Foreign Assistance

With the breakup of the Soviet Union in 1991, the five countries that comprise the Central Asian Republics--Kazakhstan, the Kyrgyz Republic, Tajikistan, Turkmenistan, and Uzbekistan--became independent along with Russia and the former republics of the Soviet Union. The United States has important strategic interest in the Central Asian Republics, including dismantling Kazakhstan's nuclear arsenal; developing oil and gas reserves; and helping stabilize a region surrounded by China, Iran, and Russia. The U.S. Agency for International Development (USAID) has provided about $274 million for economic and democratic reform initiatives in the five republics. This report answers the following questions: What were USAID's economic and democratic reform initiatives in the five republics designed to achieve, what has been accomplished, and what factors have limited the implementation of reforms? Have lessons learned from similar USAID programs in Central Europe and Russia been applied to the five republics? How has USAID ensured that its assistance funds in the five republics are spent as intended?

GAO noted that: (1) AID's economic and democratic reform initiatives in the five republics are designed to help develop market-oriented economies, increase citizen participation in economic and political decision-making, and promote more democratic and responsive governments; (2) with AID and other donor assistance, the CAR governments have made progress in this regard; (3) most notably, Kazakhstan and the Kyrgyz Republic--the two republics most committed to reforms--have privatized many small and medium-sized, state-owned enterprises, implemented trade and financial reforms, and developed nongovernmental organizations and independent broadcast news stations to encourage greater citizen involvement in governmental activities; (4) however, the goal of reaching a market-oriented democracy in each of these five republics is decades away; (5) even those republics that appear to have the greatest commitment to reform--Kazakhstan and the Kyrgyz Republic--have not completed many reforms; (6) with the exception of the Kyrgyz Republic, none have supported key democratic reforms, such as holding fair and free elections; (7) several important factors have affected the implementation of reforms in all the republics, including long-standing government corruption, inadequate resources to implement and enforce new laws and regulations, inexperience in managing market economies and democracies, and most importantly, the governments' limited commitment to implement comprehensive reforms at the national level; (8) AID's programs in CAR reflect numerous lessons learned from similar programs in Central Europe and Russia; (9) for instance, based on efforts to privatize economies in Central European countries, AID designed an integrated program to privatize the CAR economies, stressing simultaneous reforms in the fiscal, legal, and financial sectors; (10) similarly, based on experience with democratic reforms in Russia, AID has focused on working with citizen groups rather than with national political leaders and institutions that are adverse to reforms; (11) to ensure that assistance funds are spent for intended purposes, AID requires that cognizant technical officers carry out various project oversight requirements; and (12) based on GAO's review of 14 CAR projects, AID was meeting the requirements.