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Development Challenge The USAID Program Other Program Elements Other Donors Program Data Sheets Summary Tables USAID Search: Russia Previous Years' Activities 2002, 2001, 2000, 1999, 1998, 1997 Last updated: 31     (text taken from the FY 2003 Congressional Budget Justification) THE DEVELOPMENT CHALLENGE: The Russian Federation has made major strides in its transition to a market-oriented democracy, but many challenges remain. Over the past three years, the Russian economy, fueled in part by a boom in oil export revenues, grew at an average rate of 6.4%, with a projected rate of 5.5% in 2001. By the end of 2001, the Russian government achieved a budget surplus for the second consecutive year, with foreign exchange reserves reaching record levels. Sustaining this growth is partly dependent on fundamental policy changes. In the past 18 months, the Russian government has enacted an array of legislation crucial to Russia's long-term economic future and social transition. This includes groundbreaking legislation on personal income tax, land ownership, business deregulation, leasing, labor code, housing and communal services, judicial reform, money laundering, and child welfare. While reform progress has been unprecedented over the past year, the remaining agenda is staggering. Legislation currently before the Duma covers: military reform, further tax reforms, pension reform, further land reform, implementing legislation to promote real estate market development, civil service reform, natural monopoly restructuring, World Trade Organization accession, banking reform, education reform, and health care financing. USAID has played an important role in developing many of these proposed reforms over the past ten years. A USAID-funded survey found per capita income increased by 22% between 1998 and 2000; incomes of the lowest income quintile grew by over 30%. Clearly more needs to be done, both in deepening reforms and in translating reform into improved living standards for the majority of Russians, supporting the growth of the middle class - a vital constituency for a vibrant market-oriented democracy. Problems in the regions need to be confronted directly, and success more broadly disseminated. The standard of living - measured by average purchasing power - has improved in much of the country since the 1998 financial crisis; however, though by late 2000 few regions had achieved pre-crisis levels of prosperity. Small and medium-sized businesses continue to be hampered by excessive government regulation and lack of access to essential resources and services. Poor environmental management is also resulting in inefficient business operations. Life expectancy, in decline for two decades, was 65.9 in 1999, among the lowest in Europe, and the gap between men (59.8 years) and women (72.2 years) is the largest in the world. This trend is symptomatic of the health care system's lack of attention to lifestyle factors and the over-reliance on antiquated curative approaches. The re-emergence of tuberculosis at epidemic proportions along with one of the fastest rates of increase in HIV/AIDS infections in the world are threats to world health. These scourges, if unchecked, will further tax Russia's health care and social services and could devastate the economy. Russia and Ukraine have the most rapid rates of increase in HIV infection in the world. Russia's civil society has blossomed over the past ten years, but the relationship between the state, the media, and independent citizen groups remains uneasy and ill-defined. The Putin Administration has centralized political power in a way that has facilitated some important reforms but leaves few checks on federal executive power. The independent mass media -- crucial for ensuring government accountability - is under increasing pressure from the government and struggles to maintain itself in an economy that lacks the means to sustain it. Meanwhile, responsibility and some resources for providing a broad array of basic social services have been devolved to the regions. Municipal and regional governments, in turn, increasingly, look to partnerships with civil society to deliver these services. Russia is making progress in strengthening the rule of law, but reform is impeded by the absence of strong enforcement mechanisms, failure to protect the social and economic rights of the poor and vulnerable, corruption, and the judiciary's struggle to gain independence from the executive branch. NGOs need to step forward to play a more constructive role in addressing religious and ethnic intolerance, gender discrimination and trafficking in persons. Meanwhile, the Chechnya conflict remains unresolved, resulting in violations of human rights on both sides and displacement of the civilian population. U.S. foreign policy priorities germane to Russia - including missile defense, the future of NATO, nuclear disarmament, non-proliferation, trade and investment, regional stability and conflict prevention, transboundary health and environmental threats - are amongst the most critical to national interests. In addition, Russia has become a United States ally in the war on terrorism and is likely to be a vital partner in Afghanistan's reconstruction. THE USAID PROGRAM: FY 2002 Estimate: $157.73 million FY 2003 Request: $148.0 million The Program Data Sheets provided below cover the objectives for which USAID is requesting funds. These objectives concentrate on supporting Russian economic policy reform initiatives, expanding the small and medium size business sector, sustaining economic growth through improved environmental resources management, opening up society to broad participation by men and women, strengthening the rule of law, strengthening local governance, improving health care and child welfare practices, financing the U.S.-Russia Investment Fund and financing cross-cutting programs. FY 2002 and FY 2003 funds will be used to implement ongoing programs in all of these areas, taking into account the inter-agency program review of assistance to Russia which called for focusing U.S. assistance in the areas of health, civil society, and small enterprises, while limiting engagement with the GORF. USAID also intends to use FY 2002 funds to carry out certain new activities in response to changing circumstances. The specific activities to be funded by FY 2002 and FY 2003 appropriations are described in more detail in the following Program Data Sheets. ONGOING PROGRAMS FOR WHICH NO FY 2002 OR FY 2003 FUNDING IS REQUESTED: In FY 2002, USAID/Russia is amending its country strategy to refocus its programs. Consequently, the USAID program in Russia continues to expend funds for the following programs for which funds are not being requested in FY2002 or FY2003. The Program Data Sheets describe the adjusted programs that build on the programs listed below. Number: Title: Last Notified: Planned Completion: 118-0130 Accelerated Growth of Private Enterprises FY02 CBJ p. 589 FY03 118-0140 Improved Economic Infrastructure FY02 CBJ p. 594 FY03 118-0160 Improved Environmental Management FY02 CBJ p. 600 FY03 118-0210 Increased Better Informed Citizen Participation FY02 CBJ p. 604 FY03 118-0220 Strengthened Rule of Law and Human Rights FY02 CBJ p. 609 FY03 118-0320 Improved Effectiveness of Social Services FY02 CBJ p. 615 FY03 Russia is no longer on an International Monetary Fund program, and World Bank funding has declined. OTHER PROGRAM ELEMENTS: Non-bilateral resources include U.S.-Russian health and environmental partnerships, donated medical equipment, regional programs to combat tuberculosis and HIV/AIDS, farmer-to-farmer advisors, and small business loan guarantees. OTHER DONORS: The United States is the largest donor in Russia, followed by: the European Union (legal, civil service, fiscal, banking, and social reform); Germany (education, health, environment, and economic infrastructure); the United Kingdom (economic policy reform, participatory government, civil society, the rule of law, health, and enterprise development); France (economic and social infrastructure); and the Netherlands (economic and social infrastructure). Program Data Sheets 118-013X  Strengthened and Expanded Small and Medium Enterprises 118-014X  Market-Oriented Reforms Developed and Implemented in Selected Sectors 118-016X  Environmental Resources Managed More Effectively to Support Economic Growth 118-021X  A More Open, Participatory Society Fostered 118-022X  Increased Confidence in a Strengthened Rule of Law 118-023X  More Responsive and Accountable Local Governance 118-032X  Increased Use of Improved Health and Child Welfare Practices 118-041  Special Initiatives 118-0420  Cross-Cutting Programs Country Background Information Resources     CIA Factbook Library of Congress National Geographic Country Maps State Dept. Country Information

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