[Senate Report 106-45]
[From the U.S. Government Publishing Office]



                                                       Calendar No. 106

106th Congress                                                   Report
                                 SENATE
 1st Session                                                     106-45

======================================================================



 
                   THE SILK ROAD STRATEGY ACT OF 1999

                                _______
                                

                  May 11, 1999.--Ordered to be printed

                                _______


          Mr. Helms, from the Committee on Foreign Relations,
                        submitted the following

                              R E P O R T

                             together with

                             MINORITY VIEWS

                         [To accompany S. 579]

    The Committee on Foreign Relations, to which was referred 
the bill (S. 579), to amend the Foreign Assistance Act of 1961 
to target assistance to support the economic and political 
independence of the countries of the South Caucasus and Central 
Asia, having considered the same, reports favorably thereon 
without amendment and recommends that the bill do pass.

                                CONTENTS

                                                                   Page

Purposes of the bill.............................................     1
Committee action.................................................    19
Section-by-section analysis......................................    21
Cost estimate....................................................    23
Evaluation of regulatory impact..................................    24
Changes in existing law..........................................    24
Minority views...................................................    31

                          Purposes of the Bill


                              Introduction

    The Silk Road Strategy Act is necessitated by the failure 
of current U.S. policy and assistance laws to resolve regional 
conflicts or effectively advance American interests in the 
South Caucasus and Central Asia. Eight years after the collapse 
of the Soviet Union, the Silk Road Strategy Act establishes a 
policy framework that elevates and differentiates Armenia, 
Azerbaijan, Georgia, Kazakhstan, Kyrgyzstan, Tajikistan, 
Turkmenistan and Uzbekistan from the status of ``former Soviet 
republics'' and ``newly independent states.'' The very use of 
these labels by U.S. policy makers has frustrated states in the 
South Caucasus and Central Asia that view themselves as 
permanently independent and sovereign countries. Most of these 
states--including several pro-Western, secular Muslim 
governments--are racked by civil wars, ethnic tensions, and 
weak and undemocratic regimes. They are falling dangerously 
behind in both economic and democratic reforms, which in turn 
provides an opening for attempts by regional powers and sub-
regional forces to undermine their very sovereignty.
    The countries in the South Caucasus and Central Asia have 
almost without exception shown a strong desire to work with the 
United States in pursuit of economic and democratic reforms. 
Clearly, enormous economic gains are possible in several 
countries in the region due to the presence of oil and gas 
reserves. The goal of the United States should be to promote 
economic and democratic reforms in the region while helping to 
develop oil and gas resources in a manner that is beneficial to 
all states in the region. Specifically, American interests in 
the region are threefold: (1) to ensure the development of 
stable, democratic states in the region, including the 
resolution of regional conflicts; (2) to develop friendly 
relationships among the states in the region and with the 
United States and its allies; and (3) to ensure that the 
economies and the natural resources of the region are developed 
in a manner dictated by the market, rather than through 
exploitation by regional, hegemonic powers.
    The Silk Road Strategy Act will not lead to any immediate 
increase in foreign assistance to the South Caucasus and 
Central Asia. The goal of the legislation is to focus U.S. 
assistance better to achieve U.S. interests. The legislation 
provides general authorization for a broad range of U.S. 
assistance to promote reconciliation and recovery from regional 
conflicts; to foster economic growth and development, including 
the conditions necessary for regional economic cooperation; to 
develop regional infrastructure; to secure borders and 
implement effective controls necessary to prevent smuggling of 
illegal narcotics and the proliferation of technology and 
materials related to weapons of mass destruction; and to 
promote institutions of democratic government and create the 
conditions for the growth of pluralistic societies. As these 
programs develop, in a regional context, the Silk Road Strategy 
Act can be the means to bring peace, stability and economic 
development to the South Caucasus and Central Asia.
    The goal of regional cooperation, which is the underlying 
rationale for the Silk Road Strategy Act, has drawn the support 
of every government in the South Caucasus and Central Asia with 
the exception of Armenia, as well as the governments of close 
American allies such as Turkey, Ukraine, and Romania. The 
legislation is endorsed by a broad coalition of organizations, 
including the Women's Commission for Refugee Women and 
Children, the American Petroleum Institute, the National 
Association of Manufacturers, the National Foreign Trade 
Council, the United States Chamber of Commerce, the Georgian 
American Community, the American Jewish Committee, the American 
Jewish Congress, the Anti-Defamation League, B'nai B'rith, and 
the National Conference on Soviet Jewry.
    The authorities in the Silk Road Strategy Act complement 
and build upon the authorities included in the Freedom Support 
Act (the law currently governing U.S. assistance to the 13 
independent nations that once composed the Soviet Union), while 
creating a regional focus for U.S. policy in the South Caucasus 
and Central Asia. The legislation encourages a re-energized 
U.S. assistance initiative in the region while maintaining a 
strong emphasis on democratic reform and human rights. In fact, 
the restrictions on assistance included in section 499E of the 
Silk Road Strategy Act are, verbatim, the same restrictions on 
assistance that are included in the Freedom Support Act. In a 
May 19, 1998 letter to the Foreign Relations Committee, the 
Department of State offers the Clinton Administration's 
unqualified support for the Silk Road Strategy Act which 
``provides a useful framework for U.S. interests in the 
Southern Caucasus and Central Asia.'' The letter goes on to 
state that, in the view of the Administration, ``(t)his Act 
builds upon the Freedom Support Act and highlights America's 
interests in this region.''
    Under the Freedom Support Act, U.S. assistance in the 
region has been skewed by earmarks, rigid restrictions and, 
especially, an absence of correlation between dollar amounts 
and results in economic or democratic reforms. For example, the 
only country in the region recognized as having conducted a 
fully free and fair election, Georgia, has received less than 
half of the total assistance--and less than a quarter on a per 
capita basis-- provided to Armenia since 1992. Yet, in a 
critique of democratic progress in Armenia, a February 3, 1998 
Human Rights Watch report reveals that the resignation of the 
Armenian President last year was in fact forced by a powerful 
Armenian militia group. Furthermore, according to the April 
1998 Digest of the Commission on Security and Cooperation in 
Europe (CSCE), the subsequent March 1998 presidential election 
in Armenia did not meet the standards of the Organization on 
Security and Cooperation in Europe (OSCE). In fact, according 
to the CSCE report, ``(s)ince the 1991 election of Levon Ter-
Petrossyan, Armenia has not held an election that the OSCE/
ODIHR observation missions have been able to certify as free 
and fair.''
    Other governments in the region have also failed to 
implement democratic reforms. The government of Azerbaijan is a 
case in point. Opposition candidates boycotted the October 
1998, Azerbaijani presidential election due to a lack of 
confidence in an electoral process solely under the control of 
the incumbent president. Ironically, until 1996, the government 
of Azerbaijan was prevented by the Freedom Support Act from 
receiving any U.S. assistance, including technical assistance 
designed specifically to promote the development of democratic 
institutions and sound election laws. Nonetheless, in a June 
1998 letter to the Congress, the five leading opposition 
candidates in Azerbaijan made an explicit appeal for the 
lifting of assistance restrictions against Azerbaijan as an 
essential step for encouraging democratic development of their 
country.
    The Clinton Administration has requested that the Congress 
allow broader U.S. assistance to Azerbaijan, pointing out that 
critics of corruption and undemocratic tendencies in the 
government of that country have simultaneously blocked the very 
assistance that could facilitate reforms. According to the 
Department of State, anti-corruption assistance, counter-
narcotics programs, economic reform assistance (including 
transparency in budgeting and tax reform), and funding of 
regional environmental cooperation programs are all prohibited 
to the Government of Azerbaijan under section 907 of the 
Freedom Support Act.

          East-West versus North-South: The Silk Road Strategy

    The Silk Road Strategy Act establishes a regional approach 
for U.S. trade, economic assistance and foreign policy 
specifically to build an East-West axis of political 
cooperation among the eight countries that lie between Russia 
and Iran on the southern periphery of the former Soviet Union. 
Efforts to resolve conflicts in the region are at a standstill, 
economic and democratic reforms are slowing, and Russia and 
Iran are fomenting instability in order to establish political 
influence over those states.
    Russian and Iranian mischief can be attributed to a mutual 
desire to expand political control in the South Caucasus and 
Central Asia while seeking to maintain control over the flow of 
oil and gas resources from the region. Senior officials from 
Russia and Iran meet frequently to coordinate their interests 
in the South Caucasus and Central Asia. At a June 27, 1998, 
meeting between the Transportation Ministers of Russia and 
Iran, a plan was announced to develop a North-South economic 
corridor between the two countries. On July 19, 1998, the 
governments of those two countries reiterated their intention 
to frustrate efforts to delimit the ownership of resources in 
the Caspian Sea. Meanwhile, Russia has used its exclusive 
control of existing oil and gas pipelines to force economic and 
political concessions from neighboring states.
    As part of the deepening relationship with Iran, the 
Russian Government has shown reckless disregard for the 
proliferation of sophisticated weapons technology to that 
country. According to an April 25, 1998, New York Times report, 
the Russian Government failed to stop ``a truck laden with 22 
tons of stainless steel that could be used to make missiles'' 
that was on its way to Tehran, despite advance warning by the 
United States Government. Fortunately, according to the report, 
cooperative customs agents in Azerbaijan were willing to stop 
the shipment before it entered Iran.

                         Promoting Human Rights

    A leading challenge for United States policy in the South 
Caucasus and Central Asia is to determine when to disengage and 
when to use the broad array of U.S. assistance programs to 
strengthen democratic institutions, encourage economic reforms, 
and foster the development of civil society in countries that 
otherwise have poor human rights records. Among the factors 
that must weigh heavily in deciding U.S. policy in the South 
Caucasus and Central Asia are the friendly, pro-American 
receptivity found among most states in the region that could 
allow democratic ideals to take root. Also, consideration must 
be given to compelling U.S. geostrategic and economic interests 
in the region, as well as the likelihood that U.S. 
disengagement will do nothing to improve human rights while 
regional powers such as China, Iran and Russia (countries with 
human rights records of even more dubious quality than those in 
the South Caucasus and Central Asia) increase their political 
influence over those states.
    There is no benefit in the Silk Road Strategy Act for those 
who violate basic human rights. Section 499E of the Silk Road 
Strategy Act specifically prohibits assistance to the 
government of any country that ``is engaged in a consistent 
pattern of gross violations of internationally recognized human 
rights.'' It is necessary to recognize that human rights 
problems exist in every country in the region. However, under 
existing human rights statutes, the Administration has not 
found such violations to be sufficient to merit a cut-off of 
U.S. assistance.
    To some extent, human rights abuses, undemocratic 
tendencies and authoritarian government can be attributed to 
ongoing conflicts in the region, especially in Armenia, 
Azerbaijan, Georgia and Tajikistan. Both Russia and Iran have 
sought to exploit, and at times foment, instability in the 
South Caucasus and Central Asia--a principal cause of 
undemocratic behavior and abuse. Specifically, Russia has 
provided covert and overt military assistance to fuel 
separatist conflicts in Georgia and Azerbaijan, while Iran has 
sought to impose an anti-Western, anti-Israeli orientation on 
states in the region, including a direct threat by the Iranian 
Government upon the life of the President of Azerbaijan in 
retaliation for warming Azerbaijani-Isreali relations. To this 
day Russia harbors the mastermind of a 1995 assassination 
attempt against Georgian President Eduard Shevardnadze. The 
individual, Lt. General Igor Georgadze, was surreptitiously 
flown out of a Russian military base in Georgia only days after 
the assassination attempt.
    When the Freedom Support Act was approved by the Congress 
in 1992, few could have conceived that Russia would be actively 
seeking to subvert the elected governments of neighboring 
states within three years. In fact, while providing some 
benefits to other eligible countries, the Freedom Support Act 
has been most beneficial to Russia. From 1992, Russia has 
maintained its position as the leading recipient of aid under 
the Freedom Support Act, despite perpetrating the single 
greatest human rights abuse by any recipient of U.S. foreign 
assistance in the region. The Russian military's brutal 1994-
1996 assault on the southern Russian region of Chechnya 
resulted in the massacre of tens of thousands of innocent men, 
women, and children, and has plunged the area into ongoing 
chaos. Nonetheless, these atrocities had absolutely no impact 
on the Clinton Administration's determination to continue 
Russia's generous aid levels. No other state in the region has 
come close to such horrific action, although the human rights 
records of most are in need of substantial improvement.
    It is clear, in fact, that the level of U.S. assistance to 
countries in the region is most certainly not correlated with 
the human rights records of the recipients to date. Listed 
below is a simple comparison of aid levels and human rights 
records, with a breakdown of total assistance provided to each 
country in the South Caucasus and Central Asia from 1992-1998 
(as provided in the State Department's 1999 ``Report on U.S. 
Government Assistance to and Cooperative Activities with the 
New Independent States of the former Soviet Union''), and the 
most recent assessment of each country's human rights record by 
the United States Department of State:

                                Armenia

U.S. Assistance Provided under the Freedom Support Act: $519.03
  million
Population: 3,465,611
Per Capita Assistance 1992-1998: $149.77

    Armenia has a Constitution that provides for the separation 
of powers; however, the directly elected President has 
extensive powers of appointment and decree that are not 
balanced by a legitimate legislature or an independent 
judiciary. The President appoints the Prime Minister, who is in 
charge of the Cabinet. Robert Kocharian was elected President 
in a multi-candidate election in March 1998, after former 
President Levon Ter-Petrossyan was forced to resign in February 
by his former political allies in the Defense and Internal 
Affairs and National Security Ministries.
    Ter-Petrossyan's reelection in 1996 was flawed by numerous 
irregularities and serious breaches of the election law. In an 
interview in December 1998, the former Interior Minister 
admitted that Ter-Petrossyan avoided a runoff against a strong 
opponent in the 1996 presidential elections by falsifying the 
results of the first round. The March elections were an 
improvement with respect to the ability of a number of 
candidates to campaign more freely, with access to the media; 
however, the voting and counting process revealed numerous 
irregularities, including bloc voting by the military and a 
turnout inflated at least 10 percent by ballot box stuffing and 
other fraud.
    Although the Parliament is no longer as docile as in 
previous years, the current parliamentary majority usually 
votes in support of the executive branch, and does not 
represent effectively either the views of the population or 
existing political party composition. Armenian National 
Movement (ANM) members won 88 percent of the seats in a 
transitional National Assembly elected in 1995 in elections 
that local and international observers characterized as 
``generally free but not fair;'' however, most of the ANM 
members had deserted the party by February. The current 
Parliament showed increasing independence late in the year, as 
it tried to distance itself from unpopular government reform 
measures before the scheduled May 1999 parliamentary elections. 
The legislature approves new laws, must confirm the Prime 
Minister's program, and can remove the Prime Minister by a vote 
of no confidence. Both the Government and the legislature can 
propose legislation. The Constitution provides for an 
independent judiciary; however, in practice, judges are subject 
to pressure from the executive branch and frequently corrupt.
    The Ministry of Internal Affairs and National Security is 
responsible for domestic security, intelligence activities, 
border control, and the national police force. Members of the 
security forces committed human rights abuses.
    The transition from a centralized, controlled economy to a 
market economy continues to move forward, despite the collapse 
of the industrial sector. Industrial output remains low. About 
50 percent of the population is unemployed or underemployed, 
and there is a high degree of income inequality. Most small and 
medium enterprises have been privatized, as has most 
agricultural land. About 75 percent of landowners now have 
secure title to their land. Gross domestic product (GDP) 
increased about 6 percent during the year, to about $600 per 
capita. Inflation fell to under 5 percent for the year. Foreign 
assistance and remittances from Armenians abroad play a major 
role in sustaining the economy.
    The Constitution provides for broad human rights 
protections, but human rights problems persist in several 
important areas. Substantial intervention by local power 
structures in the March presidential election continued to 
restrict citizens' ability to change their government 
peacefully. Members of the security forces routinely beat 
detainees during arrest and interrogation, made arbitrary 
arrests and detentions without warrants, and did not respect 
constitutional protections regarding privacy and due process. 
Prison conditions remained poor. The judiciary is subject to 
political pressure and does not enforce constitutional 
protections effectively.
    There are some limits on press freedom; journalists 
practice self-censorship. State television, which refrains from 
criticizing government policy, remains the major source of news 
for most of the population, but independent television and 
newspapers, along with private radio stations, offered 
substantial competition. The nongovernmental media often 
criticize the country's leadership and policies. Burdensome 
registration requirements hinder freedom of association. The 
law places some restrictions on religious freedom, including a 
prohibition on proselytizing by religions other than the 
Armenian Apostolic Church. Registration requirements for 
religious groups kept Jehovah's Witnesses from being able to 
operate legally, and seven Jehovah's Witnesses are in jail for 
refusing military service. The Government places some 
restrictions on freedom of movement. Discrimination against 
women, minorities, and the disabled remains a problem.
    After his election, President Kocharian appointed an 
opposition presidential candidate to head two presidential 
commissions charged with improving human rights and reforming 
the Constitution to create a more even balance of power among 
executive, legislative, and judicial branches. One of 
Kocharian's first actions was to legalize the Armenian 
Revolutionary Federation (ARF/Dashnaktsutyun) and to pressure 
successfully the judiciary to secure the release of many 
persons convicted in politically linked trials. At the new 
President's urging, the Supreme Court quickly reviewed and set 
aside the convictions of Dashnak and other figures convicted 
for political reasons in the ``Dro'' and ``31'' trials in 1996 
and 1997.

                               Azerbaijan

U.S. Assistance Provided under the Freedom Support Act: $104.82
  million
Population: 7,735,918
Per Capita Assistance 1992-1998: $13.55

    Azerbaijan is a republic with a presidential form of 
government. Heydar Aliyev, who assumed presidential powers 
after the overthrow of his democratically elected predecessor 
in 1993, was reelected in October in a controversial election 
marred by numerous, serious irregularities, violations of the 
election law, and lack of transparency in the vote counting 
process at the district and national levels. President Aliyev 
and his supporters, many from his home region of Nakhchivan, 
continue to dominate the Government and the multiparty 125-
member Parliament chosen in the flawed 1995 elections. The 
Constitution, adopted in a 1995 referendum, established a 
system of government based on a division of powers between a 
strong presidency, a legislature with the power to approve the 
budget and impeach the President, and a judiciary with limited 
independence. The judiciary does not function independently of 
the executive branch and is corrupt and inefficient.
    After years of inter-ethnic conflict between Armenians and 
Azerbaijanis, Armenian forces and forces of the self-styled 
``Republic of Nagorno-Karabakh'' (which is not recognized by 
any government) continue to occupy 20 percent of Azerbaijan's 
territory. A cease-fire was concluded in 1994, and the peace 
process continues. Exchanges of fire occurred frequently along 
the Azerbaijan-Armenian border and along the line of contact 
with Nagorno-Karabakh causing casualties, including some 
civilians. Military operations continued to affect the civilian 
population. There are 800,000 Azerbaijani refugees and 
internally displaced persons (IDP's) who cannot return to their 
homes. In the part of Azerbaijan that Armenians control, a 
heavily militarized ruling structure prevents ethnic 
Azerbaijanis from returning to their homes. In the part of 
Azerbaijan that the Government controls, government efforts to 
hinder the opposition continue to impede the transition to 
democracy.
    Police, the Ministry of Internal Affairs, and the Ministry 
of National Security are responsible for internal security. 
Members of the police committed numerous human rights abuses.
    Azerbaijan continued economic reform in 1998 and the 
economy is in transition from central planning to a free 
market. Economic growth has been spurred by substantial foreign 
investment in the hydrocarbon sector, but it is offset by a 
highly organized system of corruption and patronage. The 
country has rich petroleum reserves and significant 
agricultural potential. Oil and oil products are the largest 
export, followed by cotton and tobacco. Other key industries 
are chemicals and oil field machinery. The Government signed 5 
oil production sharing agreements with foreign oil companies in 
1998, bringing the total to 14. Agriculture employs 33 percent 
of the labor force and contributes 20 percent to the gross 
domestic product (GDP). The leading crops are wheat, fruit and 
vegetables, cotton, tobacco, and grapes. Privatization of 
industry continues through auction sales of small- and medium-
sized state-owned enterprises.
    Large enterprises remain almost exclusively under 
government control and operate at a fraction of their capacity. 
Accumulation of large wage arrears is common. Private retail 
enterprises, cotton gins, and grain mills are proliferating. 
About 90 percent of the nation's farmland is now in private 
hands, but new small farmers have poor access to credit and 
markets, and commercial agriculture remains weak. Per capita 
GDP is approximately $500 per year. Much of the labor force is 
employed by the state sector where wages are low. The overall 
economic situation of the average citizen remains tenuous, 
although in urban areas a growing moneyed class with trade and 
oil-related interests has emerged. According to the World Bank, 
60 percent of the citizens live in poverty. Economic 
opportunity for the average citizen still depends largely on 
connections to the Government. Severe disparities of income 
have emerged that are partly attributed to patronage and 
corruption.
    The Government's poor human rights record improved in a few 
areas, but government actions toward the end of the year 
negated some of the positive developments, and serious problems 
remain. Police beat persons in custody, arbitrarily arrested 
and detained persons, and conducted searches and seizures 
without warrants. In most instances, the Government took no 
action to punish abusers, although perpetrators were prosecuted 
in a few cases. In a variety of separate incidents, the 
Government arrested and opened criminal proceedings against 
approximately 40 members of opposition parties. Prison 
conditions remained harsh. The judiciary is corrupt, 
inefficient, and subject to executive influence.
    Corruption continued to pervade most government organs, and 
it is widely believed that most persons in appointed government 
positions and in state employment generally purchase their 
positions. The Government holds an estimated 75 political 
prisoners. The Government infringed on citizens' privacy 
rights. The Government eased restrictions on freedom of speech 
and the press. After open discussion in the press, the 
Government abolished censorship in August. Scores of opposition 
and independent newspapers continued to publish and discuss a 
wide range of sensitive domestic and foreign policy issues. 
However, the Government cracked down on the media later in the 
year in the postelection period. The Government continued to 
deny broadcast licenses to several organizations applying to 
open independent television and radio stations. The Government 
restricted freedom of assembly, association, religion, and 
movement when it deemed it in its interest to do so.
    Police suppressed or refused to allow many peaceful public 
demonstrations, while allowing others to occur. Opposition 
political parties carried on open and vigorous public 
activities in the months leading up to the election. In August-
September, the Government allowed a number of public 
demonstrations, and closed its criminal investigation of eight 
prominent figures from opposition parties. After these positive 
steps, the Government clamped down on freedom of assembly after 
the election. The Government tolerated the existence of many 
opposition political parties, although it continued to refuse 
to register some of them. The Government continues to restrict 
citizens' ability to change their government peacefully. 
Although the Government passed an improved election law, the 
presidential election was marred by many irregularities, and a 
number of international and independent organizations concluded 
that it did not meet international standards. The Government 
was critical of certain domestic human rights activists, 
although it was open to limited dialog with domestic and 
international human rights organizations. Societal 
discrimination and violence against women and discrimination 
against certain ethnic minorities are problems.
    Cease-fire violations by both sides in the Nagorno-Karabakh 
conflict continued. They resulted in injuries and deaths among 
combatants and civilians, and the taking of prisoners, 
including civilians. Insurgent Armenian forces in Nagorno-
Karabakh and the occupied territories continued to prevent the 
return of IDP's to their homes. This restriction resulted in 
significant human suffering for hundreds of thousands of 
persons.

                                Georgia

U.S. Assistance Provided under the Freedom Support Act: $239.64
  million
Population: 5,174,642
Per Capita Assistance 1992-1998: $46.31

    Georgia declared independence from the Soviet Union in 
1991. Multiparty parliamentary elections followed a short-lived 
military coup in 1992 that ousted the elected government of 
Zviad Gamsakhurdia. The 1995 Constitution, as adopted by 
Parliament, provides for an executive branch that reports to 
the President and a legislature. In 1995 Eduard Shevardnadze 
was elected President, and a Parliament was selected in 
elections described by international observers as generally 
consistent with democratic norms, except in the autonomous 
region of Ajaria. The President appoints ministers with the 
consent of the Parliament. The Constitution provides for an 
independent judiciary; however, it is subject to executive 
pressure.
    Internal conflicts in Abkhazia and South Ossetia that 
erupted in the early 1990's remain unresolved. Cease-fires are 
in effect in both areas, although sporadic incidents of 
violence occur in Abkhazia. These conflicts, together with 
problems created by roughly 283,000 internally displaced 
persons (IDP's), pose a significant threat to national 
stability. In 1993 Abkhaz separatists won control of Abkhazia, 
and most ethnic Georgians--a large plurality of the 
population--were expelled or fled the region. In 1994 Russian 
peacekeeping forces representing the Commonwealth of 
Independent States (CIS) deployed in the conflict area with the 
agreement of the Government and the Abkhaz separatists. Despite 
the presence of peacekeepers, there has been only very limited 
repatriation of ethnic Georgian IDP's during the year, apart 
from about 53,000 spontaneous returnees to the Gali region of 
Abkhazia. However, in May fighting broke out again in Gali, 
resulting in at least 239 casualties. Abkhaz forces burned an 
estimated 50 percent of houses in some areas, and 40,000 of the 
residents of Gali who had fled their homes have not yet 
returned. A Russian peacekeeping force also has been in South 
Ossetia since 1992. Repatriation to South Ossetia also has been 
slow. The Government has no effective control over Abkhazia or 
much of South Ossetia.
    The Ministry of Interior (MOI) and Procuracy have primary 
responsibility for law enforcement, and the Ministry of State 
Security (MSS, formerly the KGB) plays a significant role in 
internal security. In times of internal disorder, the 
Government may call on the army. On October 19, army forces put 
down a small scale mutiny led by Colonel Akaki Eliava, a 
supporter of deceased former President Gamsakhurdia. The mutiny 
resulted in the deaths of one soldier and two mutineers and 
generated almost no popular support. Reformist, elected, 
civilian authorities maintain inadequate control of the law 
enforcement and security forces. Members of the security forces 
committed serious human rights abuses, although slightly fewer 
than in the previous year.
    The economy continued to grow during the year but was 
affected by the Russian financial crisis, which reduced exports 
to Russia and the value of ruble-denominated remittances from 
Georgians working in Russia. Agricultural production and 
hydropower production suffered from the worst drought in 50 
years. These factors, coupled with low government revenues, 
created a fiscal crisis and pressure on the lari, which was 
allowed to float on December 7. Key exports are manganese, 
wine, mineral water, and agricultural products.
    The Government continued efforts to improve its uneven 
human rights record, but serious problems remain. Police and 
security forces continued to torture, beat, and abuse prisoners 
and detainees, force confessions, and routinely fabricate or 
plant evidence. Security force abuses, along with inhuman 
prison conditions, led to several deaths in custody. However, 
local human rights groups reported that the extent of such 
abuse declined slightly. Nonetheless, government promises of 
reform of prison conditions remained unfulfilled. Authorities 
continued to use arbitrary arrest and detention. Senior 
government officials acknowledged serious human rights 
problems, especially those linked to law enforcement agencies, 
and sought international advice and assistance on needed 
reforms. However, while structural reforms designed to improve 
respect for human rights continued to be passed by the 
reformist Parliament, law enforcement agencies have been slow 
to adapt their practices to democratic norms.
    The Government delayed implementation of the new Criminal 
Procedures Code, passed in November 1997, until May 1999. 
Corrupt and incompetent judges seldom displayed independence 
from the executive branch, leading to trials that were neither 
fair nor expeditious. However, the Government began serious 
implementation of the 1997 Law on the Courts with the first 
judicial examinations, which are designed to identify and 
remove corrupt and incompetent judges. Law enforcement agencies 
and other government bodies illegally interfered with citizens' 
right to privacy. The Government constrains some press 
freedoms. The Government limits freedom of assembly, and 
security forces continued to disperse some peaceful rallies 
violently. Discrimination and violence against women are also 
problems. However, increased citizen awareness of civil rights 
and democratic values and the continued evolution of civil 
society provided an increasingly effective check on the 
excesses of law enforcement agencies.
    The number, variety, and sophistication of independent 
nongovernmental organizations (NGO's) grew, as did their 
ability to speak out for, and defend the rights of, individual 
citizens. Criticism from the press and the NGO community played 
an important role in reducing the incidence of prisoner abuse. 
It also led to the ouster of the corrupt Minister of 
Communications, who had violated privacy laws routinely.
    Independent newspapers continued to criticize government 
policies and actions.

                               Kazakhstan

U.S. Assistance Provided under the Freedom Support Act: $316.90
  million
Population: 16,898,572
Per Capita Assistance 1992-1998: $18.75

    The Constitution of Kazakhstan concentrates power in the 
presidency. President Nursultan Nazarbayev is the dominant 
political figure. The Constitution, adopted in 1995 in a 
referendum marred by irregularities, permits the President to 
legislate by decree and dominate the legislature and judiciary; 
it cannot be changed or amended without the President's 
consent. President Nazarbayev was elected to a new 7-year term 
on January 10, 1999 in an election that fell far short of 
international standards. Previous presidential elections 
originally scheduled for 1996 did not take place, as President 
Nazarbayev's term in office was extended in a separate 1995 
referendum, also marred by irregularities. Under the 1995 
Constitution, Parliament's powers are more limited than 
previously. However, members of Parliament have the right to 
introduce legislation and some bills introduced by Parliament 
have become laws. The judiciary remained under the control of 
the President and the executive branch. The lack of an 
independent judiciary made it difficult to root out corruption, 
which was pervasive throughout the Government.
    The Committee for National Security (the KNB, successor to 
the KGB) is responsible for national security, law enforcement 
activities on the national level, and counterintelligence. An 
external intelligence service, Barlau (the Kazakh word for 
intelligence) was created in 1997, but during the year, 
Barlau's functions were reabsorbed into the KNB. The KNB 
reports directly to the President. The Ministry of Internal 
Affairs, which is subordinate to the KNB, supervises the 
criminal police, who are poorly paid and widely believed to be 
corrupt. The KNB continued efforts to improve its public image 
by focusing on fighting government corruption, religious 
extremism, terrorism, and organized crime. Members of the 
security forces committed human rights abuses.
    Kazakhstan is rich in natural resources, chiefly petroleum 
and minerals. The Government has made significant progress 
toward a market-based economy since independence. After a 5-
year decline, overall production began to rise in 1996, 
although the rate of growth slowed in 1998. The Government has 
been successful in stabilizing the local currency (tenge) and 
reducing inflation to less than 10 percent a year. The average 
annual wage was approximately $1,500. The agricultural sector 
has been slow to privatize. The Government has privatized 
successfully small- and medium-sized firms and most large-scale 
industrial complexes. However, living standards for the 
majority of the population continue to decline. According to 
several surveys, in 1997 approximately 33 percent of citizens 
lived below the government-defined poverty line of $50 per 
month.
    The Government generally respected the human rights of its 
citizens in some areas, but serious problems remain in others. 
Democratic institutions are weak. The Government infringed on 
citizens' right to change their government, notably in its 
flawed conduct of preparations for the January 1999 
presidential election. The Organization for Security and 
Cooperation in Europe (OSCE) publicly cited flawed election 
preparations in declining the Government's request for election 
observers. The Government used a new amendment to the 
presidential decree on elections to prohibit some government 
opponents from running in the election because they were found 
guilty of participating in unauthorized public meetings and 
demonstrations. The Government repeatedly harassed its 
opponents during the election campaign and appeared to have 
complicity in at least four assaults on perceived opponents.
    The legal structure, including the Constitution adopted in 
1995, does not fully safeguard human rights. Members of the 
security forces often beat or otherwise abused detainees, and 
prison conditions remained harsh. There were allegations of 
arbitrary arrest and detention, and prolonged detention is a 
problem. The judiciary remains under the control of the 
President and the executive branch, and corruption is deeply 
rooted. A political prisoner, Labor Movement leader Madel 
Ismailov, was sentenced to 1 year in prison for insulting the 
President. The Government infringed on citizens' rights to 
privacy.
    Government tolerance of the independent media markedly 
deteriorated, as some opposition newspapers and other media 
outlets were ordered to close, forced to sell to progovernment 
interests, or brought under pressure by regulatory authorities. 
The Government reportedly pressured media not to cover the 
opposition during the presidential campaign. The media 
practiced self-censorship and the Government maintained control 
of most printing presses and facilities. Academic freedom is 
not respected. Freedom of assembly sometimes was restricted. 
Some organizers of unsanctioned demonstrations were arrested 
and fined or imprisoned. Freedom of association, while 
generally respected, sometimes was hindered by complicated and 
controversial registration requirements that restrict this 
right for organizations and political parties. Domestic 
violence against women remained a problem. There was 
discrimination against women, the disabled, and ethnic 
minorities. The Government discriminated in favor of ethnic 
Kazakhs. The Government limited worker rights; it tried to 
limit the influence of independent trade unions, both directly 
and through its support for state-sponsored unions, and members 
of independent trade unions were harassed. The courts removed 
the legal status of two independent unions in Kentau for 
holding unauthorized demonstrations to protest unpaid wages.

                            Kyrgyz Republic

U.S. Assistance Provided under the Freedom Support Act: $158.24
  million
Population: 4,540,185
Per Capita Assistance 1992-1998: $34.85

    The Kyrgyz Republic became an independent state in 1991. 
Although the 1993 Constitution defines the form of government 
as a democratic republic with substantial civil rights for its 
citizens, the President, Askar Akayev, dominates the 
Government. Akayev was reelected in December 1995 in an open, 
multi-candidate presidential election, which was marred, 
however, by deregistration of three rival candidates 
immediately prior to the vote. Also in 1995, a two-chamber 
Parliament was elected for a 5-year term. The Constitution was 
amended by referendum in February 1996 to strengthen 
substantially the Presidency and define the role of Parliament. 
However, the February referendum was marred by serious 
irregularities. On October 17, the Government held a 
constitutional referendum that, among other things, reformed 
the structure of the Parliament and the national budget 
process. The referendum passed by over 90 percent, but there 
were again a number of serious irregularities. Although 
Parliament has become increasingly active, it still does not 
check the power of the President effectively. The judiciary is 
dominated by the executive branch.
    Law enforcement responsibilities are divided among the 
Ministry of Internal Affairs (MVD) for general crime, the 
Ministry of National Security (MNB) for state-level crime, and 
the procurator's office for both types of crime. Both the MVD 
and MNB deal with corruption and organized crime. These 
ministries inherited their personnel and infrastructure from 
their Soviet predecessors. Both appear to be under the general 
control of the Government and generally conform their actions 
to the law. Kyrgyz Republic's border with China and one of its 
two international airports are manned by Russian border troops 
under an agreement with the Russian Federation. Border guards 
are under the full control of the Government. As of January 1, 
1999, responsibility for border control lies with the 
Government, except for the Sino-Kyrgyz border where Russian 
guards operate under joint Kyrgyz-Russian agreement. Final 
withdrawal of Russian border guards is scheduled for 2003. Some 
members of the police committed human rights abuses. Police 
patrols are poorly supervised, not always paid promptly, and 
sometimes commit crimes. Supervision of conditions for pretrial 
detainees is also poor, and abuses sometimes occur.
    The Kyrgyz Republic is a poor, mountainous country with a 
rough balance of agricultural and industrial production. 
Cotton, tobacco, and sugar are its primary agricultural 
exports. The country also exports hydroelectric power, 
antimony, mercury, and uranium. The Government has carried out 
progressive market reforms. The moderate growth apparent in 
most sectors has increased, and the public generally supports 
economic reform. Gross domestic product for the first half of 
1998 increased by 5 percent compared with the same period of 
1997; however, the level of hardship for pensioners, unemployed 
workers, and government workers with salary arrearages 
continues to be very high. The average annual salary is $152 
(4,641 som). Foreign assistance plays a significant role in the 
country's budget.
    The Government generally respected the human rights of its 
citizens in many areas, but serious problems remained. The 
Government limited citizens' ability to change their 
government, and there were serious irregularities in the 
October constitutional referendum. There were credible reports 
of police abuse and brutality. Prison conditions are very poor, 
and there were some cases of arbitrary arrest and detention. 
Executive domination of the judiciary limited citizens' right 
to due process, although the judiciary is undergoing reform. 
Although government supervision of ``village elders courts'' 
remains uneven, abuses such as stoning and death sentences have 
abated. Although sanctioned by the Government, elders' courts 
are not part of the regular judicial structure, and the 
Government has made efforts to curtail their activities.
    The Government at times infringed on freedom of speech and 
of the press. Authorities at times pressured journalists who 
criticized individual members of the Government. Unlike the 
previous year, the Government did not use libel laws against 
the press; however, the Government on occasion apparently used 
tax laws and registration requirements to intimidate the 
opposition press or to suspend newspapers. The Government at 
times inhibited freedom of assembly and association. The 
Government deregistered the Kyrgyz Committee for Human Rights 
(KHRC) prior to the October referendum. The Government at times 
infringes on freedom of religion. Violence against women is a 
problem that authorities often ignore, and trafficking in women 
also is a growing problem. Child abuse is a problem, and there 
is a growing number of street children. Discrimination against 
ethnic minorities persisted.

                               Tajikistan

U.S. Assistance Provided under the Freedom Support Act: $58.43
  million
Population: 6,013,855
Per Capita Assistance 1992-1998: $9.72

    Tajikistan remains in the hands of a largely authoritarian 
government, although it has established some nominally 
democratic structures. The Government's narrow base of support 
limits its ability to control the entire territory of the 
country. The Government of President Emomali Rahmonov, which 
consists largely of natives of the Kulob region, continued to 
dominate the State, even though some Kulobis were removed from 
senior positions in 1998 and opposition members were taken into 
Government. The judiciary is not independent.
    Tajikistan took a significant step toward national 
reconciliation after its 1992 civil war with the June 1997 
signing of a comprehensive peace accord. Under the provisions 
of the accord, the Commission of National Reconciliation (CNR) 
began work in July 1997, and has made some progress in 
establishing peace. By year's end, the Government almost had 
fulfilled its obligation to name United Tajik Opposition (UTO) 
candidates to 30 percent of senior government positions. The 
UTO had registered virtually all of its fighters in 
anticipation of their demobilization or reintegration into 
regular military units. The return during the year of virtually 
all exiled UTO leaders and Tajik refugees from Afghanistan 
constituted further progress. However, implementation of the 
peace agreement (originally scheduled to be completed during 
the year) is still behind schedule, and basic issues such as 
constitutional amendments, legalization of banned political 
parties, and the disarming or reintegration of fighters remain 
to be resolved. Parliamentary elections that were scheduled 
under the agreement to take place in June are not expected to 
be held until 1999 at the earliest. In addition the United 
Nations Mission of Observers to Tajikistan (UNMOT) has reported 
several cease-fire violations. The killing of four UNMOT 
personnel in July led to the temporary withdrawal of most UNMOT 
observers.
    Internal security is the responsibility of the Ministries 
of Interior, Security, and Defense. The Russian Army's 201st 
Motorized Rifle Division, part of a Commonwealth of Independent 
States (CIS) peacekeeping force established in 1993, remained 
in the country. The Russian Border Guard Force (RBF) reports to 
Moscow and has primary responsibility for guarding the border 
with Afghanistan. It consists mostly of Tajiks with some 
Russians and a limited number of other Central Asians, although 
the officer corps remains principally Russian. The Government 
depends militarily on a handful of commanders who use their 
forces almost as private armies. The soldiers of some of these 
commanders are the source of serious problems, including crime 
and corruption. Some regions of the country remained 
effectively outside the Government's control, and government 
control in other areas existed only by day, or at the 
sufferance of local opposition commanders. Some members of the 
security forces and government-aligned militias committed 
serious human rights abuses.
    The economy continued to be extremely depressed, and 
government revenue remains highly dependent on the government-
dominated cotton and government-owned aluminum industries. The 
economy also suffers from narcotics trafficking, other forms of 
corruption, and crime in general. Most Soviet-era factories 
operate at a minimal level, if at all. Small-scale 
privatization is over 60 percent complete, but medium- to 
large-scale privatization still is stalled. Government figures 
show a 3.8 percent increase in gross domestic product during 
the first 8 months of 1998, but also indicate that as much as 
one-third of the total population is unemployed or 
underemployed. The Tajik ruble remained stable until its value 
fell in August, mainly as a consequence of the economic crisis 
in Russia. The inflation rate has stabilized at 7 percent, and 
the Government essentially has followed recommendations by 
international financial institutions to establish fiscal and 
budgetary discipline. Many, but not all, wages and pensions are 
being paid. There were serious shortages of natural gas for 
heating and industry, largely as a result of continued disputes 
with Uzbekistan over natural gas purchases. The Government 
states that per capita gross domestic product is approximately 
$230 to $300; other estimates are lower.
    The Government's human rights record is poor and made only 
limited improvements in a few areas over last year. The 
Government limits citizens' right to change their government. 
Some members of the security forces were responsible for 
killings and beatings, and frequent abuse of detainees. These 
forces were also responsible for threats, extortion, looting, 
and abuse of civilians. Certain battalions of nominally 
government forces operated quasi-independently under their 
leaders. The Government prosecuted few of the persons who 
committed these abuses. Prison conditions remain life 
threatening, and the Government continued to use arbitrary 
arrest and detention, and lengthy pretrial detention remains a 
problem. Basic problems of rule of law persist. There are often 
long delays before trials, and the judiciary is subject to 
political and paramilitary pressure. The authorities infringe 
on citizens' right to privacy.
    The Government severely restricts freedom of speech and of 
the press, and essentially controls the electronic media; 
however, two new opposition newspapers began publishing during 
the year. The authorities strictly control freedom of assembly 
and association for political organizations. One new party was 
allowed to register in 1998, but the registration of another 
was held up by bureaucratic delays. Three opposition parties 
and a branch of a fourth affiliated with the armed opposition 
remained suspended. There are some restrictions on freedom of 
movement. The Government cooperated to a limited extent with 
the Organization for Security and Cooperation in Europe (OSCE) 
in Dushanbe and in some field offices, but the officer in Pyanj 
was accused of destabilizing the area and ordered out of the 
district by local officials for a period of 2 weeks in May. The 
Government still has not established a human rights ombudsman 
position, despite a 1996 pledge to do so. Violence against 
women is a problem, as is discrimination against the disabled.
    The general weakness of the Government and its limited 
ability to maintain law and order were evident in the armed 
clashes between the Government and opposition forces at various 
points during the year. The actions led by Mahmud Khudoiberdiev 
in November indicated dissatisfaction among those who feel 
blocked from participation in the current inter-Tajik peace 
process. Other clashes during the year involved UTO elements. 
All of these clashes resulted in civilian deaths, abuse, and 
property damage. There are credible reports of excesses by both 
opposition elements and government forces involved in these 
clashes. Following the November anti-government action led by 
Mahmud Khudoiberdiev, there were allegations of heavy-handed 
treatment of civilians in the Leninabad region by government 
forces seeking to identify potential insurgents and locate 
caches of weapons allegedly left behind by Khudoiberdiev's 
forces. There are credible reports that Ministry of Interior 
troops killed civilians during and after May and July clashes 
near Dushanbe.
    The armed opposition committed serious abuses, including 
killings and abductions. There were credible reports that UTO 
units threatened, extorted, and abused the civilian 
populations.

                              Turkmenistan

U.S. Assistance Provided under the Freedom Support Act: $51.05
  million
Population: 4,225,351
Per Capita Assistance 1992-1998: $12.08

    Turkmenistan, a one-party state dominated by its president 
and his closest advisers, made little progress in moving from a 
Soviet-era authoritarian style of government to a democratic 
system. Saparmurad Niyazov, head of the Turkmen Communist Party 
since 1985 (renamed the Democratic Party in 1992) and President 
of Turkmenistan since its independence in 1991, legally may 
remain in office until 2002. The Democratic Party, the renamed 
Communist Party, retained a monopoly on power; the Government 
registered no parties during the year and continued to repress 
all opposition political activities. Emphasizing stability and 
gradual reform, official nation-building efforts focused on 
fostering Turkmen nationalism and the glorification of 
President Niyazov. The 50-member unicameral Parliament (Mejlis) 
has no genuinely independent authority, and in practice the 
President controls the judicial system.
    The Committee on National Security (KNB) has the 
responsibilities formerly held by the Soviet Committee for 
State Security (KGB), namely, to ensure that the regime remains 
in power through tight control of society and discouragement of 
dissent. The Ministry of Internal Affairs directs the criminal 
police, which work closely with the KNB on matters of national 
security. Both operate with relative impunity and have been 
responsible for abusing the rights of individuals as well as 
enforcing the Government's policy of repressing political 
opposition.
    Turkmenistan is largely a desert with cattle and sheep 
raising, intensive agriculture in irrigated areas, and huge oil 
and gas reserves. Its economy remains dependent on central 
planning mechanisms and state control, although the Government 
has taken a number of small steps to make the transition to a 
market economy. Agriculture, particularly cotton cultivation, 
accounts for nearly half of total employment. Gas, oil and gas 
derivatives, and cotton account for almost all of the country's 
export revenues. The Government is proceeding with negotiations 
on construction of a new gas export pipeline across the Caspian 
Sea, through Azerbaijan and Georgia to Turkey, and also is 
considering lines through Iran and Afghanistan.
    The Government continued to commit human rights abuses, and 
the authorities in particular severely restricted political and 
civil liberties. Citizens do not have the ability to change 
their government peacefully. Following a commitment by 
President Niyazov in May, dissident Gulgeldi Annaniyazov was 
released on January 9, 1999. Security forces continued to beat 
and otherwise mistreat suspects and prisoners, and prison 
conditions remained poor and unsafe. Arbitrary arrest, 
detention, unfair trials, and interference with citizens' 
privacy remained problems. The Government completely controls 
the media, censoring all newspapers and rarely permitting 
independent criticism of government policy or officials. The 
Government imposes restrictions on some religious groups. The 
Government generally gave favored treatment to ethnic Turkmen 
over minorities and to men over women. Women experience 
societal discrimination, and domestic violence against women is 
a problem.
    The law on religion, amended most recently in 1996, 
reaffirmed a number of important religious freedoms but also 
tightened government control of religious groups. The 
requirement that religious organizations have at least 500 
Turkmen citizens as members to be registered legally has 
prevented all but Sunni Muslims and Russian Orthodox Christians 
from legally establishing themselves.
    The Institute for Democracy and Human Rights, given a 
mandate to conduct research in support of the democratization 
of the government and society and to monitor the protection of 
human rights, completed its second year of operation in 
October. In December the Government signed a Memorandum of 
Understanding with the Organization for Security and 
Cooperation in Europe (OSCE) concerning the opening of an OSCE 
office in Ashgabat in 1999.

                               Conclusion

    The states in the South Caucasus and Central Asia are 
falling behind in economic and democratic reforms and in their 
respect for human rights. The choice for the United States is 
either to remain passive, with a parochial and largely 
ineffective aid program, or to re-engage with these countries 
to advance an agenda of real economic and democratic gains we 
support. Failure to engage will likely result in a downward 
spiral of economic hardship and a deterioration of human rights 
for populations in the region, followed most likely by the full 
collapse of state structures and an ensuing loss of 
sovereignty. Once state structures collapse, the choice for 
populations in the region will be either anarchy or 
incorporation with Russia or Iran, circumstances that offer no 
hope for improved human rights, democratic opportunities or 
economic prosperity.
    Absent a renewed effort by the United States Government, 
prospects for economic and democratic reforms in the region are 
bleak. Currently, in many of these countries, major investment 
in the oil and gas sectors by U.S. companies is the single 
greatest form of engagement with the United States. This will 
remain the case, regardless of how undemocratic or corrupt 
governments in the region become. The Silk Road Strategy Act is 
necessary to ensure that natural resource development will not 
be the only form of engagement. While United States economic 
assistance is not a requirement for economic or democratic 
reforms to be undertaken in the South Caucasus and Central 
Asia, targeted U.S. assistance would address areas--such as 
democratic governance and human rights--that simply are not a 
priority for foreign investors. For better or for worse, 
without the flexibilities included in the Silk Road Strategy 
Act, the dominant and even exclusive source of U.S. engagement 
in countries such as Azerbaijan will remain oil and gas 
interests.
    If broader engagement is the choice for the United States, 
as outlined by the Silk Road Strategy Act, time is of the 
essence. Restive populations, increasing misery, and 
exploitation by hostile powers must be addressed through a 
comprehensive regional strategy. U.S. economic assistance and 
diplomacy must be brought to bear to resolve regional 
conflicts, to open blocked borders, to build regional economic 
cooperation, to advance human rights, and to promote the 
establishment of democratic governments. It is not 
inconceivable that, in failing to act, the United States would 
miss an opportunity to secure the independence of states that, 
in the worst circumstance, could prove to be the building 
blocks of a hostile, regional empire reproducing the threat and 
tensions of the Cold War. The Silk Road Strategy Act is an 
active step toward a much brighter alternative in the region.

                            Committee Action

    The Silk Road Strategy Act of 1999 was introduced by 
Senator Sam Brownback, Senator Gordon Smith, and eleven 
cosponsors on March 10, 1999. On March 23, 1999, the Committee 
on Foreign Relations debated and ordered reported the bill by a 
voice vote. Prior to committee approval of the Silk Road 
Strategy Act of 1999, several hearings were held in the 
Committee on Foreign Relations to assess United States policy 
in the South Caucasus and Central Asia.

April 24, 1997

Full Committee hearing: Conventional Armed Forces in Europe 
    (CFE) Treaty, Revisions of the Flank Agreement.
          The Honorable Lynn Davis, Undersecretary of State for 
        Arms Control and International Security Affairs.
          The Honorable Walter Slocombe, Undersecretary of 
        Defense for Policy.
          General Gary M. Rubus, Deputy Director for 
        International Negotiations, Joint Chiefs of Staff.
          Dr. Sherman Garnett, Senior Associate. Carnegie 
        Endowment for International Peace.
          Dr. Paul Goble, Director of Communication Department, 
        Radio Free Liberty/Radio Liberty.

May 5, 1997

Subcommittee on European Affairs hearing: The Foreign 
    Assistance Program to the Former Soviet Union and Central 
    and Eastern Europe.
          The Honorable Richard L. Morningstar, Coordinator, 
        Office of U.S. Assistance to the Newly Independent 
        States.
          Mr. James H. Holmes, Coordinator, Office of Eastern 
        European Assistance.

July 21, 1997

Subcommittee on European Affairs and Subcommittee on Near 
    Eastern and South Asian Affairs joint subcommittee hearing: 
    U.S. Foreign Policy Interests in the South Caucasus and 
    Central Asia.
          The Honorable Stuart E. Eizenstat, Undersecretary of 
        State for Economic Affairs.
          The Honorable Caspar Weinberger, Chief Executive 
        Officer, Forbes, Inc.
          Lt. Gen. William E. Odom, USA (ret.), Director of 
        National Security Studies, Hudson Institute.
          Dr. Paul Goble, Director, Communications Department, 
        Radio Free Europe/Radio Liberty.
          Dr. Martha Olcott, Senior Associate, Carnegie 
        Endowment for International Peace.

October 22, 1997

Subcommittee on International Economic Policy, Export and Trade 
    Promotion hearing: U.S. Economic and Strategic Interests in 
    the Caspian Sea Region: Policies and Implications.
          The Honorable Sam Brownback (R-KS), United States 
        Senate.
          The Honorable Stuart E. Eizenstat, Undersecretary of 
        State for Economic, Business and Agricultural Affairs.
          The Honorable Lawrence S. Eagleburger, Senior Foreign 
        Policy Advisor, Baker, Donelson, Bearman and Caldwell.
          Mr. Charles J. Pitman, Chairman and President, Amoco 
        Eurasia Petroleum Company.

February 24, 1998

Subcommittee on International Economic Policy, Export and Trade 
    Promotion hearing: Implementation of U.S. Policy on 
    Construction of a Western Caspian Sea Oil Pipeline.
          The Honorable Robert W. Gee, Assistant Secretary of 
        Energy for Policy and International Affairs.
          Mr. Jan Kalicki, Counselor to the Department of 
        Commerce.
          Mr. Lawrence R. Fisher, Vice President, Production 
        and Pipelines, Fluor-Daniel Incorporated.
          The Honorable Charles William Maynes, President, The 
        Eurasia Foundation.

June 16, 1998

Subcommittee on International Economic Policy, Export and Trade 
    Promotion hearing: Implementation of U.S. Policy on 
    Construction of a Western Caspian Pipeline.
          The Honorable Marc Grossman, Assistant Secretary of 
        State for European and Canadian Affairs.
          The Honorable Stephen R. Sestanovich, Special Advisor 
        to the Secretary of State for the New Independent 
        States.
          The Honorable Zbigniew Brzezinski, Counselor, Center 
        for Strategic and International Studies.
          Dr. Martha Brill Olcott, Senior Associate, Carnegie 
        Endowment for International Peace.
          Mr. Van Krikorian, Chairman, Board of Directors, 
        Armenian Assembly.

March 3, 1999

Subcommittee on International Economic Policy, Export and Trade 
    Promotion hearing: Commercial Viability of a Caspian Sea 
    Main Energy Pipeline.
          The Honorable Richard L. Morningstar, Special Advisor 
        to the President and Secretary of State for Caspian 
        Basin Energy Diplomacy.
          Mr. Edward M. Smith, President and CEO, Pipeline 
        Solutions Group International.
          Mr. J. Michael Stinson, Senior Vice President, Conoco 
        Inc.
          Ms. Maureen Greenwood, Advocacy Director for Europe 
        and the Middle East, Amnesty International.

                      Section-by-Section Analysis


Section 1--Short Title

    This Act may be cited as the Silk Road Strategy Act of 
1999.

Section 2--Findings

Section 3--Policy of the United States

    Section 3 establishes that it shall be the policy of the 
United States in the South Caucasus and Central Asia to promote 
and strengthen independence, sovereignty, democratic 
government, and respect for human rights; to promote tolerance, 
pluralism, and understanding and counter racism and anti-
Semitism; to assist actively in the resolution of regional 
conflicts and to facilitate the removal of impediments to 
cross-border commerce; to promote friendly relations and 
economic cooperation; to help promote market-oriented 
principles and practices; to assist in the development of 
infrastructure necessary for communications, transportation, 
education, health, and energy and trade on an East-West axis in 
order to build strong international relations and commerce 
between those countries and the stable, democratic and market 
oriented countries of the Euro-Atlantic Community; and, to 
support United States business interests and investments in the 
region.

Section 4--United States Efforts to Resolve Regional Conflicts in the 
        South Caucasus and Central Asia

    Sense of the Congress that the President should use all 
diplomatic means practicable, including the engagement of 
senior United States Government officials, to press for an 
equitable, fair and permanent resolution to the conflicts in 
the South Caucasus and Central Asia.

Section 5--Amendment of the Foreign Assistance Act of 1961

    The Silk Road Strategy Act of 1999 authorizes the provision 
of assistance to countries in the South Caucasus and Central 
Asia to promote reconciliation and recovery from regional 
conflicts; to foster economic growth and development, including 
the conditions necessary for regional economic cooperation; to 
secure borders and implement effective controls necessary to 
prevent the trafficking of illegal narcotics and the 
proliferation of technology and materials related to weapons of 
mass destruction; and to promote institutions of democratic 
government and to create the conditions for the growth of 
pluralistic societies, including religious tolerance and 
respect for internationally recognized human rights.
    The Silk Road Strategy Act restricts assistance to 
countries in the South Caucasus and Central Asia on the exact 
same eligibility requirements that are otherwise currently 
applied to those countries under Foreign Assistance Act of 
1961. Specifically, except as provided in the waiver contained 
in this section (also identical to that contained in the 
Foreign Assistance Act of 1961), assistance may not be provided 
under this chapter for the government of a country of the South 
Caucasus or Central Asia if the President determines and 
certifies to the appropriate congressional committees that the 
government of such country:
          (1) is engaged in a consistent pattern of gross 
        violations of internationally recognized human rights;
          (2) has, on or after the date of enactment of this 
        chapter, knowingly transferred to another country--
                  (A) missiles or missile technology 
                inconsistent with the guidelines and parameters 
                of the Missile Technology Control Regime; or
                  (B) any material, equipment, or technology 
                that would contribute significantly to the 
                ability of such country to manufacture any 
                weapon of mass destruction(including nuclear, 
                chemical and biological weapons) if the 
                President determines that the material, 
                equipment, or technology was to be used by such 
                country in the manufacture of such weapons;
          (3) has repeatedly provided support for acts of 
        international terrorism; or
          (4) is prohibited from receiving such assistance by 
        chapter 10 of the Arms Export Control Act or section 
        306(a)(1) and 307 of the Chemical Biological Weapons 
        Control and Warfare Elimination Act of 1991.

Section 6--Restriction on Assistance for the Government of Azerbaijan

    This section amends Section 907 of the Freedom Support Act 
to provide the President with the authority to waive 
restrictions on assistance to the Government of Azerbaijan if 
it is in the national interest of the United States of America.

Section 7--Annual Report

    The annual reporting requirements under section 104 of the 
Freedom Support Act are revised to include specific analysis on 
progress toward implementing the policies of the Silk Road 
Strategy Act of 1999.

Section 8--Conforming Amendments

    Conforming amendment to the Freedom Support Act (Public Law 
102-511).

Section 9--Definitions

    Precise definitions of terms used in the Silk Road Strategy 
Act of 1999.

                             Cost Estimate

    In accordance with rule XXVI, paragraph 11(a) of the 
Standing Rules of the Senate, the Committee provides the 
following estimate of the cost of this legislation prepared by 
the Congressional Budget Office.
                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, April 6, 1999.
Hon. Jesse Helms,
Chairman, Committee on Foreign Relations,
U.S. Senate,
Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office (CBO) 
has prepared the enclosed cost estimate for S. 579, the Silk 
Road Strategy Act of 1999.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Joseph C. 
Whitehill.
            Sincerely,
                                          Barry B. Anderson
                                    (for Dan L. Crippen, Director.)
    Enclosure.

               Congressional Budget Office Cost Estimate

S. 579--Silk Road Strategy Act of 1999

    S. 579 would state U.S. policy on various economic and 
political matters related to countries of the South Caucasus 
and Central Asia. Although the bill would authorize several 
broad categories of assistance to the region, it would not 
authorize specific amounts, and the authorizations would 
overlap with more general authorizations in current law.
    Because the bill would not substantially expand the 
Administration's authority to provide assistance, either 
geographically or programmatically, CBO estimates that spending 
targeted at the region would continue at the current rate--
approximately $460 million in economic assistance, security 
assistance, food aid, and export financing. That spending would 
be subject to appropriation. S. 579 would not affect direct 
spending or receipts; therefore, pay-as-you-go procedures would 
not apply.
    The bill contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act, and 
would not affect the budgets of state, local, or tribal 
governments.
    The estimate was prepared by Joseph C. Whitehill. This 
estimate was approved by Robert A. Sunshine, Deputy Assistant 
Director for Budget Analysis.

                    Evaluation of Regulatory Impact

    In accordance with rule XXVI, paragraph 11(b) of the 
Standing Rules of the Senate, the Committee has concluded that 
there is no regulatory impact from this legislation.

                        Changes in Existing Law

    In compliance with paragraph 12 of Rule XXVI of the 
Standing Rules of the Senate, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

Foreign Assistance Act of 1961

           *       *       *       *       *       *       *


CHAPTER 11--SUPPORT FOR THE ECONOMIC AND DEMOCRATIC DEVELOPMENT OF THE 
INDEPENDENT STATES OF THE FORMER SOVIET UNION

           *       *       *       *       *       *       *


CHAPTER 12--SUPPORT FOR THE ECONOMIC AND POLITICAL INDEPENDENCE OF THE 
            COUNTRIES OF THE SOUTH CAUCASUS AND CENTRAL ASIA

SEC. 499. UNITED STATES ASSISTANCE TO PROMOTE RECONCILIATION AND 
                    RECOVERY FROM REGIONAL CONFLICTS.

    (a) Purpose of Assistance.--The purposes of assistance 
under this section include--
            (1) the creation of the basis for reconciliation 
        between belligerents;
            (2) the promotion of economic development in areas 
        of the countries of the South Caucasus and Central Asia 
        impacted by civil conflict and war; and
            (3) the encouragement of broad regional cooperation 
        among countries of the South Caucasus and Central Asia 
        that have been destabilized by internal conflicts.
    (b) Authorization for Assistance.--
            (1) In general.--To carry out the purposes of 
        subsection (a), the President is authorized to provide 
        humanitarian assistance and economic reconstruction 
        assistance for the countries of the South Caucasus and 
        Central Asia to support the activities described in 
        subsection (c).
            (2) Definition of humanitarian assistance.--In this 
        subsection, the term ``humanitarian assistance'' means 
        assistance to meet humanitarian needs, including needs 
        for food, medicine, medical supplies and equipment, and 
        clothing.
    (c) Activities Supported.--Activities that may be supported 
by assistance under subsection (b) include--
            (1) providing for the humanitarian needs of victims 
        of the conflicts;
            (2) facilitating the return of refugees and 
        internally displaced persons to their homes; and
            (3) assisting in the reconstruction of residential 
        and economic infrastructure destroyed by war.
    (d) Policy.--It is the sense of Congress that the United 
States should, where appropriate, support the establishment of 
neutral, multinational peacekeeping forces to implement peace 
agreements reached between belligerents in the countries of the 
South Caucasus and Central Asia.

SEC. 499A. ECONOMIC ASSISTANCE.

    (a) Purpose of Assistance.--The purpose of assistance under 
this section is to foster economic growth and development, 
including the conditions necessary for regional economic 
cooperation, in the South Caucasus and Central Asia.
    (b) Authorization for Assistance.--To carry out the purpose 
of subsection (a), the President is authorized to provide 
assistance for the countries of the South Caucasus and Central 
Asia to support the activities described in subsection (c).
    (c) Activities Supported.--In addition to the activities 
described in section 498, activities supported by assistance 
under subsection (b) should support the development of the 
structures and means necessary for the growth of private sector 
economies based upon market principles.
    (d) Policy.--It is the sense of Congress that the United 
States should--
            (1) assist the countries of the South Caucasus and 
        Central Asia to develop policies, laws, and regulations 
        that would facilitate the ability of those countries to 
        join the World Trade Organization to enjoy all the 
        benefits of membership; and
            (2) consider the establishment of zero-to-zero 
        tariffs between the United States and the countries of 
        the South Caucasus and Central Asia.

SEC. 499B. DEVELOPMENT OF INFRASTRUCTURE.

    (a) Purpose of Programs.--The purposes of programs under 
this section include--
            (1) to develop the physical infrastructure 
        necessary for regional cooperation among the countries 
        of the South Caucasus and Central Asia; and
            (2) to encourage closer economic relations and to 
        facilitate the removal of impediments to cross-border 
        commerce among those countries and the United States 
        and other developed nations.
    (b) Authorization for Programs.--To carry out the purposes 
of subsection (a), the following types of programs for the 
countries of the South Caucasus and Central Asia may be used to 
support the activities described in subsection (c):
            (1) Activities by the Export-Import Bank to 
        complete the review process for eligibility for 
        financing under the Export-Import Bank Act of 1945.
            (2) The provision of insurance, reinsurance, 
        financing, or other assistance by the Overseas Private 
        Investment Corporation.
            (3) Assistance under section 661 of this Act 
        (relating to the Trade and Development Agency).
    (c) Activities Supported.--Activities that may be supported 
by programs under subsection (b) include promoting actively the 
participation of United States companies and investors in the 
planning, financing, and construction of infrastructure for 
communications, transportation, including air transportation, 
and energy and trade including highways, railroads, port 
facilities, shipping, banking, insurance, telecommunications 
networks, and gas and oil pipelines.
    (d) Policy.--It is the sense of Congress that the United 
States representatives at the International Bank for 
Reconstruction and Development, the International Finance 
Corporation, and the European Bank for Reconstruction and 
Development should encourage lending to the countries of the 
South Caucasus and Central Asia to assist the development of 
the physical infrastructure necessary for regional economic 
cooperation.

SEC. 499C. BORDER CONTROL ASSISTANCE.

    (a) Purpose of Assistance.--The purpose of assistance under 
this section includes the assistance of the countries of the 
South Caucasus and Central Asia to secure their borders and 
implement effective controls necessary to prevent the 
trafficking of illegal narcotics and the proliferation of 
technology and materials related to weapons of mass destruction 
(as defined in section 2332a(c)(2) of title 18, United States 
Code), and to contain and inhibit transnational organized 
criminal activities.
    (b) Authorization for Assistance.--To carry out the purpose 
of subsection (a), the President is authorized to provide 
assistance to the countries of the South Caucasus and Central 
Asia to support the activities described in subsection (c).
    (c) Activities Supported.--Activities that may be supported 
by assistance under subsection (b) include assisting those 
countries of the South Caucasus and Central Asia in developing 
capabilities to maintain national border guards, coast guard, 
and customs controls.
    (d) Policy.--It is the sense of Congress that the United 
States should encourage and assist the development of regional 
military cooperation among the countries of the South Caucasus 
and Central Asia through programs such as the Central Asian 
Battalion and the Partnership for Peace of the North Atlantic 
Treaty Organization.

SEC. 499D. STRENGTHENING DEMOCRACY, TOLERANCE, AND THE DEVELOPMENT OF 
                    CIVIL SOCIETY.

    (a) Purpose of Assistance.--The purpose of assistance under 
this section is to promote institutions of democratic 
government and to create the conditions for the growth of 
pluralistic societies, including religious tolerance and 
respect for internationally recognized human rights.
    (b) Authorization for Assistance.--To carry out the purpose 
of subsection (a), the President is authorized to provide the 
following types of assistance to the countries of the South 
Caucasus and Central Asia:
            (1) Assistance for democracy building.
            (2) Assistance for the development of 
        nongovernmental organizations.
            (3) Assistance for development of independent 
        media.
            (4) Assistance for the development of the rule of 
        law.
            (5) International exchanges and advanced 
        professional training programs in skill areas central 
        to the development of civil society.
            (6) Assistance to promote increased adherence to 
        civil and political rights under section 116(e) of this 
        Act.
    (c) Activities Supported.--Activities that may be supported 
by assistance under subsection (b) include activities that are 
designed to advance progress toward the development of 
democracy.
    (d) Policy.--It is the sense of Congress that the Voice of 
America and RFE/RL, Incorporated, should maintain high quality 
broadcasting for the maximum duration possible in the native 
languages of the countries of the South Caucasus and Central 
Asia.

SEC. 499E. INELIGIBILITY FOR ASSISTANCE.

    (a) In General.--Except as provided in subsection (b), 
assistance may not be provided under this chapter for the 
government of a country of the South Caucasus or Central Asia 
if the President determines and certifies to the appropriate 
congressional committees that the government of such country--
            (1) is engaged in a consistent pattern of gross 
        violations of internationally recognized human rights;
            (2) has, on or after the date of enactment of this 
        chapter, knowingly transferred to another country--
                    (A) missiles or missile technology 
                inconsistent with the guidelines and parameters 
                of the Missile Technology Control Regime (as 
                defined in section 11B(c) of the Export 
                Administration Act of 1979 950 U.S.C. App. 
                2410b(c); or
                    (B) any material, equipment, or technology 
                that would contribute significantly to the 
                ability of such country to manufacture any 
                weapon of mass destruction (including nuclear, 
                chemical, and biological weapons) if the 
                President determines that the material, 
                equipment, or technology was to be used by such 
                country in the manufacture of such weapons;
            (3) has repeatedly provided support for acts of 
        international terrorism; or
            (4) is prohibited from receiving such assistance by 
        chapter 10 of the Arms Export Control Act or section 
        306(a)(1) and 307 of the Chemical and Biological 
        Weapons Control and Warfare Elimination Act of 1991 (22 
        U.S.C. 5604(a)(1), 5605).
    (b) Exceptions to Ineligibility.--
            (1) Exceptions.--Assistance prohibited by 
        subsection (a) or any similar provision of law, other 
        than assistance prohibited by the provisions referred 
        to in paragraphs (2) and (4) of subsection (a), may be 
        furnished under any of the following circumstances:
                    (A) The President determines that 
                furnishing such assistance is important to the 
                national interest of the United States.
                    (B) The President determines that 
                furnishing such assistance will foster respect 
                for internationally recognized human rights and 
                the rule of law or the development of 
                institutions of democratic governance.
                    (C) The assistance is furnished for the 
                alleviation of suffering resulting from a 
                natural or man-made disaster.
                    (D) The assistance is provided under the 
                secondary school exchange program administered 
                by the United States Information Agency.
        (2) Report to congress.--The President shall 
        immediately report to Congress any determination under 
        paragraph (1) (A) or (B) or any decision to provide 
        assistance under paragraph (1)(C).

SEC. 499F. ADMINISTRATIVE AUTHORITIES.

    (a) Assistance Through Governments and Nongovernmental 
Organizations.--Assistance under this chapter may be provided 
to governments or through nongovernmental organizations.
    (b) Use of Economic Support Funds.--Except as otherwise 
provided, any funds that have been allocated under chapter 4 of 
part II for assistance for the independent states of the former 
Soviet Union may be used in accordance with the provisions of 
this chapter.
    (c) Terms and Conditions.--Assistance under this chapter 
shall be provided on such terms and conditions as the President 
may determine.
    (d) Relationship to Other Laws.--
            (1) Superseding existing law.--The authorities 
        contained in this chapter and in chapter 11 to provide 
        assistance for the countries of the South Caucasus and 
        Central Asia shall supersede the FREEDOM Support Act 
        (22 U.S.C. 5801 et seq.).
            (2) Available authorities.--The authority in this 
        chapter to provide assistance for the countries of the 
        South Caucasus and Central Asia is in addition to the 
        authority to provide such assistance under the FREEDOM 
        Support Act (22 U.S.C. 5801 et seq.) or any other Act, 
        and the authorities applicable to the provision of 
        assistance under chapter 11 may be used to provide 
        assistance under this chapter.

SEC. 499G. DEFINITIONS.

    In this chapter:
            (1) Appropriate congressional committees.--The term 
        ``appropriate congressional committees'' means the 
        Committee on Foreign Relations of the Senate and the 
        Committee on International Relations of the House of 
        Representatives.
            (2) Countries of the south caucasus and central 
        asia.--The term ``countries of the South Caucasus and 
        Central Asia'' means Armenia, Azerbaijan, Georgia, 
        Kazakstan, Kyrgyzstan, Tajikistan, Turkmenistan, and 
        Uzbekistan.

 Freedom for Russia and Emerging Eurasian Democracies and Open Markets 
                          Support Act of 1992

FREEDOM Support Act

           *       *       *       *       *       *       *


TITLE I--GENERAL PROVISIONS

           *       *       *       *       *       *       *


SEC. 102. PROGRAM COORDINATION, IMPLEMENTATION, AND OVERSIGHT.

    (a) Coordination.--The President shall designate, within 
the Department of State, a coordinator who shall be responsible 
for--
            (1) * * *
            (2) ensuring program and policy coordination among 
        agencies of the United States Government in carrying 
        out the policies set forth in [this Act] this Act and 
        the Silk Road Strategy Act of 1999 (including the 
        amendments made by [this Act] this Act and the Silk 
        Road Strategy Act of 1999);
            (3) * * *
            (4) ensuring that United States assistance programs 
        for the independent states are consistent with [this 
        Act] this Act and the Silk Road Strategy Act of 1999 
        (including the amendments made by [this Act] this Act 
        and the Silk Road Strategy Act of 1999);
            (5) * * *

           *       *       *       *       *       *       *


SEC. 104. ANNUAL REPORT.

           *       *       *       *       *       *       *


            (3) an assessment of the effectiveness of United 
        States assistance in achieving its purposes; [and]
            (4) an evaluation of the manner in which the 
        ``notwithstanding'' authority provided in section 
        498B(j)(1) of the Foreign Assistance Act of 1961, and 
        the ``notwithstanding'' authority provided in any other 
        provision of law with respect to assistance for the 
        independent states, has been used and why the use of 
        that authority was necessary[.]; and
            (5) with respect to the countries of the South 
        Caucasus and Central Asia--
                    (A) identifying the progress of United 
                States foreign policy to accomplish the policy 
                identified in section 3 of the Silk Road 
                Strategy Act of 1999;
                    (B) evaluating the degree to which the 
                assistance authorized by chapter 12 of part I 
                of the Foreign Assistance Act of 1961 has been 
                able to accomplish the purposes identified in 
                those sections; and
                    (C) recommending any additional initiatives 
                that should be undertaken by the United States 
                to implement the policy and purposes contained 
                in the Silk Road Strategy Act of 1999.

           *       *       *       *       *       *       *


TITLE IX--OTHER PROVISIONS

           *       *       *       *       *       *       *


SEC. 907. RESTRICTION ON ASSISTANCE TO AZERBAIJAN.

    (a) Restrictions.--United States assistance under this or 
any other Act (other than assistance under title V of this Act) 
may not be provided to the Government of Azerbaijan until the 
President determines, and so reports to the Congress, that the 
Government of Azerbaijan is taking demonstrable steps to cease 
all blockades and other offensive uses of force against Armenia 
and Nagorno-Karabakh.
    (b) Waiver.--The restriction on assistance in subsection 
(a) shall not apply if the President determines, and so 
certifies to Congress, that the application of the restriction 
would not be in the national interests of the United States.

MINORITY VIEWS OF SENATORS SARBANES, KERRY, FEINGOLD, WELLSTONE, BOXER 
                             AND TORRICELLI

    While we strongly support efforts to promote peace, 
democracy and prosperity in the South Caucasus and Central 
Asia, it is our view that the legislation as written will not 
further these objectives. Rather, by waiving important human 
rights and humanitarian conditions on bilateral assistance, S. 
579 contradicts fundamental U.S. values and principles, thereby 
sending an unfortunate message to the countries of the region 
and the entire world.
    We appreciate the efforts of the sponsors of this 
legislation to respond to some of the concerns raised last 
year, but the changes fall short of what is needed to produce a 
policy that will advance U.S. national interests and encourage 
respect for international law. As reported, the bill would have 
several damaging consequences.
    First, the bill would grant the President authority to 
waive Section 907 of the Freedom Support Act without requiring 
the Government of Azerbaijan to take any steps to lift its 
economic blockade against Armenia and Nagorno-Karabakh. Such a 
waiver runs directly counter to the intent of the law, which is 
to create pressure for ending the blockade. We believe that 
Section 907 made sense when it was enacted and that it 
continues to make sense today. To waive it in the absence of 
any progress toward a lifting of the blockade would reward the 
Government of Azerbaijan for its intransigence and remove a 
major incentive for good-faith negotiation from one side in the 
conflict.
    For nearly a decade, the government of Azerbaijan has 
prevented the transport of food, fuel, medicine, and other 
vital commodities to Armenia and Nagorno-Karabakh, causing 
immense human suffering. During winters, much of the Armenian 
population has had to live without heat, electricity or water. 
Schools and hospitals have been unable to function, and most 
Armenian industries have been forced to close down, crippling 
the economy and producing widespread unemployment and poverty.
    Under current law, all Azerbaijan must do in order for 
Section 907 to be lifted is to ``take demonstrable steps to 
cease all blockades against Armenia and Nagorno-Karabakh.'' 
This is an entirely reasonable expectation, especially given 
the basic purpose of this bill, which is to promote trade and 
economic cooperation between the countries of the region.
    Supporters of this legislation have called Section 907 an 
economic ``sanction'' and argued that such sanctions are unfair 
or ineffective. Yet it should be understood that United States 
foreign assistance is not an entitlement. The placing of 
conditions upon government-to-government aid is both reasonable 
and appropriate, for policy as well as budgetary reasons. Such 
conditions on government aid are not sanctions; they are a 
means for ensuring that foreign assistance serves American 
values and interests. While there may be disagreements over 
what the conditions should be, aid should not be provided 
without regard to the recipient's policies and actions.
    Even with the existing Section 907, Azerbaijan receives 
tens of millions of dollars each year in U.S. aid. In FY 1999, 
Azerbaijan is slated to receive $24 million in economic 
assistance, bringing the total of U.S. aid to Azerbaijan to 
over $100 million since it began in 1994. Annual appropriations 
bills have exempted from coverage under Section 907 all 
assistance through the Trade and Development Agency (TDA), the 
Export-Import Bank, the Overseas Private Investment Corporation 
(OPIC), the Foreign and Commercial Service, and non-
governmental organizations, as well as programs for 
humanitarian relief, democracy promotion, and nonproliferation 
and disarmament. Moreover, trade with Azerbaijan is unaffected 
by Section 907. The U.S. has normal trading relations with 
Azerbaijan.
    Our second objection to S. 579 is that it will undermine 
U.S. efforts to promote respect for human rights and the 
development of open and accountable government institutions. 
According to the State Department's Country Reports on Human 
Rights Practices for 1998, Turkmenistan is ``a one-party state 
dominated by its president and his closest advisers'' which 
``made little progress in moving from a Soviet-era 
authoritarian style of government to a democratic system.'' 
Human Rights Watch called the year 1998 ``disastrous for human 
rights in Uzbekistan,'' noting that ``in a sweeping effort to 
eliminate religion as a potential source of political 
opposition, the government of [President] Islam Karimov 
employed mass arbitrary arrests, torture of men in custody, 
religious discrimination, and harassment of independent human 
rights activists and journalists.'' And the New York Times 
condemned Kazakhstan's ``empty election'' last November, 
calling its leader ``a thinly disguised dictator who stages 
elections he has no chance of losing.''
    By increasing the availability of U.S. assistance for 
countries that fail to demonstrate a commitment to democratic 
principles and routinely violate the basic rights of their 
citizens, the legislation rewards poor performance and 
eliminates incentives for improvement. It unfortunately 
suggests that economic prosperity can be achieved outside the 
context of political freedom and the rule of law. In our view, 
human rights, democracy and free markets are goals that need to 
be achieved in relationship to one another.
    We are particularly concerned by language in the bill that 
could have the effect of exempting recipient countries from 
U.S. laws designed to promote cooperation on human rights, 
counterterrorism, and nonproliferation of weapons of mass 
destruction. For instance, the new section 499E, which the bill 
would add to the Foreign Assistance Act of 1961, would weaken 
the standards for waiving laws such as the ban on assistance to 
any unit of the security forces of a foreign country if the 
Secretary of State has credible evidence that such unit has 
committed gross violations of human rights. We believe the 
countries of the Caspian Sea basin should be held to the same 
standards of conduct in the areas of human rights, 
proliferation of weapons of mass destruction, and terrorism as 
every other country that receives foreign assistance.
    Finally, S. 579 repudiates the framework established by the 
Freedom Support Act, through which the United States has 
encouraged the transition to democracy and free markets in the 
New Independent States of the former Soviet Union. In providing 
assistance under that Act, the President must take into account 
the extent to which each government is committed to, and making 
progress toward, such goals as the establishment of a 
democratic political system and a market-based economy, respect 
for internationally recognized human rights, adherence to 
international law and obligations, cooperation in seeking 
peaceful resolution of ethnic and regional conflicts, 
implementation of responsible security and non-proliferation 
policies, and protection of the international environment. All 
the countries of the South Caucasus and Central Asia currently 
receive U.S. aid under this program, amounting to $342 million 
in FY 1999. The ``Silk Road Strategy Act of 1999'' exempts 
eight of the thirteen former Soviet republics from the 
requirements of the Freedom Support Act while authorizing new 
forms of aid for them, thus creating two classes of states: 
those who must comply with the Freedom Support Act, and those 
who are outside it. We believe this unequal treatment, based 
not on the progress made in each country but rather on its 
geographic location, could have a negative effect on our 
relations with Russia and the other New Independent States.
    For all of these reasons, we are unable to support this 
legislation. In our judgment, S. 579 represents an unwise shift 
from the current, more balanced approach to the problems of the 
region.

                                  
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