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2006
U.S. POLICY IN CENTRAL ASIA: BALANCING PRIORITIES (PART II)
HEARING
BEFORE THE
SUBCOMMITTEE ON THE MIDDLE EAST
AND CENTRAL ASIA
OF THE
COMMITTEE ON
INTERNATIONAL RELATIONS
HOUSE OF REPRESENTATIVES
ONE HUNDRED NINTH CONGRESS
SECOND SESSION
APRIL 26, 2006
Serial No. 109–186
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Printed for the use of the Committee on International Relations
Available via the World Wide Web: http://www.house.gov/international—relations
COMMITTEE ON INTERNATIONAL RELATIONS
HENRY J. HYDE, Illinois, Chairman
JAMES A. LEACH, Iowa
CHRISTOPHER H. SMITH, New Jersey,
Vice Chairman
DAN BURTON, Indiana
ELTON GALLEGLY, California
ILEANA ROS-LEHTINEN, Florida
DANA ROHRABACHER, California
EDWARD R. ROYCE, California
PETER T. KING, New York
STEVE CHABOT, Ohio
THOMAS G. TANCREDO, Colorado
RON PAUL, Texas
DARRELL ISSA, California
JEFF FLAKE, Arizona
JO ANN DAVIS, Virginia
MARK GREEN, Wisconsin
JERRY WELLER, Illinois
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MIKE PENCE, Indiana
THADDEUS G. McCOTTER, Michigan
KATHERINE HARRIS, Florida
JOE WILSON, South Carolina
JOHN BOOZMAN, Arkansas
J. GRESHAM BARRETT, South Carolina
CONNIE MACK, Florida
JEFF FORTENBERRY, Nebraska
MICHAEL McCAUL, Texas
TED POE, Texas
TOM LANTOS, California
HOWARD L. BERMAN, California
GARY L. ACKERMAN, New York
ENI F.H. FALEOMAVAEGA, American Samoa
DONALD M. PAYNE, New Jersey
ROBERT MENENDEZ, New Jersey
SHERROD BROWN, Ohio
BRAD SHERMAN, California
ROBERT WEXLER, Florida
ELIOT L. ENGEL, New York
WILLIAM D. DELAHUNT, Massachusetts
GREGORY W. MEEKS, New York
BARBARA LEE, California
JOSEPH CROWLEY, New York
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EARL BLUMENAUER, Oregon
SHELLEY BERKLEY, Nevada
GRACE F. NAPOLITANO, California
ADAM B. SCHIFF, California
DIANE E. WATSON, California
ADAM SMITH, Washington
BETTY McCOLLUM, Minnesota
BEN CHANDLER, Kentucky
DENNIS A. CARDOZA, California
RUSS CARNAHAN, Missouri
THOMAS E. MOONEY, SR., Staff Director/General Counsel
ROBERT R. KING, Democratic Staff Director
Subcommittee on the Middle East and Central Asia
ILEANA ROS-LEHTINEN, Florida, Chair
STEVE CHABOT, Ohio, Vice Chair
THADDEUS G. McCOTTER, Michigan
JOHN BOOZMAN, Arkansas
CONNIE MACK, Florida
JEFF FORTENBERRY, Nebraska
JO ANN DAVIS, Virginia
MIKE PENCE, Indiana
KATHERINE HARRIS, Florida
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DARRELL ISSA, California
GARY L. ACKERMAN, New York
HOWARD L. BERMAN, California
JOSEPH CROWLEY, New York
SHELLEY BERKLEY, Nevada
ADAM B. SCHIFF, California
BEN CHANDLER, Kentucky
DENNIS A. CARDOZA, California
RUSS CARNAHAN, Missouri
YLEEM POBLETE, Subcommittee Staff Director
YEVGENY GUREVICH, Professional Staff Member
DAVID ADAMS, Democratic Professional Staff Member
LEE COHEN, Staff Associate
C O N T E N T S
WITNESSES
The Honorable Richard A. Boucher, Assistant Secretary for South and Central Asian Affairs, U.S. Department of State
Mr. Drew W. Luten, Acting Assistant Administrator, Bureau for Europe and Eurasia, U.S. Agency for International Development
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The Honorable James MacDougall, Deputy Assistant Secretary, U.S. Department of Defense
Ms. Elizabeth Dugan, Vice President, International Republican Institute
Ms. Martha Brill Olcott, Senior Associate, Russian and Eurasian Program, Carnegie Endowment for International Peace
Ms. Paula Schriefer, Director of Rights Programs, Freedom House
LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING
The Honorable Richard A. Boucher: Prepared statement
Mr. Drew W. Luten: Prepared statement
The Honorable James MacDougall: Prepared statement
Ms. Elizabeth Dugan: Prepared statement
Ms. Martha Brill Olcott: Prepared statement
Ms. Paula Schriefer: Prepared statement
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U.S. POLICY IN CENTRAL ASIA: BALANCING PRIORITIES (PART II)
THURSDAY, APRIL 26, 2006
House of Representatives,
Subcommittee on the Middle East
and Central Asia,
Committee on International Relations,
Washington, DC.
The Subcommittee met, pursuant to notice, at 2:54 p.m. in room 2255, Rayburn House Office Building, Hon. Thaddeus McCotter presiding.
Mr . MCCOTTER. I call this meeting to order. We apologize for the delay. We were voting.
I would like to express the sentiments of the Chairwoman Ms. Ros-Lehtinen, who was called home to Florida for a family emergency, but could not be here.
At this point, I would like to introduce the witnesses. We have the Honorable Richard A. Boucher, Assistant Secretary for South and Central Asian Affairs; Mr . Drew W. Luten, acting assistant administrator, and Mr . James MacDougall, Deputy Assistant Secretary, U.S. Department of Defense on panel 1. On panel 2, we have Ms. Paula Schriefer, Director of Programs, Freedom House, Ms. Elizabeth Dugan, vice president, International Republican Institute, and Ms. Martha Brill Olcott, Senior Associate, Russian and Eurasian Program, Carnegie Endowment for International Peace.
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With that said, I would like to begin with the panel.
STATEMENT OF THE HONORABLE RICHARD A. BOUCHER, ASSISTANT SECRETARY FOR SOUTH AND CENTRAL ASIAN AFFAIRS, U.S. DEPARTMENT OF STATE
Mr . BOUCHER. Thank you, sir. Mr . Chairman, thank for having us today. And if I can I have got a longer statement I would like to be entered into the record, if I could give you a brief version of the remarks?
Mr . MCCOTTER. Without objection, I would like to have your remarks and all witnesses, if they have prepared remarks, entered into the record as well as those of Chairman Ros-Lehtinen.
Mr. BOUCHER. Thank you, sir. This region is very strategically important to the United States. We are looking to support the development of fully sovereign, democratic and prosperous nations in Central Asia who cooperate with the United States and cooperate with one another to advance regional security and stability. The strategy rests on three integrated pillars: Security cooperation, commercial economic and energy interests, and political and economic reform.
We see the three pillars as mutually reinforcing. General stability, in our view, requires a process of democratic change, and stability, in turn, provides for economic develop and prosperity. Thus we are determined to pursue all three sets of interests in a balanced way. The people of these countries deserve choices and be opportunities so they can exercise their independence, not by relying on one market or power but by having a variety of options. Simply put, our policy is to help them have options.
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The opening of Afghanistan has transformed that nation from an obstacle that separated south and Central Asia into a bridge that can connect the two, and that, in turn, opens up new and exciting possibilities. Our efforts to integrate south and Central Asia are aimed at helping the countries in the region prosper through trade, communications, and people to people contact. U.S. assistance is essential to achieving these policy goals. We are making an effort to think more regionally about our assistance efforts by increasing our regional allocations of Freedom Support Act funding and of our economic support fund.
In fiscal year 2006, the U.S. Government has budgeted approximately $170 million in assistance to Central Asia, focusing on building civil society capacity, promoting economic and democratic reform, and as I said, promoting regional security and regional integration. All the countries of Central Asia have as you know provided valuable support to Operation Enduring Freedom in Afghanistan, whether it is through over flights or refueling supports or, in some cases, basic arrangements.
In turn, our military assistance programs including international military education and training, have been essential tools in helping them modernize their forces and become interoperable with NATO partners. We are also actively working with all five governments as well as Afghanistan to put in place safeguards against trafficking and weapons of mass destruction and against trafficking in narcotics which is one threat to the region.
The second set of policy priorities in Central Asia involves energy and commercial interests. One of our leading objectives is to fund greatly the expanded Afghan power grid with connections to energy sources in Central Asia. It is a winning solution for all of them, providing much needed energy to Afghanistan, serving as a major source out of future revenue for countries like Tajikistan and Kyrgyzstan. And we hope eventually expanding to the north into Kazakhstan and to the south down into Pakistan and India to really tie the power grids together of the region.
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A third pillar is promoting freedom through democratic reform. Our assistance programs support democratic and economic reform in Central Asia and continue to yield positive results in a challenging environment. We are helping to create better business environments, to reform education to bolster independent media, to encourage the rule of law, develop civil society, improve health care, fight corruption, develop democratic institutions, and support small and medium size enterprises. All these things contribute to the diversity of the society, contribute to a more open society, and contribute to economic growth.
Fundamental to all this is education. We place special emphasis on education. People feel deeply about the need for education in order to build a better future, and supporting education is perhaps one of the best ways we can strengthen and keep our relationships with the people, even when government-to-government relationships get rocky.
I would like to close by saying that of all the things I have just spoken about works toward a vision that Secretary Rice has articulated for a stable and democratic Central Asia that cooperates between its neighbors and cooperates in a broader region for the mutual benefit of all of us. These policy objectives are ambitious, but we cannot afford to fail. We know the threats of terrorism, of drugs, of trafficking, of weapons of mass destruction in this region. It is important that we succeed and we look forward to working with you in this very important effort.
Mr. MCCOTTER. Thank you.
[The prepared statement of Mr. Boucher follows:]
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PREPARED STATEMENT OF THE HONORABLE RICHARD A. BOUCHER, ASSISTANT SECRETARY FOR SOUTH AND CENTRAL ASIAN AFFAIRS, U.S. DEPARTMENT OF STATE
Madam Chairman and Members of the Committee: Thank you for inviting me here today to talk with you about our policy in Central Asia. I would like to briefly discuss the challenges we face and how we plan to overcome them in this strategically important region.
The United States supports the development of fully sovereign, democratic and prosperous nations in Central Asia, cooperating with America and with one another to advance regional security and stability. Our strategy rests on three integrated pillars: security cooperation; our commercial and energy interests; and political and economic reform. We see these three pillars as mutually reinforcing. Genuine stability, in our view, requires a process of democratic change, and stability, in turn, provides for economic development and prosperity. Thus, we are determined to pursue all three sets of interests simultaneously in a balanced way. The people of these countries, strategically and individually, deserve choices and opportunities so that they may exercise their independence—not by relying on one market or power, but by having a variety of options. Our policy is to help them have options.
The recent transfer of responsibility at the Department of State for the Central Asian states into our new Bureau of South and Central Asian Affairs has provided a fresh perspective to our view on how these countries fit into the broader region. We have long sought to support efforts among these states to enhance regional cooperation in trade, energy and border security. Progress has been spotty, and at times has moved in reverse, due to border disputes or the unilateral imposition of border controls and restrictive trade regimes. Yet I am convinced that we are now seeing a new paradigm take shape, helped by a shift in the region's strategic landscape. The opening of Afghanistan has transformed it from an obstacle separating Central from South Asia into a bridge connecting the two. And this in turn opens exciting new possibilities.
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The Central Asian states recognize that it is very much in their long-term economic and security interests to build linkages to the south that complement their existing ties to the north and west. They are used to conducting foreign policy based on the assumption that ''bad things''—drugs, terrorists, instability—come from the south, and must be stopped. But now, while these threats remain, Central Asians are increasingly looking south for trade partners, export markets and opportunities for security and law enforcement cooperation.
Last October, when Secretary Rice visited Kyrgyzstan, Tajikistan and Kazakhstan, she observed that their citizens see Afghanistan as a part of Central Asia. They understand they have a huge stake in Afghanistan's future, just as we do. They understand that a stable Afghanistan, anchored in the broader region, will be good for their own future stability. And they see the potential economic benefits of reaching new markets to the south, in Pakistan and India.
When I attended a conference on trade and development in Greater Central Asian in Kabul last month, I heard the same message and saw the potential for the Central Asian states to help break Afghanistan out of its geographic isolation and give it access to global markets. Our goal is to revive ancient ties between South and Central Asia and to help create new links in the areas of trade, transport, democracy, energy and communications. At the same time, we seek to preserve and enhance the ties of Central Asian countries to Europe, especially through organizations like NATO and its Partnership for Peace (PfP) and the Organization for Security and Cooperation in Europe (OSCE) as well as the important interests Japan has in Central Asia. While we seek to expand the new relationship between Central and South Asia, we also recognize the well-established historical, cultural and linguistic ties between the countries of Central Asia and the rest of the former Soviet Union, including Russia and the growing relationship with China. In short, our efforts to connect South and Central Asia are aimed at helping all countries in the region to prosper through trade, communications, and people-to-people contacts. Prosperous countries that trade and share ideas are more likely to be stable, peaceful, and less vulnerable to the call of extremism.
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THE ROLE OF U.S. ASSISTANCE
To ensure a democratic and peaceful future for Afghanistan, we must address the dual challenges of narcotics trafficking and economic development. Unless we look for regional solutions to these challenges, the possibility exists that the Afghan economy will remain reliant on drugs and foreign assistance. To prevent this, we need to focus on building a sustainable economic system integrating Central and South Asian markets.
Central Asia faces numerous threats to its stability, including Islamic extremism, a population that remains poor and has little economic opportunity, the post-Soviet legacy of authoritarianism, public perceptions of injustice, and high levels of corruption. As a consequence, nurturing both economic and democratic reform in the region is difficult, even daunting. Furthermore, the repressive and backward-looking authoritarian regimes in Turkmenistan and Uzbekistan may further challenge our efforts to integrate the region and encourage reform and development.
March 24 marked the one-year anniversary of the ''Tulip Revolution'' in Kyrgyzstan. Nine months ago, the Kyrgyz people held an election that, while failing to meet international standards, was judged by many to be the freest and fairest in Central Asia's modern history. Since then, the people of Kyrgyzstan have worked hard to consolidate the gains of their democratic experiment. Democratic institutions remain fragile, however, pending constitutional, judicial and other reforms critical to ensuring the people of Kyrgyzstan overcome the challenge of organized crime and corruption to achieve democratic stability.
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Kazakhstan, an economic success story, is rapidly becoming one of the top energy-producing nations in the world. We look to Kazakhstan to be a true leader in the region by further advancing democratically, together with continued progress on economic development and infrastructure investment.
U.S. assistance is essential to achieving our policy goals in Central Asia and is designed to address threats to stability while promoting long-term economic and democratic reforms. We are making an effort to think more regionally about our assistance efforts by increasing our regional allocations of Freedom Support Act funding and our Economic Support Funds, and we should focus more on agriculture, and other projects that serve people in the region directly.
In order to support foreign policy goals in this quick-changing environment, we continuously evaluate our assistance strategies, adjusting programs to fit changing realities, and working to ensure that our programs are cost-effective. In Fiscal Year 2006, the U.S. Government has budgeted approximately $170 million in assistance to Central Asia, focusing our efforts on building civil society capacity, and promoting economic and democratic reform and institutions. We also actively promote regional security through non-proliferation, counter-terrorism, and counter-narcotics cooperation.
Security Cooperation
All of the countries of Central Asia have provided valuable support to Operation Enduring Freedom in Afghanistan through over-flights, refueling support, and, in some cases, basing arrangements. We especially appreciate Kyrgyzstan's support for the Manas Airbase to support Coalition operations. U.S. military assistance programs such as International Military Education and Training and Foreign Military Financing, have been essential tools in modernizing the regions' military forces and creating NATO-interoperable partners.
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Central Asia is a geographic crossroads and therefore an attractive potential route for trafficking in weapons of mass destruction, missiles and other related technologies. We are actively working with all five governments as well as Afghanistan to put in place safeguards against such trafficking. Since their independence, the countries of Central Asia have also been an integral part of the United States' nonproliferation strategy. In fact, Kazakhstan was one of the first countries included in Nunn-Lugar Counter-proliferation assistance, and their cooperation with the United States is a benchmark.
We are pleased that most of the countries of Central Asia have endorsed the Proliferation Security Initiative, providing a strong deterrent to the proliferation of weapons of mass destruction. The Departments of State, Defense, and Energy provide nonproliferation assistance in Central Asia that engages former weapons experts in transparent, sustainable and cooperative civilian research projects. We also help deliver basic training and equipment to border guards and customs officials to detect nuclear materials transit and secure borders. In Afghanistan, we are developing the Border Management Initiative that will partner with the Government of Afghanistan and other international donors to develop integrated border facilities which will improve border security and increase government revenues from customs fees.
In addition, we are working multilaterally to stop the flow of narcotics from Afghanistan through Central Asia to markets in Russia, Europe and beyond. The Central Asia Regional Information Coordination Center, being established in Kazakhstan, will play a crucial role in the fight against narcotics trafficking. Throughout the region, we have funded the construction of new border crossing checkpoints, including most recently two in Turkmenistan on the Iranian and Afghan borders, respectively.
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In Tajikistan we have a good partner in the fight against illicit narcotics. According to the United Nations Office on Drugs and Crime (UNODC), Tajikistan boasts a very high narcotics seizure rate—the government seized over 2,300 kilograms of heroin and 1,100 kilograms of opium in 2005. Since the withdrawal of Russian Border Forces from the Tajikistan-Afghanistan border last year, we have intensified our assistance efforts with European Union partners to build and equip a network of outposts on that border and to ensure the border troops receive training, equipment, and salaries to do their jobs. In January of this year, with the assistance of our military forces in the region, we provided emergency assistance to Tajik border forces guarding the Afghan border during the long, cold winter. These efforts, together with assistance to the drug control agencies in Tajikistan and Kyrgyzstan, are bolstering the capability to interdict traffickers of illicit materials and have already yielded positive results.
Regional Integration
The second set of our policy priorities in Central Asia involves our energy and commercial interests. To advance regional economic development and integration, we would like to have a strategic dialogue with the countries of the region, including Afghanistan. In partnership with multilateral development banks and other donors—we want to help build new links among the countries of the broader region and connect them more closely to the rest of the world. One of our leading objectives is to fund a greatly expanded Afghan power grid, with connections to energy sources in Central Asia. It's a winning solution for both sides, providing much-needed energy to Afghanistan and serving as a major source of future revenue for countries like Tajikistan and Kyrgyzstan.
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Our vision includes new energy routes that will ensure the next generation of South and Central Asian entrepreneurs have access to the resources they need to prosper. We want to give South Asians access to the vast and rapidly-growing energy resources in Central Asia, whether they are oil and gas in Kazakhstan and Turkmenistan, thermal power in Uzbekistan, or hydropower in Tajikistan and Kyrgyzstan. This vision is within our grasp. Within the next few years, we expect to see private investment lead to the establishment of a 500 kilovolt power line transmitting much-needed electricity from Central Asia across Afghanistan to Pakistan and India.
Our assistance can foster inter- and intra-regional energy trade, investment, and competition through technical assistance and coordination with relevant international financial institutions. Likewise, diversification of Central Asian economies and the growth of small- and medium-size enterprises outside the energy sector can help create new jobs in the region to extend prosperity. When possible, assistance programs should increasingly incorporate regional links, whether the focus is roads, energy, education, or even training exchanges to include participants from neighboring countries.
Through diplomacy and assistance, we are already doing much to realize this vision. Afghan road improvements have dramatically reduced driving times, thus increasing regional trade. Next year's opening of a U.S.-funded $36.5 million Tajik-Afghan bridge with customs and border security facilities on each side, linked to the Tajik national highway system by a Japanese-funded road rehabilitation project, will create a safe and reliable ground transportation link within the region. Central Asia has an abundance of existing and potential oil, gas, and electricity sources that the growing economies of South Asia need. Together with other donors, we are exploring ways to export electricity from Central Asia to Afghanistan, Pakistan, and India.
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We support establishing multiple, commercially viable pipelines and other new energy transportation routes, because the United States believes that diversification of energy transport routes to and from Central Asia increases stability and energy security, not just regionally but throughout the world. In June, the U.S. Trade and Development Agency will host a forum on the Central Asian electricity sector, which we hope will spur investment and promote further regional cooperation. We are also funding feasibility studies in energy, transportation, and telecommunications, and coordinating with the International Financial Institutions and other donors.
Democratic and Market Reform
The third key pillar of our strategy for Central Asia is to promote freedom through democratic and economic reform, because long-term stability comes from democratic governments that enjoy the trust of their people and that are accountable to them. To paraphrase President Bush, all people, given a free choice, will choose democracy over tyranny. We actively support democracy and civil society in the region not only because it is the right thing to do, but because it creates conditions that lead to greater political and economic opportunity.
Our assistance programs supporting democratic and economic reform in Central Asia continue to yield positive results in a challenging environment by creating better business environments, reforming education, bolstering independent media, encouraging the rule-of-law, developing civil society, improving health care, fighting corruption, developing democratic institutions and electoral processes, and supporting small- and medium-sized enterprises. At the same time, we emphasize to the governments of Central Asia that repression and a lack of respect for human rights and religious freedom lead to political instability. The OSCE is an important agent for reform in the region, and we have also funded numerous programs in the region through their missions and the Office for Democratic Institutions and Human Rights.
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For regional links to flourish and for Central Asian economies to prosper, their governments must redouble their efforts to fight corruption and strengthen the rule-of-law. Ordinary people need to feel that government officials will not use their authority solely to enrich themselves. Similarly, foreign investors must feel confident in the rule-of-law before committing to large and risky ventures. Furthermore, the banking sector must be transparent, and provide access to credit and capital. Encouraging economic freedom means a welcoming investment climate, transparency, and consistent adherence to legal contracts, supported by equitable government enforcement and a strong, independent judiciary. We promote all these reforms with technical assistance to governments that demonstrate their willingness to reform.
THE FUNDAMENTAL ROLE OF EDUCATION
A well-educated population is key to freedom and long-term prosperity in Central Asia, and I strongly believe the U.S. can make a major contribution in this area.
Across our region, people feel deeply about the need for education to build a better future. The challenge of assuring that there are adequate, quality schools and colleges that provide needed training is the preoccupation of our friends and of their governments. It is precisely because education is such a deeply held value and deeply felt need that I believe the United States should make it a central element of our regional dialogue.
During my recent trip to the region, I visited the American University of Central Asia in Bishkek, and talked to some of its nearly 1200 students. I was impressed with what I saw. The school is a model of excellence for the region and I am proud that the United States was a key player in its founding and growth. Our support for the school dates back to 1993 and includes faculty development, administrative training, and financial support including a $10 million endowment. The State Department also provides full four-year scholarships for approximately 17 students from Turkmenistan to attend college. Supporting education is perhaps one of the best ways to strengthen and keep our relationships with the people even when government-to-government relationships may get rocky.
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We would like to build on this success story by extending our educational partnerships to elsewhere in the region. For example, we would like to see some of our friends in South Asia working with our Central Asian friends in the development of a regional business school or a regional journalism program. Such programs could attract students and faculty from across the region to develop skills and connections that will serve them in their home countries. In addition, there are tremendous opportunities to support training for Central Asia's current and future government and business leaders in the premier education institutions of Pakistan and India. USAID is already developing a scholarship initiative to do exactly this, which is not only cost efficient but has tremendous potential to create links that last literally a lifetime.
Another model worth citing is the ''Bolashak'' exchange program sponsored by the government of Kazakhstan that sends 3,000 young Kazakhs a year to study abroad. This program, administered by an American non-governmental organization with broad experience in organizing academic exchanges with the United States, provides an example of merit-based selection and a commitment to the country's future that will hopefully be emulated by other Central Asian nations.
There are other possibilities as well. The important point is that there is a serious need for more education in Central Asia. The people of the region know this, and we intend to work with them on this challenge.
COUNTRY-SPECIFIC CHALLENGES AND OPPORTUNITIES
Kazakhstan: Regional Anchor
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The United States' strategic partnership with Kazakhstan has gained momentum over the past year with the visits of Secretary Rice to Astana last October and by Agriculture Secretary Johanns and Energy Secretary Bodman this year. We expect that Vice President Cheney's trip to Astana next month will further elevate our strong relations and pave the way for enhanced cooperation. Having undertaken extensive economic reforms, Kazakhstan has an opportunity to achieve stability by upholding standards of democracy and human rights. Kazakhstan can also play a leading role as an investor in regional infrastructure projects, including in Afghanistan. We are also working closely to ensure that Kazakhstan has multiple channels to bring its energy resources to world markets.
Kazakhstan is emerging as a world leader in oil and gas production. U.S. companies have invested heavily there and would like to do more. Transport of energy resources to markets remains a challenge; we are working on securing the flow of oil from Kazakhstan's North Caspian fields via tanker to the Baku-Tbilisi-Ceyhan pipeline and encouraging Russia to agree on terms to expand the Caspian Pipeline Consortium pipeline. Kazakhstan, as well as Turkmenistan, could also be a new source of natural gas for European markets, particularly if a trans-Caspian gas pipeline were built.
Kazakhstan still has major challenges to meet in democratic reform, as illustrated by its December 2005 presidential election, which fell short of OSCE standards. We have encouraged Kazakhstan to lead a new regional ''corridor of reform'' by working swiftly to implement democratic and additional economic reforms at home. We look forward to increased cooperation on democracy, including implementing OSCE recommendations for electoral reform.
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We support Kazakhstan's goal of joining the World Trade Organization (WTO) and have been working with the Kazakhstani government toward that end. WTO membership will support Kazakhstan's long-term growth by lowering barriers to trade and investment and establishing a system based on internationally recognized rules.
Our assistance to Kazakhstan seeks to diversify its economic growth, both geographically and industrially, build momentum on democratic reforms. Our security and law enforcement programs continue to support Kazakhstan's partnership in the Global War on Terror and improve its abilities to fight narcotics trafficking and protect its borders. Our energy and water programs support the development of regional energy markets and water-sharing.
Kyrgyzstan: Reform for Democratic Stability
Kyrgyzstan continues to have strong potential already embarking on a new era of democratic change, Kyrgyz leaders need to fulfill the promise of their ''Tulip Revolution'' last March and the presidential election last July through bold democratic and economic reform. Primary in importance are the twin problems of corruption and organized crime. The government must tackle these head-on if it wants to maintain credibility with its newly-engaged population and build a fully-thriving democracy. Additionally, we must assist the government in responding to the aspirations of Kyrgyz citizens for a better justice system and more economic opportunities, which will further help Kyrgyzstan to stabilize and better institutionalize their progress and reforms.
Our assistance has been timely and targeted since March 2005. We initiated several new programs, including the U.S. Department of Treasury's economic growth advisor to address emerging reform opportunities and provide much-needed technical assistance to the government. Similarly, the Millennium Challenge Corporation has selected Kyrgyzstan as a Threshold Country—the first to date in Central Asia. We are currently working with the government to develop a plan to combat corruption and implement wide-ranging judicial reforms, including the courts, police, and prosecutors. We also continue to support independent media, human rights protections, civil society, and electoral reform.
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Again, we look to our regional partners for assistance, and plan to encourage India, not only as a good neighbor, but also as a pillar of stability and the largest democracy in the world, to consider providing parliamentary assistance, as they are currently doing in Afghanistan. The OSCE is also an important ally in helping Kyrgyzstan strengthen its democratic institutions, implement electoral reform, and deepen the rule-of-law. Furthermore, we need to increase the range and scope of the American University of Central Asia, which already enrolls more than 80 Afghan students, and establish it as a regional center of academic excellence.
We applaud the government of Kyrgyzstan's current efforts and are committed to working with the Government and citizens of Kyrgyzstan to help advance the reforms necessary to participate. There is no question that we and all the countries of the broader region have a great stake in Kyrgyzstan's success.
Tajikistan: Civil War No More
Tajikistan has transformed itself from being a civil war-ravaged state to having a stable country with strong economic potential. Today, Tajikistan is attracting outside investment, especially in the field of hydropower. Critical to fostering this positive arc of development is to continue to support democratic and economic reforms.
Our assistance program to Tajikistan promotes democracy and the rule-of-law, strengthens security and law enforcement capabilities, develops the investment climate, and improves social services. In response to last year's transfer of responsibility for the Tajik-Afghan border from the Russian military to the Tajik border guards, we are supporting a large program to help Tajikistan defend its borders from the transit of weapons of mass destruction, illicit drugs, trafficked persons, and potential terrorists.
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Tajikistan is in urgent need of investment in order to address its staggering poverty. Increasingly the Tajiks look toward Afghanistan as a land bridge to Indian Ocean ports and South Asian markets. We seek to stimulate such regional and intra-regional cooperation by working with International Financial Institutions and our European, Japanese and South Asian partners.
Uzbekistan and Turkmenistan: Sliding Backwards
In Uzbekistan and Turkmenistan, we are dealing with difficult regimes that are holdovers from the obsolete model of Soviet central control and repression. In these very challenging environments, we must find creative ways to continue supporting the people who deserve the political choices and economic opportunities that their governments do not provide. We are giving crucial financial and moral support to the beleaguered non-governmental organizations and individuals who aspire to build civil society in these difficult environments.
While doing this we need to maintain ties in areas of importance to us, such as improving border controls to combat drug trafficking and enhancing detection of nuclear material to prevent its use by terrorists. We also seek to strengthen our exchange programs where we can. Even though governments in both Turkmenistan and Uzbekistan actively attempt to thwart and stop these programs, it is important to provide these crucial educational opportunities to the talented students and professionals there.
Turkmenistan is dominated by president-for-life Saparmurat Niyazov and the political and economic reform has been minimal or negative since independence. The government continues to commit serious abuses and its human rights record remains extremely poor. Opportunities for education and employment are in severe decline. We are pursuing a policy of focused engagement and careful cooperation with the government.
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We will continue to press the government for progress on freedom of religion, assembly and movement for its citizens. Simultaneously, we must provide the people of Turkmenistan with tools for progress and eventual reform, with special emphasis on educational and professional exchanges through non-governmental organizations and exchanges to the United States.
In Uzbekistan we have continued to press for a broad relationship that includes attention to democracy, including human rights and political reform, security cooperation, including on terrorism, and economic cooperation, and we have made clear at the highest levels of the Government of Uzbekistan that our relationship should be based upon progress on all of these fronts, as laid out in our 2002 Strategic Framework Agreement. In response to the tragic events of Andijon in May 2005, we have consistently called for an independent, international investigation into these events. We also undertook an immediate review of U.S. assistance to the central government, canceling many military, border security, and economic reform assistance programs and limiting others. Approximately $3 million of these funds were reprogrammed to support democracy and human rights programs. Unfortunately, the Uzbek government has so far refused to allow an independent investigation into Andijon, and has chosen to close down non-governmental organizations, independent media sources, and other civil society organizations. We continue to urge the Government of Uzbekistan to reverse its current path and to embrace reform as the only way to achieve long-term stability and to help realize the aspirations of its citizens.
U.S. assistance programs in Uzbekistan focus on working directly with the people of Uzbekistan on human rights, micro-credit lending and agribusiness development, health and education reform, water use management, and community development. The Government of Uzbekistan has hampered the delivery of assistance by implementing banking regulations that slow or prevent the transfer of funds to non-governmental organizations. Many international and local non-governmental organizations have lost their accreditation to work in Uzbekistan, and many others have been harassed.
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Nevertheless, we should continue to engage the government of Uzbekistan where it is in our own interest to do so. Security, non-proliferation, narcotics smuggling, and law enforcement programs, when possible in the current political environment, advance key U.S. interests by addressing improved treatment of suspects and detainees, trafficking in persons and weapons, and the proliferation of nuclear and biological materials and expertise.
CONCLUSION: ASSISTANCE SUPPORTING A REGIONAL VISION
The Secretary has articulated a vision for a stable and democratic Central Asia, cooperating between its nations and with the broader region for mutual benefit. In this future Central Asia, students and professors from Bishkek and Almaty can collaborate with and learn from their counterparts in Karachi and Kabul, legitimate trade can freely flow overland from Astana to Islamabad, facilitated by modern border controls, and an enhanced regional power grid stretching from Almaty to New Delhi will be fed by oil and gas from Kazakhstan and Turkmenistan and hydropower from Tajikistan and Kyrgyzstan.
Our policy objectives for Central Asia are ambitious, but we can not afford to fail. As we pursue our security interests, commercial and energy interests, and democratic and market reform simultaneously, Central Asia can re-establish itself as a commercial and cultural crossroads with greater links to South Asia. Our support to this region is a key ingredient to Afghanistan's stability as well, as to our own security.
Madame Chairman, members of the Committee, thank you again for this opportunity to discuss this important region. I stand ready to take your questions.
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STATEMENT OF MR. DREW W. LUTEN, ACTING ASSISTANT ADMINISTRATOR, BUREAU FOR EUROPE AND EURASIA, U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT
Mr. LUTEN. Thank you, Mr. Chairman. The past 15 years have yielded significant results in areas of opportunity in Central Asia. USAID's activities are contributing to the creation and growth of small businesses, the development of civil society, reductions in the spread of infectious disease and advances in health reform, improve basic education in efforts to lessen the potential for human rights abuses.
Nonetheless, many challenges persist. Within the materials that we have provided there are a number of charts that we produce and refer to in planning assistance. They illustrate the difficult challenges that the countries face. And I just would mention a few of them that indicate the nature of the problems, the nature of the challenges. One of these charts on economic and democratic reforms, it is that one, shows that in the economic area while Kazakhstan and Kyrgyzstan have done relatively well in adopting market-oriented economic reforms, the other countries have not. With respect to democratic reform, all of the countries lag significantly in the policies that they have adopted in comparison to the other countries of the former Soviet bloc and Europe.
Also economically, one of the challenges that they face is getting their economies back to a level of productivity as it stood in 1989. Real gross domestic product in these countries, in Kazakhstan, Uzbekistan and Turkmenistan, which are all energy wealthy, only rates the level of GDP that they had in 1989 in the last 2 or 3 years and the other countries are far behind still.
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The business environment in each of the countries is weak, not surprisingly cumulative direct foreign per capita investment is low. One of the things that is most troubling in terms of the challenge that these countries face and that we face in thinking about how we can support them are the declining health indicators across a number of the subjects.
USAID sees its role in supporting transition and development of these countries as one that supports the larger interests of the United States. Assistance that helps counter-authoritarianism and economic stagnation, each of which provide the fuel for domestic unrest, religious extremism and terrorism, is critical to protecting United States interests in Central Asia and the nearby countries as well.
We are at the point now where we are developing new country strategies for the five central Asian republics and as we do this in line with the vision that the Secretary has articulated, we will be looking for opportunities to expand regional integration with south Asia, particularly with respect to energy markets, but also with trade facilitation and health networking is also a possibility.
As Secretary Boucher indicated, the work that we do in various areas is interrelated. So in our case, the support for the expansion of both political and economic freedom and for better governance go hand in hand, along with support for the institutions and experiences that make them possible. I would offer just a couple of comments that in the democracy sector while there have been challenges, particularly greater challenges in some of the countries, Uzbekistan and Turkmenistan are hard cases at present.
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In general, over the past 15 years, in large part, due to USAID's efforts and the efforts of partners that we support, civil society which was virtually unknown 15 years ago has grown and become much more sophisticated across the region.
In the economic sector, Kazakhstan has been the best performer and our program there has reached a new phase such that our development assistance or economic development is going to be shared. The government of Kazakhstan is going to share in the cost of that assistance and collaborate with us jointly in the design of that assistance. It is an important precedent. Then in the health and education sectors, we are not only helping with systemic reforms but we are working on programs that combat the threat of HIV/AIDS and helping the countries' plan for prevention of Avianinfluenza, trying to help it not become an endemic in poultry.
There have been many successes and there are certainly many areas of opportunity. There are many areas of challenge as we go forward. We will be focusing our resources on both opportunities and challenges. And we look forward to working with the Department and other parts of the administration and the Congress in looking for opportunities to link both what happened in Central Asia to South Asia and the rest of the region. Thank you.
Mr. MCCOTTER. Thank you.
[The prepared statement of Mr. Luten follows:]
PREPARED STATEMENT OF MR. DREW W. LUTEN, ACTING ASSISTANT ADMINISTRATOR, BUREAU FOR EUROPE AND EURASIA, U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT
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INTRODUCTION.
Madame Chairwoman, distinguished Members of the Committee, thank you for the opportunity to testify on U.S. foreign assistance to the five Central Asian Republics of Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan, and Turkmenistan.
Since the overthrow of communist regimes in Europe and dissolution of the Soviet Union, the U.S. Agency for International Development (USAID) has been charged with assisting the countries of Europe and Eurasia to make the transition from centralized, authoritarian control to sovereign nations governed on the basis of democratic, free-market principles. When this Committee crafted the FREEDOM Support Act (FSA) and Support for East European Democracy (SEED) Act, it was with the goal of helping these countries develop the technical basis and managerial skills needed to redirect their resources toward open and participatory political and economic systems. USAID assistance has helped countries make tangible progress across Europe and Eurasia, including in the five republics of Central Asia.
The past fifteen years have yielded significant results and areas of opportunity in Central Asia. Our activities are contributing to the growth of small business, civil society development, reductions in the spread of infectious disease and advanced health reform, improved primary education, better management of natural resources, and efforts to lessen the potential for human rights abuses and conflict. Nevertheless, many challenges persist—in developing democracies and promoting respect for human rights, encouraging economic growth, improving health, and increasing the quality of education.
USAID's principal goal within the Europe and Eurasia (E&E) region remains the establishment of functioning, effective democracies with open, market-oriented economic systems and responsive social services. As the following chart demonstrates, we see a correlation between countries' performance in economic and democratic reform in the E&E region. Indeed, the very elements which enable a democracy to function, namely, participatory decision-making, transparency, rule of law, and good governance—are also conducive to a healthy business environment. It should come as no surprise that the highest performers in both of these areas are the Northern Tier states, several of which, namely, the Czech Republic, Slovakia, Hungary, and Poland, have graduated from USAID assistance to become members of the European Union and donor countries in their own right. On the other end of the spectrum are the low performers, comprised almost exclusively of the Eurasian states, of which the Central Asian Republics (and Belarus) occupy some of the lowest ranks. The data underscore the enormous challenges we face in assisting these states to narrow that gap by embracing real democratic and economic reforms.
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THE GEOPOLITICAL AND STRATEGIC CONTEXT.
Since the September 11, 2001 attacks on the United States, the geopolitical and security importance of the post-Soviet states of Central Asia has increased markedly. Countering authoritarianism and economic stagnation, which provide the fuel for domestic unrest, religious extremism, and international terrorism, is critical to protecting U.S. interests in the region.
Despite the many differences among these countries, there are some unifying themes of strategic importance to the United States Government:
Central Asia's strategic location, between South Asia, China, Russia, and Iran, ensures that its importance will continue to grow in the years ahead. What happens in Central Asia concerns not only Russia to the north, but also China, its eastern neighbor. Events in Afghanistan, India, Pakistan, Iran, and the broader Middle East are also impacted by developments in the region.
Central Asia is a critical source of energy. Kazakhstan, Turkmenistan and Uzbekistan all boast substantial petroleum reserves. Turkmenistan is the second largest natural gas-producing country in the former Soviet Union. The country also ranks fourth worldwide—after Russia, the United States and Iran—with proven natural gas reserves totaling nearly 100 trillion cubic feet (Tcf). Uzbekistan currently possesses about 600 million barrels of proven oil reserves. Uzbekistan is the eighth-largest producer of natural gas in the world, but most of this is used domestically. Kazakhstan has large oil and gas reserves. Its giant, offshore Caspian Kashgan field is one of the most important petroleum finds in thirty years. The United States, as a significant energy importer, has a vital interest in ensuring that efficient export outlets are developed and that Central Asia emerges as an important source of energy in the years ahead, not just for the United States but for the world market.
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RESOURCE LEVELS AND COUNTRY PRIORITIES.
Despite a growing acknowledgement of Central Asia's strategic importance, USG assistance funding for the region has declined precipitously since a high point in 2002, when Congress authorized major supplemental funding for Central Asia in recognition of its proximity to Afghanistan and pivotal role in the Global War on Terrorism. Indeed, today's funding levels for USAID assistance to Central Asia ($73.9 million in FY06) represent a significant decrease from pre-9/11 levels ($93.8 million in FY01.)
Among the Central Asian Republics, Kazakhstan and Kyrgyzstan are the highest dollar recipients of USAID's assistance, with $20.1 million and $22.5 million respectively in FY06. Kazakhstan has made considerable progress on economic reform while making inconsistent progress in its commitment to democratic reform. Kazakhstan is strategically important to the United States due to its geographic location and significant resources, growing U.S. investment, and relative openness to trade.
Moreover, in Kazakhstan, we are entering a new phase of our development cooperation which involves the Government of Kazakhstan sharing in the cost of USAID managed economic development programs. The $40 million joint ($25M USAID; $15M GOKZ) Program for Economic Development calls for even closer collaboration in the formulation, delivery, and monitoring of programs. Aside from the greater impact we hope to achieve with this new approach, we also hope it will strengthen sustainability prospects and help pave the way for Kazakhstan's own development assistance programs.
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Kyrgyzstan, the smallest of the republics, has distinguished itself through early, consistent, and aggressive economic reform and a commitment to and demonstration of democratization. In March 2005, the people of Kyrgyzstan took to the streets to signal their dissatisfaction with the Government's manipulation of the electoral process; their efforts led to the popular ouster of autocratic President Askar Akayev. While the new Government has been slow to honor its election-year promises, particularly in the areas of anti-corruption, good governance, and constitutional reform, Kyrgyzstan remains the most open of the Central Asian Republics in both economic and political terms. It is important that the U.S. Government support Kyrgyzstan's reform trajectory. To that end, USAID is coordinating closely with the Department of State and the Millennium Challenge Corporation to ensure that our resources are strategically allocated, mutually supportive, and conducive to our shared goal: helping the Kyrgyz Republic to achieve its full democratic, social, and economic potential.
With roughly 64 percent of its population below the poverty line and the lowest GDP per capita in the region, Tajikistan's socioeconomic indicators rival those of sub-Saharan Africa. Although still an authoritarian state, Tajikistan's political system remains among the more pluralistic in the region. It is the only country in Central Asia with a legally-recognized Islamic opposition party, one which also holds positions in government. USAID has budgeted $15.6 million in assistance to Tajikistan in FY06 to support programming that promotes democratic, economic, and health reform and conflict mitigation.
Uzbekistan, the largest of the five in terms of population, is important to regional stability due to its central location (it borders each of the republics and Afghanistan) and historic leadership role in Central Asian culture and religious life. Despite early signs of economic progress, the Government of Uzbekistan has backpedaled considerably in its commitment to real economic reform. The central government, led by former Soviet leader Islam Karimov, remains authoritarian.
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Relations between the United States and Uzbekistan have deteriorated significantly in the past year, partly as a result of the U.S. call for an independent inquiry into the Government's response to a militant uprising in Andijan in May 2005, which left hundreds of civilians dead, according to reports. While regional sensitivities to U.S. democracy programs were already heightened following Kyrgyzstan's Tulip Revolution in March 2005, the decline in our bilateral relationship post-Andijan has enabled the Ministry of Justice to step up its campaign to force termination of those programs which the host government considers most threatening. These include programs in human rights, civil society development, and support for independent media. Despite these setbacks, USAID will continue to reach out to the people of Uzbekistan, whose support for our work remains unwavering. Meanwhile, we have found ways to continue our programs in such areas as health, agriculture and natural resource management, with limited disruptions. The FY06 budget for Uzbekistan is $13.1 million, which is aimed at consolidating economic and health reforms while promoting a more open society.
Turkmenistan continues to receive the lowest level of funding in the region, $3.6 million, despite its strategic importance. This level reflects the regime's failure to institute a serious economic reform program and its totalitarian stand. Civil society groups face difficult registration rules and are closely monitored. Government cooperation to reform the health sector nevertheless remains strong and we will continue to push ahead to work with citizens that represent the future generation of leaders.
USAID ASSISTANCE TO CENTRAL ASIA.
USAID's operations in Central Asia are managed by a Regional Mission headquartered in Almaty, Kazakhstan, with satellite offices in the other four republics and in Kazakhstan's capital, Astana. This approach has proven successful in overseeing five bilateral programs, and interacting with five U.S. Embassies through the mobilization of a wide range of technical expertise that can be applied throughout the region, achieving cost and management efficiencies. It has provided the flexibility needed to respond quickly to events in the region while applying lessons learned in five different programs.
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With our current assistance strategy set to expire in early September 2006, USAID is working in close coordination with the Department of State to prepare a new strategy for assistance to the region over the next several years. Unlike the current strategy, which covers all five republics in a single overarching document, the new strategies will be country-specific, reflecting the unique environments and challenges we face in each country. Next month, I will travel to Central Asia to conduct oversight of USAID's programs in four of the five republics and participate in an Interagency Country Assistance Review (ICAR) in Uzbekistan. I would be pleased to offer my preliminary observations with the Committee upon my return and to share with you a copy of USAID's final strategy for Central Asia once it has been approved.
USAID's development strategy for assistance to Central Asia rests on three mutually supportive pillars: (1) promoting a democratic culture; (2) bolstering economic growth and reform; and (3) facilitating social transition through more effective and equitable approaches to health and education.
DEMOCRATIC REFORM: ACCOMPLISHMENTS AND RESULTS.
USAID's approach to democracy assistance in Central Asia is based on promoting a strong democratic culture. With few indigenous democratic traditions, leadership in all five countries has historically tended towards autocratic and authoritarian methods of governance—with little understanding of citizen participation in political and governance matters. Overtly political civic organizations, political parties, and labor unions all continue to face strong resistance and even periodic repression from most Central Asian governments. Private television and radio stations still face significant degrees of state control and interference—except in Turkmenistan and Uzbekistan, where no such media exist.
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Most notably, civil society, virtually unknown at independence, has grown and become more sophisticated throughout Central Asia. Literally thousands of diverse citizen organizations are now thriving, and in some countries, playing increasingly vocal roles in political debates. USAID assistance has also been important in developing the management and technical skills of independent electronic media and in introducing civic education in secondary schools.
Still, the past several years have seen significant backsliding or stagnation in Central Asia on key democracy indicators, such as the respect for a free press, judicial independence, and the conduct of free and fair elections. To meet this challenge, USAID focuses on strengthening civil society; bolstering independent media; protecting human rights; and promoting reform at the local levels. Where possible, we also work on political party development, enhancing the rule of law and elections. USAID's activities in Central Asia increase dialogue between government and citizens by assisting institutions that inform and empower people. Civic organizations and civic advocacy programs provide means to advocate for good governance, accountability, transparency, rights protection, and democratic reforms. USAID focuses on informing and engaging citizens through independent television and radio stations. Lawyers and young people learn about democratic values through reformed legal curricula at law schools, democracy camps, simulated court trials and civic education. Several programs diffuse tensions that could cause conflict through community involvement in local economic development and joint community-local government councils.
Despite some major setbacks, most notably, in Uzbekistan, USAID has achieved important results in its democracy programming in Central Asia. The following represents a sampling of our activities and achievements:
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Civil Society Promotion:
To strengthen local NGOs in each of the five republics, USAID's Civil Society Support Program provides training, information, networking opportunities, and professional assistance through a network of civil society support centers. The program awards institutional grants to leading NGOs in specific sectors, and promotes advocacy at the national level. USAID also provides technical input for the development of a supportive legal network for NGO operations, as well as direct legal advice to NGOs.
Human Rights & Rule of Law:
USAID's ongoing support to local human rights defenders (HRDs) in Kazakhstan, Kyrgyzstan, and until recently, Uzbekistan, provides a critical protection network, technical training and access to legal resources at a time when HRDs are being targeted for questioning, arbitrarily arrested, or detained. Based on this collaboration, HRDs monitor the human rights situation to highlight significant issues and trends. In Kyrgyzstan and Uzbekistan, HRDs have worked with local law enforcement to improve pre-trial detention conditions and address the most important local level human rights concerns.
In Uzbekistan, USAID's Open Dialogue program provides the opportunity for dialogue between law enforcement agencies and human rights defenders and has fostered collaboration on deaths-in-custody cases and forensic investigations. In collaboration with the U.S. Department of Justice, roundtables on issues such as habeas corpus have been held around the country.
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In Uzbekistan, Turkmenistan, Kazakhstan and Kyrgyzstan, USAID has helped establish law clinics at local universities to provide pro bono legal advice and build practical skills of law students.
In Kazakhstan, supporting the installation of video and audio court recording equipment in a pilot court to increase the transparency of court proceedings. The judiciary was so impressed with the results that they are planning to expand this system—with their own funds—to more than 100 additional courts.
Civic Education:
USAID's civic education program, active in Kazakhstan, Kyrgyzstan, and Tajikistan, encourages critical thinking skills within a broader framework of principles of good governance, democracy, and civic activism. In addition to supporting textbook development and teacher training in interacting teaching methodologies, the program also provides secondary school students with hands-on experience with democracy through extracurricular activities like student government, local government day and democracy summer camps. More than 100,000 students are reached each year through this program.
Complementing this work, USAID also supports Street Law programs in all five Central Asian countries, which provide additional training on civic rights and responsibilities. These courses are typically taught by law school students, giving them an opportunity to increase their public speaking and training skills.
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Anti-Trafficking Programs:
To help combat trafficking in persons, USAID organizes public awareness campaigns and information hotlines, supports local NGOs that provide services to trafficking victims, and in several countries, we operate shelters for such victims.
Support for Independent Media:
USAID's media initiative, which is active in Kazakhstan, Tajikistan, Kyrgyzstan, and until recently, in Uzbekistan, provides training and assistance to improve the use of modern production technology and management techniques and update journalism quality in both print and broadcast media. In addition, a production fund encourages local programming, and legal advisors provide consultation to media outlets. Under a new initiative, USAID plans to support the broadcast of news and informational programming by satellite to expand access to information across the region.
Local Government Reform:
USAID's work in local government reform in Kyrgyzstan and Tajikistan has resulted in an improved policy environment and strengthened the capacity of local authorities to organize public hearings, undertake strategic and financial planning, and manage public works and fee-for-service municipal enterprises. While Kyrgyzstan is the only country in Central Asia with democratically-elected mayors, Tajikistan has recently approved a strategy for decentralization which would include direct elections for mayors as well.
Elections Assistance:
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USAID has provided assistance for both parliamentary and presidential elections in Kazakhstan, Kyrgyzstan, and Tajikistan. In Kyrgyzstan, USAID sponsored both international and domestic election monitoring, efforts to provide checks on the official results, including exit polls and a parallel vote count, the training of poll workers, and the use of indelible ink to prevent multiple voting.
ECONOMIC GROWTH AND REFORM: ACCOMPLISHMENTS AND RESULTS
USAID's assistance in economic reform encompasses work in enterprise development; financial sector reform; trade facilitation; microfinance and banking sector reform; commercial law and accounting reform; financial sector reform; and economics and business education. We focus on these areas because in each country improvements in the overall business environment will be important to long-term prospects for economic growth. As the chart below indicates, Kazakhstan and Kyrgyzstan rank relatively low in the World Bank analysis, and Uzbekistan is near the bottom of those countries surveyed. Tajikistan and Turkmenistan are not included in the Bank's survey but can also be assumed to be near the bottom.
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Our results in each of these areas, especially in Kazakhstan and Kyrgyzstan, are impressive:
SME Development:
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Since 2002, USAID has provided firm-level assistance to improve the competitiveness of over 1900 private enterprises throughout Central Asia. Business managers receive coaching to improve strategic planning, basic financial and management accounting, human resource management, operations and quality management, and market analysis. Results of this assistance has led to measurable increases in sales and productivity gains, expanded market linkages and trade relationships within the region and with neighboring countries including Afghanistan, and increased understanding of fundamental market principles necessary for growth of a thriving and diversified small and medium business sector.
Financial Sector Reform:
Financial sector reform in Kazakhstan is one of USAID's major successes in Central Asia. USAID has supported the introduction of corporate bonds, mortgage bonds, warehouse receipts, and other investment vehicles. The corporate bond market introduced in 2000 has grown to $2 billion in bonds in circulation. Mortgage-backed securities, introduced in 2002, now comprise $300 million in outstanding mortgage bonds. In partnership with the National Bank and the Association of Financiers, USAID helped Kazakhstan develop a Law on Credit Bureaus. Adopted in July 2004, the law establishes the legal basis for the first comprehensive credit reporting system in the CIS. With technical assistance from USAID, seven local commercial banks and an international credit bureau operator, Iceland-based Credit Info, recently established the first credit bureau in Kazakhstan. The credit bureau will serve to further strengthen Kazakhstan's financial sector and expand access to finance for citizens and local entrepreneurs.
Trade Facilitation:
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USAID provides assistance to governments and businesses in Kazakhstan, Kyrgyzstan, Tajikistan (and until recently Uzbekistan) to modernize their legal and regulatory frameworks for trade administration. This includes help to develop and introduce new Customs Codes that modernize customs procedures in accordance with the Kyoto convention and WTO agreements and principles. USAID has also worked to strengthen the dialogue between Customs and the private sector by supporting the establishment of Consultative Councils, which are used to discuss issues of concern to traders, transporters and other stakeholders.
Microfinance and Banking Sector Reform:
Over the past five years, USAID has provided considerable financial assistance to strengthen the banking and microfinance sectors in four of the Central Asia republics: Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan. This assistance has spanned from improvement of financial regulation and bank supervision to bring it in line with international standards, including the establishment of clear legal frameworks for the provision of microfinance and institutional strengthening of commercial banks and microfinance institutions.
USAID's work in microfinance has led to groundbreaking achievements, among them, the passage of legislation in several countries permitting a stable and consistent base for microfinance activities. Leading microfinance institutions in Kyrgyzstan, and the Kazakhstan Loan Fund were inspired by legislative reform and market prospects—and are now making plans to transform into microfinance banks. The sector has grown in the number and variety of market players. Commercial banks are now increasingly lending to micro and small businesses, which they previously considered too risky and costly. Microfinance institutions are recognized as full market players in the financial systems of these countries; and EBRD, an international financial institution, has even started lending to such institutions.
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Reduction of Business Constraints:
USAID provides assistance to governments and businesses in Kazakhstan, Kyrgyzstan, Tajikistan (and until recently Uzbekistan) to modernize their legal and regulatory frameworks for doing business and reduce the burden of government regulations on SMEs. This includes reforms in such key areas as business registration, licensing and permits, government inspections, land site acquisition and real estate construction and development. USAID has also built a large network of both government and private-sector partner organizations that actively tackle regulatory barriers to SME development at the local and national level in Kazakhstan. In the next four years, we are planning to roll out this partnership program to Kyrgyzstan and Tajikistan.
Commercial Law Reform:
In Tajikistan and Kyrgyzstan, USAID trains local judges and attorneys in the interpretation and proper application of commercial laws to promote the establishment of secure property rights, enforcement of contracts, and drafting of basic commercial legislation necessary for the operation of a market economy. For example, in March 2006, the Ministry of Justice launched a new movable property registry in Tajikistan with substantial technical assistance from USAID's Commercial Law Project. Until now, lenders in Tajikistan have been unwilling to give credit against moveable property due to the lack of an efficient and reliable registration system. By increasing security of lending transactions, the registry will help small businesses obtain financing and reduce the interest rates on loans.
Accounting Reform:
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Through the implementation of its Certified International Professional Accountant (CIPA) program—the first, internationally recognized professional certification for accountants in the Russian language—USAID is helping to promote financial management, transparency, accountability, and professional values. The use of modern management accounting and uniform international standards will improve the competitiveness of the regions' enterprises, allowing them to compete both internationally and domestically. To date, over 54,000 exams have been issued and over 3,900 individuals have earned the entry level Certified Accounting Practitioner (CAP) or CIPA designation in Central Asia.
Business Education:
Business and management education comprises a critical, albeit oft-overlooked, component of private sector development. Such assistance ensures that citizens receive education that is relevant to their participation in a market economy. USAID's Business and Economics Education Program seeks to develop stronger linkages between businesses and universities, enabling the latter to become more flexible and responsive to the market requirements for educated professionals, and to improve career opportunities for graduates in their host countries and throughout the region. USAID funded Junior Achievement Program promotes the development of entrepreneurship and practical business skills at middle grade and high-school level to increase youth participation in the economy.
SOCIAL TRANSITION: ACCOMPLISHMENTS AND RESULTS
Among the least expected consequences of post-communist transformation in Central Asia was a decline in living standards for many and a stark erosion in the stock of human capital. As an example, the following chart depicts the decline in life expectancy at birth in Central Asia as compared to the Northern and Southern Tiers of Central and Eastern Europe; this trend holds for all other indicators in the social sector:
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The evidence is impossible to ignore: rising morbidity and mortality due to infectious disease, weakened life expectancy, high unemployment, low wages, and the outward migration of individuals seeking better opportunities in Russia, where, as migrant workers, Central Asians are regularly subject to discrimination. To mitigate these concerns, our assistance in Central Asia is aimed at establishing viable social systems appropriate to market-oriented democracies. The first challenge is to halt serious health threats and reduce crises in education. We are meeting this challenge in Central Asia:
Primary Health Care Reform and Maternal and Child Health: At independence, the Central Asian countries inherited massive, inefficient health care systems that they are no longer able to support financially. In their current form, the region's public health, service delivery, health finance, and medical education systems are unable to address a range of problems leading to falling life expectancy in the region. Physicians have not been well-prepared to provide high quality, evidence-based services that effectively treat the most common and urgent conditions that their people face. Preventive care measures are poorly funded, and few people understand their own role in and responsibility for taking care of their own health. USAID is working to improve the quality of health care in Central Asia by changing the way that care is given. A priority is to increase the use of primary care, provided at the local level and on an outpatient basis. USAID's models of health reform are being continued and expanded by the Central Asian governments as they see the positive results of these interventions.
USAID's assistance has increased access to quality primary health care throughout the Central Asian region, establishing facilities that have trained more than 10,000 clinicians in family medicine and general practice.
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Our provision of training and contraceptives throughout Central Asia has helped significantly to reduce abortion rates throughout the region. A comparison of the 1999 Kazakhstan Demographic Health Survey (KDHS) and the 1995 KDHS indicates a decline of 22 percent in the abortion rate.
USAID has assisted the Governments of Kyrgyzstan, Kazakhstan and Uzbekistan in the design and implementation of National Health Reform Plans; a similar plan for Tajikistan is currently being developed with assistance from USAID-funded experts.
USAID's efforts have led four countries in Central Asia officially to adopt, for national use, the World Health Organization (WHO)—recommended Live Birth Criteria, paving the way for reductions in infant morbidity and mortality. To date, as a result of pilot activities to introduce the new criteria, 221 infants have lived who otherwise would have been abandoned as dead.
USAID has trained more than 12,000 clinicians in the Integrated Management of Childhood Illnesses, the WHO strategy to reduce death, illness, and disability, and to promote improved growth and development among children under five years of age.
HIV/AIDS, Tuberculosis and Malaria: Seventy to ninety percent of HIV infection in Central Asia is linked to injecting drug use, primarily heroin. The same percentage of the world's heroin comes from Afghanistan. While the USG has devoted considerable resources to poppy eradication in Afghanistan and border control support with Tajikistan, USAID's Drug Demand Reduction Program is one of the few regional efforts to reduce demand for heroin. USAID's efforts in this area are notable:
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Through our foreign assistance, USAID has helped establish eleven HIV sentinel surveillance sites in the region, thereby producing the first scientifically valid data on the course of the epidemic.
With assistance from USAID, more that 76,000 Central Asian youths have been educated on the risks involved with drug use.
We have used our assistance to leverage resources, such as assisting governments in the region to obtain $74 million in additional funding through grants from the Global Fund to Fight AIDS, Tuberculosis and Malaria (GFATM).
USAID programs have assisted countries in the region to advance toward the World Health Organization (WHO) global goal of 85 percent treatment success for tuberculosis (TB). The current range of treatment success in Central Asia in USAID project sites is from 75.7 percent in Uzbekistan to 85.3 percent in Tajikistan.
In Kazakhstan, where USAID has supported tuberculosis (TB) control efforts since 1998, TB deaths decreased 41.6 percent between 1998 and 2003, and the Centers for Disease Control and Prevention calculates that the USAID-supported TB control strategy has saved more than 18,000 lives during that time.
USAID has supported malaria prevention and control efforts in the region since 2000, resulting in an 84 percent decrease in malaria cases in the region between 2000 and 2005, and effective responses to outbreaks in Kyrgyzstan in 2002 and 2005. Governments in the region have been assisted to receive $11 million in grants to fight malaria from the GFATM.
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USAID Efforts to Mitigate an Outbreak of Avian Influenza: In support of the President's International Partnership on Avian and Pandemic Influenza, USAID has entered into partnerships with host country governments and the donor community, and is helping to lay the groundwork for an effective prevention and response strategy to outbreaks of avian influenza in Central Asia, including Kazakhstan, where H5N1 was confirmed as the causative agent in an outbreak in poultry last year and another outbreak in wild birds earlier this year:
Together with international donors, in early June USAID will support a regional conference in Kazakhstan on Avian Influenza Preparedness and Prevention with representatives from all the Central Asian countries and their neighboring country governments. The key objectives of the meeting are to learn lessons from past experiences with outbreak control management and preparedness planning (including risk communication), and to review countries' responses and identify potential gaps for further assistance.
With supplemental funding, USAID will provide technical assistance to all five Central Asian host country governments for surveillance, detection, laboratory testing, and animal and human outbreak management.
Basic Education: Education has a central role in the formation of human capital—an essential component of economic growth and societal development. More than a decade after the dissolution of the Soviet Union and the beginning of a transition to a market economy and democratic society, the Central Asian Republics face three broad challenges in the education sector: (1) maintaining previous educational achievements and slowing or reversing the process of deterioration that has taken place; (2) reforming educational systems so that they correspond to the market economy and democratic society; and (3) assuring access and equity to education for all groups, regardless of gender, ethnicity, and socio-economic standing. USAID's education assistance in the area of primary and secondary education is designed to prepare young people with flexible skills necessary to work in a market economy. In addition to promoting greater parental and community involvement, our programs support in-service teacher training, the introduction of a more efficient model for funding schools, and the rehabilitation of dilapidated schools.
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While USAID began assistance in basic education only in 2003, much already has been accomplished:
USAID-supported teacher training programs were officially recognized by the Governments in Kyrgyzstan and Tajikistan as meeting the teachers' mandatory professional development requirement. In Kyrgyzstan, the USAID core schools received the official legal status of teacher training provider, which allows them to offer paid services to other public and private entities.
In Tajikistan, Uzbekistan, and Kyrgyzstan, at the request of the governments, USAID introduced a new per-capita budget formula to improve equity and increase efficiency in the area of school finance. The new model will give greater autonomy to schools in managing their budgets, while the capitation principle will reward quality improvement by giving a higher budget to schools with a growing number of students. In Tajikistan, the pilot has already expanded with technical assistance from USAID and additional donor support from World Bank and other donors. In Kyrgyzstan, the Government plans to use the USAID pilot as a model for future expansion of per capita financing.
Community cost sharing in school renovation projects, mostly in the form of labor, has been surprisingly high even in the poorest areas of Kyrgyzstan, Uzbekistan, and Tajikistan, and in many cases, matched or even exceeded the value of USAID's grant.
In Turkmenistan, where the education system is in a state of crisis, more than 300 teachers have been trained in critical thinking methodology, and over 30,000 children have benefited from teacher and administrator training.
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Higher Education: While the focus of USAID's limited resources for education are at the primary level, the following constitute important examples of our commitment to higher education:
One of USAID's legacies in Central Asia is the establishment of the American University of Central Asia (AUCA), the region's premier institution of higher learning, based in Bishkek, Kyrgyzstan. AUCA is a showcase of U.S. teaching methods, recently benefiting from an endowment of $15 million funded by USAID and the Open Society Institute.
As a means to reduce corruption in higher education, in 2002, USAID helped to create a National Scholarship Test for high school graduates in Kyrgyzstan. The examination now serves as a basis for admission to higher education as well as the sole criterion for the administration of over 5,700 state-sponsored scholarships.
THE WAY AHEAD: CENTRAL-SOUTH ASIA REGIONAL INTEGRATION.
In addition to focusing on our bilateral programs, USAID's new strategy will pay special attention to opportunities for enhanced integration between Central and South Asia, in keeping with the goals articulated by Secretary Rice during her recent trip to the region and reiterated by my colleague, Assistant Secretary Boucher, in his testimony today. As the U.S. government aims to strengthen trade, transportation, communications, and energy links between Central and South Asia, USAID is taking a leadership role in the facilitation of cross-border trade and energy sector development.
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Energy Sector Development: Perhaps the greatest potential benefits of intra- and inter-regional collaboration lie in the energy sector, where better coordination is needed to (1) develop a transparent, commercial Central Asian electricity market; (2) enable the short and medium term export of power to Afghanistan; (3) build a reliable transmission system in Afghanistan; and (4) develop export capacity, a dedicated transmission system and a regulatory, contractual and security framework for trade and investment.
Although energy is an important economic driver in Central Asia, the potential for electricity sector development is limited because of the lack of an effective regional electricity market and problems with energy sector transparency and governance. USAID/Central Asia will soon launch a $3.3 million Regional Energy Market Assistance Program (REMAP), a two-year project to improve the management of energy and related water resources through development of a transparent, reliable and commercially oriented regional electricity market.
In the Afghan power strategy, high priority is placed on economically priced power imports from Central Asia. Without such imports, Afghanistan will not be able to meet the domestic power supply needs in the long term. USAID/Kabul is working with Agency counterparts in South Asia to develop electricity import agreements.
Trade Facilitation: To foster greater regional trade in Central Asia, Secretary Rice announced in October 2005, as part of a larger USG initiative, a $400,000 USAID trade facilitation program. The purpose of this program is to benchmark existing national customs procedures against international standards and best practices and identify opportunities to reduce transaction costs for business by harmonizing, strengthening and streamlining customs functions. It will be a vital complement to similar work in Afghanistan. USAID/Central Asia is also in the process of designing next generation programs that aims to reduce the regulatory and administrative burden for SMEs, facilitate trade, and provide assistance to the Central Asian countries to accede to the WTO or to meet their post accession commitments.
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CONCLUSION.
In conclusion, we are proud of what we have accomplished over the last fifteen years in supporting Central Asia's transition in the post-Soviet era. However, there is a still a great deal yet to accomplish. Central Asia's historical legacy includes entrenched developmental problems. There is much more to do in creating legal and institutional frameworks for business and in developing democratic civil societies, effective economic choice, improved social services such as health and education, and personal freedom. Consequently, in Central Asia, significant technical assistance will continue to be devoted to helping countries establish the institutional, legal and policy underpinnings of market democracies.
As new priorities emerge in other parts of the world, we urge the distinguished members of the House International Relations Committee to provide continued support to our programs in Europe and Eurasia. The geopolitical, security, and trade and economic importance of the region remains of vital interest to the United States, and our very close working relationships with the Coordinator's Office in the Department of State allow us to program resources in a way that will be most responsive to these interests.
Thank you, Madame Chairwoman. Without the support that this Committee and Congress have given us over the years, the progress that we have made in the region would not have been possible. In closing, I want to assure you of our continued commitment to achieving the noble goals Congress set out in the SEED and FREEDOM Support Acts, both within Central Asia and the broader E&E region.
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STATEMENT OF THE HONORABLE JAMES MACDOUGALL, DEPUTY ASSISTANT SECRETARY, U.S. DEPARTMENT OF DEFENSE
Mr. MACDOUGALL. Thank you, Mr. Chairman, for the opportunity to discuss United States policy on Central Asia. Central Asia is in the middle of a historic transition. The United States is in the position to help these countries as they orient themselves toward Western democratic and market-based economic principles, and I believe it is imperative that we do so. If I could reiterate what Assistant Secretary Boucher, our three sets of strategic interest in Central Asia, namely political and economic reform, energy and regional economic cooperation, and security are all interrelated and equally important. Given my responsibilities, I would like to focus a few minutes on the security aspects of our policy in Central Asia.
Our core security goals in the region are threefold: To support the global war on terrorism; to strengthen regional border security; and reduce the risk of proliferation, particularly of weapons of mass destruction; and to promote and assist with defense sector reform.
On the global war on terrorism, the United States is engaged in what has appropriately been called ''the long war.'' to prevail, we must find and destroy terrorists, bolster our own defenses, and particularly for this region, empower our partners to develop capabilities to isolate and expose terrorist groups and their means of support. Access to Central Asia supports ongoing combat and stability and reconstruction operations in Afghanistan. Because this part of the world is landlocked, we must rely on strategic airlifts to sustain large scale operations. That cannot be done without overflight and basing rights. Each country in the region has provided assistance to operation enduring freedom through bilateral arrangements for overflight, divert agreements, refueling rights, all critical to our operations in Afghanistan.
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Currently our relationship with Kyrgyzstan is particularly important and we are working hard to maintain our cooperative arrangements with them. We are currently renegotiating the terms of our use of facilities at Manas. These negotiations are complex and require determination and flexibility on both sides, but we are committed to a successful conclusion.
The second core security goal is to secure the borders of the region from illicit trafficking including in WMD materials. We believe shutting down trafficking routes is essential to the long-term stability of both Afghanistan and the Central Asian region as a whole. Here we utilize cooperative threat reduction in counternarcotics funds to help countries build and modernize border crossing facilities, establish interdiction teams and other units. We train appropriate defense and military personnel and help modernize their equipment and facilities.
Central Asia has emerged as a significant narcotics trafficking route. DOD, in cooperation with the Departments of State and Justice is helping to build central Asia's capacity to combat the drug trade. We are training host nation counternarcotics enforcement personnel and refurbishing border security infrastructure in Kyrgyzstan and Tajikistan. In Tajikistan, we are also providing real-time communications capability that will enhance interagency coordination on counternarcotics operations.
Thirdly, our core security goal in Central Asia is to transform the central Asian Soviet legacy defense establishments into modern institutions along the Euro Atlantic lines. Specifically, we envision interdependent Central Asian militaries that are firmly under civilian control, are subject to budget transparency and legislative oversight, are affordable in size to meet realistic security requirements. All five Central Asian states are members of NATO's Partnership For Peace, PFP. Their participation in PFP events and exercises helps develop interoperability which, in turn, enhances their capabilities to participate in coalition and other operations. PFP mechanisms including the Individual Partnership Action Plan, or IPAP, are important tools to help these countries implement defense reform. Earlier this year, I would like to note that Kazakhstan became the first Central Asian state to develop and secure NATO approval for an individual partnership action plan.
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Contact between U.S. and foreign military officials promotes defense reform. Through bilateral defense consultations, states and National Guard partnerships and central command sponsored training conferences and other events, we are deepening personal and professional ties between the militaries of Central Asia and the United States, building, in effect, the next generation of leaders. As such, we strongly encourage young central Asian officers to participate in programs at the George C. Marshall Center for Security Studies.
Mr. Chairman, we have vital interests, security, economic and political that will endure in Central Asia well after operations in Afghanistan have ended. These interests require our attention now. We believe we must continue to balance our approach based on where each country stands in the economic, political and security realms. I look forward to working with you, with this Committee and my colleagues in the Executive Branch to further U.S. interests in this important region. Thank you, sir.
[The prepared statement of Mr. MacDougall follows:]
PREPARED STATEMENT OF THE HONORABLE JAMES MACDOUGALL, DEPUTY ASSISTANT SECRETARY, U.S. DEPARTMENT OF DEFENSE
Madame Chair, Congressman Ackerman, Members of the Subcommittee, thank you for the opportunity to discuss U.S. policy on Central Asia.
The United States faces significant policy challenges in Central Asia. This region, made up of Kazakhstan, Uzbekistan, Kyrgyzstan, Tajikistan, and Turkmenistan, is now in the middle of an historic transition to fully independent, sovereign nations. We are in a position to assist these countries as they orient themselves toward western democratic and market-based economic principles, and it is imperative that we do so. Our policy is to help create a Central Asian region comprised of independent, sovereign pluralistic states that are territorially secure, free from external political domination, and economically engaged with international markets.
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A region comprised of secular Muslim states, Central Asia has a rapidly growing population, much of which lives with limited economic and political opportunities. Difficult domestic conditions are exacerbated by international trafficking—in weapons, narcotics, and people. In sum, much of Central Asia is subject to a dangerous mix of demographic, economic, social, and political pressures that could help foment terrorism and Islamic extremism.
Alongside these challenges, however, are significant opportunities. First, Central Asia is home to ancient traditions of religious tolerance and scientific learning—traditions that can help shield it against extremism and create functioning examples of moderate Islamic states. Second, this region has proven economic potential. Central Asia once made up the heart of the Silk Road. The prospect of regional economic dynamism still exists, especially given Central Asia's vast energy reserves and strong agricultural potential. These natural resources, if invested wisely, can help revive that economic vitality and foster much-needed economic growth. Third, Central Asian governments recognize that the transnational threats of international terrorism and illicit trafficking endanger their own national security. As such, we have strong opportunities for cooperation as we continue to prosecute the Global War on Terror.
The great policy questions of our time are all present in Central Asia—from combating terrorism to energy security; from supporting moderate Islam to promoting democratic development.
CENTRAL ASIA STRATEGY
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The United States continues to pursue three sets of strategic interests in Central Asia, namely:
Political and economic reform;
Energy and regional economic cooperation; and
Security.
We consider these objectives highly interdependent, mutually reinforcing, and equally important. Given my responsibilities, I will focus my attention primarily on the security aspects of our policy. But I would first like to briefly outline our goals in the other spheres. Additionally, I want to emphasize that we endeavor to pursue these different objectives simultaneously. No one objective trumps another.
As Assistant Secretary of State Fried told this subcommittee in October, failure in one area will undermine the chance of success in another. Therefore, our efforts in these countries must be crafted by carefully balancing developments in each sphere. Naturally, our enthusiasm for broadening our security cooperation with Central Asia must be tempered by economic and political realities. Likewise, our disappointment with the pace of reform in the region does not change that fact that we have important security interests in Central Asia.
POLITICAL AND ECONOMIC REFORM
Political liberalization and economic development in Central Asia are key to the region's long-term success. Lack of freedom from oppression and poverty breeds instability. Similarly, where a government lacks authority throughout its country's territory, you will find predatory forces, both inside and outside the country, that seek to fill the vacuum, often in destabilizing ways.
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Economic opportunity and good governance are the long-term solutions to these problems. Terrorist groups will find few recruits within a population that has a vibrant economy and confidence in its governmental institutions. Regarding internal stability, no government has more legitimacy than one that is freely selected by its citizens.
The Department of Defense (DoD) has fewer tools than other U.S. institutions to directly empower the forces of political and economic reform. Still, our defense reform efforts play a significant role in strengthening one of the basic foundations of democratic society—capable, civilian-controlled, and responsible defense establishments.
ENERGY AND REGIONAL ECONOMIC COOPERATION
The economic vitality we seek to create in Central Asia can be promoted through regional cooperation and international investment. The U.S. government seeks to tie Central Asia into a regional web of economic cooperation and stability, with support from the international financial and U.S. commercial sectors. In this regard, I would like to highlight the important work being done by the U.S. Army Corps of Engineers in Tajikistan. Their work building a bridge over the Pyanzh River at the Afghan-Tajik border is a prime example of DoD's commitment to support projects to develop the economic infrastructure of the region.
Central Asia's energy sector needs increased investment. We must work to link up the impressive hydrocarbon and hydroelectric energy resources in Central Asia with regional and global energy markets. Further development of these resources and diversification of delivery routes from Central Asia—both economically beneficial to these countries—is a U.S. priority.
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SECURITY STRATEGY
We have three core goals for our security relationship with Central Asia:
To support the Global War on Terrorism;
To strengthen regional border security and reduce the risk of the proliferation of weapons of mass destruction (WMD); and
To promote and assist with regional defense sector reform.
Global War on Terrorism
The United States is engaged in what has been appropriately called ''the long war''. We are faced with a determined and amorphous enemy that operates internationally and leaves us few fixed targets. To prevail, we must find and destroy terrorists, bolster our own defenses, and empower our allies and partners to isolate and expose terrorist groups and their means of support.
In greater Central Asia, our main focus is on supporting stability and reconstruction efforts in Afghanistan. This cannot be done without partners in the region. The most salient geographical fact of this part of the world is that it is land-locked. As a result, we need to rely on strategic airlift to sustain large-scale operations in the heart of the Asian landmass. And that cannot be accomplished without overflight and basing rights.
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Every country in the region has provided assistance in some form to Operation Enduring Freedom. Through bilateral arrangements, we have secured basing access and the overflight, divert, and refueling rights that have been critical to our ongoing operations in Afghanistan.
Neighboring countries have consistently applied pressure on Central Asian governments to downgrade their cooperative relations with us, and this remains a constant challenge to regional security. In our view, every state with significant interests in the region benefits from stability in Afghanistan. That is why it is so important that Central Asian governments remain committed to supporting the development of a stable, secure Afghanistan.
Until November 2005, our operations in Afghanistan were supported from airbases in Karshi-Khanabad (K2), in Uzbekistan, and Manas, in Kyrgyzstan. At the request of the Uzbek government we left Karshi-Khanabad and now rely on Manas for logistical support to U.S. and Coalition forces in Afghanistan. That is not to say that other options do not exist. However, I want to emphasize that our relationship with Kyrgyzstan is important and we are working hard to maintain our cooperative arrangements with them. We are in the process of renegotiating the terms of our use of facilities at Manas with the Kyrgyz government. We are committed to an expeditious conclusion of these negotiations, which will require determination and flexibility by both sides.
Counterterrorism in Central Asia cannot solely be addressed in the context of Afghanistan. As I mentioned earlier, political and economic conditions in Central Asia potentially make the region susceptible to the rise of extremist movements. It is crucial that we act now to stem the tide by better preparing Central Asian governments to deal with these threats themselves.
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To that end, we work within our statutory authority to provide counterterrorism training and expertise to Central Asian defense and military officials. Where appropriate, we have also helped equip our partners with non-lethal defense articles, increasing their operational effectiveness and interoperability with multinational forces. DoD is not alone in this endeavor. We work with our State, Justice, and Homeland Security colleagues to build capacities in the defense and security sector establishments.
In one prime example of the success of our counterterrorism efforts, DoD assistance helped establish Kazakhstan's peacekeeping battalion, elements of which are currently serving a fifth rotation in Iraq. Originally tasked with ordnance disposal and water purification, this battalion has since begun training Iraqi security forces in these same tasks. Kazakhstan is one of three predominantly Muslim states with troops serving in Iraq, with Albania and Azerbaijan the other two.
Non-Proliferation/Border Security
Our second core security goal is to increase national capacities to secure borders (land, riverine, maritime, and airspace) from all types of illicit trafficking and the proliferation of materials for WMD. We believe that shutting down trafficking routes is essential to the long-term stability both of Afghanistan and Central Asia as a whole. To accomplish this, we utilize a variety of Cooperative Threat Reduction (CTR) and counter-narcotics (CN) funds to help countries build and/or modernize border crossing facilities, to establish interdiction teams and other military units, to train appropriate defense and military personnel, and to help modernize their equipment and facilities.
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Central Asia has emerged as an important trafficking route for Southwest Asian narcotics. The UN estimates that 30 percent of Afghan narcotics transit Central Asia on their way to Russia and Europe. Porous borders, scarce resources, and corruption constrain the Central Asian countries' efforts to stem the drug trade. In addition, we continue to see some links between drug trafficking organizations, organized crime, and terrorist groups in the region.
DoD, in cooperation with the State Department's Bureau of International Narcotics and Law Enforcement and the Drug Enforcement Agency, is helping to build the capacity of the Central Asian nations to combat the burgeoning drug trade in the region. In FY05, DoD dedicated $28M in supplemental CN assistance to Central Asia. In FY06, we requested $55M for CN capacity building in Central Asia. We are utilizing CN assistance to improve training for host-nation counter-narcotics enforcement personnel and to refurbish border security infrastructure in Tajikistan, Kyrgyzstan, and Turkmenistan. In Tajikistan, we are also providing a real-time communications capability that will enhance interagency coordination on internal CN operations.
Regarding non-proliferation, let me say that keeping WMD out of the hands of terrorists must be our highest priority. We have been working hard on this front. Kazakhstan, Uzbekistan, Tajikistan, and Turkmenistan have endorsed the Proliferation Security Initiative. We are working with Kazakhstan to destroy WMD-related infrastructure. Additionally, we are helping Kazakhstan build a Caspian Sea monitoring and response capability. We also work with Uzbekistan to improve border WMD detection capabilities and to identify, safeguard, and destroy dangerous pathogens.
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Defense Reform
Our third core security goal is to gradually transform Central Asia's legacy Soviet defense establishments into modern forces along the Euro-Atlantic model. Specifically, we envision independent Central Asian militaries that are firmly under civilian control, are subject to budget transparency and legislative oversight, and that are affordable and sized to meet realistic security requirements.
All five Central Asian states are Partnership for Peace (PfP) members. Participation in PfP events and exercises helps develop interoperability with U.S. and NATO forces, which in turn enhances these nation's opportunities for participation in coalition operations. PfP mechanisms, including the Individual Partnership Action Plan (IPAP) and the PfP Planning and Review Process, are important tools to help them implement defense reform. Earlier this year, Kazakhstan became the first Central Asian state to develop and secure NATO approval for an IPAP.
Additionally, DoD uses its extensive bilateral contacts to expose foreign military officials to U.S. values and policies. It is our belief that increased contact is essential to promote both the interest and the ability to enact reform in Central Asia's defense establishments. Through bilateral defense consultations, State National Guard partnerships, and CENTCOM-sponsored training, conferences, and other contacts, we are working to deepen personal and professional ties between the militaries of Central Asia and the United States. Similarly, we strongly encourage and assist in the participation of young Central Asian officers and diplomats in courses at the George C. Marshall Center for Security Studies. We have strong interests in helping to build the next generation of leaders.
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CONCLUSION
Madame Chairman, we must continue to balance our approach based on where each country stands in the economic, political, and security realms. Supporting operations in Afghanistan is an important part of this balance. Additionally, we have vital interests—security, economic, political—that will endure long after operations in Afghanistan have ended, and they require our attention now.
Thank you. I look forward to working with this committee and my colleagues in the executive branch in this important region.
Mr. MCCOTTER. Thank you.
We have waited a long time. I suppose we can go to panel 2 now. I have some questions from the Chair and then I will have some of my own.
STATEMENT OF MS. ELIZABETH DUGAN, VICE PRESIDENT, INTERNATIONAL REPUBLICAN INSTITUTE
Ms. DUGAN. Thank you, Mr. Chairman. Good afternoon, and thank you for this opportunity to address you today. A little less than a year ago, I made a trip to Central Asia, and my flight was delayed into JFK, and so I missed the connection to Istanbul. So I presented myself to the airline representative to rearrange my itinerary, and she basically told me that she could get me to Istanbul, but that it would not be in time to make the onward connection to Bishket. And her recommendation to me was that perhaps I could drive there from Istanbul. I told her that I didn't think she understood the geography involved.
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So I begin by commending the Committee for not only appreciating the geography of this far-flung and often forgotten region of the world, but for hosting this hearing to draw attention to the challenges and opportunities that exist there. It matters. Central Asia's proximity to Iraq, Iran and Afghanistan highlights its strategic importance to the United States. Among other challenges, the region faces the potential for radical Islamist inroads into impoverished societies. So I am here today to make the case that Central Asia is worthy of democracy support efforts that are reinforced by our robust public diplomacy effort.
Since 2003, the International Republican Institute has proudly implemented democracy building programs in Kazakhstan, Uzbekistan and the Kyrgyz Republic, and we have built a nonpartisan reputation by organizing hundreds of training events and roundtable discussion in the three countries, all designed to advance democratic institutions and practices. But these three countries present diverse challenges to us. In a manner of speaking, they represent the good, the bad and the ugly.
In the Kyrgyz Republic, I want to emphasize in particular the positive dynamic that occurs when funding, technical skills and an eager beneficiary are fused together. Thanks in large part to development assistance over the past 10 years the Kyrgyz Republic is the least authoritarian of the five former Soviet Central Asian republics.
Over the last year the country has been taking steps in the right direction, albeit with some delays and setbacks. Here are the positive developments. An unhindered press, a vocal civil society, an open public discussion of national issues. In fact, IRI polling from a month ago shows that the population is generally positive about the development of the country.
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On major issues like unemployment, corruption and dealing with organized crime, though there is only limited progress. Additionally, there is the core issue of the country's future form of government, a Parliamentary, Presidential or mixed system. So President Bakiev has decreed that a national referendum on the form of government will take place in late 2006 preceded by a massive public education campaign.
At this stage, IRI polling shows that a majority of people are not aware of the coming constitutional referendum. And of those who are aware, 70 percent are not sufficiently informed to vote on it. Clearly much work needs to be done if the referendum is to be meaningful. And with USAID funds, IRI has developed information and training materials for political parties to spread throughout the country in this critical national education campaign.
While the referendum may be its single political event of 2006, the need for development of political parties remains a top priority if the country is to have a stable political system. Debate over constitutional changes in 2005 focused on their importance, and by 2010, it is possible that political parties will occupy at least half of the seats in a more robust Parliament that is endowed with increased legislative and oversight powers. This would be an unprecedented development in Central Asia. The way to achieve it, to echo Secretary of State Rice's words of last October, stay the course.
This is a critical time in the country's development as an independent nation, and I cannot emphasize enough the key role that United States assistance plays in the Kyrgyz Republic.
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Uzbekistan presents a far different and rather dark and ugly picture. It's tragic aftermath highlighted the fact that the country is effectively ruled by a dictator. Not one of the 220 members of the Parliament utt