For the most current version of this Note, see Background Notes A-Z.

PROFILE

OFFICIAL NAME:
Russian Federation

Geography
Area: 17 million sq. km. (6.5 million sq. mi.); about 1.8 times the size of the U.S.
Cities: Capital--Moscow (pop. 9 million). Other cities--St. Petersburg (5 million), Novosibirsk (1.4 million), Nizhniy Novgorod (1.3 million).
Terrain: Broad plain with low hills west of Urals; vast coniferous forest and tundra in Siberia; uplands and mountains (Caucasus range) along southern borders.
Climate: Northern continental, from subarctic to subtropical.

People
Nationality: Noun and adjective--Russian(s).
Population (1997 est.): 147.5 million.
Annual growth rate: Negative.
Ethnic groups: Russian 81%, Tatar 4%, Ukrainian 3%, other 12%. Religion: Russian Orthodox, Islam, Judaism, Roman Catholicism, Protestant, Buddhist, other.
Language: Russian (official); more than 140 other languages and dialects. Education (total pop.): Literacy--98%.
Health: Life expectancy--(1996) 58 yrs. men, 72 yrs. women.
Work force (85 million): Production and economic services--84%; government--16%.

Government
Type: Federation.
Independence: August 24, 1991.
Constitution: December 12, 1993.
Branches: Executive--president, prime minister (chairman of the government). Legislative--Federal Assembly (Federation Council, State Duma). Judicial--Constitutional Court, Supreme Court, Supreme Court of Arbitration, Office of Procurator General.
Political parties: Shifting. The 1999 elections were contested by Conservative Movement of Russia, Russian All-Peoples Union, Women of Russia, Stalin Bloc-For the USSR, Yabloko, Working Russia, Peace-Labor-May, Bloc of Nikolayev and Federov, Spiritual Heritage, Congress of Russian Communities, Peace and Unity Party, Party for the Protection of Women, Unity Interregional Movement, Social Democrats, Movement in Support of the Army, Zhirinovskiy's Bloc, For Civic Dignity, Fatherland-All Russia, Communist Party, Russian Cause, All-Russian Political Party of the People, Union of Right Forces, Our Home is Russia, Socialist Party of Russia, Party of Pensioners and the Russian Socialist Party.
Subdivisions: 21 autonomous republics and 68 autonomous territories and regions.
Suffrage: Universal at 18 years.

Economy (1999 est.)
GDP: $183 billion.
Growth rate: 3.2%.
Per capita GDP (exchange rate method): $1,241.
Natural resources: Petroleum, natural gas, timber, furs, precious and nonferrous metals.
Agriculture: Products--Grain, sugarbeets, sunflower seeds, meat, dairy products.
Industry: Types--Complete range of manufactures: automobiles, trucks, trains, agricultural equipment, advanced aircraft, aerospace, machine and equipment products; mining and extractive industry; medical and scientific instruments; construction equipment.
Trade: Exports (f.o.b.)--$74 billion: petroleum and petroleum products, natural gas, woods and wood products, metals, chemicals. Major markets--EU, NIS, China, Japan. Imports (c.i.f.)--$41 billion: machinery and equipment, chemicals, consumer goods, medicines, meat, sugar, semi-finished metal products. Major partners--EU, U.S., NIS, Japan, China. Principal U.S. exports ($1.85 billion)--meat, machinery, tobacco. Principal U.S. imports ($5.81 billion)--aluminum, precious stones and metals, iron, and steel.

PEOPLE
Russia's area is about 17 million sq. km. (6.5 million sq. mi.). It remains the largest country in the world by more than 2.5 million sq. mi. Its population density is about 23 persons per square mile (9 per sq. km.), making it one of the most sparsely populated countries in the world. Its population is predominantly urban.

Most of the roughly 150 million Russians derive from the Eastern Slavic family of peoples, whose original homeland was probably present-day Poland. Russian is the official language of Russia, and an official language in the United Nations. As the language of writers such as Tolstoy, Dostoevsky, Chekov, Pushkin, and Solzhenitsyn, it has great importance in world literature.

Russia's educational system has produced nearly 100% literacy. About 3 million students attend Russia's 519 institutions of higher education and 48 universities. As a result of great emphasis on science and technology in education, Russian medical, mathematical, scientific, and space and aviation research is generally of a high order. The number of doctors in relation to the population is high by American standards, although medical care in Russia, even in major cities, is far below Western standards.

The Russian labor force is undergoing tremendous changes. Although well-educated and skilled, it is largely mismatched to the rapidly changing needs of the Russian economy. Millions of Russian workers are underemployed. Unemployment is highest among women and young people. Many Russian workers compensate by working other part-time jobs. Following the collapse of the Soviet Union and the economic dislocation it engendered, the standard of living fell dramatically, and one third of the population lives on just over $1 a day.

Moscow is the largest city (population 9 million) and is the capital of the Federation. Moscow continues to be the center of Russian Government and is increasingly important as an economic and business center. Its cultural tradition is rich, and there are many museums devoted to art, literature, music, dance, history, and science. It has hundreds of churches and dozens of notable cathedrals; it has become Russia's principal magnet for foreign investment and business presence.

St. Petersburg, established in 1703 by Peter the Great as the capital of the Russian Empire, was called Petrograd during World War I, and Leningrad after 1924. In 1991, as the result of a city referendum, it was renamed St. Petersburg. Under the Tsars, the city was Russia's cultural, intellectual, commercial, financial and industrial center. After the capital was moved back to Moscow in 1918, the city's political significance declined, but it remained a cultural, scientific and military-industrial center. The Hermitage is one of the world's great fine arts museums. Finally, Vladivostok, located in the Russian Far East, is becoming an important center for trade with the Pacific Rim countries.

HISTORY
Human experience on the territory of present-day Russia dates back to Paleolithic times. Greek traders conducted extensive commerce with Scythian tribes around the shores of the Black Sea and the Crimean region. In the third century B.C., Scythians were displaced by Sarmatians, who in turn were overrun by waves of Germanic Goths. In the third century A.D., Asiatic Huns replaced the Goths and were in turn conquered by Turkic Avars in the sixth century. By the ninth century, Eastern Slavs began to settle in what is now Ukraine, Belarus and the Novgorod and Smolensk regions.

In 862, the political entity known as Kievan Rus was established in what is now Ukraine and lasted until the 12th century. In the 10th century, Christianity became the state religion under Vladimir, who adopted Greek Orthodox rites. Consequently, Byzantine culture predominated, as is evident in much of Russia's architectural, musical, and artistic heritage. Over the next centuries, various invaders assaulted the Kievan state and, finally, Mongols under Batu Khan destroyed the main population centers except for Novgorod and Pskov and prevailed over the region until 1480.

In the post-Mongol period, Muscovy gradually became the dominant principality and was able, through diplomacy and conquest, to establish suzerainty over European Russia. Ivan III (1462-1505) was able to refer to his empire as "the Third Rome" and heir to the Byzantine tradition, and a century later the Romanov dynasty was established under Tsar Mikhail in 1613.

During Peter the Great's reign (1689-1725), Russia began modernizing, and European influences spread in Russia. Peter created Western-style military forces, subordinated the Russian Orthodox Church hierarchy to the Tsar, reformed the entire governmental structure, and established the beginnings of a Western-style education system. His introduction of European customs generated nationalistic resentments in society and spawned the philosophical rivalry between "Westernizers" and nationalistic "Slavophiles" that remains a key dynamic of current Russian social and political thought.

Peter's expansionist policies were continued by Catherine the Great, who established Russia as a continental power. During her reign (1762-96), power was centralized in the monarchy and administrative reforms concentrated great wealth and privilege in the hands of the Russian nobility.

Napoleon failed in his attempt in 1812 to conquer Russia after occupying Moscow; his defeat and the continental order that emerged following the Congress of Vienna (1814-15) set the stage for Russia and Austria-Hungary to dominate the affairs of eastern Europe for the next century.

During the 19th century, the Russian Government sought to suppress repeated attempts at reform from within. Its economy failed to compete with those of Western countries. Russian cities were growing without an industrial base to generate employment, although emancipation of the serfs in 1861 foreshadowed urbanization and rapid industrialization late in the century. At the same time, Russia expanded across Siberia until the port of Vladivostok was opened on the Pacific coast in 1860. The Trans-Siberian Railroad opened vast frontiers to development late in the century. In the 19th century, Russian culture flourished as Russian artists made significant contributions to world literature, visual arts, dance, and music.

Imperial decline was evident in Russia's defeat in the unpopular Russo-Japanese war in 1905. Subsequent civic disturbances forced Tsar Nicholas II to grant a constitution and introduce limited democratic reforms. The government suppressed opposition and manipulated popular anger into anti-Semitic pogroms. Attempts at economic reform, such as land reform, were incomplete.

1917 Revolution and the U.S.S.R.
The ruinous effects of World War I, combined with internal pressures, sparked the March 1917 uprising, which led Tsar Nicholas II to abdicate the throne. A provisional government came to power, headed by Aleksandr Kerenskiy. On November 7, 1917, the Bolshevik Party, led by Vladimir Lenin, seized control and established the Russian Soviet Federated Socialist Republic. Civil war broke out in 1918 between Lenin's "Red" army and various "White" forces and lasted until 1920, when, despite foreign interventions, the Bolsheviks triumphed. After the Red army conquered Ukraine, Belorussia, Azerbaijan, Georgia, and Armenia, a new nation was formed in 1922, the Union of Soviet Socialist Republics.

The U.S.S.R. lasted 69 years. In the 1930s, tens of millions of its citizens were collectivized under state agricultural and industrial enterprises. Millions died in political purges, the vast penal and labor system, or in state-created famines. During World War II, as many as 20 million Soviet citizens died. In 1949, the U.S.S.R. developed its own nuclear arsenal.

First among its political figures was Lenin, leader of the Bolshevik Party and head of the first Soviet Government, who died in 1924. In the late 1920s, Josif Stalin emerged as General Secretary of the Communist Party of the Soviet Union (CPSU) amidst intraparty rivalries; he maintained complete control over Soviet domestic and international policy until his death in 1953. His successor, Nikita Khrushchev, served as Communist Party leader until he was ousted in 1964. Aleksey Kosygin became Chairman of the Council of Ministers, and Leonid Brezhnev was made First Secretary of the CPSU Central Committee in 1964, but in 1971, Brezhnev rose to become "first among equals" in a collective leadership. Brezhnev died in 1982 and was succeeded by Yuriy Andropov (1982-84), Konstantin Chernenko (1984-85), and Mikhail Gorbachev, who resigned as Soviet President on December 25, 1991. On December 26, 1991, the U.S.S.R. was formally dissolved.

The Russian Federation
After the December 1991 dissolution of the Soviet Union, the Russian Federation became its largest successor state, inheriting its permanent seat on the United Nations Security Council, as well as the bulk of its foreign assets and debt.

Boris Yeltsin was elected President of Russia by popular vote in June 1991. By the fall of 1993, politics in Russia reached a stalemate between President Yeltsin and the parliament. The parliament had succeeded in blocking, overturning, or ignoring the President's initiatives on drafting a new constitution, conducting new elections, and making further progress on democratic and economic reforms.

In a dramatic speech in September 1993, President Yeltsin dissolved the Russian parliament and called for new national elections and a new constitution. The standoff between the executive branch and opponents in the legislature turned violent in October after supporters of the parliament tried to instigate an armed insurrection. Yeltsin ordered the army to respond with force to capture the parliament building (known as the White House).

In December 1993, voters elected a new parliament and approved a new constitution that had been drafted by the Yeltsin government. Yeltsin has remained the dominant political figure, although a broad array of parties, including ultra-nationalists, liberals, agrarians, and communists, have substantial representation in the parliament and compete actively in elections at all levels of government.

In late 1994, the Russian security forces launched a brutal operation in the Republic of Chechnya against rebels who were intent on separation from Russia. Along with their opponents, Russian forces committed numerous violations of human rights. The Russian Army used heavy weapons against civilians. Tens of thousands of them were killed and more than 500,000 displaced during the course of the war. The protracted conflict, which received close scrutiny in the Russian media, raised serious human rights and humanitarian concerns abroad as well as within Russia.

After numerous unsuccessful attempts to institute a cease-fire, in August 1996 the Russian and Chechen authorities negotiated a settlement that resulted in a complete withdrawal of Russian troops and the holding of elections in January 1997. The Organization for Security and Cooperation in Europe (OSCE) played a major role in facilitating the negotiation. A peace treaty was concluded in May 1997. Following an August 1999 attack into Dagestan by Chechan separatists and the September 1999 bombings of two apartment buildings in Moscow, the federal government launched a military campaign into Chechnya. Russian authorities accused the Chechan government of failing to stop the growth of the rebels activities and failure to curb widespread banditry and hostage taking in the republic. By spring 2000, federal forces claimed control over Chechan territory, but fighting continues as rebel fighters regularly ambush Russian forces in the region.

GOVERNMENT AND POLITICAL CONDITIONS
In the political system established by the 1993 constitution, the president wields considerable executive power. There is no vice president, and the legislative is far weaker than the executive. The president nominates the highest state officials, including the prime minister, who must be approved by the Duma. The president can pass decrees without consent from the Duma. He also is head of the armed forces and of the national security council.

Duma elections were on December 19, 1999 and presidential elections March 26, 2000. While the Communist Party won a narrow plurality of seats in the Duma, the pro-government party Unity and the centrist Fatherland-All Russia also won substantial numbers of seats in the legislature. In the presidential election, Vladimir Putin, named Acting President following the December 31 resignation of Boris Yeltsin, was elected in the first round with 53% of the vote. Both the presidential and parliamentary elections were judged generally free and fair by international observers.

Russia is a federation, but the precise distribution of powers between the central government and the regional and local authorities is still evolving. The Russian Federation consists of 89 components, including two federal cities, Moscow and St. Petersburg. The constitution explicitly defines the federal government's exclusive powers, but it also describes most key regional issues as the joint responsibility of the federal government and the Federation components.

Judicial System
Russia's judiciary and justice system are weak. Numerous matters which are dealt with by administrative authority in European countries remain subject to political influence in Russia. The Constitutional Court was reconvened in March 1995 following its suspension by President Yeltsin in October 1993. The 1993 constitution empowers the court to arbitrate disputes between the executive and legislative branches and between Moscow and the regional and local governments. The court is also authorized to rule on violations of constitutional rights, to examine appeals from various bodies, and to participate in impeachment proceedings against the president. The July 1994 Law on the Constitutional Court prohibits the court from examining cases on its own initiative and limits the scope of issues the court can hear.

In the past 3 years, the Russian Government has begun to reform the criminal justice system and judicial institutions, including the reintroduction of jury trials in certain criminal cases. Despite these efforts, judges are only beginning to assert their constitutionally mandated independence from other branches of government.

Human Rights
Russia's human rights record remains uneven and worsened in some areas. Despite significant improvements in conditions following the end of the Soviet Union, problem areas remain. In particular, the Russian government's military policy in Chechnya is a cause for international concern. Government forces have killed numerous civilians through the use of indiscriminate force in Chechnya. There have been credible allegations of violations of international human rights and humanitarian law by Russian forces. Chechen groups also have committed abuses.

Although the government has made progress in recognizing the legitimacy of international human rights standards, the institutionalization of procedures to safeguard these rights has lagged. Implementation of the constitutional provisions for due process and timely trials, for example, has made little progress. There are indications that the law is becoming an increasingly important tool for those seeking to protect human rights; after a lengthy trial and eight separate indictments, environmental whistleblower Alexander Nikitin was acquitted of espionage charges relating to publication of material exposing hazards posed by the Russian Navy's aging nuclear fleet earlier this year. Nonetheless, serious problems remain. The judiciary is often subject to manipulation by political authorities and is plagued by large case backlogs and trial delays. Lengthy pretrial detention remains a serious problem. There are credible reports of beating and torturing of inmates and detainees by law enforcement and correctional officials. Prison conditions fall well below international standards and, according to human rights groups, in 1996 between 10,000 and 20,000 prisoners and detainees died, most because of overcrowding, disease, and lack of medical care.

Efforts to institutionalize official human rights bodies have been mixed. In 1996, human rights activist Sergey Kovalev resigned as chairman of the Presidential Human Rights Commission to protest the government's record, particularly the war in Chechnya. Parliament in 1997 passed a law establishing a "human rights ombudsman," a position that is provided for in Russia's constitution and is required of members of the Council of Europe, to which Russia was admitted in February 1996. The Duma finally selected Duma deputy Oleg Mironov in May 1998. A member of the Communist Party, Mironov resigned from both the Party and the Duma after the vote, citing the law's stipulation that the Ombudsman be nonpartisan. Because of his party affiliation, and because Mironov had no evident expertise in the field of human rights, his appointment was widely criticized at the time by human rights activists. International human rights groups operate freely in Russia, although the government has hindered the movements and access to information of some individuals investigating the war in Chechnya.

The Russian Constitution provides for freedom of religion and the equality of all religions before the law as well as the separation of church and state. Although Jews and Muslims continue to encounter prejudice and societal discrimination, they have not been inhibited by the government in the free practice of their religion. High-ranking federal officials have condemned anti-Semitic hate crimes, but law enforcement bodies have not effectively prosecuted those responsible. The influx of missionaries over the past several years has led to pressure by groups in Russia, specifically nationalists and the Russian Orthodox Church, to limit the activities of these "nontraditional" religious groups. In response, the Duma passed a new, restrictive, and potentially discriminatory law in October 1997. The law is very complex, with many ambiguous and contradictory provisions. The law's most controversial provisions separates religious "groups" and "organizations" and introduce a 15-year rule, which allows groups that have been in existence for 15 years or longer to obtain accredited status. Senior Russian officials have pledged to implement the 1997 law on religion in a manner that is not in conflict with Russia's international human rights obligations. Some local officials, however, have used the law as a pretext to restrict religious liberty.

The constitution guarantees citizens the right to choose their place of residence and to travel abroad. Some big-city governments, however, have restricted this right through residential registration rules that closely resemble the Soviet-era "propiska" regulations. Although the rules were touted as a notification device rather than a control system, their implementation has produced many of the same results as the propiska system. The freedom to travel abroad and emigrate is respected although restrictions may apply to those who have had access to state secrets. Recognizing this progress, since 1994, President Clinton has found Russia to be in full compliance with the provisions of the Jackson-Vanik amendment.

Principal Government Officials
President--Vladimir Putin
Prime Minister--Mikhail Kasyanov

(A list of other government officials is not available at this time)

The Russian Federation maintains an embassy at 2650 Wisconsin Ave. NW, Washington, DC 20007 (tel. 202-298-5700) and a consular section at 2641 Tunlaw Road, Washington DC (tel. 202-939-8907/8913/8918). Russian consulates also are located in New York, San Francisco, and Seattle.

ECONOMY
The Russian economy has undergone tremendous stress as it has moved from a centrally planned economy toward a free market system. Difficulties in implementing fiscal reforms aimed at raising government revenues and a dependence on short term borrowing to finance budget deficits led to a serious financial crisis in 1998. Lower prices for Russia's major export earners (oil and minerals) and a loss of investor confidence due to the Asian financial crisis exacerbated financial problems. The result was a rapid decline in the value of the ruble, flight of foreign investment, delayed payments on sovereign and private debts, a breakdown of commercial transactions through the banking system and the threat of runaway inflation. However, Russia appears to have weathered the crisis relatively well. Real GDP increased by the highest percentage since the fall of the Soviet Union, the ruble stabilized, inflation was moderate, and investment began to increase again. Russia is making progress in meeting its foreign debts obligations. In 1999, with limited access to financing from international financial institutions or bilateral sources, the Government of Russia serviced around half its external debt payments due, and sought delays in servicing Soviet-era debt pending negotiations in the Paris and London Clubs. In early 2000 Russia negotiated a 35% write off of its commercial debt with the London Club. Russia's current Paris Club agreement expires at the end of 2000.

Gross Domestic Product
Russia's GDP, estimated at $183 billion at exchange rates current in 1999, increased by 3.2% in 1999 compared to 1998. The major factors behind this strong growth were the earlier devaluation of the ruble (spurring production of Russian products as substitutes for more expensive imports); record high commodity prices on international markets, particularly oil (Russia's principal export); low inflation; and strict government budget discipline. For 1999 the unemployment rate was 12.6% (using International Labor Organization methodology). Combined unemployment and underemployment may exceed that figure. Industrial output in 1999 was up sharply (to 8.1%) compared to 1998, aided by the devalued ruble.

Monetary Policy
The exchange rate stabilized in 1999 -- after falling from 6.5 rubles/dollar in August 1998 to approximately 25 rubles/dollar by April 1999, one year later it had further depreciated only to approximately 28.5 rubles/dollar. After some large spikes in inflation following the August 1998 economic crisis, inflation declined steadily throughout 1999, with an overall figure of 36.5%; inflation for the first quarter of 2000 was an estimated 4.1%. Factors dampening price increases include weak domestic demand, a relatively stable ruble, and the absence to date of a federal budget deficit for the Central Bank of Russia to monetize.

Government Spending/Taxation
Fiscal policy has been very disciplined in 1999 and early 2000. The overall budget deficit for 1999 was 1.7% of GDP, with a primary surplus of 2%; 1999 was the first year the federal budget was fully implemented. The primary surplus during the first quarter of 2000 was 3.5% of GDP. The GOR estimates that it will exceed budgeted revenue forecasts for 2000 by about 100 billion rubles, collecting 897.2 billion rubles. In part, the increase in cash revenues reflects increased receipts from large taxpayers, e.g. oil companies and natural monopolies, as well as growing economic activity.

Law
Lack of legislation in many areas of economic activity is a pressing issue. Taxation and business regulations are unpredictable, and legal enforcement of private business agreements is weak. Government decisions affecting business have often been arbitrary and inconsistent. Crime has increased costs for both local and foreign businesses. On the positive side, Russian businesses are increasingly turning to the courts to resolve disputes. The passage of an improved bankruptcy code in January 1998 was a positive step; the government is advocating further improvements to this legislation.

Natural Resources
The mineral-packed Ural mountains and the vast oil, gas, coal and timber reserves of Siberia and the Russian Far East make Russia rich in natural resources. However, most such resources are located in remote and climactically unfavorable areas that are difficult to develop and far from Russian ports. Oil and gas exports continue to be the main source of hard currency, but declining energy prices have hit Russia hard. Russia is a leading producer and exporter of minerals, gold and all major fuels. The Russian fishing industry is the world's fourth-largest, behind Japan, the U.S. and China. Russia accounts for one-quarter of the world's production of fresh and frozen fish and about one-third of world output of canned fish.

Industry
Russia is one of the most industrialized of the former Soviet republics. However, much of its industry is antiquated and highly inefficient. Besides its resource-based industries, it has developed large manufacturing capacities, notably in machinery. Russia inherited most of the defense industrial base of the Soviet Union. Efforts have been made with varying success over the past few years to convert defense industries to civilian use.

Agriculture
Russia comprises roughly three-quarters of the territory of the former Soviet Union, but has relatively little area suited for agriculture because of its arid climate and inconsistent rainfall. Northern areas concentrate mainly on livestock, and the southern parts and western Siberia produce grain. Restructuring of former state farms has been an extremely slow process, partially due to the lack of a land code allowing for the free sale, purchase and mortgage of agricultural land. Private farms and garden plots of individuals account for over one-half of all agricultural production.

Investment
In 1999, investment increased by 4.5%, the first such growth since 1990. The increase came in the last half of 1999, and has continued in the opening months of 2000, up 5.9% year-on-year in the first quarter. Higher retained earnings, increased cash transactions, the positive outlook for sales and political stability have contributed to these favorable trends. Over the medium-to-long term, Russian companies that do not invest to increase their competitiveness will find it harder either to expand exports or protect their recent domestic market gains from higher quality imports.

Foreign direct investment rose slightly in 1999, but remains small. Foreign direct investment in Russia in 1999 was U.S.$2.9 billion, up from U.S.$2.8 billion in 1998, but still well below the U.S.$6.6 billion of FDI received in 1997.

A significant drawback for investment is the banking sector, which has neither the resources, capability, nor the trust of the population to attract substantial savings and intermediate them to productive investments. While ruble lending has doubled since the October 1998 financial crisis, loans are still only 28% of total bank assets, the same percentage as before the crisis. The CBR has reduced its refinancing rate three times in 2000, to 33%, signaling its interest in lower lending rates. Banks still perceive commercial lending as risky, and some banks are inexperienced with assessing credit risk.

Trade
The major factor contributing to Russia's significant economic growth in 1999 was trade performance. Exports were up slightly to U.S.$74.3 billion, while imports slumped by 30.5% to U.S.$41.1 billion. As a consequence, the trade surplus ballooned to U.S.$33.2 billion, more than double the previous year's level. After a weak start, both imports and exports recovered somewhat in the second half of the year, as the economy began to stabilize. The effect of higher oil prices had a major effect on export performance, particularly in the latter half of the year. Even though volumes of crude oil exports (to non-CIS countries) were down by 2.9%, prices jumped up 45.9%. Fuels and energy comprise 42% of Russian exports. Other exports performed better in 1999: fertilizer exports were up 16.7%, forestry products up 38%, copper up 17.6%, and aluminum up 10.5%. On the import side, food and consumer goods suffered especially, with food imports dropping by 28%.

Most analysts predict these trade trends will continue to some extent in 2000. The Government of Russia forecasts export increases of about 4% and, as the ruble strengthens in real terms and purchasing power slowly recovers, a slightly larger recovery in imports of about 8%. However, imports in the first quarter remained flat at U.S.$9.4 billion, compared to U.S.$9.5 billion in the same period in 1999. The devaluation of the ruble and difficulties in completing transactions through the Russian banking system continue to depress imports. The combination of import duties, a 20% value-added tax and excise taxes on imported goods (especially automobiles, alcoholic beverages, and aircraft) and an import licensing regime for alcohol further restrain demand for imports. Frequent changes in customs regulations also have created problems for foreign and domestic traders and investors. Exports have continued to benefit from higher oil prices, bolstered by higher natural gas prices. In the first quarter of 2000, exports were up U.S.$6 billion, driving the trade surplus to U.S.$12.1 billion from U.S.$6.1 billion higher than the same period last year.

FOREIGN RELATIONS
Russia has taken important steps to become a full partner in the world's principal political groupings. On December 27, 1991, Russia assumed the seat formerly held by the Soviet Union in the UN Security Council. Russia also is a member of the Organization for Security and Cooperation in Europe (OSCE) and the North Atlantic Cooperation Council (NACC). It signed the NATO Partnership for Peace initiative on June 22, 1994. On May 27, 1997, NATO and Russia signed the NATO-Russia Founding Act, which provides the basis for an enduring and robust partnership between the Alliance and Russia--one that can make an important contribution to European security architecture in the 21st century. On June 24, 1994, Russia and the European Union (EU) signed a partnership and cooperation agreement.

Russia has played an important role in helping mediate international conflicts and has been particularly actively engaged in trying to promote a peace following the conflict in Kosovo. Russia is a co-sponsor of the Middle East peace process and supports UN and multilateral initiatives in the Persian Gulf, Cambodia, Angola, the former Yugoslavia, and Haiti. Russia is a founding member of the Contact Group and (since the Denver Summit in June 1997) a member of the G-8. In November 1998, Russia joined APEC. Russia has contributed troops to the NATO-led stabilization force in Bosnia and has affirmed its respect for international law and OSCE principles. It has accepted UN and/or OSCE involvement in instances of regional conflict in neighboring countries, including the dispatch of observers to Georgia, Moldova, Tajikistan, and Nagorno-Karabakh.

DEFENSE
Since the breakup of the U.S.S.R., the Russians have discussed rebuilding a viable, cohesive fighting force out of the remaining parts of the former Soviet armed forces. A new Russian military doctrine, promulgated in November 1993, implicitly acknowledges the contraction of the old Soviet military into a regional military power without global imperial ambitions. In keeping with its emphasis on the threat of regional conflicts, the doctrine calls for a Russian military that is smaller, lighter, and more mobile, with a higher degree of professionalism and with greater rapid deployment capability. Such a transformation has proven difficult.

The challenge of this task has been magnified by difficult economic conditions in Russia, which have resulted in reduced defense spending. This has led to training cutbacks, wage arrears, and severe shortages of housing and other social amenities for military personnel, with a consequent lowering of morale, cohesion, and fighting effectiveness. The poor combat performance of the Russian armed forces in the Chechen conflict in part reflects these breakdowns.

The actual strength of the Russian armed forces probably falls between 1.4 and 1.6 million and is scheduled to fall to 1.2 million by the end of 1999. Weapons production in Russia has fallen dramatically over the past few years; between 1988 and 1993, it fell by at least 50% for virtually every major weapons system. Weapons spending in 1992 was approximately 75% less than in 1988. Almost all of Russia's arms production is for sales to foreign governments, and procurement of major end items by the Russian military has all but stopped.

About 70% of the former Soviet Union's defense industries are located in the Russian Federation. A large number of state-owned defense enterprises are on the brink of collapse as a result of cuts in weapons orders and insufficient funding to shift to production of civilian goods, while at the same time trying to meet payrolls. Many defense firms have been privatized; some have developed significant partnerships with U.S. firms.

U.S.- RUSSIA RELATIONS
The United States remains committed to maintaining a constructive relationship with Russia in which we seek to expand areas of cooperation and effectively work through differences. The United States continues to support Russia's political and economic transformation and its integration into major international organizations. These steps, in conjunction with achievements in considerably reducing nuclear weapons, have greatly enhanced the security of the United States.

The intensity and frequency of contacts between President Yeltsin and President Clinton, most recently the Moscow Summit in August 1998, are indicative of the strong commitment to working together on a broad range of issues. These include European security, reducing the threat to our countries posed by weapons of mass destruction, and economic cooperation, especially American investment in Russia.

Economic Relations

U.S.- Russia Joint Commission on Economic and Technological Cooperation. Under the leadership of Vice President Gore and the Russian Prime Minister, the U.S. and Russia are working to advance bilateral cooperation through nine working committees and several working groups known collectively as the U.S.-Russian Joint Commission on Economic and Technological Cooperation. Committees address issues in the fields of science and technology, business development, space, energy policy, environmental protection, health, defense conversion, capital markets, and agriculture. In addition, the commission provides a forum for high-level discussions of priority security and economic issues. The commission held its 10th session in Washington in March 1998 and an executive session in Washington in July 1999.

Trade and Investment. In 1999, the U.S. trade deficit with Russia was $3.96 billion, up $1.76 billion over 1998. U.S. merchandise exports to Russia were nearly $1.85 billion in 1999. Russia was the United States' 41st largest export market in 1999. U.S. imports from Russia were $5.81 billion in 1999, making Russia the 28th largest supplier of U.S. imports. The 1992 U.S.-Russia trade agreement provides mutual most-favored-nation status and includes commitments on intellectual property rights protection. In 1992, the two countries also signed treaties on the avoidance of double taxation and on bilateral investment. In 1992, the two countries also signed treaties on the avoidance of double taxation and on bilateral investment. As of spring 2000, however, the Russian parliament has not ratified the bilateral investment treaty. It has been ratified by the U.S. Senate.

The U.S. actively supports Russia's efforts to join the World Trade Organization on commercially viable terms. Russia is currently in the process of negotiating terms of accession to the WTO. By the end of 1999 it had completed ten working party meetings. It tables its initial services market access offer in October 1999 and has conducted negotiations on its goods market access offer. These offers contain Russia's proposed commitments to maximum tariff rates and opening of its markets to foreign providers of services. The U.S. actively supported Russian membership in the Asia-Pacific Economic Cooperation (APEC) forum. Russia became a member of APEC in November 1998.

Security Cooperation

NATO/Russia Founding Act. Russia signed the NATO Partnership for Peace initiative in June 1994. U.S. and Russian troops are serving together in the Implementation Force in Bosnia and its successor, the Stabilization Force. Building on these steps, NATO and Russia signed the NATO-Russia Founding Act on May 27, 1997, in Paris. The act defines the terms of a fundamentally new and sustained relationship in which NATO and Russia will consult and coordinate regularly, and where appropriate, act jointly. Cooperation between NATO and Russia exists in scientific and technical fields.

Agreements/Cooperation/Nuclear Arms. The U.S. and Russia signed a memorandum of understanding on defense cooperation in September 1993 that institutionalized and expanded relations between defense ministries, including establishing a broad range of military-to-military and scientist to scientist contacts. The U.S. and Russia carried out a joint peacekeeping training exercise in Totskoye, Russia, in September 1994. Based on the January 14, 1994, agreement between Presidents Clinton and Yeltsin, the two nations stopped targeting their strategic nuclear missiles at each other as of May 30, 1994. U.S. and Russian security cooperation emphasizes strategic stability, nuclear safety, dismantling nuclear weapons, preventing proliferation of weapons of mass destruction and their delivery systems, and enhancing military-to-military contacts. The START I Treaty was signed by the United States and the Soviet Union on July 31, 1991. Five months later, the Soviet Union dissolved, and in May 1992, Belarus, Kazakhstan, Russia and Ukraine signed the Lisbon Protocol to the START I Treaty, making them Parties to the START I Treaty. Belarus, Kazakhstan and Ukraine have also fulfilled their commitment to accede to the Nuclear Non-Proliferation Treaty (NPT) as non-nuclear weapon states in the shortest possible time, and to return all nuclear weapons on their territory to Russia for dismantlement. The START I Treaty entered into force on December 5, 1994. START I requires reductions in strategic offensive arms to 6,000 accountable warheads on each side as of December 4, 2001. All Parties to the Treaty have been successful in meeting the Treaty's reduction requirements.

START II. The START II Treaty was signed by the United States and Russia on January 3, 1993. START II builds on the START I Treaty, requiring reductions in two phases to 3,000-3,500 deployed strategic nuclear warheads on each side, a two-thirds reduction from Cold War levels. At the September 1994 summit, the two nations agreed to begin removing nuclear warheads due to be scrapped under START II immediately, once START I takes effect and the START II Treaty is ratified by both countries, instead of taking the 9 years allowed. At their May 1995 summit, Presidents Clinton and Yeltsin agreed on a set of principles that would guide further discussion in the field of demarcation between anti-ballistic missile systems and theater missile defenses. They also agreed on steps to increase the transparency and irreversibility of nuclear arms reduction and committed not to use newly produced fissile materials or to reuse the fissile materials removed from nuclear weapons being eliminated and excess to national security requirements in nuclear weapons. Since that time, all strategic nuclear weapons have been removed from Ukraine, Belarus, and Kazakhstan to Russia. Under START II, all heavy ICBMs and MIRVed ICBMs must be eliminated from each side's deployed forces. In January 1996, the U.S. Senate provided its advice and consent to ratification of the START II Treaty.

The deadline for START II reductions was extended to December 2007 by the START II Protocol signed by the United States and Russia on September 26, 1997. The Protocol has not been submitted to the U.S. Senate for ratification. On April 14, 2000, the Russian Duma approved the START II Treaty and the START II Protocol, and on May 5, President Putin signed the ratification document. In ratifying the START II Treaty, the Russian Duma passed a federal law containing a number of conditions. Among them is a requirement that the United States ratify the START II Protocol before the START II Treaty can enter into force. The Duma's ratification law and the relationship between the 1997 agreements, including those related to the ABM Treaty, and START III and changes to the ABM Treaty, will be considered before the START II Protocol is submitted to the Senate for approval.

In March 1997, in Helsinki, Finland, Presidents Clinton and Yeltsin agreed that a START III agreement would include the following basic elements, among others:

  • Lower aggregate levels of 2,000-2,500 strategic nuclear warheads -- 80 percent below the Cold War peak -- for each of the parties
  • Transparency measures related to strategic nuclear warheads inventories and the destruction of strategic nuclear warheads
  • Resolving issues related to the goal of making the current START treaties of unlimited duration
  • Exploration of possible measures relating to nuclear long-range sea-launched cruise missiles and tactical nuclear systems, including confidence-building and transparency measures
  • Early deactivation of all strategic nuclear delivery vehicles to be eliminated under START II by December 31, 2003, by removing their nuclear warheads or taking other jointly agreed steps.

In June 1999, in Cologne, Germany, Presidents Clinton and Yeltsin reaffirmed their readiness to conduct new negotiations on strategic offensive arms aimed at further reducing the level of strategic nuclear warheads on each side, elaborating measures of transparency concerning existing strategic nuclear warheads and their elimination, as well as other agreed technical and organizational measures. Presidents Clinton and Yeltsin also agreed at this Summit to begin discussions on START III and the ABM Treaty.

START III. As agreed at Cologne, the United States and Russia began discussions on both START III and ABM issues during the summer of 1999. Since then extensive discussions have been held on these matters at senior levels of both governments. On July 23, 1999, the President signed into law H.R. 4, the National Missile Defense (NMD) Act of 1999. We are continuing substantive discussions with Russia on START III, in parallel with discussions on changes to the ABM Treaty. These discussions are continuing and, with Russia's ratification of START II, are expected to intensify.

CFE. Following ratification by Russia and the other NIS, the Conventional Armed Forces in Europe Treaty entered into force on November 9, 1992. This treaty establishes comprehensive limits on key categories of military equipment--tanks, artillery, armored combat vehicles, combat aircraft, and combat helicopters--and provides for the destruction of weaponry in excess of these limits. An adapted CFE Treaty was adopted at the November 1999 Istanbul Summit. The adapted Treaty takes account of the changes in Europe since CFE was signed. Politically, the process of adaptation has played a pivotal role in managing Russian concerns and expectations regarding NATO enlargement, through both the Madrid and Washington NATO Summits. NATO Allies addressed deeply-held Russian concerns by accepting provisions in CFE which demonstrated that NATO did not contemplate a massive eastward shift in peacetime military potential as a result of enlargement. But this remains a very NATO-friendly Treaty.

Cooperative Threat Reduction (CTR). Often called Nunn-Lugar assistance, this type of assistance is provided to Russia (as well as Belarus, Kazakhstan and Ukraine) to aid in the dismantling of weapons of mass destruction and to prevent the proliferation of such weapons. More than $730 million has been allocated for assistance to Russia during fiscal years 1997 and 1998 under this program, and 13 implementing agreements have been signed. Key projects have included assistance in the elimination of strategic offensive arms ($184 million), design and construction of a fissile material storage facility ($127 million), provision of fissile material containers ($45 million), material control and accounting and physical protection of nuclear materials ($51 million), and development of a chemical weapons destruction facility and provision of equipment for a pilot laboratory for the safe and secure destruction of chemical weapons ($106 million).

Under the highly enriched uranium agreement, the U.S. is purchasing uranium from Russian weapons for use in power reactors. Also, both the U.S. and Russia will cooperate to dispose of excess military plutonium. The U.S. also is assisting Russia in the development of export controls, providing emergency response equipment and training to enhance Russia's ability to respond to accidents involving nuclear weapons, providing increased military-to-military contacts.

In a multilateral effort (the European Union, Japan, and Canada also are involved), the U.S. also has provided over $60 million to establish and support the International Science and Technology Center (ISTC), which provides alternative peaceful civilian employment opportunities to scientists and engineers of the former Soviet Union involved with weapons of mass destruction and their delivery systems.

U.S. Assistance to Russia

Cumulative U.S. Assistance Figures. Since 1992, the U.S. Government has allocated more than $8.2 billion in grant assistance to Russia, funding a variety of programs in four key areas: security programs, humanitarian assistance, economic reform and democratic reform. The U.S. Government is also providing assistance in such areas as nuclear reactor safety and the environment. The grant assistance provided by the U.S. Government to date can be broken down as follows: almost $3.3 billion in security assistance (weapons dismantlement and nonproliferation), over $2.2 billion in humanitarian assistance, over $1.4 billion in economic reform programs, almost $650 million in democratic reform programs, and $615 million in cross-sectoral and other programs. The U.S. Government has also supported approximately $8.9 billion in commercial financing and insurance for Russia. Nearly 40,000 Russians have traveled to the United States under U.S. Government-funded training and exchange programs. The annual level of FREEDOM Support Act-funded assistance for Russia, which declined from a peak of $1.6 billion in FY 1994 to $95 million in FY 1997, is about $178 million in FY 2000. For more detailed information on these programs, please see the FY 1999 Annual Report to Congress on U.S. Government Assistance to and Cooperative Activities with the New Independent States of the Former Soviet Union, which is available on the State Department's website at the following address: http://www.state.gov/www/regions/nis/nis_assist_index.html

How U.S. Assistance Has Evolved. The U.S. Government's strategy for assistance to Russia is based on the premise that Russia's transition to democracy and free markets will be a long-term process. The U.S. will need to remain engaged throughout this process, and therefore U.S. assistance emphasizes activities that promote the establishment of lasting ties between Russians and Americans at all levels of society. Over the past three years, the U.S. assistance program has moved away from technical assistance to the central government, although such assistance is still provided when it is appropriate and will help to advance reform. An increasing proportion of U.S. assistance is focussed at the regional and municipal level, where programs are helping to build the infrastructure of a market economy, remove impediments to trade and investment, and strengthen civil society. In general, U.S. assistance programs in Russia are working at the grassroots level by bolstering small business through training and enhanced availability of credit; expanding exchanges so that more Russian citizens can learn about America's market democracy on a first-hand basis; and increasing the number of partnerships between Russian and U.S. cities, universities, hospitals, business associations, charities, and other civic groups. In FY 1999, humanitarian assistance accounted for approximately 60% of U.S. assistance to Russia, in response to the increased need for such assistance in the aftermath of Russia's August 1998 financial crisis. However, in FY 2000, security and nonproliferation programs represent over two-thirds of U.S assistance to Russia.

Security programs help demilitarize facilities; eliminate weapons of mass destruction and prevent their proliferation, as well as the proliferation of weapons materials, delivery systems, technology and weapons expertise; and enable compliance with arms accords.

U.S. Government-funded humanitarian assistance consists mainly of food assistance provided by the U.S. Department of Agriculture (see below). The U.S. Government also transports food, medical equipment and other humanitarian assistance donated by U.S. private voluntary organizations (PVOs), as well as Defense Department excess commodities.

Increasingly, U.S. Government-funded economic reform programs are focused in Russia's regions. A limited amount of assistance is targeted at promoting reforms at the national level, particularly with regard to tax administration and Russia's efforts to accede to the World Trade Organization (WTO).

Democratic reform programs are helping Russians develop the building blocks of a democratic society based on the rule of law by providing support to non-governmental organizations (NGOs), independent media the judiciary and other key institutions. To support this long-term generational transition, the U.S. Government is increasingly promoting links between U.S. and Russian communities and institutions, including universities, hospitals and professional associations, and is establishing public-access Internet sites throughout Russia. The U.S. Government will also be awarding a grant to support a curriculum development program for the Institute of Public Administration and Social Studies at Moscow State University. In addition, the U.S. Government is helping Russia combat crime and corruption through cooperation with U.S. law enforcement agencies and community-based groups.

Regional Initiative (RI). The RI concentrates an array of U.S. government technical assistance, business development, and exchange programs in a small group of progressive Russian regions, with the goal of helping to create successful models of economic and political development at the regional level. Over time, it is hoped that these regions will achieve broad-based economic growth, attract outside investment, and build a strong civil society, and that they will participate in efforts to disseminate their experience to other regions of Russia. Three RI sites are up and running, in Novgorod, Samara, and Khabarovsk/Sakhalin in the Russian Far East, and a new site is currently being established in Tomsk.

Cooperative Threat Reduction (CTR) Program The Defense Department's (DoD) CTR or "Nunn-Lugar" Program was initiated in FY 1992 to reduce the threat posed to the United States by the weapons of mass destruction (WMD) remaining on the territory of the former Soviet Union. CTR promotes denuclearization and demilitarization, and seeks to prevent WMD proliferation.

Through FY 1999, DoD has notified the U.S. Congress of over $1.6 billion in CTR assistance to Russia, of which over $1.2 billion has been obligated through FY 1999 and over $790 million disbursed. Cooperation has evolved and strengthened over the years in DoD's interaction with the Russian ministries administering the CTR program, including the Ministry of Defense (MoD), the Ministry of Atomic Energy (MinAtom), the now-disbanded Ministry for Defense Industry (MDI), and the Ministry of Economy (MinEcon). In June 1999, the U.S. and Russian Governments extended the CTR Umbrella Agreement through 2006.

Since FY 1997, the CTR Program has focused increasingly on Russia. About $383 million of the $440.4 million appropriated for CTR in FY 1999 was earmarked for Russia. To position Russia to reduce its force structure to START II or potential START III levels, DoD, MoD and MinEcon agreed in December 1997 on new CTR projects to support the required missile systems dismantlement, strategic submarine elimination, and enhance nuclear weapons and fissile material security. Several of these projects are underway. In 1999, projects were being developed to help the Russians process and package fissile material in the post-dismantlement stage and to prevent the proliferation of biological weapons (BW) expertise and technology.

The CTR Program is providing Russia equipment, training, services and logistical support to expedite the elimination of strategic offensive arms pursuant to the START Treaties. This includes assistance with liquid rocket-fuel disposition, SLBM launcher and associated submarine elimination, solid rocket-motor elimination, SS-18 and heavy-bomber dismantlement, and other projects. This also includes provision of equipment for emergency support in case of an accident involving the transport or elimination of missiles. Under the CTR Program, the U.S. is helping Russia destroy its CW stockpile and associated infrastructure. Efforts have focused on designing a CW destruction facility at Shchuchye that the U.S. Government plans to help construct. Construction is under way on a Central Analytical Laboratory (CAL) that will enhance Russia's ability to conduct chemical-agent monitoring at CW storage and destruction sites. The U.S. Government procured and delivered three mobile analytical laboratories to support Russian CW destruction projects. U.S. Government-funded efforts also continued to eliminate CW infrastructure at the KhimProm Volgograd and Novocheboksarsk chemical complexes.

Construction continues on a facility for the storage of fissile material derived from dismantled Russian weapons at Mayak in the Southern Urals. DoD is providing design assistance, construction support and equipment, and facility equipment. The U.S. Government is also providing Russia's Ministry of Atomic Energy (MinAtom) with containers for the transport and storage of fissile materials from dismantled weapons. Production of the containers began in October 1995, and initial shipments to Russia began in December 1995. Through FY 1999, more than 32,000 fissile material containers have been produced and delivered.

CTR Weapons Protection Control and Accounting (WPC&A) Program. This program is improving security of nuclear weapons during transportation and interim storage. The project was started in April 1995 under two CTR implementing agreements with Russia. Assistance provided includes supercontainers, railcar upgrades, emergency support equipment, automated inventory control and management systems, computer modeling, a personnel reliability program, 50 sets of "quick-fix" fencing and sensors for storage sites, and the development of a Security Assessment and Training Center to test and evaluate new security systems for storage sites. This project is planned to expand to protect over 70 additional storage sites.

CTR Materials Protection, Control and Accounting Program. Since 1993, the United States and Russia have worked together to prevent the theft or loss of nuclear material by improving nuclear materials protection, control, and accounting (MPC&A). MPC&A improvements are designed to keep nuclear materials secured in the facilities that are authorized to contain them, and are the first line of defense against nuclear smuggling that could lead to nuclear proliferation and/or nuclear terrorism. DOE took over the program from DOD and is seeking to enhance the security of weapons-grade fissile materials at more than 40 sites in Russia.

In addition, under the highly enriched uranium agreement, the U.S. is purchasing uranium from Russian weapons for use in power reactors. Also, both the U.S. and Russia will cooperate to dispose of excess military plutonium.

Export Control Assistance. Since the early 1990s, the U.S. has provided assistance to Russia to help it develop more effective export control systems and capabilities in order to prevent, deter and detect the potential proliferation of weapons of mass destruction (WMD) and associated materials. The objective is to help Russia build export control institutions, infrastructure and legislation to help prevent weapons proliferation. Initial funding from the CTR program has been augmented by funds from the Departments of Commerce, Energy, State and Treasury (Customs Service). In FY 1996, overall responsibility for export control assistance shifted to the Department of State, which provides policy direction and coordinates all agencies providing export control and border security assistance, capitalizing in particular on the unique capabilities of the U.S. Coast Guard to support export control and border security assistance programs. Recent State Department funded programs with Russia include supporting the Russian Center for Export Controls (CEC) work with the Department of Commerce to install internal compliance programs (ICPs) in key Russian defense and high-technology enterprises and facilitating the adoption of a new, comprehensive export control law and other legal/regulatory changes in Russia. DOE export control efforts in Russia include traditional activities such as workshops, studies and regulatory development. DOE also initiated the Second Line of Defense program for Russia to combat the trafficking of illicit nuclear materials across border and control points to strengthen its overall capability to prevent nuclear materials, equipment and technology from getting into the hands of would-be proliferators. This program entails procuring Russian-manufactured detection equipment for key border crossings and training programs for Russian Customs officials.

International Science and Technology Center (ISTC). In a multilateral effort involving the European Union, Japan, and Canada, the U.S. has provided over $100 million to the Moscow-based ISTC for redirection activities in Russia in addition to millions of dollars in contributions from the EU, Canada, Norway, Japan and South Korea. The ISTC provides alternative peaceful civilian employment opportunities to scientists and engineers of the former Soviet Union involved with weapons of mass destruction and their delivery systems. To date, the ISTC has funded more than 500 projects involving more than 20,000 Russian scientists.

Biotechnical Redirection Program. In FY 1999, the U.S. Government implemented a State Department-led pilot project aimed at increasing transparency in former Soviet biological weapons (BW) facilities and redirecting their scientists to civilian commercial, agricultural and public health activities. All activity under this project is subject to strict oversight by an interagency working group. Facilities and government officials in countries where the U.S. Government is pursuing redirection activities are explicitly informed that any cooperation with countries of proliferation concern or terrorist entities, or any behavior inconsistent with the Biological and Toxin Weapons Convention (BWC), would have an immediate and negative impact on U.S. Government assistance. The majority of U.S. Government-funded redirection activities are taking place under the auspices of the International Science and Technology Center (ISTC), which has access to facilities, provides tax-exempt assistance directly to scientists, and can engage multilateral funding. Agencies involved in these efforts include the U.S. Departments of State, Energy (DOE), Defense (DoD), Agriculture (USDA) and Health and Human Services (HHS). Most of these activities are oriented toward Russian institutes and scientists. The State Department has allocated over $22 million since FY 1998 for these activities. DoD also has initiated a CTR program to fund collaborative biotechnical research with former biological weapons scientists to prevent the proliferation of biological weapons expertise and technology, increase access to Russian scientists, and to enhance the transparency of their work. CTR also is enhancing the security of Russian biotechnical facilities through initiation in FY 1999 of a Biological Material Protection, Control and Accountability Program.

Implementing Agencies
U.S. Agency for International Development (USAID). USAID has implemented the lion's share of U.S. Government-funded technical assistance to Russia--over $1.8 billion since 1992. USAID has devoted its assistance efforts to helping Russia develop democratic institutions and transform its state-controlled economy to one based on market principles. USAID has been active in the areas of privatization and private-sector development, agriculture, energy, housing reform, health, environmental protection, economic restructuring, independent media, and the rule of law.

U.S. Department of State--Public Diplomacy Exchanges (formerly the U.S. Information Agency). Approximately 27,000 Russians have traveled to the United States on USIA-funded exchanges since 1992. Public diplomacy exchanges promote the growth of democracy and civil society, encourage economic reform and growth of a market economy in Russia. USIA's professional and academic exchanges cover such diverse fields as journalism, public administration, local government, business management, education, political science, and civic education.

Library of Congress. In FY 2000, the Russian Leadership Program will bring 1,800 Russians from throughout Russia to the United States for short-term study tours, including up to 150 members of the Russian Parliament for meetings with their counterparts in the U.S. Congress.

U.S. Department of Commerce. The Special American Business Internship Training (SABIT) Program places Russian managers for short-term internships with U.S. companies. To date, over 1,000 Russians have participated in the SABIT Program. The Commerce Department also operates the Business Information Service for the New Independent States (BISNIS), which provides market information, trade leads, and partnering services to U.S. companies interested in the Russian market.

U.S. Export-Import Bank (Eximbank). Eximbank has approved more than $3.6 billion in loans, loan guarantees, and insurance for transactions in Russia since 1991. Of this total, more than $1 billion was approved under its Oil and Gas Framework Agreement.

U.S. Overseas Private Investment Corporation (OPIC). OPIC has provided more than $4.0 billion in loans, loan guarantees, and political investment insurance to American companies investing in Russia.

Trade and Development Agency (TDA). TDA has approved approximately $55 million in funding for feasibility studies on more than 135 investment projects.

U.S. Department of Agriculture (USDA). In FY 1999, in response to a request by the Russian Government, USDA provided more than 3.7 million metric tons of food valued at more than $1 billion, including 100,000 metric tons of nonperishable food donated through U.S. private voluntary organizations (PVOs), 1.7 million tons of wheat on a grant basis, and 1.55 million tons of commodities (including beef, pork, poultry, corn, rice, wheat and soybeans) on a concessional basis under USDA's P.L. 480, Title I Program. USDA also donated 15,000 tons of corn and vegetable seeds to the Russian Government for the 1999 planting season. In FY 2000, USDA will be providing approximately $225 million in food assistance to Russia, which will consist of approximately 300,000 metric tons of government-to-government commodities targeted at institutions such as orphanages and hospitals, and approximately 200,000 metric tons of commodities provided by U.S. PVOs. In addition, USDA provides training to Russian agriculturists and agricultural faculty through its Cochran Fellowship and Faculty Exchange Programs, with the goal of helping to familiarize the Russian agricultural sector with Western-style agribusiness management, marketing, and other issues, while at the same time increasing U.S. agricultural exports to Russia. Since 1992, over 500 Russians have traveled to the U.S. under these two programs.

U.S. Department of Defense (DoD). DoD implements the majority of the U.S. Government's security-related assistance programs through its Cooperative Threat Reduction (CTR) Program (see above). DoD also implements the Foreign Military Financing (FMF) and International Military Education and Training (IMET) programs in support of the Partnership for Peace.

U.S. Department of Energy (DOE). DOE funds and implements a wide range of programs in the security area, including the provision of Material Protection Control and Accounting (MPC& A) assistance to secure and prevent proliferation of nuclear materials and plutonium disposition assistance. DOE is also focusing on preventing proliferation of weapons expertise, facilitating the downsizing of Russia's nuclear cities, and improving the safety of Russia's nuclear reactors.

  • Initiatives for Proliferation Prevention (IPP). DOE's IPP Program provides meaningful, sustainable, non-weapons-related work for former Soviet weapons-of-mass-destruction (WMD) scientists, engineers and technicians in the NIS through commercially viable market opportunities. IPP provides seed funds for the identification and maturation of technology and facilitates interactions between U.S. industry and NIS institutes for developing industrial partnerships, joint ventures and other mutually beneficial arrangements. Since 1994, IPP has funded over 440 projects involving more than 7,000 former Soviet weapons scientists at over 170 NIS institutes. Since establishing the IPP program, DOE has allocated over $100 million to support IPP projects in Russia.

  • Nuclear Cities Initiative (NCI). NCI was established by DOE in late FY 1998 to help Russia provide new employment opportunities to the workers who are displaced through downsizing of the Russian nuclear weapons complex. DOE has initially concentrated its efforts on three focus cities of Sarov, Snezhinsk and Zheleznogorsk, which house the two Russian weapons-design laboratories and a plutonium production enterprise. NCI is helping create the conditions under which new jobs can be created through economic diversification in these closed cities. DOE has allocated $20 million through FY 2000 for this program.

Eurasia Foundation. The Eurasia Foundation, a private, non-profit, grant-making organization supported by the U.S. Government and private foundations, has awarded more than 1,600 grants totaling more than $40 million to Russian non-governmental organizations (NGOs) and U.S.-Russian NGO partnerships since 1993. The Foundation's grants have been targeted in three main programmatic areas: economic reform, governmental reform and the non-profit sector, and media and communications. The Foundation has also implemented targeted grant initiatives to address specific issues, such as the rule of law and alternative dispute resolution.

Principal U.S. Embassy Officials
Ambassador--Alexander Vershbow
Deputy Chief of Mission--Paul Smith
Counselor for Political Affairs--George Krol
Counselor for Economic Affairs--Mary Warlick
Counselor for Commercial Affairs--Stephen Wasylko
Counselor for Consular Affairs--James Warlick
Counselor for Administrative Affairs--Robert McAnneny
Counselor for Public Affairs--Anne Chermak
Counselor for Science and Technology--Deborah Linde
Director, U.S. Agency for International Development--Carol Peasley
Immigration and Naturalization Service--Karen Landsness
Department of Energy--Andrew Beniawski
National Aeronautics and Space Administration (NASA)--Dennis McSweeney

The U.S. embassy is located in Russia at Bolshoy Devyatinskiy Pereulok, Number 8, 121099 Moscow (tel. [7](095) 728-5000; fax: [7](095) 728-5090).

Consulates General
Consulate General, St. Petersburg (Furshtskaya Ulitsa 15, tel. [7](812) 275-1701--Michael Klecheski, Consul General
Consulate General, Vladivostok (Mordovtseva Ulitsa 12, tel. [7] (4232) 268-458/554--James Schumaker, Consul General
Consulate General, Yekaterinburg (Ulitsa Gogolya 15A, tel. [7](3432) 60-11-43-- Dale Eppler, Consul General

In Moscow, the U.S. Commercial Office is located at Bolshaya Molchanovka 23/38 (tel. [7](095) 737-5030, fax: [7](095) 737-5033)
In St. Petersburg, the U.S. Commercial Office is located at Nevsky Prospekt 25 (tel. [7](812) 326-2560, fax: [7](812) 326-2561)

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