Winter 2000 (8.4)
Earmarks and Exclusionss
and Outs of U.S. Assistance to Azerbaijan
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.
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.
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
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.
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
"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
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
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
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.'"
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.
(8.4) Winter 2000.
© Azerbaijan International 2000. All rights reserved.
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