Winter 2000 (8.4)
Pages 48-49

Earmarks and Exclusionss
The Ins and Outs of U.S. Assistance to Azerbaijan
Ambassador William Taylor

by Betty Blair

When the subject of U.S. aid to Azerbaijan comes up, a number of sensitive questions arise: How is it that the U.S. is forbidden to give aid directly to Azerbaijan's government but gives assistance to all other governments of the 11 former republics of the Soviet Union? Why does the relatively small amount of aid allocated to Azerbaijan mostly have to be dispersed through non-governmental organizations (NGOs)? Why does the U.S. assign so many more funds to Armenia than to Azerbaijan, even though Azerbaijan's population is nearly three times larger?

To better understand these issues, we spoke with Ambassador William Taylor, the U.S. State Department's Assistance Coordinator for the Newly Independent States (NIS).

Taylor has worked in the Assistance Coordinator's office at the State Department since 1992. Prior to that, he worked at the U.S. mission to NATO and was involved in the original humanitarian assistance to former Soviet states in late 1991. In the early 1980s, Taylor was in U.S. Senator Bill Bradley's (Democrat / New Jersey) office, where he worked on energy and foreign policy.

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First of all, one might ask why the United States and European powers allocate any funds at all to countries of the former Soviet Union, considering that less than a dozen years ago the USSR was considered to be one of their greatest adversaries?

According to Taylor, the purpose is to help these republics, which have each now gained their independence, make the transition away from authoritarian governments to more democratic governments, and from centrally planned economies to market economies. "Our Congress has appropriated significant amounts of money to help support these transitions because we're convinced that democratic governments - whose leaders are chosen by the people and whose decisions are influenced by public opinion and civil society - tend to be more stable. Democracies tend not to fight other democracies; so it's clearly in our interest to have stability reign in this part of the world. Similarly, we find that a strong economy with increased living standards is an important component in maintaining continued democratic development."

But if trying to help these developing countries integrate into the world economy and the world community is clearly in the best interests of the U.S., why has Congress been so reluctant to assist Azerbaijan in this same process? The answer lies with a very controversial piece of legislation-Section 907 of the Freedom Support Act.

Freedom Support Act
In the Fall of 1992, the U.S. Congress passed the Freedom Support Act to help the former Soviet countries in their economic and democratic transitions, and to a degree, to offer some humanitarian aid. Assistance under the Freedom Support Act takes the form of expert advice, training, equipment, small loans to private firms, medicine and hospital supplies. Assistance is not given in direct cash to any of these countries. All of the NIS governments were eligible for assistance, with one exception - Azerbaijan.

The restriction on assistance to the government of Azerbaijan - also known as Section 907 - relates to the ongoing conflict with Armenians over a section of Azerbaijan's territory, Nagorno-Karabakh. Section 907 was introduced by U.S. legislators upon the initiative of the Armenian lobby.

The restriction reads: "United States assistance under this or any other Actmay not be provided to the Government of Azerbaijan until the [U.S.] 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."

The U.S. Congress later allowed for a few exemptions - often referred to as "carve-outs" - to Section 907. However, to date, the law itself has not been repealed despite the fact that both the Bush Administration (1989-1992) and the Clinton Administration (1993-2000) argued that it ran counter to U.S. interests in the region.

Azerbaijanis complain that this law was based on false premises from the very beginning - faulty history and faulty geography. First of all, they point out that Azerbaijan and Armenia were at war when the legislation was passed and, therefore, it was only normal that a country at war with its neighbor would cut off supply routes that originated in its own country. To act otherwise is pure suicide. In addition, Azerbaijanis insist that all fighting has occurred on Azerbaijan's own territory, clearly identifying Armenians as the aggressors - not Azerbaijanis, as the law implies.

Today, 12 years after the war first started, the Armenian military still occupies nearly 20 percent of Azerbaijan's territory. Furthermore, a quick glance at the map shows that it is impossible for Azerbaijan to completely blockade Armenia which shares borders with three other countries - Iran, Turkey and Georgia. Azerbaijanis blame the U.S. for rewarding the aggressors with this legislation and punishing the victims in a war that has killed tens of thousands of people and left nearly 1 million Azerbaijani civilians homeless as refugees.

Unequal Aid
Including the new budget for 2001, the U.S. Congress has allocated approximately $8.3 billion to the NIS through the Freedom Support Act. However, aid is not necessarily based on the relative populations in these countries nor on the needs that the State Department has designated. For example, of the $835 million in aid allocated for 2000, almost half of it was earmarked by Congress for three of the 12 NIS countries: Armenia ($102 million), Georgia ($108 million) and Ukraine ($180 million).

Taylor explains how this happens: "Each year, Congress appropriates funds for the NIS and provides us with guidance on how to use these funds. We are allowed to allocate some of them as we analyze the need, but for three countries - Armenia, Georgia and Ukraine - Congress tells the Administration exactly how much of the funds must go to them and often what these funds must be used for.

"The process is called 'earmarking.' At the State Department we do our best to resist these earmarks because they keep us from allocating the funds in the way that we think is best. Every year we go through the same exercise. We send our request to Capitol Hill. They send back their appropriations with these 'earmarks' or restrictions."

For example, Russia is a huge country in comparison to Armenia. Russia's population is between 146-147 million; Armenia's population is approximately 3 million and rapidly decreasing because of the massive exodus from the country. Yet, Armenia has received approximately $730 million of aid from the Freedom Support Act since 1992; Russia has received $2.6 billion. In other words, Russia has only received 3.5 times as much aid as Armenia despite the fact that its population is nearly 50 times greater.

Preferential Treatment
Why does Congress give preferential treatment to these three countries? In the case of Georgia, Taylor says that the preference is not due to the influence of any special-interest group influencing Congress: "I think Congress is genuinely concerned about the importance of Georgia. There's a war going on, just to its north [Chechnya].

"There are three kinds of assistance that we provide to Georgia. The first is training and equipping Georgian border guards. The last Russian border guards left Georgia more than a year ago. The second item of assistance is to support military relocation of Russian troops out of Georgia, and that process is now well underway. The third example is economic and democratic reform in Georgia.

"In addition, Georgia serves as an important transportation route for oil that originates from Kazakhstan and Azerbaijan and travels to Western markets via Georgia's ports on the Black Sea. Note also that Georgia is under the leadership of a president [Shevardnadze] who had a major role in bringing about the end of the Cold War."

Similar concerns have been expressed about Ukraine. "Ukraine is important to the region," Taylor says. "It's important to the world that this country be stable and independent. We want to support its independence and sovereignty."

After subtracting the funds designated by the Congress for Armenia, Georgia and Ukraine, the rest of the aid is split between the other nine countries. In the case of Azerbaijan, out of the $7.5 billion of aid [up to 2000] that has been allocated since the Freedom Support Act was passed in 1992, Azerbaijan has only received $163 million, about 2 percent of the total amount designated. Armenia has received approximately $730 million; Georgia, approximately $453 million.

For the most part, the assistance that has been identified for Azerbaijan has been channeled through non-governmental organizations (NGOs), not to Azerbaijan's government directly. Of course, given that the power base was completely centralized during the former Soviet period, the concept of NGOs is still very new, and few of them now a decade later have the power and networking base to effect much change as compared to governmental agencies.

Forms of Assistance
Taylor is convinced that the funds that support educational exchange programs have the most profound effect on transforming these new countries, including Azerbaijan. He describes how the programs work: "We've brought many young people - but not only young people - to the U.S. for periods of time that vary from two weeks to two years. We do this with high school students, undergraduates, graduate students and even some post-graduate students. We also organize professional exchanges with business people, local government and Members of Parliament."

In Azerbaijan nearly 700 students have benefited from such exchange programs since 1992. This gives youth opportunities to create friendships and connections that will last a lifetime. Taylor believes high school students benefit the most: "It's because they spend a whole year in American homes. They go to American schools, malls, bowling alleys and churches. They come back with close connections to these families and communities. These young people are dynamic, eager to make changes and really committed to doing things on a volunteer basis. It's great to see."

Educational exchanges are given high priority, even in NIS countries that receive comparatively small amounts of funding. So comparatively speaking, Armenia doesn't have so many more students than Azerbaijan in these programs. The U.S. sees these exchanges as "getting considerable bang for its buck".
However, it should be noted that in terms of other kinds of educational opportunities, Armenia is given much more assistance than Azerbaijan because of 907. For example, an American University has been established in Yerevan, an opportunity that does not exist for Azerbaijanis in Baku. In 1999 alone, the U.S. allocated $9.58 million - a significant endowment - to the university as a direct "earmark" mandate from Congress. This university specializes in business administration, political science, health and earthquake seismic studies.

U.S. assistance to Armenia also goes to the nuclear plant at Metsamor. The U.S. has put in security sensors and assisted with the auxiliary water cooling system to make the plant safer for the entire region. These funds were designated on the condition that the plant be closed down by 2004. The U.S. is concerned about the antiquated Soviet design of the nuclear plant as well as the fact that it was built in an apparent earthquake zone.

Armenia also has some programs related to comprehensive hospital reform that cannot be introduced in Azerbaijan because of 907 because hospitals fall under the category of "governmental aid". Also, there are programs in Armenia - but not Azerbaijan - that offer marketing assistance to farmers, economic restructuring for banks and Peace Corps volunteers, among numerous other examples.

Aid to Azerbaijan
Taylor says that when he holds press conferences and meetings with Azerbaijan's media, he frequently encounters the misconception that the U.S. does not provide any assistance to Azerbaijan. "I point out to people that there are constraints in some areas, but not all," he says. "We can provide some aid directly to Azerbaijan's government.

"In addition to all non-proliferation activities that were excluded in the original Section 907, there are six exceptions that have been subsequently designated by the Foreign Operations Appropriations Committee in the U.S. Congress: (1) activities that support democracy, (2) humanitarian assistance, (3) assistance provided by the Trade Development Agency, (4) by the U.S. Foreign Commercial Service, (5) by OPIC activity, (6) by EXIM bank.

"We're able to work with Azerbaijan's government to support democracy," he says. "For example, we have worked with the government of Azerbaijan to improve its election law, to provide election monitors and to improve law enforcement."

Fortunately for Azerbaijan's refugees, the U.S. is allowed to work with the government of Azerbaijan to provide humanitarian assistance. Taylor explains: "In the humanitarian sector, I've met frequently with Azerbaijan's Deputy Prime Minister for Humanitarian Issues and Refugee Issues, Ali Hasanov. He and I discuss areas where the U.S. can be most helpful in working with refugees, especially in terms of medical supplies, hospital equipment, shelter and micro-loans for refugee families.

Congress also allows for Azerbaijan to be assisted by the Trade Development Agency, which does feasibility studies that lead to investments in the Republic. Likewise, the Foreign Commercial Service fosters connections between American and Azerbaijani companies. The Overseas Private Investment Corporation (OPIC) can provide political risk insurance for investors who want to invest in Azerbaijan.

"We can also work with the government of Azerbaijan to stop the proliferation of weapons," he says. "Right now, we are providing training for border guards and customs officials to help identify and stop weapons traffic. We are providing patrol boats for the Caspian. That aid goes directly to the government officials."

'Confidence-Building'
The most recent exception to 907 comes in the fiscal year 2001 and allows support for "confidence-building measures" between countries in the Southern Caucasus. "Confidence-building measures would be activities where Azerbaijanis and Armenians work together, or Azerbaijanis and Georgians work together, or the three countries work together on common problems in order to 'build confidence' in each other," Taylor explains. For example, joint de-mining training, summer camps for youth from all three countries and other projects are now being developed.

"The language of the exception reads: 'Of the funds made available for the Southern Caucasus region, not withstanding any other provision of law' (meaning Section 907 of the Freedom Support Act), '15 percent of these funds may be used for confidence-building measures and other activities in the furtherance of the peaceful resolution of the regional conflicts, especially those in the vicinity of Abkhazia and Nagorno-Karabakh.'"

Eliminating 907
Taylor says that there are three ways that the U.S. could get rid of Section 907 completely: "First, Congress could pass another law to override this one; there have been several attempts to do this." [But none have actually succeeded.]

"The second way would be to meet the terms of the law and have whoever is president determine that the terms of the law have been fulfilled. 'Demonstrable steps' is the phrase, meaning that Azerbaijan must take steps towards lifting the blockade." According to Taylor, this hasn't happened in a way that the President [Clinton] has been able to certify. "People have suggested interpretations that would have allowed the President, in their view, to certify that these steps have been taken. But in the view of the Administration and its legal reading of the law, they felt it did not yet meet the criteria within the law. "The in-coming Bush Administration will have to live under the same law and deal directly with Congress on this issue."

The third way would be if a peace agreement were to be put into effect and the hostilities were to cease. Part of the peace deal would allow for the immediate removal of Section 907. And this is the method that Taylor hopes will ultimately win out.

Peace in the region would bring increased stability and economic growth, Taylor believes, not only to Azerbaijan but to the other Caucasian countries as well. "I think all three countries in the Caucasus - Armenia, Azerbaijan and Georgia - would benefit from peace. The stability that would come from that would make it enticing for investors to come to the region. As a result, economic growth would be spurred, and the standard of living would rise in all three countries. This is the the ultimate goal that must be achieved."

The real question is: "When will it happen?"


For more information about U.S. assistance to Azerbaijan, visit "Country Reviews" at: www.usaid.gov.

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From Azerbaijan International (8.4) Winter 2000.
© Azerbaijan International 2000. All rights reserved.

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