[Congressional Record Volume 141, Number 31 (Thursday, February 16, 1995)]
[Extensions of Remarks]
[Page E359]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


                     GAO REPORT--FORMER SOVIET UNION

                                 ______


                          HON. LEE H. HAMILTON

                               of indiana

                    in the house of representatives

                      Wednesday, February 15, 1995
  Mr. HAMILTON. Mr. Speaker, on February 7 the GAO issued Report GAO/
NSIAD-95-10, entitled ``Former Soviet Union: U.S. Bilateral Program 
Lacks Effective Coordination.'' As the report puts it:

       [w]hile the Freedom Support Act gives the State Department 
     Coordinator broad responsibility for U.S. bilateral programs 
     with the Former Soviet Union . . . We found that, in 
     practice, the Coordinator's role is much more limited. Other 
     groups within the executive branch have equal or greater 
     influence and authority over assistance to the FSU or 
     function autonomously outside the Coordinator's purview.

  A new Coordinator has now been named to replace Ambassador Simons. 
While his charter will be signed by the President instead of the 
National Security Advisor, and he will report directly to the Secretary 
of State instead of the Deputy Secretary, it is not clear that his 
legal authority has been broadened.
  I believe the GAO report is evidence that the coordinator of aid to 
the former Soviet Union should be in the White House and should have 
authority over all agencies involved in assistance to the FSU. The text 
of the report's Results in Brief follows:
                            results in brief

       This report points out that the coordination process has 
     not always worked smoothly--as could be expected for an 
     undertaking of this magnitude. Disputes have arisen between 
     the Coordinator, USAID, and other federal agencies over the 
     appropriateness of various projects. We have not judged the 
     appropriateness of positions taken by various agencies in 
     these disputes. Although the various parties agree that 
     problems exist in the coordination process, there is no 
     consensus as to how the coordination process should change. 
     We are not making any recommendations in this report.
       For fiscal years 1990 through 1993, 19 U.S. government 
     agencies committed a total of $10.1 billion for bilateral 
     grants, donations, and credit programs to the FSU. During the 
     period, federal agencies obligated $1 billion and spent $434 
     million of the $1.8 billion authorized by Congress for grant 
     programs, obligated $1.6 billion, and spent $1.22 billion for 
     the donation program, and made $6.7 billion available for 
     direct loans, guarantees, and insurance agreements.
       The structure for coordinating and managing U.S. bilateral 
     programs for the FSU starts with the National Security 
     Council's Policy Steering Group chaired by the Deputy 
     Secretary of State. This is the only place where all U.S. 
     government policies and programs involving the FSU come 
     together and where all agencies report. The National Security 
     Council Directorate for Russian, Ukrainian, and Eurasian 
     Affairs, which provides staff support to the Policy Steering 
     Group, has itself played a coordinating role and was key in 
     developing the U.S. package of assistance first presented at 
     the 1993 Tokyo Economic Summit. The Policy Steering Group 
     approved the package but has very limited involvement in 
     grant and credit program implementation.
       Pursuant to the Freedom Support Act, in May 1993, the 
     President designated a Coordinator within the Department of 
     State and charged him with (1) designing an overall 
     assistance and economic cooperation strategy for the FSU; (2) 
     ensuring program and policy coordination among agencies 
     implementing the act; (3) pursuing coordination with other
      countries and international organizations with respect to 
     assistance to the FSU; (4) ensuring proper management, 
     implementation, and oversight by agencies responsible for 
     assistance programs for the FSU; and (5) resolving policy 
     and assistance program disputes among U.S. agencies 
     participating in the assistance program. The Coordinator 
     reports to the Deputy Secretary of State.
       While the Freedom Support Act gives the State Department 
     Coordinator broad responsibility for U.S. bilateral programs 
     with the FSU--and calls on him to coordinate with other 
     countries and international organizations on aid programs to 
     the FSU--we found that, in practice, the Coordinator's role 
     is much more limited. Other groups within the executive 
     branch have equal or greater influence and authority over 
     assistance to the FSU or function autonomously outside the 
     Coordinator's purview. In addition, the Coordinator has 
     limited or no authority to direct activities of the 
     Cooperative Threat Reduction program or worldwide programs 
     with the FSU components, such as those of the Export-Import 
     Bank, the Overseas Private Investment Corporation, and 
     Department of Agriculture, and thus has no way of ensuring 
     that all programs for the FSU complement one another.
       The only bilateral program wholly within the Coordinator's 
     purview is the program funded by the Freedom Support Act. All 
     agencies, even those with programs that are not under the 
     purview of the Coordinator, generally report on their 
     activities in the FSU to the Assistance Coordination Group, 
     which the Coordinator chairs. However, the Group is not a 
     decision-making body but is essentially a forum for sharing 
     information and giving greater transparency to the program.
       Although the Coordinator has issued strategy papers on 
     assistance to and economic cooperation with the FSU and 
     Russia, these documents focus primarily on technical 
     assistance. They do not develop a clearly articulated 
     strategy for achieving the overarching goals of the Freedom 
     Support Act or for helping the countries of the FSU achieve 
     their reform objectives. For example, the strategy papers do 
     not discuss what role programs of the Export-Import Bank, the 
     Overseas Private Investment Corporation, or the Department of 
     Defense will play in achieving U.S. objectives in the FSU.
       Other participants involved with U.S. assistance to the FSU 
     have at times resisted, hindered, or overruled the 
     Coordinator's efforts to develop a
      coherent and comprehensive assistance program for the FSU. 
     These include Cabinet and other agencies, the Gore-
     Chernomyrdin Commission and Congress through congressional 
     earmarks. Regardless of the merits of individual cases, 
     the numerous efforts to work outside the coordination 
     process dilutes the Coordinator's ability to coordinate 
     the broad range of the bilateral program and to develop a 
     strategy that covers the full scope of U.S. economic 
     cooperation activities. (See apps. I and II for further 
     information on the coordination structure and process.)
       The Coordinator's role has been further complicated by the 
     existence of serious disagreement between agencies over 
     various aspects of the program. USAID, a primary implementing 
     agency for Freedom Support Act programs, has been involved in 
     numerous disputes with other government agencies over money 
     and policy.
       Agencies complained that USAID often attempted to hinder 
     their participation in the program despite the Coordinator's 
     instructions, would not cooperate with them, and often 
     ignored or overlooked experience other government agencies 
     had with the issues at hand.
       USAID officials disagreed with this characterization. They 
     said that other agencies often want to use Freedom Support 
     Act assistance funds for purposes that are not consistent 
     with priorities USAID believes are appropriate. USAID 
     believes it is responsible for maintaining accountability 
     over the program; however, USAID officials said that 
     sometimes other agencies do not understand USAID's 
     accountability requirements.
       According to an official at the Coordinator's Office, 
     disputes between USAID and other agencies have required the 
     Coordinator's Office to spend an excessive amount of time 
     dealing with high-level political battles over small amounts 
     of money instead of spending time developing program goals 
     and objectives. (See app. III for information on 
     implementation problems and app. IV for the status of program 
     obligations and expenditures.)
     

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