, had the effect of exacerbating problems related to the taxation of U.S. assistance. In FY 2002, the MFA provided the U.S. Embassy in Moscow with the text of a draft protocol relating to taxation of assistance issues; Unfortunately, however, the text falls far short of what would be needed to address the problem and, in some respects, is a step backward. For example, the draft significantly narrowed existing tax exemptions. The Embassy has prepared a counterproposal that would more effectively address problems in implementing exemptions.

On December 25, the MFA notified the U.S. Embassy of its intention to terminate the Peace Corps program in Russia in 90 days. Even though the MFA's note emphasized the good work done by the Peace Corps, but many news reports cited a Russian security official's unfounded accusations that some Peace Corps volunteers engaged in "inappropriate activities." From a logistical perspective, it will be difficult to wrap up the Peace Corps program in an orderly manner by the March 25 deadline.

In August 2002, a humanitarian assistance project sponsored by the U.S. European Command (EUCOM) encountered customs clearance difficulties with five water pumps. The project has continued, but the customs problems are not resolved.

U.S. law governing the International Military Education and Training (IMET) program required the State Department to suspend IMET assistance to Russia throughout FY 2002 because of Russian arms transfers to nations sponsoring international terrorism. This suspension was lifted in November 2002.

Training, Exchange and Educational Reform Programs

Since FY 1993, U.S. Government-funded training and exchange programs have brought over 53,000 Russian citizens to the United States for short-term professional or long-term academic training, including over 5,000 in FY 2002 alone. These programs give participants an opportunity to develop their skills and establish valuable contacts with U.S. counterparts.

Center for Russian Leadership Development - Open World Program (OWP): OWP, formerly known as the Russian Leadership Program, brings young Russian leaders to the United States for seven- to ten-day visits to observe American democratic and market-based institutions at the local level. The U.S. Congress initiated OWP in 1999 as a pilot program administered by the Library of Congress. In December 2000, Congress authorized the establishment of the independent Center for Russian Leadership Development at the Library of Congress to provide a permanent home for the program. The Center was officially launched on October 1, 2001. OWP recruits non-English-speaking, first-time visitors for its study trips and emphasizes community-based programs with a home-stay component. In FY 2002, Open World hosted 1,707 travelers and approved grants to 18 organizations that hosted participants in programs that addressed the areas of economic development, education reform, the environment, federalism, health, rule of law, women as leaders, and youth issues. At least 55 ethnic groups and a wide range of political parties, professions, and elective and appointive government positions are represented among the more than 5,400 Russian visitors hosted to date. By the end of FY 2002, OWP had hosted delegations in all 50 states (864 different communities) and had welcomed participants from all 89 of Russia's regions. FY 2002 program highlights are provided below:

  • U.S. federal and state judges in cities across the United States hosted 154 Russian judges, who observed court proceedings; received briefings on court administration, case management and media relations; toured courthouses and correctional facilities; attended law school classes; and participated in roundtables with federal and state judges, court personnel, prosecutors, private attorneys, and law enforcement officials. In anticipation of the nationwide introduction of jury trials in Russia, many OWP participants focused on the U.S. jury trial system. After returning to Russia, program participants have participated in follow-on seminars with visiting U.S. host judges; introduced alternative dispute resolution and plea-bargaining procedures in their courts; used materials collected during the program in training sessions and lectures; and worked to develop sister-court relationships with their American colleagues. In addition, OWP began its judge-to-judge hosting program in summer 2001, working in cooperation with the Judicial Conference of the U.S. Committee on International Judicial Relations.

  • The American International Health Alliance (AIHA) and World Services of LaCrosse introduced teams of health officials, doctors, and nurses from Russian sister cities to healthy community models in their respective U.S. sister cities.

  • The Women and Politics Institute of American University provided training sessions for women in leadership and political skills, organized meetings with prominent American women leaders, and arranged for each delegate to accompany an American counterpart throughout her workday. The Vital Voices Global Partnership, in cooperation with Georgetown University, offered intensive training for women in public leadership, focusing on ways in which the media can be used to help women, women's inclusion in national security issues, violence against women, and other topics.

  • In Montana, OWP participants observed how local organizations provide youth with training in job skills, work habits, life skills and peer mediation.

  • The Alaskan State Legislature hosted election officials from the Russian Far East to observe the state primary. Several other Russian delegations took part in election activities throughout the fall.

  • OWP sponsored visits by two groups of State Duma deputies in FY 2002. The first was hosted by the Center for Intellectual Property Rights. The participating Duma members were in the process of debating legislation to bring Russia's trademark and patent law in to accord with international standards of intellectual property protection. A second delegation of Duma deputies and their staff members, hosted by the National Democratic Institute for International Affairs (NDI), explored the role of congressional-constituent relations. The participants met with Members of Congress, staffers and observed congressional campaigning in Maryland and Pennsylvania.

U.S. Department of State - International Visitor (IV)/FREEDOM Support Grant (FSG) Program: In FY 2002, 379 Russians traveled to the United States under the IV Program, a professional exchange program administered by the U.S. Embassy's Public Affairs Section in collaboration with the State Department's Bureau of Educational and Cultural Affairs (ECA). Participants focused on areas ranging from the promotion of culture and improvement of health care delivery systems to the development of democratic institutions and a market economy. Specific topics included American studies, developing strategic business and marketing plans, child welfare issues, preventing money laundering, jury trials, environmental clean-up, and grassroots democracy and constituent outreach.

  • Museum Libraries: With help from an IV participant in a FY 2001 IV program on museum libraries, the Russian State History Museum, located on Red Square, opened its new information center in October 2002. For the previous 60 years, the State History Museum did not permit any public access to its collections. Now museum workers, graduate students, and history professors will be able to use printed materials, databases, and Internet resources in the center's reading hall.

  • Domestic Violence: Two alumnae of a FY 2002 IV program on domestic violence who run a crisis center in Yekaterinburg worked with local police to introduce an emergency phone number that women suffering from domestic violence can use to call officers during emergency situations. The alumnae also published a booklet entitled Life without Fear that is being distributed to police and victims of domestic violence.

  • Promoting Multiculturalism and Human Rights: The First Deputy Mufti of the Tatarstan Republic gave a leading newspaper in Tatarstan a positive review of the FY 2002 IV program on promoting multiculturalism and human rights in which he had participated. The program exposed nine Russian Muslim leaders and human rights officials to the American life through visits to Muslim communities in various U.S. cities. The Mufti said in his interview that the trip had showed him that religious tolerance exists in the United States. He was particularly impressed with the fact that the U.S. Capitol Building had a room where Muslim employees could pray.

U.S. Department of State - Community Connections Program: In FY 2002, 400 Russians took part in the Community Connections Program, which brings non-English-speaking Russians to U.S. communities to study U.S. practices in their professional areas. Community Connections also acquaints Russian participants with U.S. society and culture through homestays, cultural and social events. Program topics include business development, NGO and educational administration, youth advocacy, access to information, public health, tourism development, and historical and cultural preservation.

U.S. Department of State - Business for Russia (BFR) Program: In FY 2002, 267 English-speaking Russian entrepreneurs and 13 local government officials familiarized themselves with U.S. business and government structures through BFR internships in about 50 U.S. communities. Russian participants in the BFR program also become acquainted with American society and culture through homestays and cultural and social events. Since FY 1994, over 3500 Russians have participated in the BFR program.

U.S. Department of State - Productivity Enhancement Program (PEP): Since 1996, the Bureau of Educational and Cultural Affairs (ECA) has supported PEP, which is implemented by the San Francisco-based Center for Citizen Initiatives' (CCI) and provides month-long management training internships for non-English-speaking Russian entrepreneurs, managers, private farmers, bankers, accountants, and other business people. Participants are grouped by industry sector. CCI maintains offices in seven Russian cities—Dubna, Voronezh, Vladivostok, Volgograd, St. Petersburg, Yekaterinburg and Rostov—and works closely with U.S. volunteers to facilitate and coordinate PEP programs in communities across the United States. Russian entrepreneurs participating in the PEP program pay for their own travel and living expenses, while PEP and the host communities cover training costs. In FY 2002, 725 Russian entrepreneurs participated in PEP internships in U.S. businesses. The Russian participants were managers in a variety of business sectors, including construction, agriculture/fisheries, manufacturing, and wholesale/retail trade. Over 3,000 Russians have participated in PEP since the program's inception in 1996.

U.S. Department of State - Academic Exchange Programs: In FY 2002, approximately 1,000 participants (75 percent of whom were under the age of 30) traveled to the United States under the ECA Bureau's academic exchange programs, some of which included practical internships. Participants returned home with a deeper understanding of the foundations of democracy and market economics, as well as the concepts of government, civic activism and social responsibility. These programs included secondary-school student and teacher exchanges, undergraduate and graduate (Muskie) exchanges, and programs for university faculty members. The Future Leaders Exchange (FLEX) Program brought 352 Russian high-school students to the United States for a year of study in FY 2002. Russian FLEX students participated in a special event during the Bush-Putin Summit in Crawford, Texas, in November 2001. Other Academic Exchange Program highlights include the following:

  • A recent participant in the FSA Contemporary Issues Program is currently the deputy director of the Center for Reform of the Criminal Justice System and specializes in reform of women's prisons in Russia. In January 2002, she organized a seminar for the staff of women's prisons on creating alternative educational programs for women inmates, thus encouraging prison staff to take into consideration the social issues that exist among women in correctional facilities. As a result of the seminar, a collection of articles was published on social rehabilitation of convicted women.

  • A Russian TV news anchor who studied journalism in the United States under the Muskie/FSA Graduate Program returned home to work at two television stations that were subsequently shut down as a result of political and financial controversies. The participant reported that his U.S. experience gave him an edge in terms of personal flexibility and professionalism, enabling him to become the chief of the Foreign Desk at another, leading station and giving him the confidence and self-assurance required to navigate the job market successfully.

U.S. Department of State - College and University Partnerships: In FY 2002, an FSA-funded partnership in journalism was established between Moscow State University School of Journalism and the University of Missouri School of Journalism. This partnership benefits both institutions and supports complements the ongoing Russian-American Media Entrepreneurship Dialogue between the United States and Russia. In addition, the ECA Bureau supported six new partnerships between Russian and U.S. educational institutions, focusing on a wide range of topics, including law, American studies, applied economics, journalism, special education, and public administration and management. Program highlights are provided below:

  • The University of California at Berkeley and St. Petersburg School of Management relationship, which has benefited from two ECA Bureau university partnership grants, has grown from offering a bachelor's degree program to 33 students in 1993 to offering MBA, evening MBA, MPA, and doctoral programs. During the 2001-02 academic year, almost 1,000 students were enrolled in these programs.

  • As a result of joint research activities in connection with Oregon State University's project with Sakhalin State University, the U.S. project director recently published a new book, Environmental Politics and Policy: A Comparative Approach. The author's Russian colleague contributed to chapters on environmental politics and policy in post-Communist countries. This project is also helping Sakhalin State University develop new courses to fulfill ongoing training requirements and provide certification for regional and municipal workers.

U.S. Department of State - "English as a Foreign Language" (EFL) Fellows Program: In FY 2002, eleven EFL Fellows served in cities from St. Petersburg to Irkutsk. The Fellows' year-long professional contact with English teachers in their communities increased their English language proficiency and teaching ability, local understanding of American values, and skills essential to civil society.

  • The EFL Fellow in Petrozavodsk instituted a web-based interactive project with counterparts at Brown University through which students explore cross-cultural differences via questionnaires.

  • A course developed by the Vologda EFL Fellow examined contemporary American literature with professors and advanced-level students, looking at the writings from the perspectives of values and multi-culturalism.

  • At the American Center in Yekaterinburg, the EFL Fellow led a series of workshops on American children's literature, in which teachers analyzed a collection of texts, deducing underlying American cultural values from them.

U.S. Department of State - Alumni Programs: The U.S. Embassy's Alumni Working Group reinforces the exchange-program experience by maintaining contact with and among alumni of U.S. Government-funded exchange programs. The Alumni Working Group, which acquired a full-time staff person in FY 2002, increased alumni awareness of resources available throughout Russia, organized conferences, personal and computer-based networking opportunities, career development seminars, job forums and other U.S. Embassy and Consulate events. In FY 2002, increased cross-program and cross-agency cooperation resulted in joint events for alumni of various programs.

USAID Training Programs: Through the Global Training for Development (GTD) and Strategic Technical Assistance for Results with Training (START) projects, USAID trained nearly 650 Russians, approximately 55 percent of whom were women, through 76 U.S.-based, in-country, and third-country training programs in FY 2002. Training focused on public involvement in developmental projects; collaboration and networking between civil society, government, and business; elections monitoring; supporting human rights; strengthening independence of local media; promoting transparency in local governance; and improving communication between local governments and civil society. Training programs aimed at economic restructuring covered issues of access to finance for small business, Russia's accession to the WTO, and promotion of sound environmental management practices. Programs for alumni of U.S. Government programs concentrated on modern managerial practices and alumni association capacity building. A group of directors of 11 small television stations who received media training at California State University in January reported significant progress six months later: one station increased its annual revenue eight-fold; another developed a weekly news analysis program and signed an agreement with a national cable network for more programming. Workshops in Samara and Vladivostok addressed strategic planning for organizational networks, mobilization of local resources, membership and volunteer development and interaction with the communities. One trainee and her organization, Children's Center, organized a conference on family-based foster care for orphans that resulted in a request from the local government to conduct a series of training seminars for specialists on protecting children's rights and to develop a new model orphanage. The trainee also organized 15 seminars for over 100 doctors on the importance of early sight and hearing screening for children, which lead to a substantial increase in physicians' referrals to the Children's Center. In addition, the trainee developed new curricula for early intervention specialists and established a series of innovative day-care groups for developmentally challenged toddlers.

U.S. Department of Agriculture (USDA) - Cochran Fellowship Program: The Cochran Program provides targeted education opportunities for prominent agriculturists, policy makers, and business sector representatives. In FY 2002, the Cochran Program provided training for 45 participants in farm management, produce marketing, agricultural policy, veterinary inspection, retail and wholesale marketing, agricultural journalism, meat processing, grain trading, credit and cooperatives. In FY 2002, Russian agricultural specialists who had participated in the Cochran Fellowship program helped move the poultry inspection issue toward resolution and developed initiatives to facilitate the provision of credit to the agricultural sector.

U.S. Department of Agriculture (USDA) - Faculty Exchange Program (FEP): Since its inception in 1995, FEP has trained 59 Russian participants from 30 universities, institutes, and agricultural training institutions. In FY 2002, FEP provided nine university educators from progressive Russian agricultural institutions with five to six months of practical training at U.S. agricultural universities. Areas of interest for the FY 2002 Russian participants included agricultural economics, marketing, agribusiness and agrarian law. As a result of the linkages made through the program, several U.S. universities are establishing joint research activities, student exchanges, and distance learning programs with their Russian counterparts. For example, the University of Minnesota and Altay State Agricultural University in Barnaul will begin a student exchange program in 2003, when a group of 15 agricultural economics students from Minnesota will travel to Barnaul. In addition, a FEP website was established at the Voronezh State Agricultural University (VSAU), facilitating information exchange on a range of issues including course outlines, research papers, articles, and general information on agricultural development in all participating Eurasian countries. Several FEP program alumni assumed important new posts in FY 2002. A participant from the 1999 group was promoted to head of the Economics Department at VSAU; a participant from the 2000 group was promoted to Head of the Economics Department and named Vice Rector for International Relations at Omsk; a participant from the 2000 group was promoted to head of the Marketing Department at Barnaul; a participant from the 1999 group has been named department head of a new Distance Education Department in Omsk; and a participant from the 1999 group is in charge of developing distance education capabilities at Kostroma. In addition, a participant from the 1999 group published a textbook entitled Economic Evaluation of Investments in Agriculture.

U.S. Department of Agriculture (USDA) - Emerging Markets Program: USDA's National Agricultural Statistics Service (NASS) provided technical assistance to the Russian Federation's State Committee on Statistics (GosKomStat) on using software to improve analytical capability and economic surveys. USDA also funded efforts by the American Seed Trade Association, the Almond Board of California, the American Soybean Association, the California Prune Board, and the American Legend Cooperative to strengthen industry ties or examine commercial possibilities with their Russian counterparts. USDA also helped promote the sale of American agricultural products by participating in the ProdExp food show and the Russian Far East Marketing Conference.

U.S. Department of Commerce - Special American Business Internship Training (SABIT) Program: In FY 2002, the SABIT program trained 191 Russian managers, specialists and scientists. Of these, 147 received hands-on training in U.S. companies ranging from four weeks to six months in all areas of industry, while 44 scientists received in-country training. Individual internships took place in companies such as Applied Ultrasonics (Alabama), Seacamp (Florida), Thompson Tractor Co (Alabama), Felton Medical (Kansas), and Ridgetop Group (Arizona). SABIT conducted 17 group internships in areas such as tourism, hospital administration, technology commercialization, software development, telecommunications, plastics, standards, information technology, transportation infrastructure, oil and gas exploration, production and pipelines, energy efficiency in the construction industry, renewable energy and biotechnology. SABIT also conducted a program on good management and manufacturing practices for scientists from the VECTOR Institute in Novosibirsk.

  • Through a partnership with the American Association for the Advancement of Science, SABIT held two seminars in technology commercialization for 47 Russian scientists in Nizhniy Novgorod. Participating scientists received a formal, written technology assessment for projects that they had in development, including a market analysis, suggestions for potential partners and the technology's application potential.

  • In support of closer integration between alumni of U.S. Government-funded exchange programs, SABIT alumni actively participated in seminars/conferences organized by USAID contractors in different Russian cities, both as audience and lecturers. The Ambassador also invited SABIT alumni as guests at various openings of American Corners.

  • Feedback from U.S. host companies is positive. Many request to host SABIT groups again. Also, there was a marked increase in U.S. companies' business sales to Russia as a result of SABIT internships.

U.S. Peace Corps: On December 25, the Russian MFA notified the Embassy of the Ministry's intention to terminate the Peace Corps program in Russia in 90 days. Even though the MFA's note emphasized the good work done by the Peace Corps, many news reports cited a Russian security official's unfounded accusations that some Peace Corps volunteers had engaged in "inappropriate activities." From a logistical perspective, it will be difficult to wrap up the Peace Corps program in an orderly manner by the March 25 deadline. Prior to the Russian Government's decision to terminate the program, the Peace Corps had cooperated well with the Ministry of Education, the official host organization of PCVs in Russia. Program highlights are provided below:

  • Business Education: In FY 2002, 20 Peace Corps Volunteers (PCVs) taught a full range of modern business theory and practice as well as business English in four universities, 11 institutes and academies, one secondary school, one technical college and three NGOs in 16 communities of Western Russia. The PCVs conducted a total of almost 1,600 classes, 23 lectures and 25 seminars, thus assisting about 1,000 students and professionals. The business education PCVs also established three resource centers, which are providing Internet access to their respective communities.

  • Teaching English as a Foreign Language: In FY 2002, 141 PCVs taught various aspects of the English language in 93 secondary schools, 21 universities, 12 pedagogical universities, 12 institutes, five retraining institutes, three public-service academies, six colleges, two ecological clubs and nine NGOs located in 112 communities of Western Russia, Siberia and the Russian Far East. The PCVs taught over 200 courses in conversational English, American and British literature, and American history and culture; delivered over 100 lectures; organized and conducted 114 seminars and workshops; nominated over 70 candidates for exchange programs; established 19 English resource centers, one youth TV studio, two health and recreational centers for children and improved three existing resource centers.

Democracy Programs

USAID Political Process and NGO Development Programs: The National Democratic Institute (NDI) and the International Republic Institute (IRI) significantly enhanced their relationships with regional parties outside of Moscow, with NDI opening offices in Sverdlovsk and Saratov in 2002. From these offices, NDI organized training sessions, roundtables and seminars, and conducted consultations with regional party branches and NGOs. In FY 2002, IRI and NDI developed their first long-term joint political party training program for the Union of Right Forces (SPS). When the training program is completed in fall 2003, SPS will have dozens of internal trainers and party workers at its disposal, as well as comprehensive national and regional campaign strategies. In addition, under the Pro-NGO program, 20,000 young people were involved in community activities over the past year, and the USAID-supported domestic election observation coalition VOICE expanded its network to 16 regions, trained more than 1,200 observers, observed six local elections and gradually increased its capacity to monitor and highlight abuses. The USAID-supported League of Women Voters also expanded its network to 20 partner organizations and trained more than 1,000 observers.

USAID Support for Human-Rights Monitoring: A USAID-supported Russian organization, the Women's Consortium, successfully lobbied for two Labor Code amendments that would protect women's rights. The Women's Consortium was also asked to participate in the Presidential Human Rights Commission, which indicates that Russia is beginning to understand that women's rights are an important element of human rights. USAID also supports the Moscow Helsinki Group (MHG), which monitors human rights issues in all 89 regions of Russia. In FY 2002, USAID awarded three additional grants that enabled MHG to support local human rights NGOs. For example, MGH helped a small NGO working on migrants' issues in the Northern Caucasus. In summer 2002, USAID commissioned a study of tolerance in the Volga Federal District. Its recommendations will inform future human rights work in the Volga District.

USAID Domestic Violence Programs: Activists for women's rights and law enforcement officials have received specialized training through USAID's Gender Law Program. Forty non-lawyer social advocates have received training to assist women in crisis to navigate the Russian legal system; and assistance has been provided to local partners to advocate for changes to the criminal procedure, housing and family codes. There are pilot centers in three cities that focus on delivery of a more intensive and multi-dimensional gender program.

USAID Gender Equality Programs: Gender is an important element of USAID's civil society program because of the important role that advocacy plays in advancing gender issues in Russia's traditional society. In economic policy activities, all procurements include strict criteria to promote the active participation of both genders.

  • In the area of promoting business development and investment, the first U.S.-Russia Women Business Leaders Summit resulted in a network of women entrepreneurs, a planned mentoring program and improved prospects for additional American investment. In USAID's microfinance-sector programs, more than 70 percent of the loans have been made to women-owned businesses, and all the programs are committed to providing over 50 percent of their loans to women entrepreneurs.

  • In the environmental area, a significant percentage of the NGOs and small businesses to which USAID provides assistance are managed or owned by women. The health of men affected by environmental pollution has been targeted in Bashkiria, and both sexes will benefit from the energy efficiency and health risk assessments being implemented by municipalities.

  • In the area of health and child welfare, USAID has three programs specifically concerned with women's health: Women's and Infant's Health, Women's Reproductive Health Operations Research, and Women's Reproductive Health Policy Advocacy. The new Healthy Russia 2020 activity aims to improve the health of all Russians, but in doing so will address the declining life expectancy for men and the largest gap between men's and women's life expectancy in the world.

USAID Local Governance Program: FY 2002 was a significant year for national policy debate on the role and future of local governance in Russia, particularly in the work of the Federal Commission on Delineation of Authority among Federal, Sub-federal, and Local Governments in Russia (the Kozak Commission). The Fiscal Policy Center, a USAID-supported think tank, participated in this debate by informing national leaders how reforms work at the local level and, more significantly, by initiating a national-level public dialogue about proposed political and fiscal reforms. During the course of this dialog, many players with direct interests in the outcome of federal-level decisions, particularly local community leaders, mayors, and the media became active participants in what had previously been a "closed conversation." As a result, the nature and the direction of the federal debate have changed, and lower-level interests are being considered. Although the results of this debate are neither final, nor overly promising — the threat of increased centralization of authority continues — this is one of the best examples to date of the growing strength of civil society in Russia. In FY 2002, USAID worked closely with donors, private foundations and multilateral organizations on local governance reform, which encompasses social protection, public finance, communal service reform, environment, education, NGO support and small community development. Program highlights are provided below:

  • Institutional Capacity-Building: Since economic and political reform began more than ten years ago, the transfer of budget resources and authority to Russian municipalities has not kept pace with the transfer of responsibilities to provide goods and services to the population; USAID's Local Governance Program helped more than 30 local governments address this challenge. The program emphasizes comprehensive local reforms and provides models of community-based strategic planning for economic growth and social spending, training for local officials in democratic governance, performance-based budget decision-making processes, and local policies and procedures that could improve the business climate. As a result of the program, in just one year, six cities instituted sustainable strategic planning, with strong community involvement, as a tool for resource allocation and economic growth. In addition, six additional cities introduced quantitative analysis in budget decisions so that local governments clearly understand what resources they have and how they are used. Among these cities, two invited their communities, for the first time, to participate in budget decisions before budgets were finalized. These events reflected the growth of openness and transparency in local governments' operations, and increased opportunity for various segments of the population, be they businesses, NGOs, community leaders, or individual citizens, to work together in developing common solutions. The program also worked with local governments to help them regularize real estate markets to make them transparent and predictable to investors.

  • Targeting Social Subsidies: Local governments are the primary providers of social assistance in Russia. This assistance is inefficiently distributed: currently, only about 30 percent of social subsidies in Russia actually go to persons in need. In 2002, the Local Governance Program provided new models for governments to target assistance to those who are truly in need, to administer social programs more effectively and to make service delivery more efficient by contracting with local NGOs through competitive procurement mechanisms. Successful models were disseminated to nine additional communities, as well as to policy-makers at higher levels of government. The program also helped 11 local governments increase efficiency and cost recovery in the communal services sector, making more resources available for social programs.

USAID Independent Media Programs: The sources of non-state information accessible to the Russian public have increased and improved over the past year. In selected regions, more than half of the population now has access to non-state and public affairs broadcasting. Although there are few reliable statistics on regional non-state television programming, a variety of reports indicate that non-state regional television stations have become an established source of local news. Moreover, the quality of regional media is improving. In FY 2002, more media outlets used the USAID-supported Internovosti news exchange program, which gives small regional television stations access to news stories from other independent stations. The establishment of Regional Training Centers in Novokuznetsk, Tyumen, Luvny, Klin, Salsk, and Blagoveshchensk helped Internovosti reaching secondary cities. USAID grantee Internews' regional news competition for local reporting grew large enough for a large-scale Russian philanthropist to underwrite the competition. USAID's support for the development of independent media gained greater importance and attention before the May Presidential Summit in Moscow when Internews organized the Russian-American Media Entrepreneurship Dialogue (RAMED). RAMED inspired an unprecedented self-examination of political, managerial and regulatory constraints, resulting in the establishment of a high-level lobbying group for leading Russian media. Internews successfully coordinated the Russian participation in this ambitious, high-level initiative.

U.S. Department of State - Democracy Funds Small Grants Program: The embassy-based Democracy Commission awards small grants directly to democracy-building organizations in Russia, enabling them to develop their own programs and become self-sustaining over the long term. In FY 2002, the Democracy Commission awarded 23 grants totaling $210,000. The grants funded projects in the areas of human rights (particularly women's, children's, and prisoners' rights), volunteerism, combating domestic violence and trafficking in persons, health awareness among young people, and ethnic tolerance.

U.S. Department of State - Media and Democracy Programs: The U.S. Speakers and Specialists Program, administered by the State Department's Office of International Information Programs (IIP), aims to facilitate communication between foreign audiences and U.S. experts. In FY 2002, about 40 U.S. speakers and specialists and professionals-in-residence traveled to Russia to share their expertise on subjects including the role of the press in a democracy, U.S. legal institutions, public administration and management. The Professionals-in-Residence (PIR) Program sends U.S. consultants for three weeks to 10 months to act as consultants to media outlets and NGOs. In FY 2001 and 2002, a PIR was assigned to the Press Development Institute to consult with local newspapers on design issues. Over a three-month period, the PIR worked with two newspapers in St. Petersburg and four in northwest Russia and conducted a seminar in Moscow. As a result of these consultations, several newspapers made dramatic changes in their design and advertising. Other U.S. media specialists have traveled to Russia to advise on journalism curriculum development, the court system and the mass media, media law and ethics, television news production, the role of a government spokesperson, and business reporting.

U.S. Department of State - Support for the Global Internet Policy Initiative (GIPI): In FY 2002, GIPI, a joint project implemented by Internews and the Center for Democracy and Technology, helped relevant Duma officials to draft new telecom liberalization legislation and balanced information security legislation. GIPI staff also participated in a special working group on a draft law covering open access to information, reforming domain-name management and promoting electronic government through preparing the legal basis for the "Electronic Moscow" program. GIPI helps U.S. partners establish ongoing working groups with key stakeholders — including Internet service providers (ISPs), content providers, foreign investors, telecommunications and wireless service providers, NGOs, government officials, and foreign experts — to develop and promote an agenda for policy reform in order to support affordable and unfettered Internet access.

U.S. Department of State - Internet Access and Training Program (IATP): IATP, which is administered by the State Department's Bureau of Educational and Cultural Affairs, fosters the development of the Russian-language Internet by providing free and open Internet access and training to target audiences and alumni of U.S. Government programs. In FY 2002, 16 new public-access Internet facilities were added to the network, making a total of 73 IATP public-access facilities in 49 communities across Russia. IATP conducts training programs, professional workshops, and online events that promote the Internet as an educational tool and give Russian citizens the skills to develop quality Internet resources. An average of 579 alumni of U.S. Government programs participated in training events each month, and an average of 595 alumni used IATP facilities for Internet access each month.

U.S. Department of State - Book Translation Program: The U.S. Embassy's Public Affairs Section awards small grants to commercial publishers to help them bring translations of U.S. books to the Russian market, thereby making American books available in Russian at affordable prices and supporting the development of an independent publishing industry. In FY 2002, 17 new grants were awarded, including books on American society, history and thought, political science, business and economics, and ecology. Universities throughout Russia use selected titles in finance, management and public administration courses. Moscow State University, Russia's largest and perhaps most prestigious institution of higher learning, uses an economic textbook published through the Book Translation Program.

U.S. Department of State - Library Assistance: The U.S. Embassy's Public Affairs Section provides print and electronic resources about the U.S. Government, business and society, and English-language training to public libraries throughout Russia, thereby helping them develop as modern institutions.

U.S. Department of State - Regional Information Resource Programs: In FY 2001 and 2002, the Regional Information Resource Programs Office and the Moscow-based Information Resource Officer (IRO) developed a grant-writing manual for NGOs, provided information to libraries and universities throughout Russia, conducted media outreach, and trained advanced library-science students at Moscow State University. The IRO promotes U.S. Government programs in Russia, highlighting the print, CD-ROM, and web-based resources produced by the Office of International Information Programs (IIP) and the Regional Program Office in Vienna. The IRO manages the American Corners Program, which opened two additional American Corners in St. Petersburg and Arkhangelsk. The American Corners in Samara, Togliatti, Khabarovsk and Yuzhno-Sakhalinsk help enrich the U.S. Government's ongoing Regional Initiative (RI) projects in those regions, while the American Corner in Novgorod acts as a base for post-RI follow-up activities. (See RI section below for further details.)

USAID Rule-of-Law Programs: USAID-supported public interest law clinics continued to represent ordinary citizens and challenge government actions in the courts, thereby helping reinforce the principle that no one is above the law. In FY 2002, public interest law clinics provided 7,000 legal consultations and represented workers in more than 2,000 court hearings. Four legal clinics are now serving as resource centers. A handbook detailing the work of more than 60 legal clinics in Russia was published. With USAID's assistance, the body enforcing the code of ethics for judges published a landmark bulletin summarizing its work for 2001 and making the process of judicial discipline much more transparent. Two courts of general jurisdiction were selected for a pilot project to develop innovative case management and administrative practices for nationwide replication. USAID helped Russian lawyers hone their advocacy skills by conducting mock trials, critiquing the participants' performances and arranging follow-on training. This will help Russian lawyers meet the daunting challenges posed by the introduction of jury trials for serious crimes throughout Russia, the change in roles for judges and prosecutors under the new Criminal Procedure Code and the changes brought about by the Law on the Bar and the Civil Procedure.

USAID Anti-Corruption Programs: In FY 2002, USAID continued to support public-private partnerships to combat corruption in the Tomsk and Samara Regional Initiative areas. Anti-corruption coalitions are fully functioning in both areas and work closely with reform-oriented local officials. In Samara, the coalition helped draft a Code of Ethics for government officials. In both Tomsk and Samara, the coalitions meet regularly to discuss current issues. Public watchdog groups and lobbying groups have been formed. The popular local television channels and newspapers are covering anti-corruption activities. Journalists have been trained in investigation techniques and have taken an active part in revealing corrupt practices.

U.S. Department of State - Human Rights and Democracy Fund (HRDF): In FY 2002, the Bureau of Democracy, Human Rights, and Labor (DRL) provided HRDF funds through the Center for Strategic and International Studies (CSIS) to support efforts by Russian human rights activists to educate the Russian public about the need and build demand for democracy and respect for human rights at the local level. The project is funding the collection of data on Russian citizens' attitudes towards democratic practices, human rights, and various aspects of the war in Chechnya. The project is also funding the training of human rights activists in the use of data and other social marketing techniques in order to mount public awareness campaigns in the regions on human rights. The State Department's allocates HRDF funds. In FY 2002, DRL allocated HRDF funds to the support these efforts.

U.S. Department of State - Support for the National Endowment for Democracy (NED): In FY 2002, the State Department provided $1.2 million in FSA and Human Rights and Democracy Fund (HRDF) funding to NED to supplement its grant-making activities in Russia. Organizations receiving NED funds informed the Russian public about the situation in Chechnya. Another recipient organization worked to attract youth to human rights defense and to make information available about human rights and democracy to a wide audience through regional television stations. Other grantee organizations also worked to raise the standards of Russian legislation and to support greater budgetary transparency in the Russian regions.

Economic Development Programs

U.S. Department of Treasury - Technical Advisors: The Treasury Department's technical assistance programs in Russia during FY 2002 supported Russian economic policy reform initiatives in the areas of budget policy, financial institutions, and financial crimes law enforcement, all of which play important roles improving the business climate for small and medium size enterprises. Treasury Department assistance is focused on reforming the Russian Treasury's accounting, budgeting, and cash management systems, as well as modernizing its information technology. The advisor's primary role is to recommend and implement changes to the Russian Treasury's account structure and help establish improved standards for government accounting, with the goal of bringing Russia's accounting system up to international standards. With input from the advisor, the Russian Treasury implemented internal controls designed to ensure compliance with the new policies and procedures that have been put into effect. The Russian Treasury has also acted on the advisor's recommendation for improved cash management practices. Other program highlights are provided below:

  • Budget Policy and Management: The Russian Treasury is undergoing an ambitious program of reform with the help of International Monetary Fund (IMF) lending, World Bank short-term assistance, and Treasury Department long-term technical assistance. These reforms include reducing wage and payment arrears; creating a single account treasury that concentrates all revenues, expenditures, and cash balances; and extending budget execution and expenditure oversight to most territories within the Russian Federation, as well as to executive branch agencies (including the Ministry of Defense). This is a massive undertaking, as the Russian Treasury, whose staff totals about 55,000 employees, has 89 branches at the regional level and 2,100 local treasury units at the local level in addition to its headquarters operation in Moscow.

  • Financial Crimes Law Enforcement: The Enforcement Team assisted Russia's Financial Monitoring Committee (FMC) in developing and executing a strategy for meaningful engagement with international money-laundering control organizations. The Treasury Department assisted the FMC in developing and executing its plan for membership in the Egmont Group of international financial intelligence units. This work program included a campaign of personal contact with Egmont Outreach and Legal Working Group members; management of the steps and related tasks in the membership process and preparation of the application and presentation materials for the Legal Working Group meetings. The FMC gained admission to Egmont at the June 2002 plenary meeting in Monaco. The bulk of the Department's work with the FMC was in organizational design and deployment of operational personnel. The Treasury Department also played a large role in developing the FMC's high-level Strategic Business Plan (SBP), which was completed in February 2002. In cooperation with the FMC leadership, a function-driven business model derived from the SBP was developed and the business processes defined and documented. The FMC's information technology support systems requirements are based on this model. The FMC has made substantial progress implementing the SBP. Front-end processing capabilities for suspicious transaction reports are nearly fully operational. Analytical processes are in place, although the FMC lacks the automated tools necessary for efficient records processing. A few of the regulations (administrative regulations and operational procedures) are still pending government approval at this time; however, work continues as though they are in force. Recently, the mandate of the FMC was formally broadened to include policy and operational control over terrorist finance issues. Information provided by the FMC to the FBI has resulted in arrests and civil actions in the United States on terrorism charges.

  • Financial Institutions Policy and Regulation Program (FIPRP): In FY 2002, the appointment of a new, reform-oriented management team at the Central Bank of the Russian Federation (CBR) opened the door for the Treasury Department to resume its financial institutions technical assistance. The General Director of the Agency for Restructuring Credit Organizations (ARCO) requested placement of a resident advisor with expertise in deposit insurance systems. As currently written, Russian law designates ARCO as the agency responsible for administering the deposit insurance system. The proposed deposit guaranty law is sensibly modest and would cover only the deposits of individual citizens up to approximately $3,000. Participation by commercial banks would be mandatory, and they would pay quarterly premiums based on their deposit levels. There is broad support for this legislation from the Putin administration, which has committed the Russian federal government to provide initial funding for the deposit insurance fund. Observers expect that legislation creating a deposit guaranty system will be introduced in the Duma in spring 2003. Upon passage of this legislation, the Treasury Department will place a resident advisor with relevant experience to assist the agency in establishing a credible and sustainable deposit insurance system, as outlined in the pending legislation.

USAID Think-Tank Support Project: In FY 2003, 43 analyses prepared by USAID-funded think tanks were incorporated into legislation and policy initiatives of the Russian Government�a large increase over 2001. Perhaps most important among these were five deregulation measures drafted by a USAID grantee that substantially decrease the administrative burdens on Russian small and medium-sized enterprises (SMEs). All five measures passed, in part due to the grantee's advocacy before the Duma. The Central Bank of Russia is using another grantee's work to design a banking reform program. Also, under the aegis of USAID, the first-ever Association of Russian Think Tanks was created to promote professional and information exchanges, uniting reform-oriented think tanks into a powerful force to analyze and advocate for economic reform. Think tanks from seven regions have joined the network. Additional program highlights are provided below:

  • A new regional think tank partnership program responds to the tremendous need to share reform-oriented policy analysis between Eastern European and Russian think tanks. In FY 2002, partnerships were established between Russian-Slovakian, Russian-Czech and Russian-Hungarian think tanks. In FY 2003, another seven partnerships will be established.

  • The USAID-supported Institute for the Economy in Transition (IET) proposed amendments to the corporate profits tax and contributed to legislation to simplify and reduce the tax burden on Russian small businesses. Due in large part to IET, the Duma passed several critical amendments to the Customs Code, bringing Russia's customs system into compliance with World Trade Organization (WTO) requirements. IET experts also developed legislation that clarifies all significant tax issues with respect to petroleum production-sharing agreements.

  • Another USAID-funded think tank, the Center for Economic and Financial Research, uses surveys to monitor implementation of new deregulation laws. The first survey in April 2002 established a baseline to measure how these laws are implemented in 20 regions. The Minister of Economic Development and Trade publicized the survey results as part of its mission to encourage SME development.

USAID Fiscal Reform Programs: The Fiscal Policy Center, a USAID grantee, is a leading member of the Kozak Commission, a presidential commission established to clarify the delineation of responsibilities at all levels of government. The Commission recommended elimination of all unfunded mandates, decentralization of expenditure responsibilities wherever possible, reduction in the scope of federal regulation of regional and local functions and abolition of the federal uniform wage scale. These recommendations form the backbone of the intergovernmental fiscal reform strategy endorsed by President Putin. In FY 2003, the number of Russian regions allocating budget revenues to municipalities via the Center's revenue transfer formula increased from 15 to 25. In addition, regions eliminated 24 unfunded mandates, almost a three-fold increase from 2001. The Center continues to move gradually toward self-sustainability as it diversifies its funding base, with 18 contracts for its services with organizations such as the World Bank, the British Department for International Development, regional governments, and a joint-stock company.

USAID Financial Sector Reform Program: Under new leadership at the Russian Central Bank, which includes Deputy Governor Andrey Kozlov, the former managing director of the Moscow office of the USAID-funded Financial Services Volunteer Corps (FSVC), banking reform seems poised to take off. Priorities in the banking sector now include creating a viable deposit insurance system, establishing credit bureaus, passage of a new bank bankruptcy law, improving banking supervision, and refining other key areas of the banking system.
FSVC helped the Central Bank develop strict anti-money laundering regulations and conducted seminars for commercial banks on implementation of these new regulations. Enactment of these controls removed Russia from the Financial Action Task Force's (FATF's) watch list for money laundering and precluded the application of sanctions to Russia. FSVC also worked closely with the Central Bank, the State Duma, and Russian commercial banks to improve the banking system, helping to develop draft legislation on deposit insurance, bank bankruptcy and currency regulation.

USAID Development Credit Authority (DCA): USAID also helps meet the financial needs of small and medium-sized enterprises in Russia through DCA, which guarantees 50 percent on the net loss of loans made to the small-business sector. USAID now has DCA agreements with three Russian commercial banks. In FY 2002, these banks issued 200 loans totaling $7.5 million�a 170 percent increase over last year. USAID recently contracted with a Russian bank-rating agency to conduct due diligence analyses of partner banks that wish to participate in DCA.

USAID Regional Economic Development Programs: USAID supported the first comprehensive analysis of the local oil-and-gas workforce. A database of job specifications, skills and available qualified personnel was created based on information regarding 2,697 jobs, 5,436 businesses and 16,097 individuals. Industry and Sakhalin employment services now use the database to the local labor pool in oil-and-gas and infrastructure projects. Two seminars on environmental management of offshore oil and gas operations were held in Sakhalin, generating discussions of how government, industry and the stakeholders might together achieve common goals in development and environmental management.

U.S. Securities and Exchange Commission (SEC): In December 2001, an SEC official serving as Financial Services Volunteer Corps (FSVC) volunteer expert responded to a request from PARTAD, the Russian self-regulatory organization for registrars, by providing advice on alternative draft versions of securities legislation that would regulate American Depository Receipt and Global Depository Receipt facilities for Russian issuers. Also in December 2001, SEC staff conducted an interactive securities enforcement training program for approximately 50 securities regulators from Brazil, India, Mexico and Russia on two topics: (1) insider trading and (2) securities enforcement and the Internet. In response to an invitation from the Russian Federal Commission on the Securities Market (RFCSM), the SEC provided written comments on the draft Russian Code of Corporate Conduct. The SEC also participated in an Organization for Economic Cooperation and Development (OECD) roundtable on Russian corporate governance and developed a set of recommendations that have been published as a white paper. The SEC also conducted a three-day training program on securities enforcement techniques and regional office operations for RFCSM regional staff in Irkutsk.

U.S. Department of Commerce - Good Governance Program (GGP): In FY 2002, GGP launched a business ethics initiative in the Russian Far East, providing training to SME entrepreneurs on codes of conduct, followed up with alumni from its FY 2001 business ethics "train-the-trainer" program, and conducted a business ethics workshop in Ulan Ude in coordination with the U.S. West Coast-Russian Far East Ad Hoc Working Group. The GGP also consulted with public and private-sector organizations in the Primoriye and Khabarovsk regions and held workshops in Vladivostok and Khabarovsk with local entrepreneurs on developing codes of business conduct. The GGP also engaged Russian professionals visiting the United States through the SABIT, BISNIS and International Visitors programs. In addition, the GGP conducted one-day business ethics training workshops for business/entrepreneurial groups from Nizhniy Novgorod, Omsk and Chelyabinsk through the U.S. State Department's Community Connections Program. The GGP has also agreed to work with two leading Russian NGOs with developing a set of ethics principles for corporate and independent directors, followed by training of trainers. The GGP, in partnership with the International Finance Corporation (IFC), the Russian-American Business Dialogue and the Russian Government, began to develop a corporate governance manual for Russian enterprises.

United States Department of Transportation - Federal Aviation Administration (FAA)

  • Development and Operation of Air Traffic Routes: The FAA actively participated in the Russian-American Coordinating Group for Air Traffic Control (RACGAT) to help Russia improve air traffic services throughout its airspace and particularly on the Russian Far East and transpolar route systems. Activities included the evaluation, implementation and cataloging of new routes and transition routes. In addition, work was completed on the provision of communication services and assessment of new forms of air traffic communication between the United States and Russia.

  • Russian American Flight Standards Working Group: The FAA actively participated in a working group consisting of U.S. flight safety and legal experts and their counterparts from the State Civil Aviation Authority of Russia (SCAA). The group meets on average of twice a year to discuss air safety projects of mutual benefit, as well as addressing issues necessary to insure the safety of air operations between the U.S. and Russia.

  • Visual Flight Rules General Aviation Route: The FAA and the SCAA jointly continued work with the general aviation community on establishing the first-ever visual flight rules (VFR) general aviation route between Alaska and Russia. During FY 2002, activities included meetings between Russian and U.S. specialists, generation of VFR navigation charts, delegation of control of airspace from Russian military to the SCAA, and ensuring adequacy of dissemination of weather information. The SCAA is currently in the process of writing and implementing new regulations for general aviation. On August 4, 2002, a successful second demonstration of the route was conducted. The route is scheduled tentatively to open in April 2003.

  • Expansion of Bilateral Air Safety Agreement: In FY 2002, the FAA began working with the Russian Interstate Aviation Committee (MAK) to expand the U.S.-Russian Bilateral Aviation Safety Agreement to cover large Russian-made helicopters. Work focuses on technical cooperation in a shadow certification program, which will review Russia's capabilities in design, production and airworthiness certification of large helicopters. The project will work toward the goal of an FAA-type certification of certain Russian helicopters.

  • Certification of Beriev 103 Amphibious Airplane: The FAA is working with MAK and the Beriev Aircraft Company to complete a U.S.-type certification of the Beriev 103 amphibious airplane.

  • Sharing of Capstone Technology: The Capstone Project is a demonstration of affordable surveillance and communications technologies that enable the delivery of text and graphic information to pilots. The FAA's Alaskan Region partnered with the Alaska aviation industry in hosting the first International Advanced Aviation Technologies Conference held in Anchorage in August 2002. Russian representatives participated in Capstone familiarization activities in Bethel, Alaska. The conference provided a much-needed forum for gaining knowledge and sharing lessons learned in the advancements of aviation technologies and for building relationships and support for the application of new aviation technologies.

  • Russian-American Pacific Partnership (RAPP): The FAA actively participates in the RAPP as the U.S. co-chair of their Transportation Sector. Activities undertaken in FY 2002 included the organization of a transportation workshop and transportation-sector meetings to address the restoration of transportation links between the U.S. West Coast and the Russian Far East. Key issues included identification of barriers and obstacles to restoring these links, assessment of market conditions and transportation demand, and the development of strategies and recommendations.

  • Development of Rural Aviation: The FAA provided numerous briefings and documentation to its Russian counterparts at the International Civil Aviation Organization (ICAO) Air Transport Committee to help formulate a policy for developing rural airports and rural aviation in Northern Russia. Activities included arranging for the ICAO representative to travel to Alaska to meet with experts on development of aviation infrastructure in the remote Arctic regions; and briefings and documentation on funding sources, economic benefits of aviation, methods of developing aviation infrastructure in remote arctic regions, and state and federal aviation taxes.

  • Cooperative Research on Titanium Use in Aircraft Engines: The FAA is working cooperatively with the Central Institute of Aviation Motors to develop an international database on titanium use in turbine engines.

Trade and Investment Programs

U.S. Department of Commerce - Business Development Cooperative Initiatives (BDCI): The BDCI Program helps create conditions for expansion of U.S. trade and investment and to connect Russia to the global economy. BDCI activities include intergovernmental consultations and negotiations, advocacy and support for specific commercial projects, seminars and training, studies and analysis, conferences, and advisory functions. Major components of the program include the following:

  • Rule of Law for Business: This project seeks to improve the environment for doing business in Russia by strengthening commercial dispute resolution mechanisms, business conduct standards, and corporate governance standards�all priority concerns of U.S. companies interested in doing more business in Russia. Commerce Secretary Evans participated in a Moscow roundtable on business ethics.
  • Russian-American Pacific Partnership (RAPP): Formerly known as the U.S. West Coast-Russian Far East Working Group (AHWG), RAPP encourages the development of commercial ties between the U.S. West Coast and the Russian Far East. The AHWG held its seventh annual meeting in Anchorage, Alaska, in September 2002. Representatives of nine Russian regions and four U.S. states were among the over 300 participants. Federal government representatives participated in ongoing discussions on bilateral trade in sustainable development and energy, telecommunications (including telemedicine), forestry, transportation, tourism, fisheries, finance and mining.

  • The CLEAR-PAC Customs Project: This project facilitates trade between the U.S. West Coast and the Russian Far East (RFE) by streamlining clearance of U.S. goods through Russian customs. CLEAR-PAC is operating on a pilot basis in several RFE ports and is developing a complete computerized system for customs clearance in Russia.

U.S. Department of Commerce - Commercial Law Development Program (CLDP): In FY 2002, CLDP supported Russia's efforts to join the World Trade Organization (WTO) through regional workshops on the benefits of the WTO held in six regions of Russia with over 750 government officials and private sector participants. In addition, a CLDP-supported website and newsletter continued to provide information on Russia's bid to join the WTO, improving the transparency of the accession process and building private and public sector support through increased awareness. A key WTO text was translated into Russian and distributed to members of the Duma and to regional government officials, allowing the advancement of WTO-compliant legislation through the use of an official translation of the Uruguay Round Agreements. In addition, CLDP experts are working with the Russian Patent and Trademark Agency (RosPatent) to facilitate the training by RosPatent of judges, prosecutors, investigators, customs officers and others on the enforcement of intellectual property rights.

U.S. Department of Commerce - Business Information Service for the NIS (BISNIS): In FY 2002, BISNIS facilitated 22 projects worth nearly $28 million in sectors such as agribusiness, automotive, aviation, construction, consumer goods, information technology, power generation, recreation, telecommunications, tourism, and transportation infrastructure. The majority of these projects involved Russia's regions, reflecting BISNIS's regional emphasis. In FY 2002, 11 BISNIS representatives worked in ten cities across Russia and visited more than 50 Russian cities in 30 regions, including Amur, Khabarovsk, Irkutsk, Krasnoyarsk, Chuvashia; Krasnodar, Sverdlovsk, Kaliningrad, Karelia, Ryazan, Tver, Tambov and Voronezh. BISNIS helped advance entrepreneurship, market reform, regional development and good governance and business ethics, while at the same time promoting U.S. business interests. Program highlights are provided below:

  • BISNIS provided information about market opportunities throughout Russia, including opportunities connected to the Sakhalin oil/gas project, to the U.S. Export Assistance Centers throughout the United States. BISNIS organized a session on doing business in America for Russian participants in the Harvard-Dow Jones Russia Investment Symposium.

  • A BISNIS Bulletin article prompted U.S.-based First International Bank to seek a leasing partner in Russia to jointly pursue U.S. Export-Import (Ex-Im) Bank financing, resulting in a partnership with Delta Leasing. Ex-Im has approved a guarantee for financing to Delta Leasing for the purchase of U.S.-made equipment and machinery.

  • BISNIS worked with the Russian Venture Capital Association and prepared market reporting used by U.S. participants for the organization's annual venture capital fair.

U.S. Export-Import (Ex-Im) Bank: In September 2002, Ex-Im Bank signed memoranda of understanding (MOUs) with three large private Russian oil companies to support their purchase of U.S. equipment and services to develop Russia's vast oil and gas reserves. The MOUs express Ex-Im Bank's willingness to extend up to $100 million in medium- and long-term financing to each of the three companies: LukOil, Yukos, and the Siberian Oil Company SibNeft. In February 2002, Ex-Im Bank authorized a $15.3 million loan guarantee for the export of 362,000 energy-efficient fluorescent lighting fixtures totaling $18 million to modernize lighting in approximately 450 public high schools in St. Petersburg. This transaction was guaranteed under the sub-sovereign program. Ex-Im Bank has received a request for a preliminary commitment to support the export of U.S. goods and services for a liquefied natural gas pipeline to a terminal on the southern shore of Sakhalin Island. This project is expected to result in $3.6 billion in capital investment and will represent one of the largest single Ex-Im Bank financed transactions to date.

Overseas Private Investment Corporation (OPIC): OPIC committed a total of $94.5 million of insurance and financing in FY 2002 for five long-term investment projects in Russia. This includes $93.7 million of financing for four projects: a $30 million loan guaranty to finance the Stimul oil and gas exploration project; a $2.5 million direct loan for a bulk water bottling and cooler distribution facility of a U.S. investor (Clearwater, Inc.); a total of $60 million of financing to KMB Bank for on-lending to micro and small companies in Russia; and a $1.2 million direct loan to Russian Dairy Farm, Inc. for its milk producing project in Dimitrov, Russia. The commitment number also includes political risk insurance coverage to International Scientific Products for an optical component production facility in St. Petersburg, Russia.

U.S. Trade and Development Agency (TDA): Through the European Bank for Reconstruction and Development (EBRD), TDA provided $562,470 for technical assistance to assess the financial viability of UES, Russia's power monopoly, as well as $760,000 for technical assistance to modernize the telecommunications framework. In addition, through the International Finance Corporation (IFC), TDA granted $509,000 for a technical assistance pilot project for automotive component suppliers throughout Russia. Other highlights include a $188,380 grant for an insulin production facility in Armavir, Russia, a grant of $325,000 for the modernization and expansion of Vnukovo Airport, and, also through the EBRD, a grant of $300,000 for identifying a program for the rehabilitation and modernization of the district heating system in Ulan Ude.

U.S. Department of Agriculture (USDA) - Export Credit Guarantee Programs: In FY 2002, USDA allocated $20 million of export guarantee coverage under the GSM-102 program, resulting in $1.10 million in registered U.S. exports of animal feed products to Russia. Also in FY 2002, USDA allocated $20 million under the Supplier Credit Guarantee Program (SCGP), which resulted in $5.42 million in registered U.S. exports of poultry and meat to Russia, and $10,000 of export sales of fresh fruit. USDA also allocated $10 million in its Facility Guarantee Program, but that has not been used. The GSM-102 and SCGP programs helped facilitate a total of $6.52 million in U.S.-Russian trade.

The U.S.-Russia Investment Fund (TUSRIF): TUSRIF, which has offices in New York, Moscow, Yekaterinburg, Khabarovsk, Yuzhno-Sakhalin, Vladivostok, Rostov-on-Don, and St. Petersburg, was created in April 1995 as the result of the consolidation of the Russian-American Enterprise Fund (RAEF) and the Fund for Large Enterprises in Russia (FLER). The planned capitalization for TUSRIF is $440 million. In 1999, TUSRIF established a private management company, Delta Capital Management, to raise funding from private sources and from international financial institutions (IFIs). Delta Capital also funds technical assistance in management training, information system development, and advisory services. To date, TUSRIF has made $98 million in equity investments and loans to Delta Bank, Delta Leasing, Delta Leasing Far East, Delta Auto Lease and Delta Credit. The Delta subsidiaries have disbursed $68.5 million for business loans, equipment leases, auto and truck leases, residential mortgages and other financial services. As of September 30, 2002, TUSRIF, its partner banks and Delta financial subsidiaries have funded $76 million in loans to 3,600 Russian small businesses. Direct financing of $237 million has been provided to 37 firms that employ approximately 17,500 people in agribusiness; financial services, broadcasting/publication, consumer products, manufacturing, natural resources, retailing, telecommunications, leisure, health care and pharmaceuticals. TUSRIF has also attracted about $290 million in joint-venture investments for 30 investments. Milestones for TUSRIF in FY 2001-2002 included the sale of six investments for $43 million, which yielded $19 million in profits and demonstrated the improving liquidity of the Russian market and potential profitability of the Fund's investments. TUSRIF's Bank Partner Program (BPP) has generated over $58 million for small-business lending, micro-enterprise loans, and automobile and mortgage lending since 1995. BPP activities will be consolidated into the Delta financial subsidiaries. The Delta financial companies have secured an additional $65 million in third-party financing from the European Bank for Reconstruction and Development (EBRD) and the International Finance Corporation (IFC).

USAID Support for SME Policy Reforms: SME policy advocacy activity aims to reduce administrative barriers in selected regions by working with Russian business associations advocating regulatory reform. The lessons learned at the regional level will help the Russian Chamber of Commerce advocate for change at the federal level. In Tomsk Oblast, USAID helped identify impediments to investments and then worked with local officials to eliminate them and to encourage investment. In cooperation with the Eurasia Foundation, USAID supports the U.S. Congress-Russian Duma Task Force on SME Issues. The American Chamber of Commerce has introduced e-government programs, which will help SMEs obtain business from the Russian government.

USAID Business Development Programs: USAID continues to pair Russian consultants specializing in industry sectors showing greatest potential for growth with volunteer American counterpart consultants, thereby helping develop Russian business expertise in sectors experiencing rapid growth in Russia. USAID also continues its support for the Farmer-to-Farmer (FTF) Program. Agricultural enterprises receiving volunteers report on average 10 percent increases in both production and revenues. To promote investment and encourage transparency, USAID has helped develop a curriculum on International Accounting Standards (IAS) for Russian universities and continuing education courses for Russian accounting and auditing professionals. Four universities in Samara, Tomsk State University and the University for Public Service in Novosibirsk have included IAS classes in their curricula. The USAID-supported Junior Achievement program reached more than 300,000 students last year. This program promotes a more realistic image of private enterprise and helps create a cadre of young people who want to engage in business. Another USAID-funded program established a partnership between women entrepreneurs in Russia and leading U.S. businesswomen.

USAID Business Finance Programs: Through a nationwide network of non-bank, non-traditional financial institutions, USAID helps channel loans to SMEs and micro-enterprises, thereby helping counter commercial banks' unwillingness to lend to SMEs. The total number of loans exceeds 73,000 and the amount lent is over $73 million�both figures represent a doubling over the past year. These organizations are moving toward sustainability. More than 70 percent of the loans have been made to women-owned businesses. Development of the agricultural credit cooperative system in Russia, undertaken with co-financing from the U.S. Department of Agriculture (USDA), has also been very successful. The Rural Credit Cooperative Development Fund has, through a system of 42 rural credit cooperatives, issued over 3,000 loans, totaling more than $10 million. In addition, USAID's new Microfinance Sector Support Program will provide administrative and loan resources for Russian microfinance institutions.

Energy and Environmental Programs

U.S. Nuclear Regulatory Commission (NRC) - Nuclear Safety Regulation Program: The NRC's regulatory assistance activities with the Russian Federal Nuclear and Radiation Safety Authority (GosAtomNadzor or GAN) began in 1992. Since then, NRC has provided assistance in such areas as licensing of nuclear power plants, development of a legislative basis for nuclear regulation and legal enforcement, development of an emergency response capability, development of an analytical simulator and development of a regulatory training program and training center. In FY 2002, the NRC and GAN completed the integration of analytical simulators into regulatory training activities and contributed to two draft laws governing the roles, responsibilities and authorities of the regulatory authorities.

U.S. Department of Energy (DOE) - Nuclear Safety Programs: A nuclear power plant simulator for training plant operators was installed at Kalinin Nuclear Power Plant's (NPP) Unit 2, the sixth simulator project completed in Russia. A safety parameter display system, which assists reactor operators in monitoring key plant parameters, was also installed at Novovoronezh NPP's Unit 5, bringing the total installed in Russia to four. Contracting and design activities were completed for providing mechanical stress improvement process equipment in FY 2003, which will help to address the issue of reactor pipe cracking. In FY 2002, work continued towards completing an in-depth safety assessment for the Leningrad NPP's Unit 1. This assessment will identify areas of weakness and aid in the determination of future safety improvement projects. The assessment will also be provided to the regulatory authority as part of the licensing process. In addition, international nuclear safety centers in the U.S. and in Russia continued progress on validating the application of U.S. safety analysis computer codes for Russian reactors.

U.S. Department of Energy (DOE) - Environmental Restoration and Waste Management: This program helps DOE meet its domestic environmental restoration and waste management goals by employing leading U.S. and Russian scientists to solve the world's most difficult environmental management challenges. This program enables DOE to identify and access Russian environmental management-related technologies to meet DOE site clean-up needs, leverage its environmental management investments by capitalizing on available low-cost Russian technologies, and improve access to technical information and scientific expertise applicable to environmental management needs. Through its Office of Environmental Management and the Office of Science and Technology (OST), DOE conducts its activities with the Russian Federation under the auspices of the Joint Coordinating Committee for Environmental Restoration and Waste Management (JCCEM) and the Joint Coordinating Committee on Science and Technology Cooperation (JCCST).

  • Joint Coordinating Committee for Environmental Restoration and Waste Management (JCCEM): In September 1990, DOE and the Ministry of Atomic Energy (MinAtom) signed a memorandum of cooperation (MOC) in the areas of environmental restoration and waste management. JCCEM manages the MOC. Collaborative projects, which involve scientists from Russian academic and government organizations and DOE sites and U.S. national laboratories, cover six areas of cooperation: high-level waste tanks; deactivation and decommissioning; transuranic stabilization; efficient separations; contaminant transport and site characterization; and vadose zone issues. The eleventh JCCEM meeting was conducted in early September 2001, in St. Petersburg, Russia. A JCCEM Technical Review Meeting was conducted in November 2002 in Oakland, California, to address current collaborative projects implemented under the auspices of the JCCEM.

  • Joint Coordinating Committee for Science and Technology Cooperation (JCCST): Current JCCST activities focus on two areas: advanced spatial data analysis and uranium transfer phenomena. The first JCCST meeting was held in May 2000 in Moscow. The second JCCST annual meeting is tentatively scheduled to take place in Moscow in March 2003. A workshop on cooperative research and development activities concerning the beneficial use/reuse of depleted uranium (DU) took place in December 2002 in Moscow. Participants in the workshop reviewed the history of the generation of DU, current management practices, and current plans to disposition of material, to identify science and technology areas of mutual interest related to the properties and uses of DU. JCCST activities take place under the auspices of a March 1999 memorandum of understanding (MOU) to promote cooperation in science and technology between DOE and the Russian Academy of Sciences, and the U.S.-Russian Science and Technology Agreement that has been in effect since December 16, 1993. The JCCST manages activities under the MOU.

U.S. Department of Energy - Radiation Effects Research: Under this program, which was begun in 1994, U.S. and Russian scientists work together to study and determine, to the extent possible, the risks associated with working at or living near Russian nuclear sites. The work is conducted under the management of the Joint Coordinating Committee for Radiation Effects Research (JCCRER). DOE is the lead U.S. agency, and the Ministry of Emergencies is the lead Russian agency. Under the JCCRER agreement, U.S. and Russian scientists study the health-impacts of exposures of Russian nuclear workers and members of the communities around Russian nuclear sites, and plan emergency response to nuclear incidents. In FY 2002, DOE supported two radiation dose reconstruction studies, two epidemiological studies, three tissue studies, a tissue repository, data preservation and integration activities, and other public health activities such as education and outreach to the public and to other scientists in Russia and worldwide. All research activities are conducted at the Mayak Production Association and in communities surrounding the complex and along the Techa River in the South Urals. The workers at Mayak, the first nuclear weapons facility in Russia, were exposed to chronic radiation doses 100 to 1,000 times higher than those U.S. workers normally experience. (U.S. nuclear worker exposures average less than 0.1 rem, making it very difficult to detect health effects by studying them). Studying the Russian nuclear workers and people in surrounding communities helps better determine the risks associated with employment in the nuclear industry and helps validate U.S. and worldwide radiation protection standards. For example, the Mayak worker study identified statistically significant increases in lung, liver and bone cancer in workers with increasing internal exposure to plutonium. These results, in turn, are available to standard-setting organizations for evaluating the efficacy of exposure standards. An external scientific review group of eminent U.S. and Russian scientists evaluates and oversees all scientific work.

U.S. Department of Energy - Peaceful Uses of Atomic Energy Agreement (PUAE): The PUAE is a Presidential-level, government-to-government agreement established by Presidents Nixon and Brezhnev on June 21, 1973, making it the oldest science and technology agreement between the U.S. and Russia. Sixty-one Russian institutes and 43 U.S. national laboratories and universities participated in the PUAE. The MOUs on environmental restoration and waste management, nuclear reactor safety, and fusion science expired on September 16, 2001; the one on the fundamental properties of matter, high energy and nuclear physics expired on February 7, 2002. On May 24, 2002, Presidents Bush and Putin issued a joint statement affirming the desire of the United States and Russia to "promote further expansion of contacts in such areas of cooperation as areas of fundamental research, such as fusion energy and high-energy physics." However, due to MinAtom's continued cooperation with Iran's nuclear program, cooperation between the U.S. and Russia on these topics has temporarily been suspended.

U.S. Department of Energy - MinAtom Projects in Civilian Radioactive Waste Management: The Moscow-based International Science and Technology Center (ISTC) manages a radioactive waste account of $808,000 for work performed by the MinAtom institutes. The work is performed under a July 2001 amendment to an existing MOU between DOE and the ISTC. The following two projects are currently being funded:

  • Creation of an Underground Radioactive Waste Isolation Facility at the Nizhnekanskiy Rock Massif: In cooperation with the Federal State Unitary Enterprise "All Russian Research and Design Institute of Production Engineering" (FGUP-VNIPIPT) and Mining and Chemical Combine (MCC), an engineering concept will be developed for the underground isolation of radioactive waste at the Nizhnekanskiy rock massif in an area of MCC underground facilities. The $600,000, 30-month project began in May 2002. Other key participants include the Russian Academy of Sciences.

  • Chemical Assays of Irradiated VVER Fuel for Use in Burn-Up Credit: The State Scientific Center Research Institute of Atomic Reactors (RIAR) will perform chemical assay work on WWER (VVER) spent fuel. The work would be applicable for benchmarking any depletion codes and assays would include actinides and fission product isotopes important to burn-up credit. The $110,000, one-year project is in the final phase of the ISTC approval process.

U.S. Department of Energy - Arctic Military Environmental Cooperation (AMEC): The AMEC Project, which was officially established in September 1996, is a trilateral effort among Norway, Russia and the United States to mitigate the impact of military operations in the fragile Arctic environment. AMEC's creation was sparked by Norway's concern over the dumping of radioactive waste in the Arctic Ocean and neighboring seas by the Soviet Union, decommissioned nuclear submarines in a poor state of repair, and the large amounts of spent nuclear fuel and radioactive waste in Northwest Russia. AMEC has eighteen projects addressing five radioactive waste program areas (spent nuclear fuel, liquid waste, solid waste volume reduction, solid waste storage technologies, and radiation monitoring and personnel safety) and two non-radioactive waste program areas (remediation technologies and clean ship technologies). Since FY 1997, the U.S. Government has provided $25 million in support of AMEC, principally through the U.S. Department of Defense (DoD). Norway has allocated approximately $5 million for AMEC projects, and Russia's contribution is estimated at $3.4 million for FY 1999 and FY 2000, plus in-kind contributions. Under an interagency memorandum of understanding, DOE and the Environmental Protection Agency (EPA) participate in AMEC. DOE provides project management and technical oversight for most of the radioactive waste management programs. Brookhaven National Laboratory and Oak Ridge National Laboratory provide technical expertise and contract management. For additional details, please see Security, Regional Stability and Law Enforcement Programs section below.)

U.S. Department of the Interior - U.S. Fish and Wildlife Service (FWS): On May 23, 2002, the FWS celebrated its thirtieth anniversary working cooperatively with Russia in conserving wildlife and wildlife habitats under the U.S.-Russian Agreement on Cooperation in the Field of Protection of the Environment and Natural Resources. Correspondence between federal bird banding offices was ongoing as early as 1939, reporting on species of birds that migrate between the countries. Joint fieldwork on marine mammal and migratory bird species has provided valuable data on population abundance and ecology that assist wildlife managers in both nations. In FY 2002, FWS continued its grants program, initiated in FY 1995, to assist Russian federal nature reserves and national parks. Twelve nature reserves and five national parks received grants totaling $95,295. The grants were used for combating poaching, improving radio communications among staff, acquiring field gear, and conducting conservation education. In addition, five grants totaling $117,119 were awarded to Russian organizations for Amur tiger conservation (scientific monitoring, environmental education, anti-poaching efforts) under the Tiger Conservation Act. In FY 2002, a total of 32 FWS staff visited Russia. They participated in cooperative efforts to conserve saiga antelope, Pacific salmon and marine mammals and to implementation the bilateral Agreement on the Conservation and Management of the Alaska-Chukotka Polar Bear Population. Other topics of mutual interest included management of protected natural areas and control of invasive species. A total of 85 Russian biologists visited the United States in FY 2002 for fieldwork on shorebirds and migratory waterfowl and collaboration in the conservation of brown bears, Pacific salmon, sturgeon, polar bears, and walrus. A workshop for nine Russian specialists on how to design and construct educational displays for refuge and park visitor centers was held in July in St. Louis. The year's major event was bilateral migratory bird conference in Vermont in September that was attended by 22 Russian and 30 American biologists.

USAID Environmental Programs: USAID's environmental programs have improved the performance of eco-businesses and the associations that support them. USAID contributed to increased profitability and sustainability of the sector and to an increase in trade and contracts with businesses in other countries, including the United States. Russian businesses now have the capacity to implement environmental management systems conforming to WTO regulations, which increases Russia's ability to compete in the global marketplace. With USAID support, four biomass energy facilities providing clean, renewable energy were installed in the Russian Far East and Siberia, bringing economic, social and environmental benefits and reflecting the United States' commitment to address global climate change. Thanks to USAID-supported energy efficiency programs, children in schools, patients in hospitals, and average citizens using municipal facilities in the Volga Federal District are now warm and comfortable, and municipalities are saving money that can be used to address other social needs. These programs also support the President's Global Climate Change initiative. In addition, municipalities are using USAID-supported environmental health risk assessments, which have quantifiably reduced lead levels in the children's blood. Thanks to a new method to predict and control forest pest outbreaks, associated costs have been reduced by 80 percent in pilot regions. The Ministry of Natural Resources has taken the lead in this effort and there is a good chance that this new methodology will be applied throughout Russia. This would also help protect U.S. forests, which can be damaged when pests are transported to America through international trade. With USAID support, the number of individuals and NGOs taking part in activities to protect or improve the environment has significantly increased. More than 750 individuals and groups participated in a fire prevention campaign modeled on the "Smokey the Bear" campaign. They, in turn, informed thousands of others about how to prevent forest fires during the peak fire season, leading to changes in the way many Russians use their forests. More than 20 new environmental education and public advocacy programs have been implemented, and an Internet network linking children in 140 cities enables them to share their environmental experiences. Trade capacity building is an important element of our support to non-timber forest products, secondary wood processing and ecotourism. Programs encourage partnerships between Russian and American companies, and a number of contracts and equipment purchases have already occurred.

U.S. Department of Agriculture (USDA) - U.S. Forest Service (USFS) / USAID Forest Protection and Management Collaboration: The overall goal of USFS/USAID Forest Protection and Management Collaboration is to promote sustainable, ecologically sound forest management practices, while addressing global change and improving the carbon balance in forests of the Russian Far East and central Siberia. USFS, which has a long history of cooperating with Russian forestry officials, is now working with the Russian Ministry of Natural Resources on forest management and landscape level planning, forest inventory and monitoring, fire ecology and management, reforestation and pest management, and forest policy development. In FY 2002, USFS interagency fire coordination center operating plans were adapted for use in Russia and translated into Russian. In September, a team of fire experts traveled to Khabarovsk to work with Russian colleagues to implement fire coordination center operating plans at the new interagency fire coordination center. In the area of reforestation and greenhouse management, a team of experts traveled to Primorskiy Kray and Khabarovskiy Kray to observe greenhouse use and maintenance and to assess pilot reforestation demonstration plots. Many new greenhouses have been constructed in the region, principally in Primorskiy Kray. These greenhouses are modeled on those developed under a USFS/USAID project, but constructed and maintained with local funding. The USFS team provided guidance on the greenhouse expansion program in Primorskiy Kray. In the area of forest management and planning, the USFS Central Siberia Sustainability Project team worked with project partners in Krasnoyarsk to provide training and technical assistance in preparation for collaboration on a sustainable forest management plan. This year, the project supported additional data collection, as well as sustainable forest management and protection activities with local partners. The USFS project team traveled to Krasnoyarsk to provide technical assistance and finalize plans for preparation and writing of the detailed sustainable forest management plan for the Bolshaya Murta Leshoz area.

U.S. Environmental Protection Agency (EPA): In FY 2002, EPA continued its carefully targeted programs in Russia. By the end of 2002, 33 Russian regions had adopted and were implementing energy-efficient building codes, including the City of Moscow and large regions such as Krasnoyarsk, the Republic of Bashkortostan, and the Moscow, Novosibirsk, Chelyabinsk, and Tyumen Regions. Annual avoidance of greenhouse gas emissions under this project is now about one million tons, and a cumulative total of more than 50 million avoided tons is projected over the next ten years. Cost savings for the Russian economy was $28 to $30 million in FY 2002, and is expected to be $1.5 billion over the next ten years. Greenhouse gas emissions inventories have been completed in seven Russian regions to help Russia meet its obligations under the United Nations Framework Convention on Climate Change, and a hotline is in place to provide additional regions with assistance in Greenhouse gas inventory development. Other program highlights are provided below:

  • EPA's Environmental Finance Program continued to develop institutional capacity and expertise in the area of environmental finance, primarily through cooperation with the Ministry of Economic Development and Trade. In FY 2002, this program led to loan agreements for $90 million worth of environmental projects, including one project designed to cease effluent discharges from the Baikalsk pulp and paper plant into Lake Baikal.

  • In FY 2002, EPA completed the second stage of a project to help phase out the use of polychlorinated biphenyls (PCBs) and manage PCB-contaminated wastes in Russia. A feasibility study was carried out to define environmentally sound PCB destruction technologies and identify alternative dielectric liquids suitable for use in Russia's electrical grid.

  • Two EPA projects are under way to study the health effects of environmental contamination in Russia. One study examines the impact of chemical contamination on male reproductive function in Chapaevsk. The other examines the impact of PCB contamination in Serpukhov.

  • The Global Environment Facility, the United Nations Development Program (UNDP), the Russian Government, and EPA contributed to an $11 million financing package for the first coal-mine methane utilization project in the Kuzbas to improve mine safety, increase mine profitability, and decrease methane emissions.

Other Environmental Programs: The U.S. Geologic Survey's (USGS) Columbia Environmental Research Center continued to cooperate with Russia's Institute for Biology of Inland Waters in the area of aquatic ecology. USGS is also working with the Russian Government to bring the Russian National Seismological Network into accordance with the technical standards of the Global Seismographic Network, and is working cooperatively with the Russian Academy of Sciences and the Ministry of Natural Resources to develop a comprehensive database of Russia's oil, gas and mineral reserves. In addition, the National Oceanic and Atmospheric Administration's (NOAA) Alaska Fisheries Science Center continued to collaborate with Russian scientists at the Pacific Fisheries Research Center on research on the western Bering Sea, as well as a wide range of conservation projects. However, ongoing reorganization efforts at the Ministry of Natural Resources delayed the full implementation of some projects.

Social-Sector Programs

USAID Health Partnerships: USAID sponsors seven U.S.-Russian health partnerships: Khabarovsk with Lexington, Kentucky; Kurgan and Shuchye with Appleton, Wisconsin; Sakhalin with Houston, Texas; Sarov with Los Alamos, New Mexico; Stavropol and Samara with Iowa; Tomsk with Bemidji, Minnesota; Snezhinsk with Livermore, California; St. Petersburg with Boston, Massachusetts; and Volgograd with Little Rock, Arkansas. This program has launched four primary health care centers, five women's wellness centers and 50 preventive health activities, bringing preventive care and essential counseling and services closer to the population.

USAID Infectious Disease Programs: In FY 2002, USAID's tuberculosis control program expanded into two more regions and increased the use of the internationally recognized DOTS approach to control the disease. USAID's programs now cover both the prison and civilian populations undergoing treatment. Working with the World Health Organization (WHO), the Centers for Disease Control and Prevention (CDC), and other international experts and donors through a High-Level Working Group on Tuberculosis Control in the Russian Federation, USAID helped draft Russian federal guidelines on tuberculosis treatment, the first such guidance issued since 1995. USAID-led efforts resulted in the Ministry's approval of a protocol for treatment of multi-drug-resistant tuberculosis, a breakthrough that paves the way for a pilot course of complex treatment approaches in Orel Oblast. USAID also continued to target HIV/AIDS, supporting the efforts of NGOs in Moscow and Saratov to partner with NGOs in Tula, Tomsk, and Samara in promoting HIV/AIDS awareness and prevention. USAID targeted the Samara region with condom social marketing programs, outreach to groups practicing high-risk behavior, and policy work. A Samara NGO was identified for an U.S.-Russian partnership. For the first time in Russia, as part of USAID's program, a major rock star was a spokesperson for HIV/AIDS prevention. The lead singer of "Mummiy Troll" was featured in a public service announcement, televised and print interviews, personal appearances and live interviews through USAID's "Take it With You" interactive website. The campaign reached more than 10 million people. In addition, the star wore the red-ribbon campaign button in his music video, one of the most popular shown on MTV-Russia. As Russia is an intensive-focus country under USAID's Expanded Response to HIV/AIDS, the USAID Mission in Moscow began work on a new strategy on prevention, which includes research necessary for the program's reporting requirements. USAID continued to work closely with other donors to raise awareness of HIV/AIDS at a policy level. For example, USAID participated in a conference hosted by the Center for Strategic and International Studies (CSIS) which coincided with the release of the National Intelligence Council's report, The Next Wave of HIV, which laid out the national security implications of HIV/AIDS in Russia and four other countries.

USAID Crossborder HIV/AIDS Initiative: St. Petersburg and Kaliningrad are included in USAID's Baltic Sea Initiative, a regional HIV/AIDS initiative partially funded under the Support for East European Democracy (SEED) Act. Through the Network of Excellence for the Baltic Sea Region, USAID strengthens NGO efforts to prevent the spread of HIV/AIDS and facilitate greater collaboration at the national and regional levels. In St. Petersburg and Kaliningrad, NGO networking activities target the most vulnerable populations—intravenous drug users and sex workers—to integrate these groups into mainstream health care. Representatives of these two Russian cities participate in the Regional Advisory Committee that meets regularly to coordinate cross-border activities.

USAID Health-Care Reform Programs: The introduction of a new activity, Healthy Russia 2020, will streamline USAID's health portfolio, increasing resources to disseminate successful models. Based on extensive consultations and analysis, USAID concluded that it needed to put more emphasis on unhealthy lifestyle choices that contribute to morbidity and mortality from non-communicable diseases. Designed and launched in 2002, Healthy Russia 2020 is an innovative, comprehensive and strategic health education and behavioral change program with the overarching goal of bringing Russian health indicators to West European levels by the year 2020. It is the first major activity in the region dedicated to health problems in industrialized countries. At the core of Healthy Russia 2020 is a membership association based in Moscow that will unite all organizations with an interest in improving the health of Russians. Though a program of technical assistance, training, coaching and the gradual transfer of implementation and management authority, USAID, its implementing partner and Russian colleagues will work on communication and advocacy through a non-governmental organization named after the program. Outcomes are designed to result in an effective, sustainable, member-driven coalition that oversees the dissemination and adoption of evidence-based information and service-delivery models throughout the country. These outcomes will be capable of influencing policy and practices on a national, local and individual level; respond quickly to emerging health needs with high-quality communication, advocacy, or capacity building programs; work in powerful combination with public sector programs; and have a direct impact on the behavior and expectations of ordinary Russians. The Ministry of Health joined with USAID to launch a federal program to disseminate a cost-effective methodology that has been proven in tests by 42 hospitals and 500 primary care physicians in two pilot regions. After USAID and the Ministry issued a request for applications to participate in the national program, 30 regions responded and will contribute the majority of the financing.

USAID Women's and Children's Health Programs: An evaluation of the Women's and Infant Health Program confirmed that training has reduced unnecessary medical interventions during routine prenatal, delivery and newborn care; improved the effectiveness and "family-friendliness" of the services; and improved postpartum and post-abortion contraceptive counseling. In Perm Region, one of the program sites, the health administration calculated that it saved 4.6 million rubles ($153,000) with program interventions in six pilot facilities. Thirteen regions have asked USAID to replicate the program, which brought about fundamental changes in service delivery. USAID has developed a strategy currently implemented in two regions, extending the activity for a year to create a training center in one region, publish a manual on the program's interventions and analyze further cost-effectiveness to increase the savings already generated by the regions. The Ministry of Health's Director of Maternal and Child Health Programs is eager for USAID to take the lead on further dissemination and replication, planned under Healthy Russia 2020.

USAID Child Welfare Programs: In August 2002, the Russian Government approved a $200 million, four-year program, "Children of Russia," the culmination of policy dialogue and investment by international donors including USAID, UNICEF and the Department for International Development (DFID) of the Government of the United Kingdom to reform child health care and welfare in Russia. This change in favor of modern foster care instead of institutionalization in orphanages represents the beginning of the end of the orphan problem in Russia. High-ranking officials from Ministries of Health and Social Development told the press that the program would incorporate innovative practices developed in large part by NGOs. Notably, the foster care model was introduced and developed by the Child-Care Research and Training Center, a grantee of USAID's Assistance to Russian Orphans (ARO) Project. The program itself has helped an estimated 10,000 children and 7,000 families through grants to 84 NGOs in 26 regions. During 2002, a new activity, Assistance to Russian Orphans-II, was designed and an implementing partner was selected. The second phase of USAID's work in child welfare reform will foster local child welfare initiatives aimed at abandonment prevention and de-institutionalization; disseminate best practices in child welfare services; promote changes in public attitudes toward child abandonment; and support social policy improvements.

U.S. Department of Health and Human Services (HHS) - U.S.-Russia Health Committee: At its July 2001 meeting in Washington, D.C., the U.S.-Russia Health Committee noted successful U.S.-Russian collaboration in control and prevention of infectious diseases, including tuberculosis (TB), HIV/AIDS, and sexually transmitted infections (STIs), as well as progress in joint efforts to increase access to quality health care, particularly in the development of an evidence-based medicine center; the quality assurance project (QAP/Russia), depression, alcohol and substance abuse, and hypertension treatment in primary care settings; cardiovascular disease, and maternal and child health. The Committee noted the importance of developing further collaboration, as well as the need to refocus efforts on health promotion and disease prevention and health education. In FY 2002, the work of the U.S.-Russia Health Committee continued in partnership among the U.S. Department of Health and Human Services (HHS), USAID, and the Russian Ministry of Health. Program highlights are provided below:

  • Health Promotion and Disease Prevention: The United States and the Russian Federation have focused increased attention on preventive care and the promotion of healthier lifestyles and behaviors, particularly among youth. The above-mentioned "Healthy Russia 2020" Program will provide a means to disseminate successful models and technologies, mobilize communities for health, and promote changes in individual attitudes. Continued collaboration with Russian scientists working to develop an evidence base for prevention and treatment, particularly in the areas of substance abuse (alcohol, drugs, and tobacco), is essential for Russia's public health, as well as advancement of the field worldwide.

  • Infectious Diseases: The United States and the Russian Federation plan to review and approve protocols and internationally approved approaches for treatment of multi-drug resistant tuberculosis, including the use of second-line drugs as indicated in the protocols. The United States and Russian institutions and policymakers supported the promotion and expansion of multidisciplinary collaboration in HIV/AIDS prevention, treatment and research.

  • Access to Quality Health Care: In 2001, the Health Committee also noted joint successes in Tula and Tver regions and concurred that the third phase of the Quality Assurance Project in Russia (QAP/Russia) would promote national level implementation of modern quality improvement methodology in the Russian health system. Under the leadership of the Russian Ministry of Health, new regions, clinical areas, and approaches will be promoted and pursued.

  • Cardiovascular Disease: Cardiovascular disease is the number-one cause of death in Russia and the United States. The Committee agreed that joint collaboration in evidence-based health promotion and disease prevention in this area continues to be a priority.

  • Maternal and Child Health: Maternal and infant health remain a priority for the United States and Russia. New guidelines, curricula and models of care are being developed jointly. Efforts in this area to improve maternal and infant health and women's reproductive health will continue.

Security, Regional Stability and Law Enforcement Programs

U.S. Department of Defense (DoD) - Cooperative Threat Reduction (CTR) Program: Russia has been a strong cooperative partner under DOD's CTR Program, receiving an estimated $2.78 billion in CTR assistance from FY 1992 through FY 2002 to support the following projects:

  • Strategic Offensive Arms Elimination: CTR has funded over $1 billion since FY 1992, including $133 million in FY 2002 to reduce threats from Russia's strategic offensive arms by destroying strategic weapons-of-mass-destruction (WMD) delivery systems. DoD provides equipment and services to destroy or dismantle intercontinental ballistic missiles (ICBMs), their silos, road/rail mobile launchers, sea-launched ballistic missiles (SLBMs), SLBM launchers and associated strategic submarines, strategic bombers, and WMD infrastructure. Accomplishments in FY 2002 include the following:
    --
    Elimination of 44 SLBM launchers and four associated ballistic missile submarines (SSBNs), bringing the cumulative total to 347 SLBMs and 24 SSBNs;
    --
    Transportation, dismantlement and elimination of 99 liquid-fueled SLBMs, bringing the cumulative total to 240;
    --Elimination of 26 SS-18 ICBM silos and 49 ICBMs (26 SS-17s, 21 SS-18s, and 2 SS-19s), bringing the cumulative total to 95 silos and 372 ICBMs.

  • Nuclear Weapons Storage Security: In FY 2002 CTR budgeted $55 million to help Russia enhance the capabilities of guard forces, make physical security upgrades to key nuclear weapons storage sites, install inventory control systems and improve practices to account for those nuclear weapons in the custody of the Russian Ministry of Defense (MOD). Activities in FY 2002 include the following:
    --Completed final selection of the approved, standard suite of equipment to be installed at weapons storage sites; --Continued training for MOD guard personnel on equipment at the SATC;
    --
    Continued support to MOD in shipment of "Quick-Fix" perimeter fencing and sensors to address high priority security issues at nuclear weapons storage sites;
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    Tracking MOD installation of some 23 additional sets of "Quick-Fix" equipment at weapons storage sites;
    --Awarded a contract for Security and Vulnerability Assessments (S&VAs), design, and implementation of full security systems for eight nuclear weapons storage sites;
    --Completed contracting for the acquisition of small-arms training systems and procurement of live-fire shooting ranges for Russian guard forces;
    --Continued contracting for equipment, consumables and training to ensure the reliability of Russian guard forces;
    --Procured and delivered additional dosimeter systems, radon detectors and initiated training;
    --
    Delivered approximately $10 million worth of nuclear weapons storage site general support equipment and initiated procurement of additional equipment;
    --
    Delivery to MOD of all remaining operational phase Automated Inventory Control & Management System (AICMS) computer equipment;
    --
    Completed life-cycle support and hardware upgrades for AICMS prototype equipment;
    --
    Achieved initial operational capability for the Safety Enhancement Center (SEC), formerly known as the Center for Technological Diagnostics (CTD), in St. Petersburg to support Russian efforts to ensure the effectiveness of nuclear weapons handling equipment and procedures.

  • Nuclear Weapons Transportation Security: This project assists in the safe, secure movement and consolidation of nuclear weapons from MOD operational sites to Ministry of Atomic Energy (MinAtom) nuclear weapons dismantlement facilities. The project also provides assistance to the MOD to bolster its ability to respond to, and mitigate the effects of a nuclear weapons accident or attempted theft. In FY 2002, DoD provided $9.5 million for this program, bringing total funding to date above $85 million. Activities in FY 2002 included the following:
    --
    Facilitated 70 train shipments of nuclear warheads to dismantlement sites;
    --
    Maintained 79 railcars;
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    Completed delivery of 45 "first responder" emergency-response vehicles and associated equipment to be used in the event of an accident during transit.

  • Fissile Material Storage Facility: This project helps the Russian Government provide centralized, safe, secure, and ecologically sound storage at Mayak for up to 25,000 containers filled with weapons grade plutonium and highly enriched uranium removed from nuclear weapons. Accomplishments in FY 2002 included the following:
    --Completion of 91 percent of facility construction and 87 percent of equipment installation;
    --
    Substantial completion of construction of all buildings, to include interior finish with a completion of 60 percent of landscaping, roads, and curbs.
    --Continued negotiations and work on a revised set of transparency equipment and development of site-specific monitoring requirements and procedures.
    --Completion of 95 percent of installation of the Integrated Control System (ICS) and 30 percent installation of the Material Control and Accounting System (MC&A).
    --Completion of 25 percent of the start-up phase of the project.

  • Elimination of Weapons-Grade Plutonium Production: This project assists Russia in ceasing production of weapons-grade plutonium at Russia's three remaining plutonium-producing reactors: two in Seversk and one in Zheleznogorsk. During FY 2002, this project remained on hold, awaiting Congressional authority to transfer the project to the U.S. Department of Energy.

  • Biological Weapons (BW) Proliferation Prevention: This project consolidates and secures or eliminates dangerous pathogen collections, dismantles former Soviet BW research and production facilities, and targets research to enhance U.S. bio-defense capabilities against dangerous pathogens. Accomplishments in FY 2002 included the following:
    --The initiation of one and the continuation of 13 collaborative biotechnical research projects;
    --
    Security upgrades at two former BW institutes;
    --Continued development of dismantlement efforts at four Russian biotechnical institutes and conversion of one building at the Vector facility to milk production.

  • Chemical Weapons (CW) Destruction: This project assists Russia in demilitarizing two former CW production facilities, enhancing security at two nerve-agent storage facilities (Kizner and Shchuchye), and in the safe, secure, and environmentally sound destruction of its CW stockpile at Shchuchye. Accomplishments in FY 2002 included the following:
    --
    Completed approximately 75 percent of the demilitarization of the CW production facility at Volgograd and seven percent of demilitarization work at Novocheboksarsk;
    --
    Completed the designs for enhanced security at Shchuchye and Kizner and installed "Quick-Fix" security enhancements at both sites;
    --
    Continued pre-construction activities at the CW destruction facility at Shchuchye, including the installation of a permanent de-watering system;
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    Continued design for the first nerve-agent Chemical Weapons Destruction Facility in Russia at Shchuchye and built a Joint Construction Management Team office and a contractor materials warehouse.

U.S. Department of Defense (DoD) - Cooperative Threat Reduction - Defense and Military Contacts: CTR Defense and Military Contact programs promote our counterproliferation, demilitarization and defense reform objectives by fostering dialogue and cooperation with Eurasian militaries. Following a decline in 1999-2000 as a result of the Kosovo Campaign, defense and military contacts with Russia rebounded to 28 events in FY 2001 and 102 events had been planned for FY 2002. However, in 2002, the Secretary of State did not certify Russia, and several events had to be cancelled. In August 2002, the President signed a waiver, with the result that a limited number of activities were carried out until expiration of the waiver in October 2002. Events included: the Joint Staff-General Staff talks; a U.S. Pacific Command (USPACOM) visit to the Russian Far East, the U.S.-Russian Harvard Generals Program reciprocal O-6 level Small Group meetings; Trilateral Arctic Search and Rescue Exercise with Canada; and assorted Theater Missile Defense exercise meetings.

U.S. Department of Defense (DoD) - Defense Enterprise Fund: The DEF has continued and expanded defense conversion efforts begun in Russia by the U.S. Department of Defense by providing financial support through loans, grants and equity investments for the demilitarization of industries and conversion of military technologies and capabilities into civilian activities. Enterprises qualified for funding, such as privatized enterprises or spin-offs, defense enterprises or laboratories, were selected, with a priority placed on those enterprises which had previously been engaged in WMD-related activities and which have partnerships with U.S. or other Western companies. The DEF funded several successful conversion projects in Russia and also helped the Russian Government and Russia's defense industry understand the requirements that conversion projects must meet in order to attract private-sector venture capital. As a direct result of DEF investments in Russia, a former manufacturer of nuclear submarine components is now building excavation equipment, and satellite-tracking technology is now employed in private telecommunications applications.

U.S. Department of Defense (DoD) - George C. Marshall European Center for Security Studies: The Marshall Center is an international effort funded by the U.S. and Germany, located in Garmisch, Germany. Students from NATO and non-NATO countries attend courses and seminars on such topics as international relations, national security strategy, crisis management, resource management, and terrorism. In FY 2002, the Marshall Center sponsored 24 Russians to attend six different week-long conferences in Germany. Also in FY 2002, the Marshall Center sent 19 mid-career officers to two- or three-month courses and six senior officers to two-week seminars.

U.S. Department of Defense (DoD) - Asia-Pacific Center for Security Studies: The Asia Pacific Center, located in Hawaii, has a similar mission to that of the Marshall Center. It is funded solely by the Department of Defense, and its courses and seminars focus on security issues in the Asia-Pacific region. In FY 2002, two Russian officers attended a three-month course, and two senior officers attended a two-week seminar.

U.S. Department of Defense (DoD) - Arctic Military Environmental Cooperation (AMEC): As described in the Energy & Environmental Programs section above, since 1996, the AMEC program has conducted a number of technology demonstration projects addressing Russian pollution in Norway's prime fishing grounds. Some 80 percent of AMEC's projects address radiological waste issues in Northwest Russia, including projects designed to enhance the security of stored radioactive material, decreasing the potential for diversion and possible use in the manufacture of dirty bombs. Non-radiological projects are focused on elimination of hazardous waste produced during nuclear submarine dismantlement. In FY 2002, several AMEC projects were integrated into a comprehensive nuclear waste storage system. As a result, key changes in Russian nuclear waste storage technology occurred, allowing for a transition from a wet system, prone to failure, to a dry system used by most Western nations. Storage and transport of spent nuclear fuel (SNF), which accounts for 99 percent of the radioactivity released from radioactive waste but only five percent of the volume, has been improved through use of the AMEC-produced 40-ton cask, and a temporary storage/transshipment pad. The cask is Russia's first dual-use transport and storage cask, while the pad, will reduce SNF shipment time from three months to three weeks. Solid radioactive waste (SRW) processing, transport and storage will be improved through use of a mobile pretreatment facility (MPF), and use of steel transport and storage containers will be another dual-use first. Radioactive storage sites will be monitored remotely for radiological and ecological conditions, and the personal safety of radioactive waste workers will continue to be improved through training and U.S. and Norwegian supplied dosimeters. All of these projects have been or will be completed during FY 2003.

U.S. Department of State - International Military Education and Training (IMET) and Foreign Military Financing (FMF): In May 2001, the International Military Education and Training (IMET) and Foreign Military Financing (FMF) programs for Russia were suspended by the State Department in accordance with legal limitations on assistance that went into effect due to Russian arms transfers to nations on the U.S. list of nations sponsoring international terrorism. While there were limited funds available for IMET in FY 2002, there was no activity in these programs. The suspension of the IMET Program in Russia was lifted in November 2002. Initial indications are that the Russian Ministry of Defense is looking forward to participating in this unique program in FY 2003. The focus of the program in Russia for FY 2003 will be on interoperability with U.S. forces, defense resource management, civil-military relationships, and English language training. Russia was allocated $800,000 in IMET in FY 2003.

U.S. Department of State - Export Control and Related Border Security (EXBS) Program: In FY 2002, the U.S. Government allocated a total of $4.5 million in EXBS assistance for Russia from both FREEDOM Support Act (FSA) and Nonproliferation, Anti-terrorism, Demining and Related Activities (NADR) funds. Under the EXBS Program, the U.S. Departments of Commerce (DOC) and Energy (DOE) provided training to Russian high-technology enterprises to facilitate the implementation of internal export-control programs, enhance compliance with Russian laws, exchange experience and knowledge in the area of export control, strengthen regulations and procedures for export control (including licensing procedures and practices), and facilitate development of enforcement mechanisms. DOE also provided radiation-detection equipment and helped improve security at key transit points to help deter and interdict illicit transfers of nuclear-related materials and technology across Russia's borders. EXBS's focus in Russia is increasingly shifting towards enforcement. The U.S. is working with Russian Customs, Border Guards, Ministry of Atomic Energy (MinAtom), and Ministry of Economic Development and Trade's Department for Export Control on development of training programs for enforcement officials and provision of materials to enhance Russian capabilities to enforce its export control laws and regulations. EXBS assistance is focused on product identification and procedures training for handling export control violations; expanding export control outreach/education for judges, prosecutors, legislators and the scientific and academic community; and expanding installation of specialized radiation detection equipment to over 12 border sites in Russia over the next year to supplement DOE's "Second Line of Defense" Program. EXBS also will continue to engage in export control policy talks, particularly on nuclear export controls, to encourage responsible transfer policies. Collaborative development of product identification training software with Russian counterparts continues and provision of this software tool and materials will help train and assist Russian customs officers and other front line export control officials on Russia's export control laws and regulations, product identification of dual-use goods and procedures for handling export control violations at border points of entry. Beta-version testing in Russia is expected in mid-2003. Additional EXBS efforts in FY 2003 will enhance communications capabilities between border posts and Customs headquarters to help protect against unauthorized exports.

U.S. Department of State - Nonproliferation and Disarmament Fund (NDF): The Nonproliferation and Disarmament Fund (NDF) permits rapid response to unanticipated non-proliferation opportunities or emergencies worldwide. In Russia in FY 2002, NDF continued to fund two prior-year projects supporting nuclear non-proliferation. The first project concerns developing a prototype system to permit an accurate inventory of plutonium during nuclear material conversion efforts. The second is a project to install nuclear material detection equipment at Russian border crossing points to combat smuggling.

U.S. Department of State - Science Centers: Russia, a founding member and host of the International Science and Technology Center (ISTC), is also a major recipient of research grants through the Center, in keeping with its large population of former WMD scientists and institutes. In FY 2002, the Department of State provided an estimated $21 million, or about 57 percent of its Science Centers Program budget, to fund civilian research projects throughout Russia. The projects covered the full range of civilian technologies, from biotechnology and the environment to physics and fission reactors. A recurring difficulty with the ISTC operation in Russia has been the failure of the Duma to ratify the 1992 Agreement Establishing the International Science and Technology Center, which continues to be provisionally applied by the member states. Funding for Russia in FY 2003 likely will decrease to about $15 million, or about one-third, due to overall Science Centers budget decreases.

U.S. Department of State - Biotechnical Redirection: This program, which originated with one Russian institute, now involves some 40 institutes across Eurasia, and continues to engage additional institutes and to start new project work. In consultation with other U.S. Government agencies, the Department of State provides overall program coordination and policy guidance, as well as funds to support program activities carried out by the Departments of Health and Human Services (HHS) and Agriculture (USDA), and the Environmental Protection Agency (EPA). Through a one-time transfer of $30 million from DoD in FY 2002, the State Department began the Bio-Industry Initiative, which focuses on the redirection of former BW production facilities toward peaceful uses and accelerated drug and vaccine development. The initiative aims to facilitate Russian-U.S. industry partnerships within the area of biotechnology and seeks to further develop elements of the infrastructure required to support a Russian biotechnology industry, while providing former weapons scientists an opportunity to move toward longer-term self-sustainability through civilian employment.

  • U.S. Department of Agriculture - Agricultural Research Service (ARS) - Collaborative Research: In Russia, ARS has approved a total of 27 collaborative research projects, including nine approved in FY 2002, involving 55 scientists, 41 of them from 11 former weapons institutes. Seventeen projects are being implemented, including seven funded in FY 2002, and the rest are at varying stages of development from pending U.S. visits by the Russian collaborators to develop final proposals to waiting on host government concurrence. ARS partner projects funded in Russia include research on exotic diseases such as foot-and-mouth disease and classical swine fever (a.k.a. hog cholera); research on potential new vaccines for poultry and swine diseases; biological control of plant pathogens; surveillance and characterization of avian influenza viruses isolated from poultry and wild birds; and food safety related research. Positive results from the first ARS partner projects include two joint U.S.-Russian presentations at international conferences and a third partnership working with a private international company to develop a cooperative research and development agreement to continue their research. The industry partner is interested in providing funding for further research with an agreement for right of first refusal if a marketable product appears likely; and the scientists are actively pursuing a patent for their research results under the project. Also in FY 2002, National Agricultural Library (NAL) staff traveled to Russia to train institute staff from five Russian institutes on computer workstations funded by ARS. These computer workstations will facilitate access to important scientific literature cited in NAL's AGRICOLA database. Although the length of time it takes for completed proposals to be funded continues to decrease, individual institutes are still experiencing problems in gaining host government concurrence, particularly in Russia. Further, due to interference from the Russian Academy of Agricultural Sciences, ARS has not been able to engage scientists from several institutes, including the All Russian Research Institute of Veterinary Virology and Microbiology in Pokrov.

  • U.S. Environmental Protection Agency (EPA) - BW Redirection: Scientists from EPA's laboratory in Cincinnati continued to collaborate with Russian scientists on a site contaminated by polychlorinated biphenyls (PCBs) in Serpukhov, near Moscow. The Russian partners in the project are the Research Center of Toxicology and Hygienic Reglamentation of Biopreparations (Serpukhov); Sanitary-Epidemiological Surveillance Center (Serpukhov), and the Typhoon Science Production Association (Obninsk). In addition, EPA has for several years worked, through an interagency process, to involve Russian scientists from the National Research Institute of Hygiene Toxicology and Occupational Pathology, Ministry of Health, located in Volgograd, to help develop acute-exposure guideline levels (AEGLs). AEGLs are numerical health values that define the limits of exposure for the general public in chemical or other emergencies. For example, AEGL-1 is the airborne concentration (expressed as parts per million or milligrams per cubic meter) of a chemical above which the general population, including susceptible individuals, could experience notable discomfort, irritation, or certain asymptomatic, non-sensory effects.

  • U.S. Department of Health and Human Services (HHS) - Biotechnology Engagement Program (BTEP): The U.S. provided a total of $5.6 million in BTEP assistance for Russia in FY 2002. The majority of BTEP projects involve former BW scientists and institutes in Russia. BTEP projects are planned or underway at over 20 Russian institutions, including the State Research Center of Virology and Biotechnology (Vector), State Research Center for Applied Microbiology (Obolensk), Ivanovsky Institute of Virology, Central Research Institute of Epidemiology, Engelhardt Institute of Molecular Biology, Central Institute for Tuberculosis, Research Center for Toxicology and Hygienic Regulation of Biopreparations, Research Institute of Pure Biopreparations, Shemyakin/ Ovchinnikov Institute of Bioorganic Chemistry, and the All-Russia Research Center for Molecular Diagnostics and Treatment. To allow for closer collaboration and oversight, in FY 2003, the BTEP program will assign on-site visiting scientists at Vector, hire additional BTEP Project Managers at OGHA, and fund staff to work on BTEP projects at ISTC.

U.S. Department of State - Support for the Civilian Research and Development Foundation (CRDF): In FY 2002, the CRDF activated 104 Cooperative Grants Program awards to U.S.-Russian scientific teams totaling approximately $6 million. To date, over 460 such awards have been made. The CRDF also made 52 awards to Russian applied scientists under its Travel Grants Program and initiated eight new awards under its Next Steps to Market Program. One of these projects joins the Imalux Corporation of Cleveland, Ohio, with the Institute of Applied Physics at Nizhniy Novgorod to develop an optical coherence tomography device that detects cancerous cells in the human body. With additional financial support from the Edison Biotechnology Center of the State of Ohio, this project is supporting design and validation testing in Russia and at the Cleveland Clinic Foundation. In addition, CRDF received 44 proposals from U.S.-Russian research teams in response to the Special Competition for Research on Minimizing the Effects of Terrorist Acts on Civilian Populations, the majority of those from scientists with WMD expertise. CRDF has purchased a mass spectrometer for the Regional Experimental Support Center in Khabarovsk to study the content of minerals, gas and oil in the Russian Far East. Khabarovsk is a priority region for both the U.S. Government and the Russia Ministry of Industry, Science and Technology (MIST). CRDF is currently conducting a competition in Samara, which is a Regional Initiative site. The $315,000 award, which includes a matching cost-share from MIST and the Samara Regional Administration, is expected to be announced in March 2003.

U.S. Department of State - Anti-Terrorism Assistance (ATA): In FY 2002, 24 Russian law enforcement and security officials participated in ATA's airport security management training course.

U.S. Department of Energy (DOE) - Nuclear Material Protection, Control & Accounting (MPC&A) Program: The United States and Russia have been working together since 1992 to prevent the theft or loss of nuclear material. To this end, the United States has provided over $1.1 billion in assistance under the MPC&A program in Russia, which seeks to complete comprehensive MPC&A upgrades at all Russian facilities that use or store weapons-usable nuclear material, including the Russian Federation Navy sites containing spent or damaged fuel and warhead storage. The program also seeks to foster development of an indigenous safeguards culture and capability to maintain MPC&A upgrades over the long term. The MPC&A Program is providing a range of training programs and modern safeguards equipment for nuclear facilities in Russia, including radiation monitors for pedestrian and vehicular traffic which will detect attempts to remove nuclear material, modern access-control devices for areas containing nuclear material, alarm stations and computers to process data coming from sensors installed inside facilities and around their perimeters, and tamper-indicating devices to prevent unauthorized removal of nuclear material. In FY 2002, the MPC&A Program was funded at $308.7 million, and was expanded to include work to secure and account for radiological materials, in response to the threat from radiological dispersal devices (RDDs) or "dirty bombs".

  • Radiological Materials Reduction: This project combats the diversion of radiological materials from their intended peaceful use. An initial assessment was completed in FY 2002 to determine the viability, threat, and probable impact of an RDD attack. In the coming year, the program will begin implementing safeguards to enhance the security of vulnerable RDD source materials.
  • Material Consolidation and Conversion (MCC) Project: The MCC Project was initiated in May 1999 to secure storage for nuclear materials at fewer sites and at lower cost, as well as rendering a significant amount of such material not directly usable in nuclear weapons. In FY 2002, the MCC Program down-blended nearly one metric ton of attractive highly enriched uranium (HEU) into less attractive low-enriched uranium (LEU). Down-blending significantly reduces the proliferation risks associated with this material. Since 1999, nearly 3.25 metric tons of HEU has been down-blended. Also in FY 2002, a working group for Material Conversion and Consolidation (MCC) was established under the Joint Coordinating Committee between DOE and MinAtom, as called for by Secretary Abraham and MinAtom Minister Rumyantsev.

  • Nuclear Warhead Protection: In FY 2002, rapid security upgrades were completed at two Russian Navy warhead sites and comprehensive upgrades were completed at one more. DOE initiated MPC&A cooperation with the Russian Ministry of Defense's Strategic Rocket Forces, signing a vulnerability assessment and conceptual design contract for a pilot project site. In addition, open purchasing accounts with two Russian vendors of frequently used security system components were established, allowing for the acceleration of the equipment purchasing process using standardized, pre-negotiated prices.

  • Nuclear Material Protection: In FY 2002, DOE, MinAtom, and the All-Russian Scientific Research Institute of Experimental Physics (VNIIEF, formerly Arzamas-16) signed a protocol detailing areas for MPC&A upgrades on a site-wide basis. This represents a major breakthrough, as U.S. teams had previously been denied access to this site. In addition, access was granted for U.S. teams to plan and begin upgrades at previously closed areas of the Siberian Chemical Combine. A decision was made and implementation begun to construct a new Central Storage Facility at the All-Russian Scientific Research Institute of Technical Physics (VNIITF). A further protocol was signed at VNIITF detailing, on a site-wide basis, areas for MPC&A upgrades to previously closed sections. Comprehensive upgrades were begun on the final facility at Krasnoyarsk-45, which contains HEU and requires upgrades.

  • MPC&A Operations Monitoring (MOM): This program installed monitoring equipment at two sites in Russia, and is currently in the process of installing monitoring equipment at four additional sites.

  • Nuclear Materials Transportation: The Transportation Security Project accelerated activities by contracting for 30 escort vehicles for use by Russian Navy Protective Forces, as well as an additional 19 guard cars to accompany and protect shipments of nuclear material by rail by MinAtom.

  • Nuclear Inventories Listing: A total of 17 enterprises are sending inventory lists and change reports for 52 material balance areas (MBAs) to the Federal Information System (FIS) on a monthly basis. Further, 63 enterprises in the Russian Federation sent their December 31, 2001 annual summarized inventory listing to the IFS in the first quarter of calendar year 2002.

  • MPC&A Training: In FY 2002, 900 students were trained in MPC&A disciplines at the Russian Methodological Training Center and the Interdepartmental Special Training Centers in Obninsk. Eight students are enrolled in MPC&A masters' degree program.

  • Second Line of Defense (SLD) Program: In FY 2002, the SLD program continued to work with Russian Customs in equipping sites and providing training. SLD equipped twelve sites in FY 2002 and surveyed 33 Russian sites for future work. Five training projects of 18 months each were developed for Russian Customs officials, building on the two previous courses developed in 2000 and 2001.

U.S. Department of Energy - International Nuclear Export Control Program (INECP): The large number of Russian nuclear enterprises, nuclear exports and assistance to other states, and size of the Russian nuclear expert community make Russia a top INECP priority. U.S.-Russian cooperation under INECP began with a September 1996 letter of cooperation between DOE and MinAtom, which highlighted the following four areas of cooperation: (1) scientific analysis of control lists of the nuclear multilateral export control regimes; (2) training in export control for the enterprises of MinAtom; (3) exchanges of experience and knowledge in seminars and consultations; and (4) development of internal compliance programs for MinAtom enterprises. The INECP also provides support to the State Department's Export Control and Border Security Program's (EXBS) nonproliferation goals by focusing resources on cooperative projects in the three goals that guide its domestic program: licensing, industry outreach, and enforcement. INECP developed a dual-use technology guide and a nuclear reactor guide in 2002 that will be used by Russian licensing entities as a quick reference during license evaluations. Another project completed in FY 2002 was a technical review of the Russian and multilateral nuclear control lists by MinAtom technical experts, with the goal of enhancing the understanding of controlled nuclear and nuclear-related dual-use materials, equipment, and technologies. In the area of industry outreach, INECP sponsored three regional nuclear export control workshops for MinAtom nuclear enterprises and institutes in Obninsk (November 2001), St. Petersburg (June 2002) and Snezhinsk (September 2002). These workshops included personnel from local enterprises and provided nuclear-specific presentations by Russian and American experts. INECP's greatest strides in industry outreach were the creation and conducting of five single-site workshops. These workshops take place on-site at a single institute or nuclear enterprise, and are designed to focus export control training for all experts at those sites. Each meeting drew between 30 and 70 attendees. In the area of enforcement, INECP helped train Russian Customs (GTK) officials. However, a March 2002 meeting intended to plan future cooperation was cancelled at the last moment by GTK, and no further contact was made by either side until October 2002. Nevertheless, prospects for cooperation with GTK in FY 2003 are good, after a follow-up meeting in November 2002 led to greater definition of GTK's training needs.

U.S. Department of Energy - HEU Transparency Implementation Program: The Highly Enriched Uranium (HEU) Transparency Implementation Program (TIP) is designed to monitor the processing of weapons-grade uranium (nominally enriched to 90-percent U-235) into low-enriched uranium (nominally less than five percent U-235) to be used as fuel for commercial power reactors as part of the 1993 HEU Purchase Agreement. The fundamental objectives of the program are to provide assurance that the HEU is derived from dismantled Russian nuclear weapons and then converted and diluted (down-blended) into LEU. The LEU is then purchased by the United States and delivered to the United States Enrichment Corporation (USEC), which sells it to utilities and delivers it to various fuel fabricators. The HEU-TIP achieves these objectives through a combination of activities, including monitoring visits to the Russian uranium processing facilities to observe processing operations, the use of portable, non-destructive assay (NDA) instruments to confirm the presence of HEU in closed containers, use of the installed blend-down monitoring system (BDMS) equipment to continuously monitor the HEU to LEU down-blending, review and analysis of nuclear material control and accountability documentation, and providing MinAtom accountability and control of documentation of LEU delivered to the United States. Program highlights are provided below:

  • In 2002, the program conducted 20 monitoring trips to the four Russian processing plants, spending a total of 203 monitor-weeks. In addition, the permanent office was staffed by two U.S. monitors over forty-eight weeks (100 monitor-weeks). Over the course of these visits, U.S. equipment was used to confirm the presence of HEU in approximately 2,500 containers. U.S. monitoring instrumentation also confirmed the down-blending of 15 metric tons of HEU into LEU. In July 2002, in accordance with the 1999 Feed Agreement, U.S. monitors inventoried natural uranium cylinders returned to Russia from the United States.

  • At the May 2002 Summit in Moscow, Presidents Bush and Putin agreed to establish a joint experts group to develop proposals on near- and long-term bilateral and multilateral means to reduce inventories of HEU and plutonium (Pu). The HEU TIP staff is supporting this effort and participating in the Nuclear Material Expert Group (comprised of DOE and MinAtom officials) to identify options to accelerate reduction of HEU and Pu. HEU TIP is also closely involved in the development of working groups to carry out recommendations proposed by the Expert Group.

U.S. Department of Energy - Reduced Enrichment For Research And Test Reactors (RERTR): In FY 2002, the RERTR program activities, funded at $1.3 million, continued to support testing of LEU fuel elements, which can be used for HEU to LEU conversion of reactors at the St. Petersburg Nuclear Physics Institute and throughout the Eurasian region. Testing, studies and analysis continued and assessments of the performance of LEU fuel for research reactors in Russia were begun.

U.S. Department of Energy - Russian Research Reactor Fuel Return (RRRFR): Since December 1999, the United States, the Russian Federation, and International Atomic Energy Agency (IAEA) have sought to return to Russia any Soviet- or Russian-supplied fuel currently stored at foreign research reactors. The Russian Research Reactor Fuel Return (RRRFR) program seeks to eliminate these stockpiles of HEU, persuade eligible countries to convert their research reactors from HEU to LEU fuel. Trilateral discussions among the United States, Russia, and the IAEA in Vienna have identified more than 20 research reactors in 17 countries that have Soviet- or Russian-supplied fuel. Most of these reactors use at least some HEU fuel, and most have stocks of both fresh and irradiated fuel that must be carefully stored and managed for many years to come. DOE's goal is to help Russia develop a broad-based HEU minimization policy under which it would accept the return of spent and fresh HEU fuel. DOE officials have led discussions with representatives from MinAtom and the IAEA on this issue, with the IAEA agreeing to provide technical and organizational support. The first candidate for a pilot shipment of fuel back to Russia is Uzbekistan, whose government has expressed a strong interest in participation in the RRRFR program. On March 12, 2002, DOE and Uzbekistan's Ministry of Foreign Affairs signed an agreement to facilitate cooperation between the parties for the return of Uzbekistan's Soviet- or Russian-supplied nuclear fuel to Russia. DOE is contemplating entering into similar agreements with other countries that seek to return their Soviet- or Russian-supplied nuclear fuel to Russia and commit to convert from HEU to LEU use.

U.S. Department of Energy - Elimination of Weapons-Grade Plutonium Production: The Office of International Nuclear Safety and Cooperation is conducting a cooperative effort with Russia to halt reliance on plutonium-producing power plants. There are three plutonium production reactors still in operation in Russia: two at Seversk and one at Zheleznogorsk. The three reactors have approximately 15 years of remaining lifetime and as a group could generate an additional 25 metric tons of weapons-grade plutonium for the Russian stockpile. These reactors, although originally designed to produce weapons-grade plutonium, also provide heat and electricity required by the surrounding communities. This program, funded at $41.7 million in FY 2002, is providing fossil-fueled energy plants for the surrounding communities to allow shutdown of the reactors. The Seversk plutonium ADE-4 and ADE-5 production reactors will be shut down after approximately 60 months from the signing of the initial Seversk contract with Russia and the provision of U.S. assistance to commission heat and electric capacity of up to 1,560 gigacalories per hour of steam generation and 230 megawatts of electricity generation. The Zheleznogorsk ADE-2 plutonium production reactor will be shut down after approximately 96 months from the signing of the initial Zheleznogorsk contract with Russia and the provision of U.S. assistance to commission heat and electric capacity of up to 478 gigacalories per hour of steam generation and 117 megawatts of electricity generation by building a new fossil plant. The three plutonium production reactors will continue to operate until the fossil-replacement plants are completed. The reactors have deficiencies in the areas of design, equipment, materials and training and are considered to be the highest-risk reactors in the world. High-priority safety upgrades to these reactors are being expeditiously pursued to maximize their effect on safety.

U.S. Department of Energy - Russian Transition Initiatives (RTI): The purpose of RTI is to counter the proliferation threat posed by the "brain drain" of WMD scientists from the former Soviet Union, of which Russia is the primary heir. For proliferant states, sub-national groups, or terrorist organizations to pursue weapons of mass destruction (WMD) programs, they would need fuel cycle technologies to get fissile materials (or they would need to buy or steal fissile materials), weapons design information, and weapons assembly expertise. The Russian nuclear weapons complex, which is vastly oversized, decrepit, and starving for resources is still dangerously capable of performing its core functions, and is an obvious source for these inputs. The RTI program is comprised of two parts: the Initiatives for Proliferation Prevention (IPP) program and the Nuclear Cities Initiative (NCI).

  • Initiatives for Proliferation Prevention (IPP) seeks to redirect former Soviet weapons scientists towards peaceful, sustainable commercial pursuits through cooperative projects with the U.S. National Laboratories, and U.S. industry. IPP strives to stabilize institutes, personnel and technology formerly dedicated to developing and manufacturing weapons of mass destruction. Begun in 1994, the IPP program has matured from initially funding mostly research and development projects to focusing on commercially viable projects. FY 2002 funding was budgeted at $32.6 million for projects in Russia.

  • Nuclear Cities Initiative (NCI) was established in 1998 through a government-to-government agreement between the United States and the Russian Federation. NCI is an unprecedented effort to contribute to the irreversible, transparent downsizing of the Russian weapons complex by removing functions and equipment from the complex, reducing the physical footprint, and creating sustainable, alternative non-weapons work for displaced nuclear experts. Despite access difficulties imposed by MinAtom during much of FY 2002, NCI nevertheless moved nuclear complex downsizing and business infrastructure development forward with a funding level of $21 million in FY 2002. In Sarov, NCI removed an additional 50,000 square feet for use in the Avangard Technopark, which now consists of 40 percent of Avangard's nuclear weapons production floorspace. Sarov Labs, a stronger and more viable company, was formed, thus consolidating the Sarov Open Computing Center and the Sarov Open Science Center, both of which were created with NCI support. In Snezhinsk, the NCI-established Identification Technologies Company (ITEC) acquired three new distributorships and increased orders from the Russian market. An NCI-supported private engineering firm, Spektr-Conversiya, increased its orders from the Russian oil and gas market, attracted Western investors and grew to 103 full time workers from 53 at the beginning of FY 2002. In Zheleznogorsk, NCI has helped relocate isotope extraction equipment from the city's security area into an open commercial site and helped establish MCC Technologies as a new company registered in the United States and Russia to sell waste tank remediation technologies to the United States. The access issue is now resolved, and NCI will mark its fifth year with completion of several infrastructure development projects, greater Russian and Western investor interest and more independently operating small and medium enterprises in all three pilot cities. The Russian side has expressed strong interest in renewing the program for another five years

U.S. Department of Energy - Nuclear Warhead Safety and Security Exchange (WSSX) Agreement: The Agreement between the United States and the Russian Federation on the Exchange of Technical Information in the Field of Nuclear Warhead Safety and Security, more commonly referred to as the Warhead Safety and Security Exchange (WSSX) Agreement, was signed on December 16, 1994, for an initial five-year term and extended at the June 2000 Moscow Summit for an additional five-year term. Participants in the Agreement are DOE/NNSA and the Department of Defense (DOD) for the United States and MinAtom and the Ministry of Defense (MOD) for Russia. The Agreement provides for a useful exchange of unclassified technical information relating to warhead safety and security U.S.-Russian Warhead Safety and Security Agreement. Under the WSSX, contracts have been signed between U.S. and Russian National Laboratories for laboratory-to-laboratory warhead dismantlement transparency projects involving all three Russian nuclear weapons laboratories, and work is underway to conclude contracts at the Russian nuclear weapons dismantlement facilities. Work areas include radiation measurement technology, tags and seals, remote monitoring, and other topics related to transparency. In addition to providing insight into the Russian nuclear weapons dismantlement process, this program has, over the years, employed as many as 1,000 Russian nuclear weapons scientists, thus contributing to nonproliferation of WMD expertise.

U.S. Department of Energy - Plutonium Production Reactor Agreement (PPRA): PPRA is a Government-to-Government Agreement between the United States and the Russian Federation concerning cooperation regarding plutonium production reactors. Under the PPRA, successful monitoring of shutdown U.S. and Russian plutonium production reactors has taken place in both the U.S. and Russia since 1999. Subject to the PPRA, U.S. monitoring visits to the Russian plutonium oxide storage facilities in Seversk and Zheleznogorsk took place in 2002 to verify the status of the stored Russian plutonium produced by the remaining operational plutonium production reactors. DOE's Office of International Nuclear Safety is responsible for administering the replacement of the remaining operating plutonium production reactors with fossil fuel plants. Once the three operating reactors (two at Seversk and one at Zheleznogorsk) are shut down after alternative sources of heat and electricity are provided, they would be subject to the shutdown reactor monitoring regime.

U.S. Department of Energy - Fissile Material Verification: The United States, Russia, and the International Atomic Energy Agency (IAEA) have been working over the last six years to develop a new regime for international verification of fissile materials in order to promote international confidence that excess materials subject to IAEA verification remain removed from weapons programs. A U.S.-Russian-IAEA joint working group has been charged with resolving technical, legal and financing issues. The technical work continues to be focused on developing verification measures that the IAEA could use to verify plutonium that would not disclose information related to nuclear weapons. A model verification agreement (MVA) has been discussed and developed. In November 2001, the Russian side asked to defer further work on the MVA and associated subsidiary arrangements and technical criteria until outstanding issues related to symmetry between United States and Russian disposition plans could be addressed and questions regarding the use of voluntary offer safeguards agreements (VOAs) in lieu of the MVA are considered. In June 2002, the Russian side indicated that the desire of the Russian Government was to consider the original mandate to the Trilateral Initiative working group complete, and to apply to experience gained by the Trilateral Initiative to the Plutonium Management and Disposition Agreement (PMDA) monitoring and inspection approach. The technical work has continued, including a technical workshop at the JRC ISPRA research laboratory in Italy and the beginning of joint development work on an attribute verification system with information barrier in Russia.

U.S. Department of Energy - Fissile Materials Disposition Program: In July 1998, the U.S. and Russian Governments signed an agreement on scientific and technical cooperation to govern joint U.S.-Russian activities in plutonium disposition. Since then, the United States and Russia have conducted studies and pilot-scale tests to confirm the viability of certain technologies that might be used for disposition of surplus Russian plutonium. In September 2000, the United States and Russia signed an agreement for disposing of 34 metric tons of weapon-grade plutonium in each country by irradiating it as mixed-oxide (MOX) fuel in reactors. This will require construction of a new facility to fabricate plutonium into fuel with a target date of to begin operation of such facilities. The agreement seeks a minimum disposition goal of two metric tons per year and an obligation to seek to at least double that rate. The U.S. and Russia plutonium disposition programs are designed to proceed in rough parallel with both the disposition processes and the end products subject to bilateral monitoring. The 2000 agreement anticipates that the IAEA will take over some or all of the monitoring and inspection responsibilities where appropriate and agreed to by the parties. The U.S. Congress appropriated $200 million in FY 1999 for the Russian plutonium disposition program, and the United States has committed to seek an additional $200 million in future appropriations. In addition to U.S. financial support for the Russian program, the Agreement recognizes that international financing and assistance will be necessary for Russia to fulfill its plutonium disposition obligations. The United Kingdom, France, Japan, and Canada have collectively pledged approximately $300 million. Program highlights are provided below:

  • MOX Fuel Fabrication: DOE is helping Russia develop a MOX fuel fabrication process that is compatible with surplus weapon-grade plutonium, test the resulting fuel, and qualify it for use in a VVER-1000 light water reactor. Final fabrication and use of the fuel is subject to approval by GosAtomNadzor (GAN), Russia's nuclear regulatory authority, which will license the use of the MOX fuel. During FY 2002, DOE worked toward finalizing the details of the technical path forward for the Russian program. The United States and Russia discussed whether Russia would base their approach and technology for fuel fabrication on the design of the U.S. facility.

  • VVER-1000 Conversion: VVER-1000 reactors in Russia currently are fueled with uranium oxide fuel. Considerable work is required to ensure that they can be fueled with mixed plutonium and uranium oxide fuel. The first stage of this effort involves feasibility studies. This joint U.S.-Russian project is aimed at verifying and updating computer codes used to predict the behavior of MOX fuel in VVER-1000 reactors. Verification of codes for presentation to GAN for licensing approval is underway. Development of a licensing plan for VVER-1000 reactors (including transportation, storage, and other associated activities) with GAN is being initiated. RosEnergoAtom, the Russian utility that operates nuclear power reactors, is involved in the effort as the ultimate user of the MOX fuel. During FY 2002, DOE continued work on MOX fuel insertion studies, VVER-1000 reactor design modifications, and safety analysis.

  • BN-600 Conversion: DOE has agreed to help Russia assess the feasibility of converting Russia's BN-600 reactor, a fast-neutron reactor, into a reactor suitable for burning weapon-grade plutonium. The BN-600 currently uses uranium oxide fuel and produces some plutonium. Preliminary estimates indicate that the reactor could be modified to burn MOX fuel, perhaps even utilizing a full MOX core. During FY 2002, DOE initiated BN-600 reactor plant life extensions studies, continued work on BN-600 MOX insertion studies, continued hybrid core design and the safety analysis, and initiated breeder blanket replacement activities.

  • Advanced Reactor (GT-MHR) Technology: DOE is working with Russian institutes and private industry to develop a gas turbine, modular helium reactor (GT-MHR) as an option to supplement Russia's existing reactor capacity to dispose of surplus plutonium in excess of the initial 34 tons. FY 2002 accomplishments included completing the preliminary design of the GT-MHR and establishing a system of design requirements and component specifications. The program also commenced civil construction activities for the GT-MHR Bench Scale Fuel Fabrication Facility.

  • Licensing and Regulations/Other Program Support: DOE is providing technical support and funding to GAN for the identification, development, and implementation of the regulatory infrastructure required for licensing the design, construction, testing, and operation of new or modified nuclear facilities to be used for plutonium disposition. This work includes support for (1) documentation of the process for conducting licensing reviews and issuing new or revised licenses, (2) development of regulations and standards needed to license new or modified facilities, and (3) definition of the roles and support requirements of other agencies in Russia. During FY 2002, DOE continued to provide technical assistance for the Russian regulatory infrastructure by developing and reviewing new Russian licensing regulations.

U.S. Department of Energy - Warhead and Fissile Material Transparency Program: The DOE/NNSA Warhead and Fissile Material Transparency Program promotes transparent nuclear reductions by working with the Russian Federation to negotiate legally binding agreements and transparency options to allow confirmation of Russian nuclear weapons reductions and that excess fissile materials are not used in production of new nuclear weapons. In FY 2002, the Warhead and Fissile Material Transparency Program funded $5 million in projects related to Russia

U.S. Department of State - Anti-Crime Training and Technical Assistance (ACTTA) Program: In FY 2002, the Bureau of International Narcotics and Law Enforcement Affairs (INL) added a second Resident Legal Advisor (RLA) to support the law enforcement assistance efforts in Russia. The RLAs focused on criminal procedure code implementation, support for development of prosecutors, development of legislation on money laundering and trafficking in persons, and implementation of a Mutual Legal Assistance Treaty. Training and assistance was provided to Russia's 89 regions to implement the new criminal procedure code. Anti-money laundering assistance was renewed as a result of the passage of the necessary anti-money laundering legislation. Assistance was provided for the development of a financial intelligence unit and for the continued development of a task force on trafficking in persons. Additional projects have been approved to develop counter-drug and anti-smuggling capacity at Russian ports on the Black and Caspian Seas. A counter-drug task force near Russia's Central Asian border with Kazakhstan is being established. Also, a project to draft and introduce legislation criminalizing trafficking in persons has been approved and support was provided for an extension of a successful juvenile drug education and prevention program. Total INL assistance budgeted for FY 2002 was an estimated $3.86 million. Programs anticipated for FY 2003 will continue to address trafficking in persons and support efforts to fight narcotics and implement the criminal procedure code. Through the RLAs and other means, the U.S. Government will assist Russia in bringing its laws and law enforcement procedures into compliance with international standards.

U.S. Department of Justice - Overseas Prosecutorial Development and Training (OPDAT): In FY 2002, OPDAT expanded its Russia program, using FREEDOM Support Act funding provided via the State Department's INL Bureau to post two Resident Legal Advisors (RLAs) to the U.S. Embassy in Moscow simultaneously to focus on criminal procedure, human trafficking, mutual legal assistance and money laundering. With funding from OPDAT, the American Bar Association's Central European and Eurasian Law Initiative (ABA/CEELI) also continued to support a criminal law liaison (CLL) in Moscow. OPDAT and ABA/CEELI worked closely to assist the Duma's Criminal Procedure Code (CPC) Working Group with materials and expertise as it made final revisions to the draft CPC before its final readings in the Parliament. The enactment of this new code in early FY 2002 was a landmark event for Russia, as it finally brought the country into compliance with the mandates of the European Convention on Human Rights and Council of Europe membership and brought into force the transitional provisions in the 1993 Constitution providing for judicial, as opposed to prosecutorial, authority over arrest and detention. The new CPC also expands the right to trial by jury for serious crimes to all 89 regions in Russia. Following passage of the new CPC, the Working Group undertook the job of overseeing and facilitating the CPC's implementation by conducting a series of practical and interactive seminars on the interpretation and application of the new code for the legal and law enforcement community in each of Russia's seven federal regions. These seminars were also designed to allow the drafters to develop amendments, through practitioner input, to improve the new code's implementation. OPDAT also organized and participated in a seminar focused on the new CPC directed specifically at the criminal law and procedure professors and academics who will be teaching and commenting on the Codes. In addition, OPDAT partnered with the Treasury Department and USAID to hold training seminars for bankers on how to comply with the new reporting requirements. ABA/CEELI conducted a series of multi-disciplinary jury trial seminars focused on skills development for the defense bar and co-sponsored an economic crimes workshop with OPDAT in Vologda. ABA/CEELI also partnered with Transparency International to co-host a seminar on anti-corruption legislation in Russia, including participants from the State Duma, the Procuracy, other Russian departments and the media. In September 2002, OPDAT initiated an anti-trafficking program in partnership with the Duma's Anti-Trafficking Law Working Group to develop an anti-trafficking law that brings Russia into compliance with its obligations under the United Nations Convention Against Transnational Organized Crime (TOC) and its anti-trafficking protocol. One of the two RLAs has focused exclusively on conducting a mutual legal assistance training project with the General Procuracy and the production of a revised manual for processing requests under the U.S.-Russian Mutual Legal Assistance Treaty (MLAT).

  • In FY 2002, American University's OPDAT-supported Transnational Crime and Corruption Center (TraCCC) continued to fund its united research centers (URCs) in Moscow, St. Petersburg, Irkutsk and Vladivostok. The URCs produced surveys of topics of transnational crime and corruption from the local press and posted them online, making it possible to track crime and corruption across Russia in a concise and timely manner. The URCs also provided input to legislators on draft criminal laws, held roundtables on priority crime issues, coordinated large and small research grant competitions and published numerous journals and textbooks, including the research produced by the grant recipients. The St. Petersburg Center also held its annual summer school for young Russian professors, aimed at developing young Russian academics' capacity for teaching, policy development and research in the area of transnational crime and corruption.
Humanitarian Programs

U.S. Department of State - Coordinator's Office Humanitarian Assistance: In FY 2002, at a cost to the U.S. Government of $740,000, the Humanitarian Programs Division of the Office of the Coordinator of U.S. Assistance to Europe and Eurasia (EUR/ACE) transported to Russia privately donated humanitarian commodities with a total value of $12.76 million. In addition, a $1.5 million grant was awarded to the U.S. private voluntary organization International Medical Corps to work with internally displaced persons in Chechnya and the surrounding conflict-affected areas.

U.S. Department of Agriculture (USDA) - Food Assistance: In FY 2002, USDA donated a total of 38,100 metric tons of commodities valued at $7.74 million to Russia. The Vishnevskaya-Rostropovich Foundation (VRF), a private voluntary organization, received and monetized 38,100 metric tons of soybean meal under USDA's Section 416(b) program, and used the proceeds to implement a mass immunization program over a three-year period to prevent the spread of infectious diseases among children.

U.S. Department of Defense - U.S. European Command (EUCOM) Humanitarian Assistance: In FY 2002, EUCOM funded a $50,000 construction project to renovate a daycare and children's activity center in Shchuchye, where CTR funds are building a chemical weapons destruction facility. The project was completed in July 2002 with a dedication ceremony attended by the regional governor and reported in the local media. The same U.S. contractors supervising the weapons destruction facility worked on the humanitarian construction project, providing quality assurance and oversight. In August 2002, EUCOM began a more ambitious project, allocating $150,000 to renovate the city's hospital and four schools. A shipment of excess property in the form of medical equipment, school and office furniture and building supplies was also delivered. Despite lengthy delays related to customs clearance of water pipes, the project continues to progress.

Partnership Programs

U.S. Department of State - University/Distance Learning Partnerships: Video-conferencing equipment provided to the Department of Public Administration at Moscow State University allowed it to hold joint sessions with the Maxwell School of Public Administration at Syracuse University. The two universities extended their partnership program for an additional two years, established a closed chat-room for exchange of ideas among their students, and continued the exchange program of visits by professors. Moscow State University is currently developing courses in electronic format, including topics such as management of social services, innovation management, and strategic management. Other U.S.-Russian university partnerships are including Internet-based distance-learning technologies in their strategic plans. Especially noteworthy is University of Florida's project with Nizhniy Novgorod Linguistic University, now in its second year. During the first year, six faculty members from Nizhniy Novgorod developed 12 classes that will be used in an Internet-based MBA program. Development of eight more courses is now underway during the second year of the project.

U.S. Department of State - Training Grants: These grants fund Russian-U.S. partnership activities that support Russia's transition to democracy and a market economy. In FY 2002, grants were awarded for cultural exchange programs, improvement in the status of disabled people, drug enforcement and prevention, and the development of public health in Sakhalin. The State Department's Bureau of Educational and Cultural Affairs (ECA) administers the program.

USAID Partnership, Networking, Empowerment & Roll-out (PartNER) Program: In the first round of grant competitions in the Volga Federal District, five partnerships received funding for community organizing, local economic development, preventive health care, and social infrastructure development. As a result, a Teen Adaptation Center was established in Perm. In addition, a Forest Cluster Working Group was created, bringing together 20 representatives of local administration, forest enterprises, scientific research institutions, NGOs, and educational institutions. Regular networking meetings with representatives of the local administration, the presidential envoy's office, partner organizations and donor organizations provide an opportunity to discuss a strategic plan for social and economic development and the role of NGOs in local economic development, among other issues. About 14 new partnerships will receive funding under the second-round grants competition, which introduced inter-religious and inter-ethnic understanding as a topic. The New Opportunities Project expanded to ten more regions. Under the U.S.-Russian Far East Partnerships Program, outreach under the first round of grant competition helped 160 organizations to partner and submit grant applications. Activities funded in the first round include indigenous land rights, micro-finance, community organizing, maternal and infant health, emergency and preventive healthcare, eco-tourism association strengthening, and legal and judicial training. The second-round grant competition focused on SME development and good governance. Approximately 10 partnership projects will receive funding to implement joint activities and sustain their collaboration.

U.S. Department of Transportation - Federal Highway Administration (FHWA): In FY 2002, the FHWA continued to support institutional partnerships between highway administrations in the U.S. and Russia. The six states participating in Russian partnerships are Kentucky (with Perm), North Carolina (with Krasnodar), Maine (with Arkhangelsk), Pennsylvania (with Nizhniy Novgorod), Minnesota (with Kemerovo and Tomsk), and Maryland (with Leningrad Oblast). On average, two exchanges occur within each partnership annually. Activities include joint technical seminars, exchange of delegations between the U.S. and Russia and Russian participation in U.S. conferences on technology transfers. As a result, six technology transfer centers have been established in Russian regions that disseminate information on new U.S. and Russian technologies between Russian regions. In 2001-2002, the technology transfer centers in Kemerovo, Perm, Arkhangelsk, and Nizhniy Novgorod held joint training seminars with U.S. counterparts. Some Russian technical developments, such as vertical bridge welding methods, tunneling for roads in railway embankments, concrete testing procedures, maintenance management systems, and roadside design to limit the accumulation of snow on the roadways, may prove useful for U.S. highway administrators. FHWA's Russian partner, the Russian Association of Regional Highway Administrations (RADOR), coordinates Russian partnerships with the U.S. highway sector. Using its own funds, RADOR created a database for the Russian highway sector that facilitates information sharing about the Russian highway sector, including technical translations, trip reports, and material on future exchanges. The Russian cooperators, all RADOR members, meet twice annually to share information and establish priorities. In FY 2002, Russian interns and officials studied at the National Highway Institute. The course participants subsequently modified the course material to meet Russian needs and began presenting it to broad Russian audiences at joint U.S.-Russian technical seminars.

Cross-Sectoral Programs

The Regional Initiative (RI): In FY 2002, the U.S. Government's Regional Initiative (RI) continued its activities at three sites: Yuzhno-Sakhalinsk/Khabarovsk, Samara, and Tomsk. In these regions, an American RI coordinator works closely with local reform-minded officials and civil society groups to focus and coordinate U.S. Government-funded programs, help establish and support partnerships between U.S. and Russian groups and disseminate the good practices developed to other areas of Russia.

  • The Russian Far East (RFE) RI includes Yuzhno-Sakhalinsk, Khabarovsk and Vladivostok, a large area rich in natural resources, but isolated. As elsewhere in Russia, U.S. assistance programs focused on small and medium size enterprises, building a civil society in Russia and improving the health of the population. The RFE RI also helped channel the interest of Alaskans and the State of Alaska in the development of the RFE into helpful partnerships with RFE counterparts. The Agricultural Cooperative Development International/Volunteers in Overseas Cooperative Agriculture (ACDI/VOCA) and the Counterpart Enterprise Fund supported agricultural enterprises. Delta Leasing-Far East, a fully owned subsidiary of the U.S.- Russia Investment Fund (TUSRIF), supported SME leasing activity in the RFE and helped grow small, innovative technology companies serving the oil-and-gas sector. In Yuzhno-Sakhalinsk and Khabarovsk, the U.S. Commerce Department's Business Information Service for the Newly Independent States (BISNIS) complimented these endeavors with comprehensive market research and sectoral economic analyses, which it made widely available in both Russian and English. The RI also helped preserve the vast Far East forests and introduce sustainable use patterns and improving the quality of air and ground and surface water by reducing emissions of pollutants. In addition, the RI supported the Russian Far East Civic Initiatives Program, which promotes responsive local governance. The RI also helped Russian women and adolescent girls being ensnarled into prostitution by supporting targeted job training, entrepreneurship opportunities and through dissemination of information about international trafficking. The RFE RI also supported the Junior Achievement program, which promotes civic values and responsibility among school children and their teachers, and the adult-education and technical training efforts of the Sakhalin and Khabarovsk-based Russian-American Technical Centers.

  • Samara RI: During FY 2002, the Samara RI prepared itself for expansion into neighboring regions of the Privolzhskiy Federal District. The Samara RI Coordinator made assessment trips to these regions, nominated candidates for exchange programs and reinforced the efforts of U.S.-funded program directors to push beyond the borders of the Samara Region. The RI also supported the USAID-funded Partnership Against Corruption, coordinated by Management Systems International (MSI). Government, NGO, business and law enforcement officials united to put together a plan of anti-corruption priorities and activities, culminating in a "Stop Corruption" Festival in September 2002. U.S. business partnerships achieved important results in the Samara Region in FY 2002. BISNIS facilitated its first successful sale of U.S. goods to the Samara Region. The U.S. Export-Import Bank guaranteed a $11 million purchase of agricultural equipment from Case New Holland by SamaraOblAgroPromSnab. At the end of September 2002, General Motors and AvtoVAZ celebrated the start of their joint venture to make the new small SUV named the Chevy Niva. Health programs made a significant impact in FY 2002. In the area of health-care reform, Polyclinics Number 9 and Number 15 opened Women's Health Centers and continued developing the role of general practitioners with help from the Iowa Hospital Association under a USAID-funded hospital partnership managed by the American International Health Alliance (AIHA). Population Services International (PSI) had a very busy first year working with NGOs, government, pharmacies and health professionals in Samara and Togliatti to educate young people on the facts and dangers of HIV/AIDS. Junior Achievement Russia doubled the number of teachers involved in its program during FY 2002.
  • Tomsk RI: In June 2002, the Tomsk RI celebrated its first anniversary. The portfolio of U.S. Government-funded assistance programs coordinated by the Tomsk RI has grown to over 40. Sponsors of these programs include USAID; the U.S. Embassy's Public Affairs Section; and the Departments of Agriculture, Commerce, Defense and Energy. Many of the new programs build on the lessons learned in the other RI regions. Program areas include public services and education, small and medium-size enterprise development, rule of law, support for small cities and towns, and the promotion of civil-society, science, and technology. The relationship between the Tomsk RI and the Tomsk Oblast (Region) Administration is one of partnership, with growing coordination between U.S. Government- and Oblast-funded programs. SME support in the innovative technology sector, as well as social and health programs, are priority areas for cooperation. The Tomsk RI also helps establish business, educational, and cultural partnerships between the Tomsk City and Oblast and U.S. cities and states. Several of the most successful programs from the Tomsk RI have expanded their operations in other areas. This past summer, Carana Corporation, a USAID contractor, completed its work in Tomsk, having trained over 600 accountants, accounting professors and senior financial managers in International Accounting Standards (IAS). The project performed accounting system transformations from statutory Russian reporting to IAS for 21 leading Tomsk-based enterprises. The project also established the first guild of professional accountants in Tomsk. Several of Tomsk's universities have now added IAS courses to their curricula. Carana replicated its successful Tomsk training programs in Novosibirsk. The Foundation for International Community Assistance's (FINCA) USAID-funded micro-credit lending operations in Tomsk have continued to grow. FINCA now has over 900 clients to whom it has made total loans in excess of $2.3 million since March 2001. The current portfolio of loans exceeds $500,000. FINCA is currently seeking to expand its operations to Novosibirsk. Similarly, the Commerce Department's BISNIS office in Tomsk is now covering Kemerovo and Irkutsk as well. USAID's health partnership program, the Novosibirsk component of USAID's Farmer-to-Farmer Program, its Integrated Business Services Project, and the State Department's University Partnership Program brought numerous U.S. specialists to Tomsk during the past year. Conversely, hundreds of Tomsk citizens participated in specialized exchange programs to the United States in 2002. The two Tomsk alumni associations for participants of various U.S. Government-funded exchange programs continue to be active.

Eurasia Foundation: In FY 2002, the Eurasia Foundation awarded 143 grants totaling approximately $4.7 million to NGOs and private enterprises in Russia through open-door and targeted competitions. Grants were made primarily in three general areas: private-enterprise development, public administration and policy reform and civil-society strengthening. To increase domestic capacity to provide municipal strategic planning, the Foundation awarded a grant to the Leontief Center, which studied strategic planning in 50 Russian cities, developed a methodology to assess the strategic plans, and conducted an evaluation of strategic planning in 20 city administrations. The Foundation also supported Russian efforts to assess business competitiveness, evaluate e-government programs, and promote the formation of a community of Russian evaluators. Aiming to strengthen public efforts to reduce corruption, the Foundation awarded a grant to the Sodruzhestvo Fund to hold a conference to discuss NGO strategies to promote accountability among local officials and consolidate the corruption prevention efforts of community stakeholders. The Foundation promoted private enterprise by making a grant to track the implementation of small-business reform legislation in selected regions; helping the Unions of Entrepreneurs become effective and transparent SME advocacy organizations in four regions; and funding for the Institute for Entrepreneurship and Investment's business training program. Under its corporate philanthropy program, the Foundation helped to create NGO resource centers and community philanthropy organizations to improve the policy environment for corporate philanthropy and to strengthen the capacity of companies to participate in charitable activities. To increase the effectiveness and accessibility of social services for low-income families, the Foundation awarded a grant to the Obninsk City Information Center to design a pilot project on payment of child allowances in this city, which will then be tested and replicated in the rest of Kaluga Oblast. The project will provide local community members with a unique opportunity to become active participants in reforming the municipal social security system and affect its development. In addition to its grant-making programs, the Foundation manages several special initiatives in Russia, which are designed to encourage improved professional economic policy research and a more financially independent media.

  • Through the Economics Education and Research Consortium (EERC), which encourages professional policy research and improved economic policy-making, the Foundation continued to support small research grants and a series of complementary activities that help build a professional community of Russian economists. As of October 2002, the program had supported 250 research projects and 330 researchers.

  • The Foundation's Media Viability Fund (MVF), helps independent media outlets in Russia to receive long-term, low-interest loans and provides them with targeted technical assistance. In FY 2002, the MVF funded the purchase of a printing press by a newspaper in Ulan-Ude, conducted tailored on-site consultations and training on newsroom management, advertising, and financial management, carried out a workshop for 30 journalists, editors, designers and photojournalists in Barnaul, and encouraged professional linkages by organizing client-to-client trips for Russian managers and journalists to visit counterparts. The Foundation also supported grants through MVF to support the Fund for Independent Broadcasting, the journal Sreda, and Monitoring.ru.

Peace Corps - Small Project Assistance (SPA), Partnership and America on Line (AOL) Peace Pack Programs: In FY 2002, the SPA, Partnership, and AOL Peace Pack Programs awarded 48 grants totaling $140,214 in support of projects implemented by Peace Corps Volunteers (PCVs) in Western Russia and the Russian Far East:

  • Western Russia: In FY 2002, the SPA, Partnership, and AOL Peace Pack Programs awarded 20 grants totaling $70,089 in support of PCV-implemented projects in Western Russia. SPA grants supported the acquisition of resource materials, textbooks, computers and related equipment and supplies to upgrade language and resource centers, school library centers and teacher resources, while Partnership and AOL grants supported acquisition of recreational and computer equipment. One AOL Peace Pack grant enabled a school for blind and visually impaired children to obtain a computer laboratory allowing visually impaired students to receive basic Internet and computer skills training. A SPA-funded activity provided a secondary school with equipment to establish a health regulation center to monitor and correct children's physical development. In the area of small business development, a SPA grant enabled a local educational NGO to establish a career resource center with connection to the Internet. In the area of youth development, a SPA grant assisted a municipal school of additional education to create a TV studio to enable students acquire technical skills and to produce TV programs for the local TV channels.

  • Russian Far East: In FY 2002, the SPA, Partnership, AOL Peace Pack Programs awarded 28 grants totaling $70,125. SPA-funded teacher training classes helped Russian teachers enhance their skills in Teaching English as a Foreign Language (TEFL) through establishing a teachers' resource center and organizing English teachers' conferences. Other SPA-funded activities provided schools with resource materials, supplies and equipment, thus enhancing the learning environment, while simultaneously exposing students to Western values and culture. SPA-funded environmental education activities focused on protection of the environment and how people can integrate these activities into their daily lives. These activities also helped support the creation of an information and ecological center, several ecological summer camps and an ecological awareness campaign. The information technology projects focused on the creation of Internet centers and resource centers. Youth development and sports activities took place in the larger context of the Peace Corps' TEFL program and focused not only on language skills, but also on developing leadership, public speaking, debate and conflict resolution skills to help prepare young people for becoming adults.

Preview of FY 2003 Programs

Preliminary estimates are that the FY 2003 FREEDOM Support Act assistance budget for Russia will be somewhat lower than FY 2002 levels. Program offices will have to adjust accordingly, reducing or eliminating less effective programs and focusing on the three priorities established by the 2001 assistance review. While IMET funds will again be available for Russia in FY 2003 (after an 18-month hiatus), the Peace Corps faces possible closure in Russia due to host-country reluctance to support the program (see "Implementation Problems" and Peace Corps sections above). At the beginning of FY 2003, the embassy decided to disseminate the lessons learned in the Samara Regional Initiative (RI) into the entire Volga Federal District, with an emphasis on Samara, Perm, Tatarstan, Chuvashia and Saratov. Where possible, programs will be designed and/or redirected to reflect this new wider emphasis. We anticipate that Samara will join Novgorod in the ranks of the RI alumni by the end of FY 2003. In the meantime, the Tomsk RI will look to disseminate lessons learned to Novosibirsk and Omsk, albeit on a lesser scale than in the Volga District.

FY 2002 FUNDS BUDGETED FOR U.S. GOVERNMENT ASSISTANCE TO RUSSIA
(millions of dollars, rounded to the nearest $10,000, as of 12/31/02)

FREEDOM SUPPORT ACT (FSA) FUNDS 
U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT (USAID)  
- Economic Restructuring
$6.34
- Private-Sector Initiatives
$11.50
- Environmental Management
$6.80
- Democratic Reform
$20.57
- Social-Sector Reform
$13.62
- Cross-Cutting/Special Initiatives
$5.07
- Eurasia Foundation
$9.50
- Enterprise Funds
$20.00
- Parking Fine Withholding
$0.03
TOTAL USAID
$93.43
TRANSFERS TO OTHER AGENCIES
U.S. DEPARTMENT OF AGRICULTURE (USDA)
Agricultural Research Service (ARS) - BW Redirection & Collaborative Research
$2.19
Cochran Fellowship Program
$0.10
Faculty Exchange Program (FEP)
$0.46
TOTAL USDA
$2.75
U.S. DEPARTMENT OF COMMERCE
Business Information Service for the Newly Independent States (BISNIS)
$1.03
Business Development Committee Initiatives (BDCI)
$0.35
Commercial Law Development Program (CLDP)
$0.60
Special American Business Internship Training (SABIT) Program
$2.30
TOTAL U.S. DEPARTMENT OF COMMERCE
$4.28
U.S. DEPARTMENT OF STATE
Bureau of Democracy, Human Rights & Labor (DRL)
$0.10
Bureau of Educational & Cultural Affairs (ECA) - Public Diplomacy Exchanges
$29.92
EUR Bureau - Public Diplomacy Programs (including Democracy Commissions)
$1.71
Coordinator's Office (EUR/ACE) Humanitarian Assistance - Transp. Costs/Grants
$2.00
Export Control & Related Border Security (EXBS-FSA) [excluding Georgia BSLE]
$3.00
Bureau of Internatl. Narcotics & Law Enf. Affairs (INL) - Anti-Crime Training & Tech. Assist.
$3.86
International Information Programs (IIP)
$0.20
TOTAL U.S. DEPARTMENT OF STATE
$40.79
U.S. DEPARTMENT OF THE TREASURY
EBRD Loan Programs
$3.00
Technical Advisors
$1.50
TOTAL U.S. DEPARTMENT OF THE TREASURY
$4.50
U.S. ENVIRONMENTAL PROTECTION AGENCY (EPA)
Biotechnical Redirection Program
$0.35
Environmental Programs
$1.25
TOTAL EPA
$1.60
U.S. NUCLEAR REGULATORY COMMISSION (NRC) - Nuclear Reactor Safety
$0.20
U.S. DEPT. OF HEALTH & HUMAN SERVICES (HHS) - Biotech. Engagement (BTEP)
$5.60
U.S. DEPARTMENT OF JUSTICE - Criminal Law Assistance
$0.85
U.S. TRADE & DEVELOPMENT AGENCY (TDA)
$1.70
NATIONAL SCIENCE FOUNDATION / CIVILIAN R&D FOUNDATION (NSF/CRDF)
$5.25
TOTAL TRANSFERS TO OTHER AGENCIES
$67.51
TOTAL FY 2002 FSA FUNDS BUDGETED
$160.94
OTHER U.S. GOVERNMENT FUNDS (AGENCY BUDGETS)
U.S. DEPARTMENT OF AGRICULTURE (USDA)
Cochran Fellowship Program [through Emerging Markets Program]
$0.15
Emerging Markets Program (EMP) [not including contribution to Cochran Fellowship Program]
$0.35
PVO / NGO Food Distribution Programs
$7.74
TOTAL USDA
$8.24
U.S. DEPARTMENT OF DEFENSE (DoD)
Cooperative Threat Reduction (CTR)
$262.66
Warsaw Initiative
$0.32
U.S. European Command (EUCOM) Humanitarian Asstistance Program - Transp. Costs
$0.15
Arctic Military Environmental Cooperation (AMEC)
$3.17
TOTAL DoD
$266.29
U.S. DEPARTMENT OF ENERGY (DOE)
Elimination of Weapons-Grade Plutonium Production
$41.70
Fissile Materials Dispostion
$16.50
HEU Transparency
$14.00
Materials, Protection, Control & Accounting (MPC&A)
$308.70
Nonproliferation & International Security
$17.40
Nuclear Reactor Safety
$24.70
Russian Transition Initiatives (RTI)
$53.60
TOTAL DOE
$476.60
U.S. DEPARTMENT OF STATE
International Military Education & Training (IMET)
$0.80
NADR / Anti-Terrorism Assistance (ATA)
$0.12
NADR / Bio-Industry Initiative
$30.00
NADR / Export Control & Border Security (EXBS)
$1.50
NADR / Science Centers
$21.00
ECA Bureau - Public Diplomacy Programs (ECE Account)
$7.95
International Information Programs (IIP)
$0.11
Peacekeeping Operations (PKO)
$0.15
Bureau of Population, Refugees and Migration (PRM)
$13.94
TOTAL U.S. DEPARTMENT OF STATE
$75.57
U.S. DEPARTMENT OF TRANSPORTATION (DOT)
Federal Aviation Administration (FAA)
$0.53
Federal Highway Administration (FHWA)
$0.08
TOTAL DOT
$0.61
U.S. DEPARTMENT OF EDUCATION - Fulbright-Hays Programs
$0.57
U.S. DEPARTMENT OF THE INTERIOR - FISH & WILDLIFE SERVICE (FWS)
$0.30
U.S. DEPARTMENT OF LABOR
$0.20
U.S. ENVIRONMENTAL PROTECTION AGENCY - Environmental Programs
$0.14
PEACE CORPS
$3.85
U.S. TRADE & DEVELOPMENT AGENCY
$2.40
CENTER FOR RUSSIAN LEADERSHIP DEVELOPMENT - Open World Program (fomerly Library of Congress-RLP)
$8.00
TOTAL FY 2002 AGENCY FUNDS BUDGETED
$842.76
TOTAL FY 2002 U.S. GOVERNMENT FUNDS BUDGETED
(FSA + AGENCY FUNDS)
$1,003.71
VALUE OF TRANSPORTED DoD EXCESS & PRIVATELY DONATED COMMODITIES
$12.76

TOTAL FY 2002 U.S. GOVERNMENT ASSISTANCE
(INCLUDING HUMANITARIAN COMMODITY VALUE)

$1,016.47