II. Country Assessments and Performance Measures - Belarus


U.S. Government Assistance to and Cooperative Activities with Eurasia
Bureau of European and Eurasian Affairs
January 2006
Report

Country Overview

Map of Belarus

Country Facts

  • Area: 80,155 sq mi (207,600 sq km), slightly smaller than Kansas
  • Population: 10,300,483 (July 2005 est.)
  • Population Growth Rate: -0.09 percent (2005 est.)
  • Life Expectancy: Male 63.03 yrs., Female 74.69 yrs. (2005 est.)
  • Infant Mortality: 13.37 deaths/1,000 live births (2005 est.)
  • Gross Domestic Product (GDP): $70.5 billion (purchasing power parity, 2004 est.)
  • GDP Per Capita Income: $6,800 (purchasing power parity, 2004 est.)
  • Real GDP Growth: 6.4 percent (2004 est.)

Overview of U.S. Government Assistance

In FY 2005, the USG allocated an estimated $30.96 million in assistance to Belarus, including:

  • $14.05 million in democratic reform programs;
  • $1.79 million in security, regional stability, and law enforcement programs;
  • $0.80 million in humanitarian programs; and
  • Privately donated and USG excess humanitarian commodities valued at $14.32 million.

In FY 2005, a total of 124 Belarusians traveled to the United States on USG-funded exchange programs.

FY 2005 Assistance Overview


U.S. STRATEGIC INTERESTS

With its educated population and strategic location as a transit route between Russia and an expanded NATO and European Union (EU), Belarus has the potential to contribute to and benefit from regional economic development and stability. However, to fulfill this potential, it needs to implement appropriate democratic and market reforms. The Belarusian Government's policies hinder progress and isolate Belarus from Europe and the international community. It is in the interest of the U.S. to remain engaged in promoting the development of democratic institutions, the rule of law, and a market economy in Belarus. The U.S. Government (USG) seeks to work towards this goal in coordination with the EU, the Organization for Security and Cooperation in Europe (OSCE), and Belarus's neighbors.

KEY ISSUES

The promotion of democracy in Belarus is a top USG foreign policy priority. However, in FY 2005, Belarus continued along the path away from democratic and market economic reform and created an increasingly hostile environment for the provision of USG assistance. The regime appears determined to eliminate all political opposition in order to avoid any "colored revolutions" and ensure Lukashenko's victory in what are destined to be unfree and unfair presidential elections in March 2006. The Government of Belarus (GOB) has sharpened its anti-Western propaganda campaign in the state media and has alleged, for example, that the USG and European donors are assisting the political opposition with the intent to overthrow the Belarusian Government.

The GOB has specifically targeted USG and other assistance providers, especially those providing assistance to civil society. In the summer, it issued two decrees making it illegal to give or receive foreign assistance for any activities even remotely related to politics. At the beginning of FY 2005, the GOB denied re-registration to a major USG NGO, Counterpart International, which implemented civil society and humanitarian assistance. Other donors, including UNDP and OSCE, report major problems and delays in registering assistance projects, even in purely non-political fields. Under the guise of an anti-trafficking law passed this year, the GOB prevented high schools students from participating in the Future Leaders Exchange program (FLEX) for the first time since its initiation twelve years ago. Additional bureaucratic requirements imposed by this law are seriously complicating other student exchanges programs, and the program providers have not received permission to advertise for the next school year.

Amendments to the criminal code passed by the Parliament and signed by the President in late 2005 threaten to further restrict independent thought and activity by introducing prison sentences for discrediting Belarus' international image abroad or appealing to countries and international organizations to act "to the detriment of" the country's "security, sovereignty and territorial integrity." Additionally, the GOB can now raise criminal charges carrying a jail sentence of up to six months or a prison sentence of up to two years for organizing or taking part in activities of a suspended or closed NGO or foundation.

The Government tightened its clampdown on independent media this year, imposing excessive fines and cutting off access to state subscription service and printing presses. The GOB also silenced other sources of independent thought by, for example, closing one of the two non-governmental opinion-polling firms, forcing it to move offshore. The GOB is also exercising increasing control over Internet access in the universities.

The major pro-democracy forces have made strides in consolidation with the selection of a single contender for the presidential election. The single candidate and his team have embarked on a comprehensive campaign across the country. However, in the absence of access to the media, and with constant harassment by governmental authorities, the democratic forces face overwhelming odds in the election process.

The Belarusian economy has experienced strong growth over the past several years, and this growth has contributed to Lukashenko's domestic support. However, the growth is dependent on external factors such as high world energy prices, subsidized Russian energy imports, and a booming Russian market, and is not sustainable. Although the GOB has made some micro-level reforms in the budget process and energy efficiency, it has not undertaken any structural reforms, including major privatization. Indeed, the GOB's increasing misuse of the "golden share" has resulted in the de facto re-nationalization of many enterprises and the nationalization of some which were never government-owned. However, despite the heavy administrative burden placed on small enterprises, interest in small and medium-sized enterprise (SME) development is strong, and assistance in business education and advocacy is promising.

In the face of these trends, the USG has diversified its assistance profile to include the social and economic sectors. This approach has the potential to reach a broader spectrum of the Belarusian population, while at the same time maintaining a strong emphasis on civil society development. Programs in anti-trafficking have proven to be effective in helping reduce what is a major problem in this region of the world and a high priority for the USG. While the GOB has been cooperative in this field, it is uncertain whether implementation of other social programs, such as those addressing HIV/AIDS and orphans, will face major obstacles.

COUNTRY PERFORMANCE MEASURES

Belarusian Democratic Reform

The "radar" or "spider web" graphs below illustrate Belarus' democratic performance during 2004. Ratings are based on a 1 to 5 scale, with 5 representing the greatest advancement. These charts provide a disaggregated look at each of the indices and are reported to Congress on a regular basis. The gray shaded area represents 2004 performance levels, while the two dark lines indicate how each country compares in its progress vis-�-vis two standards: (1) the average of Romania's and Bulgaria's performance in each indicator as of 2002 (2002 was the year that Romania and Bulgaria - the "threshold countries" - were invited to join NATO and received favorable indications of future EU membership); and, (2) where the country stood in each indicator in 1999. Together, these charts provide a broad picture of where remaining gaps are in a country's performance, and to what extent these gaps are being filled. For more information, including a detailed explanation of each indicator shown in the graph, see USAID/E&E/PO, "Monitoring Country Progress in Central and Eastern Europe & Eurasia," No. 9 (April 2005), found online: www.usaid.gov/locations/europe_eurasia/country_progress/.

Graph shows electoral process, 1.2; civil society, 1.2; independent media, 1.2; governance/public admin,1.3; rule of law, 1.2; average of Romania and Bulgaria, 2002; corruption, 1.8.
The graph shows Belarus' democratic reform scores in 2004* (the gray shaded area) as compared to the average of Romania's and Bulgaria's democratic reform scores in 2002 (the bold line) when they were invited to join NATO and received favorable indications of future EU membership.

*Actual 2005 not yet available.

Graph shows electoral process, 1.2; civil society, 1.2; 1999; independent media, 1.2; governance/public admin,1.3; rule of law, 1.2; corruption, 1.8.


The graph shows Belarus' democratic reform scores in 2004* (the gray shaded area) as compared to its democratic reform scores in 1999. No progress has been made in any areas.

*Actual 2005 scores not yet available.

Belarusian Economic Reform

The "radar" or "spider web" graphs below illustrate Belarus' economic performance during 2004. Ratings are based on a 1 to 5 scale, with 5 representing the greatest advancement. These charts provide a disaggregated look at each of the indices and are reported to Congress on a regular basis. The gray shaded area represents 2004 performance levels, while the two dark line indicates how each country compares in its progress vis-�-vis two standards: (1) the average of Romania's and Bulgaria's performance in each indicator as of 2002 (2002 was the year that Romania and Bulgaria - the "threshold countries" - were invited to join NATO and received favorable indications of future EU membership); and (2) where the country stood in each indicator in 1999. Together, these charts provide a broad picture of where remaining gaps are in a country's performance, and to what extent these gaps are being filled. For more information, including a detailed explanation of each indicator shown in the graph, see USAID/E&E/PO, "Monitoring Country Progress in Central and Eastern Europe & Eurasia," No. 9 (April 2005), found online: www.usaid.gov/locations/europe_eurasia/country progress/.

Graph shows private sector share, 0.5; share of employment in SMEs, 0.5; export share of GDP, 3.0; FDI per capita cumulative, 1.5; GDP as percent 1989 GDP, 3.5; 3 year avg inflation, 1.0; average of Romania and Bulgaria, 2002; external debt percent GDP, 5.0.
The graph shows Belarus' economic reform scores in 2004* (the gray shaded area) as compared to the average of Romania's and Bulgaria's economic reform scores in 2002 (the bold line) when they were invited to join NATO and received favorable indications of future EU membership.

*Actual 2005 scores not yet available.

Graph shows private sector share, 0.5; export share of GDP, 3.0; 1999; FDI per capita cumulative, 1.5; GDP as percent 1989 GDP, 3.5; 3 year avg inflation, 1.0; sector share, 0.5; external debt percent GDP, 5.0.
The graph shows Belarus' economic reform scores in 2004* (the gray shaded area) as compared to its economic reform scores in 1999. For example, some progress has been made since 1999 in the areas except for private sector share and external debt as a percent of the GDP.

*Actual 2005 scores not yet available.


FY 2005 Country Program Performance

Democratic Reform

In 2005, the repression of civil society continued and intensified. Pro-democracy activists, including opposition politicians, independent trade union leaders, and newspaper editors, were detained, fined and imprisoned for criticizing the Government. In March, the representative of the Organization for Security and Cooperation in Europe (OSCE) found the situation had deteriorated, with fewer independent media outlets and greater use by the Government of administrative pressures to limit free expression. The GOB increased use of tax inspections and augmented technical registration requirements to control or deny registration to independent groups. New registration requirements regarding legal residence for NGOs and political parties further complicate the ability of independent organizations to operate legally. Educational exchange programs and student travel were also subjected to increased government interference.

At the end of the calendar year, the Belarusian Government stepped up its pressure on opposition groups as it prepared for Presidential elections in March 2006. In December 2005, parliament passed amendments to the criminal code that greatly inhibited the freedoms of speech and assembly. The amendment on "Discrediting the Republic of Belarus," makes it a crime, punishable by up to three years in prison, to give "false" information about the political, economic, social, military or international situation of the country to a foreigner; to provide information on government agencies or the rights of Belarusian citizens; to participate in the activities of an unregistered non-governmental organization (NGO); to participate in public demonstrations; to train people to demonstrate publicly; to finance public demonstrations; or to solicit foreign countries or international organizations to "act to the detriment" of Belarus.

U.S. ASSISTANCE PRIORITIES

In FY 2005, USG democratic reform assistance aimed to engage diverse elements of Belarusian society to increase citizens' awareness and implementation of democratic practices. The priorities included helping to develop and strengthen the NGO sector, increasing access to objective information through the Internet, strengthening independent print and broadcast media, building legal defense capacity and advocacy for the rule of law, and supporting the democratic political process leading up to the 2006 presidential elections. The USG also supported capacity-building and legal assistance for independent trade unions. USG-funded exchange programs were tailored to familiarize a wide range of Belarusian's, from students to professionals, with a democratic, market-based system.

PROGRAM PERFORMANCE

Despite the extremely harsh operating environment, USG support to Belarusian NGOs and civic groups, pro-democracy political parties, and independent media outlets provided Belarusian citizens with increased access to objective information and greater involvement in democratic practices.

Belarusian NGOs remain highly dependent on outside assistance for survival. Belarus' overall 2005 score on the NGO Sustainability Index for Central and Eastern Europe and Eurasia is its lowest since 2000 and has dropped notably with declines in all dimensions but advocacy. This low score of 5.9 reflects the plight of the civil society sector in Belarus. Domestic funding is scarce, and foreign aid is hampered by restrictive legislation. NGOs are forced to resort to survival tactics and incessantly battle with various administrative barriers, whereas quasi-NGOs enjoy preferential treatment and support by the state. The massive state propaganda campaign coupled with the lack of independent media prevents the public from understanding democratic organizations' roles and discourages volunteerism.

Despite the Belarusian Government's 2004 closure of a successful USG-funded program implemented by Counterpart International, the GOB nonetheless in 2005 registered grants that Counterpart had awarded earlier to local NGOs. Eleven grants totaling $82,000 were successfully implemented. During FY 2005, 18 local communities and 30 NGOs took part in USG-funded projects. To foster increased citizen involvement in community initiatives, 55 training workshops were conducted for more than 300 NGOs and community activists. Eighty-two NGO leaders and local government and business representatives took part in seven study tours to other Eastern Europe countries to learn best practices. The program also contributed to information dissemination by local media and produced and broadcast through its local media partner 35 TV programs in talk-show format on social, economic, and civic issues. These talk shows were broadcast in seven towns with a combined population of 1,400,000 people.

The USG continued to provide assistance to NGO lawyers. As part of an NGO legal advocacy program, the USG supported development of a web site for NGOs on current legal regulations and assisted the NGO Assembly in conducting a roundtable for 70 NGO lawyers on rendering legal aid in a new working environment. In 2005, the USG and its local partners started a Legal Advocacy Initiative analyzing the impact of mandatory short-term employment contracts on employee rights. As a result, the partners developed guidelines and distributed them in the form of pamphlets throughout the country. The NGOs also conducted a public legal education campaign on the issue of mandatory short-term contracts. The USG sponsored 12 seminars resulting in 18 (of 365) attendees bringing successful lawsuits against their employers for violations of labor rights through mandatory short-term contracts.

In FY 2005, the Eurasia Foundation spent over $180,000 in USG funding on programs benefiting Belarus through four grants and other support for projects in the areas of civil society, private enterprise development and public administration.

USG assistance to independent media focused on providing resources to keep independent media outlets in operation. Because of the artificial business climate in Belarus, media outlets are not able to sustain themselves with advertising and other means of revenue generation. The USG provided independent journalists access to such widely-used technical resources as the PhotoService, News Archives and the Press Dossier. Pre-publication analysis of articles from a legal standpoint and free legal hotline consultations ensured that fewer independent print publishers were brought to trial. Independent media's increased professionalism in providing objective and quality information resulted in a continued, high level of public trust despite closures and interrupted publication due to government pressure. According to the independent polling company IISEPS, the level of trust in independent media was 40 percent in March, 2005.

The USG continued to work with pro-democratic political parties both at the regional and the national level and focused its assistance particularly on the united opposition. Technical assistance was provided to the Permanent Council of Pro-democracy Forces for strategy development as well as for organizing nominating meetings in all 143 territorial districts of Belarus. The parties reached out to non-governmental organizations, trade unions, and citizens to identify and invite delegates from all levels of Belarusian society. Over 120 nominating meetings/caucuses were held, and over 4,000 delegates elected more than 800 delegates for the Congress of Democratic Forces. The leading pro-democracy forces in Belarus managed to consolidate, unify, elect a common candidate, develop a common platform, and form a single election team for the 2006 presidential campaign. In addition, the USG supported a non-partisan civic organization to recruit, educate, and field thousands of non-partisan election observers during the October 2004 Parliamentary election and constitutional referendum and to begin planning for a similar monitoring effort for the 2006 Presidential elections.

Through the Democracy Commission Small Grants program, the Embassy provided over $650,000 for non-political democracy-strengthening NGOs with a focus on youth, media, resource centers, trade unions, human rights, and women's groups. The U.S. funded the travel of twelve American experts to Belarus to speak on a range of topics including women's leadership and entrepreneurship, political science and ecotourism. At the same time, the U.S. initiated Democracy Outreach to bring together alumni of USG-sponsored programs to carry out projects of benefit to Belarusian society. Recent projects have focused on topics as varied as gender equality, entrepreneurship and civic education.

Few other international donors work in the democracy promotion field; the EU has begun such assistance activities in a limited way only over the past year. The U.S. maintains a dialogue with the EU and bilateral donors. Due to the restrictive nature of its mandate, the OSCE can support only assistance projects approved by the GOB. Belarus is not slated for phase-out from democracy assistance until 2013 at the earliest.

MEASURES OF PROGRAM EFFECTIVENESS

In order to determine how U.S. Government assistance affects a country, U.S. embassies set targets for improvement called "performance indicators." Data for these indicators are collected by research institutes, embassies and international organizations. By examining data over time, U.S. policymakers better understand whether specific assistance programs are having their intended impact and, if necessary, how to adjust these programs to improve the impact.

Please find below two important indicators in the area of Democratic Reform. In the charts, the "Baseline" refers to a starting point from which to measure progress or regression over time. The embassy and its partner organizations then agree on a "Target" figure that they hope to achieve as a result of U.S. assistance programs. The "Rank" figure is the resulting measurement. "CY" stands for "calendar year," or January 1 to December 31, while "FY" stands for "fiscal year," the period of the U.S. budget that runs from October 1 to September 30 of the following year.

Performance Indicator: Civil Society Index. Assesses the growth of nongovernmental organizations (NGOs), their organizational capacity and financial sustainability, and the legal and political environment in which they function; the development of free trade unions; and interest group participation in the policy process. (7-point scale: 1 indicates a very advanced NGO sector, 7 indicates a weak NGO sector) This ranking is based on 2004 data. Source: Freedom House, Nations in Transit 2005. Found online: www.freedomhouse.org/research/nattransit.htm.

CY 2002 Baseline

CY 2004 Rank

CY 2005 Target

CY 2005 Rank

6.25

6.25

6.25

6.75

The civil society sector in Belarus further weakened in 2004. Domestic funding is scarce and foreign aid was further hampered by restrictive legislation. New requirements for legal registration and continued GOB harassment of NGOs resulted in an even more difficult operating environment and fewer registered independent entities than in the preceding year.

Performance Indicator: Independent Media Rating. The Freedom House rating addresses the current state of press freedom, including libel laws, harassment of journalists, editorial independence, the emergency of a financially viable private press, and Internet access for private citizens. (1=lowest, 5=highest) Source: Nations in Transit 2004. This ranking is based on 2004 data. Found online: www.usaid.gov/locations/europe_eurasia/country_progress/index.html.

CY 2002 Baseline

CY 2004 Rank

CY 2005 Target

CY 2005 Rank

1.17

1.17

1.17

1.17

The environment for independent media remained the same, as the GOB forced publications to change their names, subjected them to fictitious libel suits, imposed fines, and cut off access to state distribution and printing services. Despite this, USG assistance helped sustain independent print media and maintain credibility among readers.

Economic Reform

In FY 2005, Belarus experienced growth of around eight percent; however, this growth was largely funded by: the purchase of crude oil at steeply discounted prices from Russia and the re-export of refined petroleum products at world prices; demand for Belarusian products from the booming Russian economy; and heavily discounted prices on natural gas from Russia. Belarus receives natural gas at sharply discounted prices, paying less than Russian consumers just across the border. These discounts are likely to be extended for 2006, but experts believe Russia will raise gas prices for 2007, particularly if Russia joins the WTO. Inflation remained high, at around 10 percent, but slowed from the previous year. The Belarusian ruble was de facto tied to the dollar during the year, depreciating less than one percent. While technically convertible, the Belarusian ruble remains unavailable in currency markets outside Belarus, a fact which attests to its weakness. Both imports and exports increased in 2005, with imports outpacing exports, leading to a growing trade deficit. As the Russian market has become more competitive, Belarusian exports to its eastern neighbor have weakened. In 2005, the budget deficit was expected to be around 1.8 percent, down slightly from recent years in part due to increased VAT revenues after Russia and Belarus adjusted their VAT mechanisms.

The GOB continued to hold tightly to the socialist command economy model, with around eighty percent of business still under government control. Taxes on small businesses and individual entrepreneurs continued to increase in FY 2005. Excessive levels of government regulations stifle entrepreneurship and make it difficult to open a new business. Frequent government inspections and constantly changing laws, which are sometimes applied retroactively, make running a business hard. Official estimates showed that around thirty-five percent of state businesses were unprofitable, as is much of the agricultural sector. To remove bankrupt collective farms from the state books, the GOB has been forcing profitable state and private companies to "adopt" these farms. The GOB remained reluctant to privatize large state enterprises, and, when it did open up such companies for investment, it insisted on maintaining a controlling share. In FY 2005 the GOB increasingly used administrative measures to renationalize firms that had previously been privatized, doing so at least 20 times.

U.S. ASSISTANCE PRIORITIES

Given the GOB's lack of interest in reform, U.S. assistance focuses on strengthening the weak SME sector, building professional expertise, providing economic/business education, and promoting public dialogue on reform.

PROGRAM PERFORMANCE

The Belarus Economic Education Project (BEEP), launched in April 2005, provided unbiased economic information through economic education and accounting training to government officials, business, academia and civil society. Five regional roundtables and one national conference provided a catalyst for dialogue on regional economic development, integration and economic reform. The USG-supported, Russian language, professional accountancy certification program (CAP/CIPA) helped bring financial reporting in compliance with international standards. This year several groups of professionals, mostly from the private sector, were trained in financial accounting, managerial accounting, tax and law. Fifty-seven examinees took the first CAP/CIPA exams in the country on financial accounting, and forty-eight took managerial accounting exams. Their pass rate (over 80 percent) was the highest in all of the Newly Independent States.

The USG also provided technical assistance to a local private economic research institution and a public association of accountants and auditors. As a result, the association revitalized its activity and became an associate member of the Eurasian Council of Certified Accountants and Auditors. USG support to the Economic Bank for Reconstruction and Development (EBRD) Micro-lending Program from April to September 2005 helped two EBRD partner banks develop their regional micro-lending network through the establishment of four new specialized micro-lending units within existing bank branch offices.

In the area of agricultural development, USG assistance is aimed at increasing farmer income by improving the performance of privatized collective farms throughout Belarus. During FY 2005, the Agribusiness Volunteer Program in Belarus assisted the most innovative privatized collective, thereby benefiting 934 farm workers (more a total of 3,000 people including family members). During FY 2005, CNFA Belarus provided technical assistance to eight host organizations through 19 volunteer assignments. As a result of this assistance, host organizations improved production and increased sales, thus increasing net income by 34 percent and average employee monthly payroll by 19 percent in comparison with 2004.

A small percentage of International Visitor Programs (IVP) and Democracy Commission grants support the development of private enterprise. The USG funded two speakers on women entrepreneurship who spoke throughout the country including at a Minsk conference on the same theme. This activity helped strengthen a network of women entrepreneurs.

The USG coordinated its activities with other donors, including the Swedish Development Agency (SIDA) and the International Financial Corporation (IFC), on SME development. (SIDA finances an IFC project which the USG funded several years ago.) The USG also worked with the US NGO Center for International Private Enterprise (CIPE) on a National Endowment for Democracy (NED) funded program to develop a network of business advocacy groups. There are no plans to phase out assistance to Belarus in this sphere for the next ten years.

MEASURES OF PROGRAM EFFECTIVENESS

In order to determine how U.S. Government assistance affects a country, U.S. embassies set targets for improvement called "performance indicators." Data for these indicators are collected by research institutes, embassies and international organizations. By examining data over time, U.S. policymakers better understand whether specific assistance programs are having their intended impact and, if necessary, how to adjust these programs to improve the impact.

Please find below two important indicators in the area of Economic Reform. In the charts, the "Baseline" refers to a starting point from which to measure progress or regression over time. The embassy and its partner organizations then agree on a "Target" figure that they hope to achieve as a result of U.S. assistance programs. The "Rank" or "Percentage" figure is the resulting measurement. "CY" stands for "calendar year," or January 1 to December 31, while "FY" stands for "fiscal year," the period of the U.S. budget that runs from October 1 to September 30 of the following year.

Performance Indicator: Private Sector Share of GDP. Source: European Bank for Reconstruction and Development, Transition Report 2004. This ranking is based on 2004 data. Found online: www.usaid.gov/locations/europe_eurasia/country_progress/index.html.

CY 2002 Baseline

CY 2004 Percentage

CY 2005 Target

CY 2005 Percentage

25 percent

25 percent

25 percent

25 percent


In the past year, the GOB did not embark on significant privatization, increased state control of many enterprises through misuse of the Golden Share, and did not improve the climate for private enterprise, especially SMEs. While assistance programs improved options for SMEs, government constraints on this sector hindered sectoral development.

Performance Indicator: Economic Reform Index. EBRD Economic Reform Index includes components on small-scale and large-scale privatization; trade liberalization; price liberalization; corporate governance; competition policy; banking; and non-banking financial reforms. Scores range from 1 to 5, with 5 being the most advanced. Source: EBRD Transition Report 2004. This ranking is based on 2004 data. Found online: www.usaid.gov/locations/europe_eurasia/country_progress/index.html.

CY 2004 Baseline

CY2005 Target

CY 2005 Rank

1.81

1.9

1.81

The GOB did not engage in any structural reform, but made some micro-level reforms in line with World Bank and IMF recommendations, especially in the fields of budget transparency and energy conservation. The USG business education project helped GOB officials and the private sector become better informed about market economic practices. Banking services to the SME sector improved as a result of USG support to the EBRD small loans program. Nonetheless due to the state's preference for a social command economy model, economic reform progress has been minimal.

Social Reform and Humanitarian Assistance

Belarus spends about two-thirds of its budget on social benefits, but still has not passed legislation to modernize its health sector or to reform the pension system. The GOB has continued to order wage and pension increases, which provide short-term improvements in the standard of living, though at the cost of worsening the fiscal imbalance. According to UNDP's National Human Development Report 2004-2005, Belarus may face serious social and economic consequences if it delays transition changes. Poverty remains relatively high: more than 27 percent live below the official poverty line, and the ratio of the population living at less than the minimum subsistence level varies significantly among regions and between urban and rural areas. It reaches up to 45.6 percent in some rural areas. The demographic situation is marked by a fast decline in fertility and a rapid rise in mortality particularly among the working-age male population. Since 1993, the Belarusian population decreased by 434,500. According to the 2005 World Population Data Sheet of the Population Reference Bureau (PRB), Belarus is one of the countries with the lowest fertility worldwide. PBR projects that if the trend continues, by 2050 the population may decrease by 13 percent. The average life expectancy is 69 years (63 for men and 75 for women). The high poverty rates and lack of economic opportunities contribute to serious problems in trafficking-in-persons and domestic violence. Belarus increased its law enforcement efforts and instituted anti-trafficking legislation but lacked adequate funding for victim protection and trafficking prevention

Major social and health problems are heavy drinking, fast-growing HIV/AIDS, tuberculosis (TB), syphilis, increased cancer especially in Chernobyl-contaminated territories, abortions among adolescents, and drug dependence. The GOB has acknowledged the mounting problems of HIV/AIDS and TB, though HIV/AIDS is still largely confined to high-risk groups. Last year the country was awarded $17.37 million grant from the U.N. Global Fund to Fight AIDS, TB and Malaria (GFATM) for an HIV/AIDS treatment and prevention project in Belarus. Belarus also applied for a similar grant to fight TB. Belarus has about 32,000 institutionalized children, 86 percent of whom were reportedly abandoned by their parents. The Government recognizes this problem and has taken measures to discourage parents from abandoning their children, such as requiring the parents of abandoned children to pay in full for food, clothes, and other essentials. Following a presidential directive, the GOB has instituted very complicated international adoptions procedures which have resulted in a virtual freeze on foreign adoptions.

U.S. ASSISTANCE PRIORITIES

The USG has just recently expanded its still modest assistance to the social sector in Belarus and implements that assistance in cooperation with international organizations and NGOs. Programs in HIV/AIDS prevention and treatment and assistance to vulnerable children and orphans are still in the preliminary phase. (The latter program will be financed from the Child Survival & Health Programs Fund (not FSA.) GOB's burdensome bureaucratic registration procedures and its reluctance to accept U.S. and international technical assistance have made provision of assistance difficult in the health sphere. However, USG and other donors have achieved some degree of cooperation with working-level authorities in combating trafficking in persons. USG assistance has focused its efforts on trafficking prevention and victim protection. The Department of Defense operates a significant humanitarian assistance program, renovating hospitals and donating excess property shipments. The Department of State's humanitarian transport program also provides valuable support to impoverished hospitals and other vulnerable groups.

PROGRAM PERFORMANCE

Over the past year, The USG designed three new activities in the area of social reform—two in the area of health (HIV/AIDS treatment and prevention) and one to support orphans and vulnerable children. HIV assistance focused on complementing the Global Fund activities. One of the new activities will improve the technical, organizational, and networking capacity of HIV/AIDS NGOs; the other HIV-related project designed this year—training medical professionals in ARV treatment, anti-stigma, and discrimination towards HIV/AIDS patients—is pending official GOB approval. The project to assist orphans and vulnerable children will work with families, community service providers, social workers, and institutionalized children and youth to reduce the number of children in institutions and increase the number of those who return to their natural families or alternative family care.

In the field of anti-trafficking, the USG began a $1 million project to build on a successful women's economic empowerment pilot activity. This activity is the only donor project targeting one of the underlying causes of trafficking, poverty and the lack of job opportunities. The opening round-table in August 2005 gathered 60 participants. NGOs who had previously participated in the pilot project in 2003-2004 shared their positive experiences and recommendations. However, the actual provision of technical assistance implemented through the International Organization for Migration (IOM) is pending registration with various agencies.

The Department of Defense completed projects to rehabilitate and renovate hospitals in Turov and Gomel, both serving the Chernobyl affected regions. In addition, DOD funded excess property shipments to two hospitals in the amount of nearly $120,000. In FY 2005, the Department of State Humanitarian transport program worked in cooperation with the U.S. private voluntary organizations Cithope International and Counterpart International to deliver fifty-five containers and two airlifts of medicines and medical and relief supplies to needy institutions and individuals throughout Belarus. The value of delivered commodities was over $14 million.

The USG works very closely with the United National Development Program (UNDP), IOM and other agencies in implementing all projects in the social field. There are no plans to phase-out assistance in this area in the next ten years.

MEASURES OF PROGRAM EFFECTIVENESS

In order to determine how U.S. Government assistance affects a country, U.S. embassies set targets for improvement called "performance indicators." Data for these indicators are collected by research institutes, embassies and international organizations. By examining data over time, U.S. policymakers better understand whether specific assistance programs are making their intended impact and, if necessary, how to adjust these programs to improve the impact.

Please find below two important indicators in the area of Social Reform and Humanitarian Assistance. In the charts, the "Baseline" refers to a starting point from which to measure progress or regression over time. The embassy and its partner organizations then agree on a "Target" figure that they hope to achieve as a result of U.S. assistance programs. The "Rank" figure is the resulting measurement. "CY" stands for "calendar year," or January 1 to December 31, while "FY" stands for "fiscal year," the period of the U.S. budget that runs from October 1 to September 30 of the following year.

Performance Indicator: Human Capital Index. Six primary indicators are used to track human capital: per capita income; secondary school enrollment; under-five mortality rates; life expectancy; public expenditure in health; and public expenditure in education. These six indicators are used to create an overall human capital index where 1 is lowest and 5 is highest. Source: World Bank and UNICEF, as adapted by "Monitoring Country Progress in Eastern Europe and Eurasia" USAID/E&E/PO, No. 9 April 2005. This ranking is based on 2004 data. Found on line: www.usaid.gov/locations/Europe_eurasia/country_progress/index.html.

CY 2002 Baseline

CY 2004 Rank

CY 2005 Target

CY 2005 Rank

3.6

3.6

3.6

3.6

Belarus has a highly educated and skilled workforce, but much of the population lives below the poverty line. The birth rate has declined and annual mortality has increased. HIV/AIDS and tuberculosis are on the rise. Due to positive external economic factors, the GOB was able to increase wages and pensions. However, as labor productivity did not increase in line with wage increases, inflation erodes much of the income gains. Newly launched projects in the social area will not show any impact until next year, and, given the small scope of these projects, that impact will be limited.

Security, Regional Stability and Law Enforcement

After the collapse of the Soviet Union, Belarus agreed to become a non-nuclear state. However, it is a supplier of conventional armaments and spare parts in the world market. Belarus is a member of the International Science and Technology Center (ISTC), a multilateral organization devoted to redirecting former Soviet weapons-of-mass-destruction (WMD) scientists to peaceful employment.

U.S. ASSISTANCE PRIORITIES

Due to concerns about human rights and democracy, the USG did not fund assistance projects for Belarusian former WMD scientists in FY 2005. A National Cancer Institute program to support studies on the long-term health effects of exposure to radiation from the 1986 explosion at the Chernobyl nuclear power plant was moved from ISTC auspices at the GOB's insistence. The USG has non-proliferation concerns about the security of radioactive materials at Belarusian research reactors. The Department of Energy and the Department of State are working on projects to safeguard materials and to remove highly enriched uranium.

Because of current USG policy, the USG did not provide bilateral security or law enforcement assistance to Belarus in FY 2005. However, the USG will continue discussions with the International Organization for Migration (IOM) on providing training to Belarusian law enforcement officials in anti-trafficking. Belarus participated in some NATO Partnership for Peace programs, and 18 military officers and civilians attended Marshall Center programs and conferences to promote military reform and civilian control of the military.

PROGRAM PERFORMANCE

The Department of Energy (DOE) is funding security upgrades at a number of facilities containing high-energy sources. The DOE estimates there are at least 36 such sites in the country. These projects involve installing secure doors and windows, video surveillance, providing radio communications and training of local security staff. Because of political sensibilities, the program will not provide assistance or equipment that could be used against the populace.

The USG assistance is providing security upgrades at Belarus's research reactor at Sosny, but the GOB placed the project on hold during the spring, citing unspecified security concerns. The USG is working with ISTC and others to try to complete this project .

The USG is also working with the Russian Government on exchanging Belarus's stockpiles of highly enriched uranium for an equal amount of low-enriched uranium. At the end of 2005 officials from a Russian reactor, accompanied by DOE specialists, visited Sosny to assess the technical possibilities of blending down the Belarusian HEU. This trip was successful and the GOB has expressed its intent to cooperate.

The 2005 Trafficking in Persons Report rated Belarus as a Tier Two country. According to the report, Belarus continued to increase its law enforcement efforts but lacked adequate funding for victim protection and trafficking prevention. Unfortunately, the anti-trafficking legislation does not define victim's rights. In 2005, GOB made most progress in detecting human trafficking cases and passing anti-trafficking legislation. In fact, the detection rate has tripled. During 2005, 574 offenses in human trafficking were detected compared to only 400 collectively in previous years. The August 2005 edict "On Preventing the Effects of TIP" is the first comprehensive legislative act that specifies actual protection of TIP victims by the government. It defines the status of trafficking victims and mandates measures to provide protection and medical care and to guarantee social security to these victims. However, the provisions of the edict do not apply, and any protection activities already administered will be terminated if a TIP victim interferes with the investigation or prosecution. The edict gives no definition of what constitutes such interference. Fighting illegal migration and trafficking is one of the few areas where the GOB welcomes foreign assistance. In November 2005, Belarus was granted membership in the IOM.

MEASURES OF PROGRAM EFFECTIVENESS

In order to determine how U.S. Government assistance affects a country, U.S. embassies set targets for improvement called "performance indicators." Data for these indicators are collected by research institutes, embassies and international organizations. By examining data over time, U.S. policymakers better understand whether specific assistance programs are making their intended impact and, if necessary, how to adjust these programs to improve the impact.

Please find below an important indicator in the area of Security, Regional Stability and Law Enforcement. In the charts, the "Baseline" refers to a starting point from which to measure progress or regression over time. The embassy and its partner organizations then agree on a "Target" figure that they hope to achieve as a result of U.S. assistance programs. The "Rank" figure is the resulting measurement. "CY" stands for "calendar year," or January 1 to December 31, while "FY" stands for "fiscal year," the period of the U.S. budget that runs from October 1 to September 30 of the following year.

Performance Indicator: Global Trafficking in Persons Report Country Rankings. Tier 1 countries are those whose governments fully comply with the minimum standards of the Trafficking Victims Protection Act of 2000. Tier 2 countries are those whose governments do not fully comply with the Act's minimum standards but are making significant efforts to bring themselves into compliance with those standards. Tier 3 countries are those countries whose governments do not fully comply with the minimum standards and are not making significant efforts to do so. This ranking is based on 2004 data. Source: U.S. State Department Global Trafficking in Persons Annual Report. Found online: www.state.gov/j/tip/rls/tiprpt/.

CY 2002 Baseline

CY 2004 Rank

CY 2005 Target

CY 2005 Rank

2

2

2

2

The Belarusian Government continued to make efforts to combat trafficking in persons. Throughout the year the GOB increased the number of television and radio public service announcements discussing the dangers of trafficking and increased the number of billboards carrying trafficking messages. Many of these public service announcements were funded by the USG through its grant to IOM. The GOB responded robustly to the USG's Trafficking in Persons report, and government officials actively participated in several IOM training programs funded with USG assistance. Throughout the year the GOB enacted new laws and decrees aimed at combating illegal trafficking, and increased arrests and convictions.

Click for FY 2005 Funds Budgeted for U.S. Government Assistance to Belarus [PDF format]



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