What Does US Assistance for Eurasia Have to Do with Foreign Aid?
BY SADA AKSARTOVA
Throughout the 1990s, the most ambitious American efforts to promote market and democracy were directed at Russia and other post-Soviet states. The enormity—physical and symbolic—of the Soviet Union, the rapidity of its collapse and the sheer scale of the economic and political transformation in its successor states presented Western policy makers with a new and unprecedented challenge. But it did not mean that Western donors produced a new kind of assistance that was specifically tailored for societies transitioning away from socialism. On the contrary, the US Agency for International Development and other donor institutions arrived in the region we now call Eurasia with the same toolkit they had previously applied to other countries and continents. A brief analysis of US bilateral assistance for transition in Eurasia in 1992-2006 shows several patterns characteristic of Western foreign aid in general, namely: the lack of absorptive capacity in countries new to foreign aid, the preference for small countries and the mismatch between the rhetoric and actual size of democracy promotion.
The United States began providing limited assistance to the Soviet Union in December 1990 to support the reform defined as the reduction of state power. The focus of economic assistance was on the privatization of state assets, while democracy aid was directed at empowering citizens vis-à-vis the state. The level of assistance grew dramatically after the Soviet Union’s dissolution in December 1991 and the enactment of assistance legislation. In October 1992 the US Congress passed the Freedom for Russia and Emerging Eurasian Democracies and Open Markets Support Act (also known as FREEDOM Support Act, or FSA). The term “Eurasia” covered the former Soviet Union with the exception of the Baltic republics, which were added to the 1989 Support for East European Democracy Act. Although the FSA is not the only source of assistance for Eurasia, it provides the legislative basis for US bilateral aid that is continually authorized by Congress.
Figure 1 presents data on the FSA appropriation levels from 1990-2006. We can see that they were at their highest in the early 1990s. Because the former Soviet republics were new to Western foreign aid, they were particularly ill-equipped to absorb large amounts of foreign assistance during the early period. In addition, the dissolution of the Soviet Union was accompanied by a severe economic crisis, collapse of the Soviet welfare state, mass unemployment and runaway inflation. In the words of British sociologist Simon Clarke, economically the post-Soviet states went “through the deepest and most sustained recession in world history” in the 1990s. This means that when the recipients’ ability to spend the assistance as intended—or what development experts call “absorptive capacity”—was at its lowest, the temptation for misuse was perhaps at its highest. Ironically, as Eurasia’s absorptive capacity grew over time, the assistance levels, as Figure 1 illustrates, declined.
Table 1 presents data on the size and distribution of US assistance—including the FSA and non-FSA funding—among the 12 states of Eurasia since 1992. In terms of the total amount, the largest share at just over 50 percent of all US aid for Eurasia (about $15 billion of the $28 billion) was budgeted for Russia. Russia is by far the region’s biggest country; its population of over 140 million is bigger than the combined population of the other 11 countries. Russia has also been the focus of Western assistance for obvious geopolitical reasons and the earliest recipient of foreign aid in the region.
However, on the per capita basis Russia received five times as little US assistance as Armenia (population 3.2 million), almost four times as little as Georgia (4.4 million) and far less than Kyrgyzstan (4.9 million), Moldova (4.3 million) and Tajikistan (6.1 million), all much smaller countries. In other words, what we see in Eurasia is a replication of the long-standing donor preference for small countries. It is a pattern that has been long recognized by development scholars but not necessarily by practitioners. For instance, in the early 1990s US and Western policy makers proclaimed Kyrgyzstan Central Asia’s “island of democracy,” and the country’s early promise is commonly used to explain its comparatively high per capita aid. However, this broad comparative snapshot suggests that the donors’ bias in favor of small countries may be a better explanation, especially because by the mid-1990s Kyrgyzstan’s political regime already began to resemble the authoritarian model prevalent in Central Asia.
The same pattern repeats itself in the distribution of US assistance for democracy promotion (Table 2). From 1992-2006, on the per capita basis, the top recipients of Eurasia-bound democracy aid—defined here as (i) democracy and civil society assistance and (ii) funding for cultural and educational exchanges—were Armenia ($73), Georgia ($40), Kyrgyzstan ($27) and Moldova ($20). By comparison, Russia—ostensibly the focus of US democracy promotion in the former Soviet Union—ranked quite low at $8 per person; only Uzbekistan ($5) received less per capita democracy assistance.
Another relevant fact to know is that despite American policy makers’ rhetorical emphasis on Eurasia’s democratization, democracy promotion constituted about 11 percent of the overall US aid package during this period. This is consistent with Thomas Carothers’s estimate of the share of US democracy aid worldwide and provides another illustration for how US aid policies toward Eurasia have followed the rule, not the exception.
The bias in favor of small countries is not unique to official foreign aid donors. Table 3 presents data on George Soros’s philanthropy in Eurasia. Soros, an American billionaire financier, was the first foreign donor to come to what was then the Soviet Union: he started giving out grants in Russia in 1987. Since then, his Open Society Institute has become the largest and most influential private donor institution in the region. Although Soros’s grantmaking philosophy and programs are quite different from the US government’s, in both cases more per capita funding flows to smaller countries.
These findings raise two points for further discussion and study. The first one is that Western attempts to guide the post-Soviet transition need to be analyzed in the broader context of foreign aid and global development, something that has been rarely done in existing studies. The assumption is that because the Soviet Union’s demise was an unprecedented event, US policies responding to it were sui generis. However, this is not the case. Even a brief look at the data provided here shows that several patterns characteristic of Western foreign aid in general—such as the favoring of small countries, the disparity between the amount of aid and the recipient country’s absorptive capacity and the mismatch between the rhetoric and actual size of democracy promotion—have repeated themselves in US public and private assistance for Eurasia. And this is because, unsurprisingly, US assistance for Eurasia has been embedded in and shaped by the larger institutional landscape of foreign aid. Hence, we should study it as such.
By doing so—and this is the second point—we will be better equipped to address the question of why US assistance for Eurasia has not worked nearly as well as US policy makers expected. Existing analyses, with few exceptions, ascribe the failures of Western aid for the post-Soviet transition to either its insufficient size or the legacies of the Soviet era. They are also unaware of the vigorous debate among development experts on foreign aid’s poor record over the last 50 years. This debate implies that US assistance for Eurasia has not performed well because foreign aid rarely does. In other words, the reasons for failure may have as much, if not more, to do with the institutional and operational logic of the assistance itself rather than with the Soviet legacy or the size of the aid package.
Sada Aksartova (saksarto@gmu.edu) is a Postdoctoral Research Fellow at the Center for Global Studies (http://cgs.gmu.edu).
