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Former USSR: U.S. Says Increase In Aid Justified

Washington, 12 March 1997 (RFE/RL) -- A senior U.S. official says President Bill Clinton's request for a 44 percent increase in aid to the states of the former Soviet Union is much needed and well justified.

Ambassador Richard Morningstar, the State Department's coordinator for assistance to the former Soviet republics, said the $900 million that Clinton has asked for will support a variety of programs aimed at continuing the transition to democracy and free market economies.

Morningstar testified Tuesday before the U.S. House of Representatives International Relations Committee. The Congress will determine the final figure for all U.S. aid programs.

Morningstar told the Committee that the dramatic increase in funds is necessary to permit the United States to direct more resources into investment programs in the region and more than double the level of effort on law enforcement and anti-crime activities than was spent in fiscal year 1997.

Another crucial part of the funds, said Morningstar, will be set aside for economic restructuring in Central Asia, Georgia and Azerbaijan. Morningstar called them "countries of key geopolitical and economic interest to the United States" that had not been "adequately supported" in the past due to certain budget constraints.

Thomas Dine, an assistant administrator at the U.S. Agency for International Development (USAID) said an increase in spending is needed in order to lock in the economic and democratic reforms already achieved with the help of U.S. assistance, and make those reforms irreversible.

Dine offered the Committee a snapshot of successes in the region, saying that U.S. aid was partly responsible for:

The private sector in Russia now accounting for 55 percent of the gross domestic product and employing about half of the labor force.

Approximately 400 formerly state-owned companies being auctioned off each month in Ukraine.

Kazakstan opening its first private stock exchange in 1995.

Economic stabilization in Kyrgyzstan which has helped make the local currency the most stable currency in the region, at times even gaining value against the U.S. dollar.

Eleven independent television stations now operating in Georgia.

Overall, at least two-thirds of the population of the former Soviet Union now living in countries where politicians are accountable to the people who elected them, where courts mediate civil affairs and where market-based institutions are the basis of economic life.

However, Dine acknowledged that not every country had shown progress, naming Belarus and parts of the Caucasus and Central Asia as particular disappointments.

"But across enough of the region, and in enough sectors, that we can say that its roots have taken strong hold of people's outlooks and expectations," Dine said. "Reform has given oxygen to the life blood of civil society and private enterprise."

But Committee chairman Congressman Benjamin Gilman (R-New York) said despite the evidence of democratic progress in the region, he and others in Congress had grave reservations about increasing aid to the region, especially to Russia.

Gilman said that President Clinton's request to increase U.S. assistance for reforms in Russia from $95 million for the current fiscal year to $242 million in fiscal year 1998, is staggering -- a 150 percent increase at a time when Congress is trying to reduce spending and balance the budget.

He also said that many in Congress were seriously troubled by the trends in Russian foreign policy and by the allegations that an increase in U.S. aid to Russia may be a part of a so-called bundle of concessions being offered to respond to Russian objections to the expansion of NATO.

Gilman said that the United States had already been generous in its aid to Russia by allocating $4.5 billion in assistance over the past five years. He added that the Unit.ed States had been far more generous than had been acknowledged by the Russian government.

"Regrettably, Russian foreign policy has not reflected any great measure of appreciation for such aid. Whether it involves Russian nuclear reactor sales to Iran and India; advanced arms and military technology sales to communist China; Russian reluctance to ratify the START-II Treaty, and allegations that Russia continues to develop chemical and biological weapons; Russian pressure on the other former Soviet states to make them agree to Russian troops and border guards on their territories ... one thing is apparent. We do not have any kind of partnership at this point with the current government in Moscow," said Gilman.

Gilman added that he and others in Congress were bothered by the fact that U.S. aid would be used to help capitalize Russian firms and approve international loans to the Russian government "at a time when that government appears unwilling to carry out reforms that would end the flight of Russian capital out of Russia to foreign banks."

Gilman said he estimated capital flight to total about $60 billion. Other financial experts say the exact figures on capital flight out of Russia are impossible to measure.

Gilman said that Congress had not yet heard President Clinton's words of support for increased aid to Russia and the countries of the former USSR. He added, however, that he plans to hold further committee hearings on the issue over the next several weeks.