PERFORMANCE REPORT HIGHLIGHTS: EURASIA REGIONAL PROGRAMS

FY 2008 Foreign Assistance Goals

Regional USG assistance programs sought to buttress democratic governance in the Eurasia region through the rule of law, enhancing the functioning of free markets through improved legislation and law enforcement, and increasing social, political, and economic stability by combating trafficking in people, narcotics, and other crimes. In the area of Peace and Security, assistance focused on three principal areas: enhancing the capacity of law enforcement and fostering professionalism and democratic principles within law enforcement agencies; promoting productive cooperation among anti-drug personnel; and improving the capacity of counter-narcotics agencies to catch and prosecute drug criminals. USG democracy-building programs sought to support the development of non-governmental organizations, foster regional cooperation and make available reports and indices to assess country progress. In the investing in people category, regional funds enhanced the USG’s bilateral foreign assistance programs by filling critical gaps best addressed by regional initiatives to combat HIV/AIDS and tuberculosis (TB), working with international organizations’ health initiatives, providing support for specific regional health activities, studies, assessments, and training. To support economic growth, USG assistance focused on establishing the macroeconomic foundation for growth via several avenues, including: targeting the preconditions for a transparent and accountable macroeconomic environment; promoting compliance with international accounting and auditing standards; developing more competent and ethical professional accountants and internal and external auditors; and developing credible and sustainable professional associations dedicated to serving the public interest. The USG-supported three-year Regional Energy Security Initiative is designed to: improve energy supply and investment planning to enhance energy security; help develop a sound regulatory framework that furthers investment in viable options for European gas supply diversification; create a regional electricity market under the Athens Energy Community Treaty; enhance the efficiency of energy production and use and greater commercial financing of energy efficiency projects to reduce dependence on imported fuels; and, identify the potential for renewable energy technologies and establishment of policies to promote investment in these alternatives throughout Eastern Europe and the former Soviet Union.

Total FY 2008 Foreign Operations Appropriated Assistance: $20.22m*

Peace and Security

In FY 2008, USG assistance:

• Focused on the Nagorno-Karabakh (N-K) region of Azerbaijan, where significant numbers of landmines were deposited during the 1990-1994 armed conflict between Azerbaijan and Armenia. Funding continued to clear landmines resulting from that conflict, which still pose a serious threat to human and animal life and hence the development of agriculture and infrastructure in the area. Resources supported the clearance of 20% of the total estimated number left as a result of the armed conflict, and 23% of the area of former battle zones. The USG supported 83 local staff who received training in various de-mining techniques. USG assistance also supported mine marking and mine awareness programs for N-K residents, as well as activities to clean up former battle fields by locating dangerous items and destroying them.

• Supported the GUAM (Georgia, Ukraine, Azerbaijan, Moldova) international organization through logistical support to improve the functioning of the Secretariat headquarter in Kyiv, Ukraine. Specific USG assistance provided included local area networks, budget and finance systems, video link capability, and online chat rooms, with subsequent benefits to GUAM’s ability to provide law enforcement training and build capacity among member states. The USG also supported the GUAM virtual law enforcement center, enabling it to become fully operational later in FY09 including the exchange of real-time information and data to member state law enforcement agencies.

• Trained and equipped regional law enforcement authorities with modern forensics capabilities, including the design and upgrade of national forensics laboratories, training of personnel in internationally-established protocols and standards, and familiarization of prosecutors and judges with the use of forensic evidence in prosecutions. Work during the past year focused on assistance to Armenia and Georgia, including assisting in the design of forensic laboratories to initiate quality assurance programs and to establish property and evidence collection facilities, and training in firearms examination, document examination, DNA analysis, and forensic chemistry.

Governing Justly and Democratically

In FY 2008, USG assistance:

• Funded the development of the Nations in Transit (NIT) report that provides annually a comprehensive progress report on the status of democracy and governance reforms in 28 European and Eurasian countries. NIT is the only publication that provides in-depth analysis and quantitative rankings of progress in democratization and is used as a benchmarking instrument for governments and other donors to assess priorities, measure the results of programs, and focus resources for future programming. In addition, NIT is becoming increasingly influential in the region in fostering discussions among political activists, journalists, and governments on democratic development.

• With other donors, funded the Non-Governmental Organization Sustainability Index (NGOSI), which reports on the legal environment, organizational capacity, financial viability, advocacy effectiveness, services provided, infrastructure, and public image of NGOs in the countries surveyed, and provides research to support sustainable development of NGOs. It has been cited by other international organizations, multilateral donors, and researchers as the premier index for NGO sector analysis. The NGOSI has been published annually for 11 years and includes 29 countries including several Central and Eastern European countries that have been “graduated” from assistance. USG assistance also supports the development of the Media Sustainability Index (MSI). The index has been published annually for seven years and covers 21 countries, including new EU member states Romania and Bulgaria. Both indices support the U.S. Agency for International Development (USAID) in preparing its Monitoring Country Progress reports, and are used by USAID and the U.S. Department of State in their strategic planning, program design, assessment, and results monitoring, and increasingly by other international development organizations as well.

• Supported the International Center for Not-for-Profit Law (ICNL) that negotiated improvements in the NGO re-registration law in Russia. The original legislation required NGOs to submit their re-registrations on paper only, which placed an almost insurmountable burden on local NGOs. The Russian government accepted the ICNL recommendations, and permitted the NGOs to re-register electronically.

• Established the Black Sea Trust, a partnership with the German Marshall Fund, which leveraged other donor funds to create a $20 Million legacy fund. In FY 2008, approximately $800,000 of the USG funds and $600,000 of other donor funds were expended in small grants to local NGOs in the countries surrounding the Black Sea to support citizen participation and regional cooperation. The creation of the Black Sea Trust was a one time only expenditure, but the mechanism will continue to support indigenous civil society development over the next ten years.

Investing in People

In FY 2008, USG assistance:

• Continued work on the regional HIV/AIDS Medication Assisted Therapy Policy project, which assists local policy makers to implement evidence-based drug dependence services. HIV/AIDS curricula and related training materials were produced, adapted, and supplemented. USG assistance helped sponsor the World Health Organization/European Division’s ministerial forum on TB, which called for the full adoption of the “Stop TB” Strategy. Funds enabled ten multidisciplinary teams working in TB and HIV to participate in the Virtual Leadership Development Program.

• Provided support to UNICEF that resulted in the almost doubling of the use of iodized salt in the region from 28% of households in 2000 to 52% in 2008. A Regional Family Planning Activity produced special publications, shared with key local stakeholders, with recommendations and best practices for improving family planning and reproductive health services. Funds supported the production of a resource for local stakeholders and donors, and the assessment “Empowering Health Care Consumers in Europe and Eurasia,” which assessed the region’s experience in motivating health care consumers to take more responsibility for their health. Also, funds supported the development of new health indicators in line with WHO standards and several months of in-country technical assistance to local institutions and professionals.

• In collaboration with UN Agencies (WHO-Euro, UNAIDS and UNICEF) and national AIDS officials and experts in the region, identified, adapted, and created curricula and related training materials on HIV/AIDS for use in Eurasian countries. These were made available online and used by training organizations in over 197 courses by 4,685 AIDS care practitioners (physicians, nurses, social workers, and NGO outreach workers) from Azerbaijan, Ukraine, Belarus, Russia, and Moldova. The project also supported web-based information exchange systems, helped establish HIV/AIDS Information Resource Centers, published professional education materials, distributed internationally recognized standards in HIV/AIDS treatment, care, and support, and supported the development of strategic information monitoring tools and resources.

• Improved the capacity of regional health systems with support to National Health Accounts (NHA), which is the globally recognized tool for identifying, classifying, and collecting data to track the flow of funds in a health system to help policymakers understand, monitor, and compare their health systems. The Regional NHA Network established a small working group composed of representatives from the region to discuss common system issues (software, reporting forms, data collection, comparisons of methods and classifications, etc.), and supported a workshop to develop skills in expenditure tracking and monitoring, and facilitating contacts and information sharing among participants. The activity especially benefited Armenia and Georgia, where national decision-makers used NHA data to determine the package of health care services the government could provide free of charge.

• Funded research and sharing of knowledge that contributed to building the awareness and capacity of experts to better address needs of vulnerable groups, including the disabled, unemployed, children, youth at risk, and victims of trafficking. USG supported field-based experts and host country development partners were direct beneficiaries of these efforts to promote accountable and effective public and private services.

Economic Growth

In FY 2008, USG assistance:

• Developed, tested, and promoted the global use of an integrated set of “model” tools for promoting high-quality professional standards of fiscal transparency and accountability. Through technical leadership, donor coordination, and outreach to international standard setters (including the World Bank, leading European professional associations, educational institutions, and multi-national audit firms), USG assistance contributed to the development of a more stable and predictable macroeconomic environment by informing and advancing the global and regional development agendas of other donors.

• Implemented programs to counter transnational crime. During FY 2008, USG funding focused on anti-money laundering activities, including improving the effectiveness of the Eurasian Group (EAG), a regional body aimed at creating the legal and institutional anti money-laundering/combating the financing of terrorism framework in EAG member-states in line with international standards, studying money laundering and terrorism financing typologies taking into account the peculiarities of the region, and implementing technical assistance programs involving the creation of Financial Intelligence/Information Units.

• Supported in collaboration and cost-share with private- and public-sector financial institutions, a total of 469 financial sector participants (both public and private sector) to attend 12 technical workshops. Topics included modernizing credit union law, improving risk management of credit unions, expanding the actuarial profession, modernizing securities regulations and supervision, and applying best practices in accounting and auditing. In addition, 40 financial regulators/supervisions received training with USG assistance, and 18 financial sector professionals were certified in compliance with international financial standards related to accounting, including certification in actuarial sciences and internal audit of central banks.

• Continued support to the Athens Energy Community and its efforts to create regional electricity and gas markets integrated with the Western European internal energy market and to share a sound and common regulatory framework. USG assistance supported Georgia’s participation in the Community that was admitted as a formal observer in 2008. USG activities helped the countries respond to the difficult energy price and energy import situation by demonstrating the potential for energy efficiency, especially to mitigate impacts on the poor. USG regional experts and mechanisms provided support for development of a new Ukraine multi-donor Heat Reform initiative and Task Force. The regional electricity transmission planning Phase II work plan began implementation and a new trilateral electricity transmission cooperation initiative among Azerbaijan, Georgia and Turkey was prepared.

• Funded investment analyses and feasibility studies of major infrastructure projects in the Eurasian countries that contributes to U.S. foreign policy objectives of expanding trade through increased regional transportation infrastructure and better telecommunications, as well as expanding global energy production and diversifying energy sources. Aviation sector projects in Ukraine would have a regional impact by increasing the efficiency of and capacity of infrastructure for air cargo and logistics, which would contribute to the independence of Ukraine as well as to economic growth in the region. Other activities include funding technical assistance to analyze the state pension program in Azerbaijan, technical assistance on a large north-south electrical transmission line in Azerbaijan, feasibility studies on electrical transmission in Kyrgyz Republic, investment analysis on a coal project in Tajikistan, and air navigation projects in Turkmenistan and Ukraine serve to support increased energy independence of this region and the export U.S. goods and services.

• Supported the inclusion of Ukraine, Georgia and Moldova in the Southeast Europe Regional Energy Demand Planning Project, resulting in the development of plans for the collection of energy data and training. Under the Energy Community Gas Forum the USG contributed to a review of current gas regulatory environments and distribution systems leading to the preparation of a regional seminar with the Government of Greece. In addition, a Memorandum of Understanding for a Black Sea Regional Electricity Transmission Planning Project was signed by eight Black Sea utilities, and a $320 million transmission project is being planned to expand electricity trade potential between Georgia and Turkey.

• Funded regional private sector competitiveness activities that led to 1,350 firms receiving assistance to improve their management practices, 270 firms receiving support to invest in improved technologies, 25 public-private dialogue mechanisms utilized, and 300 new members in private business associations. In addition, USG resources supported 160 firms to participate in firm-level training on international performance standards, including productivity and process improvement methodology to improve efficiency, profitability, and make them a desirable partner for larger companies. Surveys of a sample of companies that completed this 18-month certification process show that firms that adopt these performance standards realize almost immediate productivity improvements of 60% or more.

• Supported a pilot program targeting high growth small- and medium-sized enterprise (SME) entrepreneurs in direct peer-to-peer mentoring in Slovenia and Romania. Over 900 SME entrepreneurs received training and over 3,000 received services at 20 networking events. Training and meetings such as these helped promote regional integration through market access, training sessions, and sharing of best practices. This has resulted in firms and industries gaining access to expanded markets, improving productivity, and encouraging necessary improvements in the operating and policy environment at the regional and country levels.

Humanitarian Assistance

In FY 2008, USG assistance:

• Rehabilitated in Nagorno-Karabakh basic health, water, and shelter infrastructure destroyed or damaged as a result of the 1990-1994 conflict between Armenia and Azerbaijan. Health-related spending went toward 34 training sessions for doctors, nurses, and midwives in rural N-K areas, the provision of medical supplies and equipment, and for the physical renovation of health facilities. The USG finance and renovated 46 shelters and two water systems in N-K. Since its inception in 1998, the USG humanitarian assistance program in N-K built or renovated 1,596 shelters (58 percent of needs identified in 1998), 60 potable water systems (50 percent of needs), and 108 health facilities (100 percent of needs).

• Used a $2.7 million USG contribution to leverage over $28.1 million in private sector donations. USG support managed the humanitarian response that directly improved medical education and facilities in Tajikistan, Moldova, and throughout the Eurasia region. The humanitarian response to the Russian invasion of Georgia, which involved an airlift of over 100 containers of supplies, was sourced through already-procured material stored at a warehouse facility in Europe and transported by the U.S. Department of Defense, a long-time partner of the State Department in responding to allies in need. Funds were also used by EUR/ACE staff to make assessments of the results of USG assistance programming/spending and to develop recommendations for future programming.

Success Stories

Regional Cooperation Promoted through Partners for Financial Stability (PFS)-Eurasia – Partners for Financial Stability-Eurasia concentrated efforts on developing risk assessment programs throughout the region, as well as access to credit and insurance. The promotion of the actuarial sciences proved to be a unique success story of transporting the skills developed in Central Eastern Europe to Eurasia. PFS arranged for the cooperation between the Warsaw Actuarial Summer School in Poland and the Actuarial Society of Kazakhstan, which resulted in the first regional actuarial school program in Kazakhstan. Over 90 individuals from the region participated, including representatives from the Caucasus and Central Asia. Following on this regional success story, the Kazakh actuarial trainers are now assisting in the development of the actuarial profession throughout the region, including a recent certification program in Azerbaijan. The importance of the actuarial sciences in assessing and evaluating risk in the financial markets cannot be understated, and its development is critical for the further growth and prosperity of Eurasia region. In Azerbaijan, the PFS program, together with the Azerbaijan Credit Unions Association (AKIA), hosted a regional discussion to review best practices in the regulation of credit unions in the region and globally. This event resulted in the creation of a working group headed by AKIA to amend the credit union law in Azerbaijan to bring it in line with international standards.