Why Did Putin Terminate USAID in Russia?

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MOSCOW — Tensions between the U.S. and Russia have reached a tipping point in 2017. President Donald Trump has signed new sanctions against Russia, and Russian President Vladimir Putin has hit back expelling U.S. diplomats from the country.

Relations between the U.S. and post-Soviet Russia weren’t always so adversarial. In fact, USAID began operating in Russia shortly after the fall of the Soviet Union and continued until President Putin canceled the program in 2012. Putin ended the program as part of his ongoing attack on organizations that accept foreign money, deeming them attempts to meddle in the country. At the time, USAID was funding Russian activists and nonpartisan watchdog groups working to support democracy, protect human rights and promote fair elections.

Early USAID assistance was devoted to economic reform. The U.S. Russia Investment Fund (TUSRIF) was founded in 1995 with a $329 million grant from the U.S. government. TUSRIF was supposed to develop a free market economy in Russia by providing investment capital to potentially high-growth entrepreneurial companies. Over the years, TUSRIF generated in excess of $350 million in investment proceeds and attracted $1.2 billion in outside equity, debt, and co-investments. USAID also supported the development of the small business sector through microfinance.

USAID in Russia also participated in initiatives in legal and political reform. It assisted the adoption of the 2001 Land Code which provided the right to buy, sell and own urban and rural land in Russia. USAID-funded Rule of Law implementers helped draft the Russian Constitution, Part One of the Russian Civil Code and the Russian tax code. USAID has also supported the growth of civil society organizations in Russia, claiming on their website that they “contribute to Russia’s economic, political and social life in numerous ways and provide opportunities for citizens to help create better communities and elevate their voices”.

Since 1992, USAID in Russia has also assisted in reforming the electricity sector. Early assistance focuses on designing the future competitive electricity market. In Russia today, that design guides the electricity market as implemented by the government, electric utility system companies and their advisors. Before the cancellation of the program, USAID also sought to help Russia improve energy efficiency.

USAID in Russia also supported health and immunization projects. It helped introduce approaches in the diagnostics and treatment of tuberculosis, enabling the national TB program to decrease transmission and improve treatment success rates. Today, Russia ranks at 11 among the 22 highest tuberculosis burden countries. Russia is also experiencing a concentrated HIV/AIDS epidemic fueled by intravenous drug use.

USAID worked with several international organizations, Russian NGOs and local and national authorities to institute the best practice for prevention, care and treatment of HIV/AIDS. USAID health programs have strengthened an array of Russian NGOs, many of which work on HIV/AIDS. As of 2016, the Russian AIDS epidemic has reached crisis levels, with more than one million people in the country registered HIV positive.

In the final year of USAID in Russia, the program had a budget of $49.47 million for its programs, about half of what its average annual budget had been for the previous 20 years. About 59 percent was designated to programs supporting democracy and civil society, 37 percent was for health projects and 4 percent was for environmental programs.

Putin’s 2012 decision to end USAID was partially due to tensions over pre- and post-election protests, which the Kremlin alleged were orchestrated by U.S. funded NGOs. Disagreement over U.S. activities in the Middle East was also a factor.

But, it’s also been clear for over a decade that Russian authorities want the country to be seen as a great power and a provider of assistance, not a recipient. And USAID’s activities and interests in Russia have been waning for years. In its final years, USAID typically didn’t pay in bulk for programs, but worked in a consulting role with local partners. This is typical for countries that stop receiving foreign aid. Unfortunately, Russia is becoming more of an adversary to the U.S., leaving its people without the assistance they desperately need.

Hannah Seitz
Photo: Flickr

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Hannah Seitz

Hannah lives in Brooklyn, NY. Her academic interests include politics, culture and Media.

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