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                                                       Calendar No. 715
105th Congress                                                   Report
                                 SENATE

 2d Session                                                     105-394
_______________________________________________________________________


 
                     SILK ROAD STRATEGY ACT OF 1998

                                _______
                                

  October 9 (legislative day, October 2), 1998.--Ordered to be printed

_______________________________________________________________________


          Mr. Helms, from the Committee on Foreign Relations,

                        submitted the following

                              R E P O R T

                             together with

                             MINORITY VIEWS

                         [To accompany S. 1344]

    The Committee on Foreign Relations, to which was 
referred S. 1344 to amend the Foreign Assistance Act of 1961 to 
target assistance to support the economic and political 
independence of the countries of the South Caucasus and Central 
Asia, reports favorably thereon with an amendment and 
recommends that the bill do pass.


                                CONTENTS
                                                                   Page
  I. Purposes of the Bill.............................................1
 II. Committee Action................................................20
III. Section-by-Section Analysis.....................................21
 IV. Cost Estimate...................................................23
  V. Evaluation of Regulatory Impact.................................24
 VI. Changes in Existing Law.........................................24
VII. Minority Views..................................................31

                        I. Purposes of the Bill

                              introduction

    The Silk Road Strategy Act is necessitated by the failure 
of current U.S. policy and assistance laws to resolve regional 
conflicts or effectively advance American interests in the 
South Caucasus and Central Asia. Seven years after the collapse 
of the Soviet Union, the Silk Road Strategy Act establishes a 
policy framework that elevates and differentiates Armenia, 
Azerbaijan, Georgia, Kazakhstan, Kyrgyzstan, Tajikistan, 
Turkmenistan and Uzbekistan from the status of ``former Soviet 
republics'' and ``newly independent states''. The very use of 
these labels by U.S. policy makers has frustrated states in the 
South Caucasus and Central Asia that view themselves as 
permanently independent and sovereign countries. Most of these 
states--including several pro-Western, secular Muslim 
governments--are racked by civil wars, ethnic tensions, and 
weak and undemocratic regimes. They are falling dangerously 
behind in both economic and democratic reforms, which in turn 
provides an opening for attempts by regional powers and sub-
regional forces to undermine their very sovereignty.
    The countries in the South Caucasus and Central Asia have 
almost without exception shown a strong desire to work with the 
United States in pursuit of economic and democratic reforms. 
Clearly, enormous economic gains are possible in several 
countries in the region due to the presence of oil and gas 
reserves. The goal of the United States should be to promote 
economic and democratic reforms in the region while helping to 
develop oil and gas resources in a manner that is beneficial to 
all states in the region. Specifically, American interests in 
the region are threefold: 1) to ensure the development of 
stable, democratic states in the region, including the 
resolution of regional conflicts; 2) to develop friendly 
relationships among the states in the region and with the 
United States and its allies; and 3) to ensure that the 
economies and the natural resources of the region are developed 
in a manner dictated by the market, rather than through 
exploitation by regional, hegemonic powers.
    The Silk Road Strategy Act will not lead to any immediate 
increase in foreign assistance to the South Caucasus and 
Central Asia. The goal of the legislation is to properly focus 
U.S. assistance to better achieve U.S. interests. The 
legislation provides general authorization for a broad range of 
U.S. assistance to promote reconciliation and recovery from 
regional conflicts; to foster economic growth and development, 
including the conditions necessary for regional economic 
cooperation; to develop regional infrastructure; to secure 
borders and implement effective controls necessary to prevent 
smuggling of illegal narcotics and the proliferation of 
technology and materials related to weapons of mass 
destruction; and to promote institutions of democratic 
government and create the conditions for the growth of 
pluralistic societies. As these programs develop, in a regional 
context, the Silk Road Strategy can be the means to bring 
peace, stability and economic development to the South Caucasus 
and Central Asia.
    The goal of regional cooperation, which is the underlying 
rationale for the Silk Road Strategy Act, has drawn the support 
of every government in the South Caucasus and Central Asia with 
the exception of Armenia, as well as the governments of close 
American allies such as Turkey, Ukraine, and Romania. The 
legislation is endorsed by a broad coalition of organizations, 
including the Women's Commission for Refugee Women and 
Children, the American Petroleum Institute, the National 
Association of Manufacturers, the National Foreign Trade 
Council, the United States Chamber of Commerce, the Georgian 
American Community, the American Jewish Committee, the American 
Jewish Congress, the Anti- Defamation League, B'nai B'rith, and 
the National Conference on Soviet Jewry.
    The authorities in the Silk Road Strategy Act complement 
and build upon the authorities included in the Freedom Support 
Act (the law currently governing U.S. assistance to the 
thirteen independent nations that once composed the Soviet 
Union), while creating a regional focus for U.S. policy in the 
South Caucasus and Central Asia. The legislation encourages a 
re-energized U.S. assistance initiative in the region while 
maintaining a strong emphasis on democratic reform and human 
rights. In fact, the restrictions on assistance included in 
Section 499E of the Silk Road Strategy Act are, verbatim, the 
same restrictions on assistance that are included in the 
Freedom Support Act. In a May 19, 1998, letter to the Foreign 
Relations Committee, the Department of State offers the Clinton 
Administration's unqualified support for the Silk Road Strategy 
Act which ``provides a useful framework for U.S. interests in 
the Southern Caucasus and Central Asia.'' The letter goes on to 
state that, in the view of the Administration, ``(t)his Act 
builds upon the Freedom Support Act and highlights America's 
interests in this region.''
    Under the Freedom Support Act, U.S. assistance in the 
region has been skewed by earmarks, rigid restrictions and, 
especially, an absence of correlation between dollar amounts 
and results in economic or democratic reforms. For example, the 
only country in the region recognized as having conducted a 
fully free and fair election, Georgia, has received less than 
half of the total assistance--and less than a quarter on a per 
capita basis--provided to Armenia since 1992. Yet, in a 
critique of democratic progress in Armenia, a February 3, 1998, 
Human Rights Watch report reveals that the resignation of the 
Armenian President earlier this year was in fact forced by a 
powerful Armenian militia group. Furthermore, according to the 
April 1998 Digest of the Commission on Security and Cooperation 
in Europe (CSCE), the subsequent March 1998 presidential 
election in Armenia did not meet the standards of the 
Organization on Security and Cooperation in Europe (OSCE). In 
fact, according to the CSCE report, ``(s)ince the 1991 election 
of Levon Ter-Petrossyan, Armenia has not held an election that 
the OSCE/ODIHR observation missions have been able to certify 
as free and fair''.
     Other governments in the region have also failed to 
implement democratic reforms. The government of Azerbaijan is a 
case in point. Opposition candidates intend to boycott the 
Azerbaijani presidential election scheduled for October 11, 
1998, due to a lack of confidence in an electoral process 
solely under the control of the incumbent president. 
Ironically, until 1996, the government of Azerbaijan was 
prevented by the Freedom Support Act from receiving any U.S. 
assistance, including technical assistance designed 
specifically to promote the development in democratic 
institutions and sound election laws. In a June 1998 letter to 
the Congress, the five leading opposition candidates in 
Azerbaijan made an explicit appeal for the lifting of 
assistance restrictions against Azerbaijan as an essential step 
for encouraging democratic development of their country.
    The Clinton Administration has repeatedly requested that 
the Congress allow broader U.S. assistance to Azerbaijan, 
pointing out that critics of corruption and undemocratic 
tendencies in the government of that country have 
simultaneously blocked the very assistance that could 
facilitate reforms. According to the Department of State, anti-
corruption assistance, counter-narcotics programs, economic 
reform assistance (including transparency in budgeting and tax 
reform), and funding of regional environmental cooperation 
programs are all prohibited to the Government of Azerbaijan 
under Section 907 of the Freedom Support Act.

East-West versus North-South: The Silk Road Strategy

    The Silk Road Strategy Act establishes a regional approach 
for U.S. trade, economic assistance and foreign policy 
specifically to build an East-West axis of political 
cooperation among the eight countries that lie between Russia 
and Iran on the southern periphery of the former Soviet Union. 
Efforts to resolve conflicts in the region are at a standstill, 
economic and democratic reforms are slowing, and Russia and 
Iran are fomenting instability in order to establish political 
influence over those states.
    Russian and Iranian mischief can be attributed to a mutual 
desire to expand political control in the South Caucasus and 
Central Asia while seeking to maintain control over the flow of 
oil and gas resources from the region. Senior officials from 
Russia and Iran meet frequently to coordinate their interests 
in the South Caucasus and Central Asia. At a June 27, 1998, 
meeting between the Transportation Ministers of Russia and 
Iran, a plan was announced to develop a North-South economic 
corridor between the two countries. On July 19, 1998, the 
governments of those two countries reiterated their intention 
to frustrate efforts to delimit the ownership of resources in 
the Caspian Sea. Meanwhile, Russia has used its exclusive 
control of existing oil and gas pipelines to force economic and 
political concessions from neighboring states.
    As part of the deepening relationship with Iran, the 
Russian government has shown reckless disregard for the 
proliferation of sophisticated weapons technology to that 
country. According to an April 25, 1998, New York Times report, 
the Russian government failed to stop ``a truck laden with 22 
tons of stainless steel that could be used to make missiles'' 
that was on its way to Tehran, despite advance warning by the 
United States Government. Fortunately, according to the report, 
cooperative customs agents in Azerbaijan were willing to stop 
the shipment before it entered Iran.

Promoting Human Rights

    A leading challenge for United States policy in the South 
Caucasus and Central Asia is to determine when to disengage and 
when to use the broad array of U.S. assistance programs to 
strengthen democratic institutions, encourage economic reforms, 
and foster the development of civil society in countries that 
otherwise have poor human rights records. Among the factors 
that must weigh heavily in deciding U.S. policy in the South 
Caucasus and Central Asia are the friendly, pro-American 
receptivity found among most states in the region that could 
allow democratic ideals to take root. Also, consideration must 
be given to compelling U.S. geostrategic and economic interests 
in the region, as well as the likelihood that U.S. 
disengagement will do nothing to improve human rights while 
regional powers such as China, Iran and Russia (countries with 
human rights records of even more dubious quality than those in 
the South Caucasus and Central Asia) increase their political 
influence over those states.
    There is no benefit in the Silk Road Strategy Act for those 
who violate basic human rights. Section 499E of the Silk Road 
Strategy Act specifically prohibits assistance to the 
government of any country that ``is engaged in a consistent 
pattern of gross violations of internationally recognized human 
rights''. It is necessary to recognize that human rights 
problems exist in every country in the region. Under existing 
human rights statutes however, the Administration has not found 
such violations to be sufficient to merit a cut-off of U.S. 
assistance.
    To some extent, human rights abuses, undemocratic 
tendencies and authoritarian government can be attributed to 
ongoing conflicts in the region, especially in Armenia, 
Azerbaijan, Georgia and Tajikistan. Both Russia and Iran have 
sought to exploit, and at times foment, instability in the 
South Caucasus and Central Asia--a principal cause of 
undemocratic behavior and abuse. Specifically, Russia has 
provided covert and overt military assistance to fuel 
separatist conflicts in Georgia and Azerbaijan, while Iran has 
sought to impose an anti-Western, anti-Israeli orientation on 
states in the region, including a direct threat by the Iranian 
government upon the life of the President of Azerbaijan in 
retaliation for warming Azerbaijani-Isreali relations. To this 
day Russia harbors the mastermind of a 1995 assassination 
attempt against Georgian President Eduard Shevardnadze. The 
individual, Lt. General Igor Georgadze, was surreptitiously 
flown out of a Russian military base in Georgia only days after 
the assassination attempt.
    When the Freedom Support Act was approved by the Congress 
in 1992, few could have conceived that Russia would be actively 
seeking to subvert the elected governments of neighboring 
states within three years. In fact, while providing some 
benefits to other eligible countries, the Freedom Support Act 
has been most beneficial to Russia. Since 1992, Russia has 
maintained its position as the leading recipient of aid under 
the Freedom Support Act, despite perpetrating the single 
greatest human rights abuse by any recipient of U.S. foreign 
assistance in the region. The Russian military's brutal 1994-
1996 assault on the southern Russian region of Chechnya 
resulted in the massacre of tens of thousands of innocent men, 
women, and children, and has plunged the area into ongoing 
chaos. Nonetheless, these atrocities had absolutely no impact 
on the Clinton Administration's determination to continue 
Russia's generous aid levels. No other state in the region has 
come close to such horrific action, although the human rights 
records of most are in need of substantial improvement.
    It is clear, in fact, that the level of U.S. assistance to 
countries in the region is most certainly not correlated with 
the human rights records of the recipients to date. Listed 
below is a simple comparison of aid levels and human rights 
records, with a breakdown of total assistance provided to each 
country in the South Caucasus and Central Asia from 1992-1997 
(as provided in the State Department's 1998 ``Report on U.S. 
Government Assistance to and Cooperative Activities with the 
New Independent States of the former Soviet Union''), and the 
most recent assessment of each country's human rights record by 
the United States Department of State:

                                ARMENIA

U.S. Assistance Provided under the Freedom Support Act: $363.34 
million
Population: 3,465,611
Per Capita Assistance 1992-1997: $104.84

    Armenia has a constitutional government in which the 
President has extensive powers of appointment and decree, and 
the role of the legislature relative to the executive branch is 
severely circumscribed. The President appoints the Prime 
Minister, who is in charge of the Cabinet. President Levon Ter-
Petrossian was re-elected in a controversial multi-candidate 
election in September 1996, which was flawed by numerous 
irregularities and serious breaches of the election law. A 
transitional National Assembly in which ruling Armenian 
National Movement (ANM) members and their allies won about 88 
percent of the seats was elected in July 1995; local and 
international observers characterized these elections as 
``generally free but not fair.'' To protest the presidential 
elections, a number of opposition parties continue to boycott 
parliamentary sessions. Both the Government and the legislature 
can propose legislation. The legislature approves new laws and 
can remove the Prime Minister by a vote of no confidence. 
Elections for a new National Assembly are scheduled for 1999.
    The Constitution provides for an independent judiciary; 
however, in practice judges are subject to political pressure 
from the executive branch. The Ministry of Internal Affairs and 
National Security is responsible for domestic security, 
intelligence activities, border control, and the national 
police force. Oversight of the security services improved after 
the merger of the Interior Ministry with the National Security 
Ministry, but members of the security forces committed serious 
human rights abuses.
    The transition from a centralized, controlled economy to a 
market economy continues to move forward. Industrial output 
remains low, leaving over 50 percent of the population 
unemployed or underemployed, with a high degree of income 
inequality. Most small and medium enterprises have been 
privatized, as has most agricultural land. About one-third of 
permanent land titles had been issued by the end of the year. 
Gains in the privatized trade, service, and agriculture sectors 
generated an approximately 3 percent increase in gross domestic 
product (GDP) in 1997, to about $550 per capita. However, 
inflation rose to about 21.9 percent for the year. Foreign 
assistance and remittances from Armenians abroad play a major 
role in sustaining the economy.
    The Constitution provides for broad human rights 
protections, but human rights problems persist in several 
important areas. The Government's manipulation of the 1996 
presidential election continued to restrict citizens' ability 
to change their government. Members of the security forces made 
arbitrary arrests and detentions without warrants, beat 
detainees during arrest and interrogation, and did not respect 
constitutional guarantees regarding privacy and due process. At 
least two cases of police abuse resulting in death occurred; 
adequate institutional mechanisms do not exist to protect 
individuals from police abuse. Prison conditions remained poor.
    The judiciary is subject to political pressure and does not 
enforce constitutional protections effectively. Opposition 
groups charged that defendants in three major criminal cases 
were political prisoners. The Government continued to place 
some restrictions on freedom of the press and maintains the 
dominant role in nationwide television and radio broadcasting. 
A semi-official list of forbidden subjects encourages some 
media self-censorship. However, the nongovernmental media often 
criticize the country's leadership and policies. Local 
independent television and newspapers, along with private radio 
stations, continued to multiply.
    The Government maintains some limits on freedom of 
association. A previously suspended prominent political party, 
the Armenian Revolutionary Federation (ARF/Dashnaks), was not 
reinstated, although the authorities tolerated its activities, 
restored its offices, and permitted publication of a Dashnak 
newspaper. The legislature called into question its commitment 
to constitutional provisions for freedom of religion, by 
amending the law on freedom of conscience to further strengthen 
the role of the Armenian Apostolic Church and create new 
barriers to other denominations. The Government places some 
restrictions on freedom of movement. Discrimination against 
women, minorities, and the disabled remained a problem.
    Efforts began in October to train current and prospective 
judges and prosecutors on the draft civil and criminal law 
codes, scheduled for passage in 1998.

                               AZERBAIJAN

U.S. Assistance Provided under the Freedom Support Act: $45.19 
million
Population: 7,735,918
Per Capita Assistance 1992-1997: $5.84

    Azerbaijan is a republic with a presidential form of 
government. Heydar Aliyev, who assumed presidential powers 
after the overthrow of his democratically elected predecessor, 
was elected President in 1993. Although Azerbaijan took 
significant steps toward economic reform in 1997, it made 
little progress in moving toward democracy. President Aliyev 
and his supporters, many from his home region of Nakhchivan, 
continue to dominate the Government, the multiparty 125-member 
Parliament chosen in the November 1995 elections, and the 
judiciary. The Constitution, adopted in a November 1995 
referendum, established a system of government based on a 
division of powers between a strong presidency, a legislature 
with the power to approve the budget and impeach the President, 
and a judiciary with limited independence.
    After years of inter-ethnic conflict between Armenians and 
Azerbaijanis, Armenian forces and forces of the self-styled 
``Republic of Nagorno-Karabakh'' (which is not recognized by 
any government) occupy 20 percent of Azerbaijan's territory. A 
cease-fire was concluded in 1994, and the peace process 
continues. Serious clashes along the Azerbaijan-Armenian border 
and along the line of contact with Nagorno-Karabakh in the 
spring and summer caused scores of casualties. Military 
operations continued to affect the civilian population. There 
are 780,000 Azerbaijani refugees and internally displaced 
persons (IDP's) who cannot return to their homes. In the part 
of Azerbaijan that the Government controls. Government efforts 
to hinder the opposition continue to impede the transition to 
democracy. In the part of Azerbaijan that Armenians control, a 
heavily militarized ruling structure prevents ethnic 
Azerbaijanis from returning to their homes. Police, the 
Ministry of Internal Affairs, and the Ministry of National 
Security are responsible for internal security. Members of the 
police committed numerous human rights abuses.
    The economy is in transition from central planning to a 
free market. A highly organized system of corruption and 
patronage hampers economic development. The country has rich 
petroleum reserves and significant agricultural potential. Oil 
and oil products are the largest export, followed by cotton. 
Other key industries are chemicals, oil field machinery, and 
air conditioning equipment. However, most industry languishes 
in a post-Soviet depression. The Government signed five oil 
production sharing agreements with foreign oil companies in 
1997, bringing the total to nine. In agriculture, which employs 
35 percent of the labor force, the leading crops are cotton, 
grapes, tea, and tobacco. The Government continued its policies 
of fiscal and monetary austerity, inflation continued to fall, 
and interest rates declined to less than half of 1996 levels. 
The pace of privatization accelerated with the initiation of 
auction sales of shares in large state-owned enterprises. 
Privatization of the cotton gins ended the Government's 
monopoly on trade in cotton. Privatization of farmland 
continued, but new small farmers have poor access to credit and 
markets, and commercial agriculture remains weak.
    Per capita gross domestic product is about $300 per year. 
According to the World Bank, 60 percent of citizens live in 
poverty. Much of the labor force is ``employed'' by state 
enterprises that operate at very low levels of capacity and pay 
their workers intermittently if at all. The overall economic 
situation of the average citizen remains precarious, although 
in urban areas a growing moneyed class with trade and oil-
related interests has emerged. Economic opportunity depends on 
connections to the Government. Severe disparities of income 
have emerged that are partly attributed to patronage and 
corruption.
    The Government's human rights record continued to be poor, 
and the Government continued to commit serious abuses. Police 
beat persons in custody, and some beatings resulted in deaths. 
Police also arbitrarily arrested and detained persons, 
conducted searches and seizures without warrants, and 
suppressed and refused to allow peaceful public demonstrations. 
In most instances, the Government took no action to punish 
abusers. In a variety of separate incidents, the Government 
arrested at least 19 members of the opposition Azerbaijan 
Popular Front Party. Prison conditions remained harsh. The 
entire judiciary is corrupt, inefficient, and subject to 
executive influence. The Government holds about 120 political 
prisoners.
    The Government tolerated the existence of many opposition 
political parties, although it continued to refuse to register 
some of them. The Government restricts citizens' ability to 
change their government peacefully. The Government restricted 
freedom of speech, press, assembly, association, religion, and 
privacy when it deemed it in its interest to do so. Press 
censorship continued, as did the Government's control over the 
broadcast media. Discrimination against ethnic minorities and 
societal discrimination and violence against women are 
problems. Worker rights suffered a setback when managers in the 
state-owned oil industry, without a vote of the union 
membership, formed a progovernment union of oil and gas workers 
to displace the independent union that had represented the 
interests of workers in those industries.
    Nevertheless, there were some positive signs. Scores of 
opposition and independent newspapers continued to publish and 
discuss a wide range of sensitive domestic and foreign policy 
issues. The Government abolished military censorship and the 
press began open discussion of the issue of censorship. 
Opposition political parties carried on a variety of public 
activities. After 4 years of internal exile, and 2 months of 
confinement to a village, former president Elchibey returned to 
Baku in October, 1997, and resumed full political activity. 
Although critical of certain domestic human rights activists, 
the Government was open to limited dialogue with domestic and 
international human rights organizations. The Government 
arrested two police officials for inflicting injuries on 
detained personsthat resulted in death.
    Cease-fire violations by both sides in the Nagorno-Karabakh 
conflict increased. They resulted in injuries and deaths among 
combatants and the taking of prisoners, including civilians. 
Insurgent Armenian forces in Nagorno-Karabakh and the occupied 
territories continued to prevent the return of IDP's to their 
homes. This restriction resulted in significant human suffering 
for hundreds of thousands of people.

                                GEORGIA

U.S. Assistance Provided under the Freedom Support Act: $141.02 
million
Population: 5,174,642
Per Capita Assistance 1992-1997: $27.25

    Georgia declared independence from the Soviet Union in 
1991. Multi-party parliamentary elections followed a short-
lived military coup in 1992 that ousted the elected government 
of Zviad Gamsakhurdia. In August 1995, Parliament adopted a 
Constitution that provides for an executive branch that reports 
to the President, a legislature, and an independent judiciary. 
In November 1995, Eduard Shevardnadze was elected President, 
and a new Parliament was selected in elections described by 
international observers as generally consistent with democratic 
norms except in the self-governing region of Ajaria. The 
President appoints ministers with the consent of the 
Parliament. The judiciary is subject to executive pressure.
    Internal conflicts in Abkhazia and South Ossetia that 
erupted in the early 1990's remain unresolved, although cease-
fires in both areas are in force. These conflicts, together 
with problems created by roughly 250,000 internally displaced 
persons (IDP's), pose the greatest threat to national 
stability. In 1993 Abkhaz separatists won control of Abkhazia, 
and most ethnic Georgians, a large plurality of the population, 
fled the region. In 1994 Russian peacekeeping forces 
representing the Commonwealth of Independent States (CIS) 
deployed in the conflict area with the agreement of the 
Government and the Abkhaz separatists. Despite the presence of 
peacekeepers, there has been only very limited repatriation of 
ethnic Georgian IDP's, apart from some spontaneous returns to 
the Gali region of Abkhazia, where the security situation 
remains unstable. A Russian peacekeeping force has been in 
South Ossetia since June 1992. Repatriation to South Ossetia 
has also been slow. The Government has no effective control 
over either Abkhazia or South Ossetia. There were no large-
scale armed hostilities in South Ossetia or Abkhazia in 1997, 
but the intensity and frequency of partisan warfare in Abkhazia 
increased. Abkhaz and Georgian armed criminal bands were also 
active in Abkhazia.
    The Ministry of Interior (MVD) and Procuracy have primary 
responsibility for law enforcement, and the Ministry of State 
Security (MGB, formerly KGB) plays a significant role in 
internal security. In times of internal disorder, the 
Government may call on the army. Reformist, elected, civilian 
authorities still maintain inadequate control of the law 
enforcement and security forces. In particular, representatives 
of the MVD and Procuracy committed serious human rights abuses.
    The economy continued its turnaround, with a growth rate 
estimated by the International Monetary Fund (IMF) at 10 
percent. The economy is primarily agricultural. Foreign aid 
remains an essential component of the economy. The country 
began a second stage of economic reforms to complete the 
transition to a free market economy, but the ongoing energy 
crisis remains an obstacle to economic progress. The IMF 
estimated annual per capita gross domestic product at over 
$850.
    The Government continued efforts to improve its uneven 
human rights record, but serious problems remain. Police and 
security forces routinely abuse and beat prisoners and 
detainees, force confessions, and fabricate or plant evidence. 
Inhuman prison conditions, along with abuse, led to deaths in 
custody. Corrupt and incompetent judges seldom displayed 
independence from the executive branch, leading to trials that 
were neither fair nor expeditious. Law enforcement agencies 
illegally interfered with citizens' right to privacy at times 
and limited freedom of assembly, violently dispersing peaceful 
rallies. The Government constrains some press freedoms. 
Discrimination against women is also a problem.
    Senior government officials openly acknowledged serious 
human rights problems, especially those linked to law 
enforcement agencies, and sought international advice and 
assistance on needed reforms. However, while structural reforms 
designed to improve respect for human rights continued to be 
implemented, there was no change in the practices of the law 
enforcement agencies.
    Nevertheless, increased citizen awareness of democratic 
values, and growth of civil society provided some check on the 
excesses of law enforcement agencies. The Parliament challenged 
the law enforcement agencies by forcing the resignation of the 
Security Minister and by investigating charges of abuse. 
Parliament passed a Law on the Courts designed to increase 
judicial competence and independence as well as a new Criminal 
Procedures Code that puts into effect constitutional 
protections. Independent newspapers showed greater maturity and 
a continued willingness to criticize government policies and 
actions. The number, variety, and sophistication of independent 
nongovernmental organizations (NGO's) grew, as did their 
ability to speak out for, and defend the rights of, individual 
citizens.

                               KAZAKHSTAN

U.S. Assistance Provided under the Freedom Support Act: $304.14 
million
Population: 16,898,572
Per Capita Assistance 1992-1997: $18.00

    The Constitution of Kazakhstan concentrates power in the 
presidency. President Nursultan Nazarbayev is the dominant 
political figure. The Constitution, adopted in 1995 in a 
referendum marred by irregularities, permits the President to 
legislate by decree and dominate the legislature and judiciary; 
it cannot be changed or amended without the President's 
consent. Presidential elections originally scheduled for 1996 
did not take place, as President Nazarbayev's term in office 
was extended to 2000 in a separate 1995 referendum, also marred 
by irregularities. Under the 1995 Constitution, Parliament's 
powers are more limited than previously. However, members of 
Parliament have the right to introduce legislation. During the 
Parliament's first full session, deputies drafted 19 bills for 
consideration. The judiciary remained under the control of the 
President and theexecutive branch. The lack of an independent 
judiciary made it difficult to root out corruption, which was 
pervasive throughout the Government.
    In October as part of a larger government reorganization, 
the law enforcement community was restructured. The Committee 
for National Security (the KNB, successor to the KGB) is 
responsible for counter-intelligence and law enforcement 
activities on the national level. A new external intelligence 
service, Barlau (the Kazakh word for intelligence), was created 
to supervise overseas operations. Both report directly to the 
President. The Ministry of Internal Affairs supervises the 
criminal police who are poorly paid and widely believed to be 
corrupt. The State Committee for Investigations (GSK), a 
federal investigative and law enforcement agency established in 
1995, was dissolved. Its functions were divided between the 
Interior Ministry and the KNB. The KNB continued efforts to 
legitimize its role by focusing on activities to combat 
terrorism and organized crime. Members of the security forces 
committed human rights abuses.
    Kazakhstan is rich in natural resources, chiefly petroleum 
and minerals. The Government has made significant progress 
toward a market-based economy since independence. After a 5-
year decline, overall production began to increase in 1996. The 
Government has been successful in stabilizing the local 
currency (tenge), slowing inflation, and improving structural 
reforms. The agricultural sector, traditionally accounting for 
over one-third of national employment and production, has been 
slow to privatize. The Government successfully privatized most 
small- and medium-size firms, and is working to privatize 
large-scale industrial complexes, particularly in the oil and 
gas sector. However, living standards for many citizens 
continue to decline. According to several surveys, up to 35 
percent of citizens live below the government-defined poverty 
line of $50 per month.
    The Government generally respected the human rights of its 
citizens in some areas, but serious problems remain in others. 
Democratic institutions are weak. The Government infringed on 
citizens' right to change their government. The legal 
structure, including the Constitution adopted in 1995, does not 
fully safeguard human rights. Members of the security forces 
often beat or otherwise abused detainees, and harsh prison 
conditions continued to deteriorate. There were allegations of 
arbitrary arrest, and prolonged detention is a problem. The 
judiciary remains under the control of the President and the 
executive branch, and corruption is deeply rooted. The 
Government infringed on citizens' rights to privacy.
    The Government generally tolerates independent media, 
although the media practiced self-censorship, and the 
Government maintained control of most printing presses and 
facilities. Freedom of assembly was sometimes restricted. Some 
organizers of unsanctioned demonstrations were arrested and 
fined or imprisoned. Freedom of association, while generally 
respected, was sometimes hindered by complicated and 
controversial registration requirements for organizations and 
political parties that restrict this right. Domestic violence 
against women remained a problem. There was discrimination 
against women, the disabled, and ethnic minorities. The 
Government discriminated in favor of ethnic Kazakhs. The 
Government tried to limit the influence of independent trade 
unions, both directly and through its support for state-
sponsored unions, and members of independent trade unions were 
harassed.

                               KYRGYZSTAN

U.S. Assistance Provided under the Freedom Support Act: $133.93 
million
Population: 4,540,185
Per Capita Assistance 1992-1997: $29.50

    The Kyrgyzstan became an independent state in 1991. 
Although the 1993 Constitution defines the form of government 
as a democratic republic with substantial civil rights for its 
citizens, the President, Askar Akayev, dominates the 
government. Akayev was reelected in December 1995 in an open, 
multi-candidate presidential election, which was marred, 
however, by deregistration of three rival candidates 
immediately prior to the vote. Also in 1995, a new, two-chamber 
Parliament was elected for a 5-year term. The Constitution was 
amended by referendum in February 1996 to strengthen 
substantially the presidency and define the role of Parliament. 
However, the referendum was marred by serious irregularities. 
In 1995 a Constitutional Court was sworn in, and a reform 
program was implemented to improve the quality of the judiciary 
in 1996. While Parliament has become increasingly active, the 
balance of power resides in the office of the President. The 
judiciary is dominated by the executive branch.
    Law enforcement responsibilities are divided between the 
Ministry of Internal Affairs (MVD) for general crime, the 
Ministry of National Security (MNB) for state-level crime, and 
the procurator's office for both types of crime. Both the MVD 
and the MNB deal with corruption and organized crime. These 
ministries inherited their personnel and infrastructure from 
their Soviet predecessors. Both appear to be under the full 
control of the Government and usually conform their actions to 
the law. Kyrgyz borders are manned by Russian border troops 
under an agreement with the Russian Federation. The Government 
has little authority over these troops, who sometimes enforce 
their own rules rather than Kyrgyz law.
    The Kyrgyzstan is a poor, mountainous country with a 
predominantly agricultural economy. Cotton, wool, and meat are 
the main agricultural products and exports. Other exports 
include gold, mercury, antimony, uranium, and hydro-
electricity. The Government has carried out progressive market 
reforms. The moderate growth apparent in most sectors has 
increased, and economic reform is now accepted by the general 
public. However, the level of hardship for pensioners, 
unemployed workers, and government workers with salary arrears 
continues to be very high. Foreign assistance plays a 
significant role in the country's budget.
    The Government generally respected the human rights of its 
citizens in many areas, but there were problems with citizens' 
limited ability to change their government, freedom of speech 
and the press, due process for the accused, religious freedom, 
and ethnic discrimination. Prison conditions remained poor. As 
in the past, but with increasing frequency, journalists were 
tried, arrested, and convicted under criminal rather than civil 
statutes for libeling government officials or other prominent 
citizens. However, in a number of cases journalists received 
reduced sentences on appeal or by pardon. At year's end, a 
journalist who previously was serving a sentence under criminal 
libel had been amnestied, but eight other cases were announced 
by the President's press secretary as pending. In a number of 
cases, the accused were held for months without bail before 
their trials.
    The Constitution was amended illegally in a 1996 referendum 
marred by irregularities. In general executive domination of 
the judiciary made assurances of due process problematic. Local 
``village elders' courts'' levied harsh sentences beyond their 
mandate, but abuses such as torture and death sentences by 
stoning apparently have abated. Although sanctioned by the 
Government, elders' courts are not part of the regular judicial 
structure, and the Government has made efforts to curtail their 
activities. The Government does not fully protect freedom of 
religion. Concerns about ethnic discrimination remain, but in 
general, the situation of minorities has improved and 
emigration rates have stabilized at a low level. Violence 
against women is a problem that authorities often ignore. There 
are a growing number of street children.

                               TAJIKISTAN

U.S. Assistance Provided under the Freedom Support Act: $28.64 
million
Population: 6,013,855
Per Capita Assistance 1992-1997: $4.76

    Tajikistan remains in the hands of a largely authoritarian 
government, although it has established some nominally 
democratic structures. The Government's narrow base of support 
limits its ability to control the entire territory of the 
country. The Government of President Emomali Rahmonov, 
comprised largely of natives of the Kulob region, continued to 
dominate the State.
    Tajikistan took a significant step toward national 
reconciliation after its 1992 civil war, with the signing of a 
comprehensive peace accord in June, and the inauguration of a 
Commission on National Reconciliation in July in Moscow. An 
amnesty agreement and accord on exchange of prisoners also were 
signed; the Commission on National Reconciliation met in Moscow 
in July, before moving to Dushanbe in September. Despite the 
agreement, the United Nations Mission of Observers to 
Tajikistan (UNMOT) reported two cease-fire violations in 
August. Under the peace accords, the opposition is allotted 30 
percent of government positions but as of year's end, the 
Government still had not given the opposition any positions. 
The judiciary is not independent.
    Internal security is the responsibility of the Ministries 
of Interior, Security, and Defense. The Russian Army's 201st 
Motorized Rifle Division, part of a Commonwealth of Independent 
States (CIS) peacekeeping force established in 1993, remained 
in the country. The Russian Border Guard Force (RBF) reports to 
Moscow, has primary responsibility for guarding the border with 
Afghanistan, and is comprised mostly of Tajiks with some 
Russians and a limited number of other Central Asians, although 
the officer corps remains principally Russian. Some regions of 
the country remained effectively outside the Government's 
control, and government control in other areas existed only by 
day, or at the sufferance of local opposition commanders. 
Opposition forces based near Kofarnihon, east of Dushanbe, 
carried out a variety of attacks during the year. Some members 
of the security forces and government-aligned militias 
committed serious human rights abuses. The armed opposition 
also committed serious human rights abuses, including 
abductions and murders. There have been credible reports of 
threatening, extortion and abuse of civilian populations by 
both government and United Tajik Opposition units.
    The economy continued to be extremely depressed, and 
government revenue remains highly dependent on the government-
owned aluminum and government-dominated cotton industries. 
Economic reform has been halting. Most Soviet-era factories 
operate at a minimal level, if at all, while privatization has 
moved ahead only slowly. As much as one-third of the total 
population is unemployed or significantly underemployed 
according to government estimates. Inflation increased during 
1997, and the exchange rate declined substantially as the 
Government failed to maintain fiscal and budgetary discipline. 
Many, but not all, wages and pensions are being paid. However, 
because most yearly salary percentage increases are still 
meager and do not keep up with inflation, the sums remain 
extremely low and not enough to support adequate nutrition 
without supplemental income. Gross domestic product increased 
marginally, but remained as low as $200-$400 per person, 
according to official statistics. There were serious shortages 
of natural gas for heating and industry, largely as a result of 
continued disputes with Uzbekistan over natural gas purchases. 
Wheat acreage and the total harvest continued to increase 
dramatically as privatized farmers responded to their own and 
market needs for increased production, although state farm 
harvests continue to be mediocre.
    The Government's human rights record improved slightly, due 
principally to the reduced level of violence and the absence of 
widespread military conflict; however, serious problems remain.
    The Government limits citizens' right to change their 
government. Some members of the security forces were 
responsible for killings and beatings, and often abused 
detainees. These forces were also responsible for threats, 
extortion, looting, and abuse of civilians. Certain battalions 
of nominally government forces operated quasi-independently 
under their various leaders, who generally have government 
positions. These forces committed similar abuses. The 
government prosecuted few perpetrators for these abuses. Prison 
conditions remain life threatening, and the Government 
continued to use arbitrary arrest and detention. Basic problems 
of rule of law persist. There are often long delays before 
trials, and the judiciary is subject to political and 
paramilitary pressure. The authorities infringe on citizens' 
right to privacy. There has been public criticism of corrupt or 
criminal actions by Ministry of Interior employees, several 
dozen of whom were removed from their positions during the 
year.
    The Government severely restricts freedom of the press, 
restricts freedom of speech, and dominates the electronic 
media. No genuine opposition media appeared during the year, 
and the Government suspended and harassed independent local 
television stations. The authorities strictly control freedom 
of assembly and association for political organizations. 
Freedom of assembly is hindered. Two new political parties were 
allowed to register, bringing the total to 11; the three 
opposition parties and a branch of the fourth affiliated with 
the armed opposition remained suspended. The Government 
cooperated to a limited extent with the Organization on 
Security and Cooperation in Europe (OSCE) in Dushanbe, but did 
not establish a human rights ombudsman as recommended by the 
OSCE. The Government also did not establish its own ombudsman, 
despite its statement in 1996 that it would do so. Violence 
against women is a problem.
    Several armed clashes among ostensible government 
supporters occurred, resulting in civilian deaths, abuse, and 
property damage. The general weakness of government control and 
continuing decline in social order led to an increase in crime 
and violence, including politically-inspired violence.
    The armed opposition committed numerous serious abuses. 
Opposition forces were responsible for killings, kidnapings, 
abuse, threats, and extortion, including against civilians.
    Following the collapse of the Soviet Union and the 
independence of Tajikistan in 1991, regional, political, and 
religious tensions led to a brief but violent civil war in 
1992-93. A low scale guerrilla war continued until late 1996, 
led by a coalition of regionally based, democratic and Islamic 
groups, with a political base and refugee population in 
northern Afghanistan, against the winners of the civil war, a 
loose coalition of also regionally based, but more politically 
traditional, that is Communist, elements. By June a series of 
accords had been signed ending the civil strife and pointing to 
elections in 1998.

                              TURKMENISTAN

U.S. Assistance Provided under the Freedom Support Act: $18.84 
million
Population: 4,225,351
Per Capita Assistance 1992-1997: $4.46

    Turkmenistan, a one-party state dominated by its President 
and his closest advisers, made little progress in moving from a 
Soviet-era authoritarian style of government to a democratic 
system. Saparmurad Niyazov, head of the Turkmen Communist Party 
since 1985 and President of Turkmenistan since its independence 
in October 1990, may legally remain in office until 2002. The 
Democratic Party, the renamed Communist Party, retained a 
monopoly on power; the Government registered no parties in 1997 
and continued to repress all opposition political activities. 
Emphasizing stability and gradual reform, official nation-
building efforts focused on fostering Turkmen nationalism and 
glorification of President Niyazov. In practice the President 
controls the judicial system, and the 50-member unicameral 
Parliament (Mejlis) has no genuinely independent authority.
    The Committee on National Security (KNB) has the 
responsibilities formerly held by the Soviet Committee for 
State Security (KGB), namely, to ensure that the regime remains 
in power through tight control of society and discouragement of 
dissent. The Ministry of Internal Affairs directs the criminal 
police, which works closely with the KNB on matters of national 
security. Both operate with relative impunity and have been 
responsible for abusing the rights of individuals as well as 
enforcing the Government's policy of repressing political 
opposition.
    Turkmenistan is largely desert with cattle and sheep 
raising, intensive agriculture in irrigated oases, and huge oil 
and gas reserves. Its economy remains dependent on central 
planning mechanisms and state control, although the Government 
has taken a number of potentially significant steps to make the 
transition to a market economy. Agriculture, particularly 
cotton cultivation, accounts for nearly half of total 
employment. Gas, oil and gas derivatives, and cotton account 
for almost all of the country's export revenues. Seeking 
increased outlets for its gas exports (and, thereby, greater 
economic independence), the Government is considering 
construction of new gas export pipelines to or through a number 
of countries, including neighboring Iran and Afghanistan.
    The Government continued to commit human rights abuses, and 
the authorities in particular severely restricted political and 
civil liberties. Citizens do not have the ability to change 
their government peacefully. Dissident Durdymurad Khodzha-
Mukhammed remains in a psychiatric hospital in Geok-Depe, and 
dissident Ata Aymamedov is still imprisoned for calling for the 
President's removal from office. Senior government officials 
failed to respond to inquiries regarding these two cases. 
Security forces continued to beat and otherwise mistreat 
suspects and prisoners, and prison conditions remained poor and 
unsafe. Arbitrary arrest, detention, unfair trials, and 
interference with citizens privacy remained problems. The 
Government completely controls the media, censoring all 
newspapers and rarely permitting independent criticism of 
government policy or officials. The Government generally gave 
favored treatment to ethnic Turkmen over minorities and to men 
over women. Women experience societal discrimination, and 
domestic violence against women is a problem.
    The recently amended law on religion reaffirmed a number of 
important religious freedoms but also tightens government 
control of religious groups. The requirement that religious 
organizations have at least 500 members to be legally 
registered has prevented some minority religions from legally 
establishing themselves.
    The Institute for Democratization and Human Rights, given a 
mandate to conduct research in support of the democratization 
of the Turkmen government and society and to monitor the 
protection of human rights, completed its first year of 
operation in October, 1997. During the year, it continued to 
develop its research and monitoring activities. Early in 1997, 
it conducted inspections of prisons, and several reforms 
resulted from these inspections.

                               UZBEKISTAN

U.S. Assistance Provided under the Freedom Support Act: $82.21 
million
Population: 23,860,452
Per Capita Assistance 1992-1997: $3.45

    Uzbekistan is an authoritarian state with limited civil 
rights. The Constitution provides for a presidential system 
with separation of powers between the executive, legislative, 
and judicial branches. In practice President Islam Karimov and 
the centralized executive branch that serves him remain the 
dominant forces in political life. The Oliy Majlis (Parliament) 
is dominated by the executive branch, and only parties that 
support the President are represented. Although the 
Constitution provides for an independent judicial authority, in 
practice the judicial branch is heavily influenced by the 
executive branch in civil and criminal cases.
    The police are controlled by the Ministry of Interior 
(MVD). The police and related MVD forces are responsible for 
most normal internal police functions. The National Security 
Service (NSS)--the former KGB--deals with a broad range of 
national security questions, including corruption, organized 
crime, and narcotics. The army and border guards are 
responsible for external defense. They are not routinely used 
in internal disturbances and rarely are implicated in human 
rights abuses. The police and the NSS committed numerous, 
serious human rights abuses.
    The Government continued to move toward market reform, 
especially through improvement in the legislative framework. 
However, restrictions continue on currency convertibility and 
other financial steps which have led to suspension of 
international loans. The economy is based primarily on 
agriculture and agricultural processing; Uzbekistan is the 
world's fifth largest producer of cotton, the seventh largest 
producer of gold and has substantial deposits of copper, 
strategic minerals, gas, and oil. The Government has proclaimed 
its commitment to a gradual transition to a free market 
economy. It has achieved substantial progress in reducing 
inflation and the budget deficit. However, progress on 
privatization of the large state-owned enterprises that account 
for the bulk of gross domestic product remained slow, and a 
host of formal and informal barriers continued to constrain the 
nascent private sector.
    The Government's human rights record remained poor, and 
there were serious problems in several areas. Citizens cannot 
exercise their right to change their government peacefully. 
Chosen president in a 1991 election that most observers 
considered neither free nor fair, Karimov had his stay in 
office extended to 2000 by a 1995 Soviet-style referendum. 
Parliament subsequently voted to make the extension part of 
Karimov's first term, thus making him eligible to run again in 
2000. Police and NSS forces used torture, harassment, illegal 
searches, and wiretaps, and arbitrarily detained or arrested 
opposition activists on false charges. They committed these and 
other abuses against both dissidents and other citizens, 
although reported abuses against dissidents decreased sharply. 
Arbitrary arrest and detention is common; even foreigners are 
not exempt. Police often beat criminal suspects, and detention 
can be prolonged. Prison conditions are poor. Although the 
Government says that it investigates abuses, those responsible 
for documented abuses rarely are punished. The judiciary does 
not always ensure due process and takes its direction from the 
executive branch.
    The Government severely limits freedom of speech and the 
press, and freedom of expression is constrained by an 
atmosphere of repression that makes it difficult to criticize 
the Government publicly. Although the Constitution expressly 
prohibits it, press censorship continues. The Government 
sharply restricts the importation of foreign print media. The 
Government limits freedom of assembly and association. The 
Government continues to ban unsanctioned public meetings and 
demonstrations. To control the political arena, the Government 
continues to deny registration to independent political parties 
and other groups potentially critical of the Government, and 
prevents unregistered opposition parties and movements from 
operating freely or publishing their views. The Government 
continued to decline to approve the registration application of 
the Human Rights Society of Uzbekistan, which has been seeking 
to register since 1992, citing technical deficiencies in its 
paperwork. The Government limits freedom of religion; it has 
harassed and arrested independent Islamic leaders on 
questionable grounds, citing the threat of Islamic extremism. 
It has also arrested and allegedly threatened evangelical 
leaders, and denied registration to Christian sects it does not 
accept. Despite a constitutional prohibition, there continues 
to be significant traditional societal discrimination and 
domestic violence against women.
    The pace of reform slowed during the year. Nevertheless, 
several potentially positive steps were taken. In April the 
Oliy Majlis passed legislation establishing an ombudsman's 
office. However, by year's end, the office had not yet 
demonstrated whether it could function in accordance with its 
legislative mandate and play an important role in monitoring 
human rights abuses. The Oliy Majlis also enacted legislation 
reforming the penal system and protecting the rights of 
prisoners. In April new laws providing increased access to 
information and protection of journalists were passed, and a 
mass media law passed in December, although the effects on 
press freedom remained unclear at year's end.

                               conclusion

    The states in the South Caucasus and Central Asia are 
falling behind in economic and democratic reforms and in their 
respect for human rights. The choice for the United States is 
either to remain passive, with a parochial and largely 
ineffective aid program, or to re-engage with these countries 
to advance an agenda of real economic and democratic gains we 
support. Failure to engage will likely result in a downward 
spiral of economic hardship and a deterioration of human rights 
for populations in the region, followed most likely by the full 
collapse of state structures and an ensuing loss of 
sovereignty. Once state structures collapse, the choice for 
populations in the region will be either anarchy or 
incorporation with Russia or Iran, circumstances that offer no 
hope for improved human rights, democratic opportunities or 
economic prosperity.
    Absent a renewed effort by the United States Government, 
prospects for economic and democratic reforms in the region are 
bleak. Currently, in many of these countries, major investment 
in the oil and gas sectors by U.S. companies is the single 
greatest form of engagement with the United States. This will 
remain the case, regardless of how undemocratic or corrupt 
governments in the region become. The Silk Road Strategy Act is 
necessary to ensure that natural resource development will not 
be the only form of engagement. While United States economic 
assistance is not a requirement for economic or democratic 
reforms to be undertaken in the South Caucasus and Central 
Asia, targeted U.S. assistance would address areas--such as 
democratic governance and human rights--that simply are not a 
priority for foreign investors. For better or for worse, 
without the flexibilities included in the Silk Road Strategy 
Act, the dominant and even exclusive source of U.S. engagement 
in countries such as Azerbaijan will remain oil and gas 
interests.
    If broader engagement is the choice for the United States, 
as outlined by the Silk Road Strategy Act, time is of the 
essence. Restive populations, increasing misery, and 
exploitation by hostile powers must be addressed through a 
comprehensive regional strategy. U.S. economic assistance and 
diplomacy must be brought to bear to resolve regional 
conflicts, to open blocked borders, to build regional economic 
cooperation, to advance human rights, and to promote the 
establishment of democratic governments. It is not 
inconceivable that, in failing to act, the United States would 
miss an opportunity to secure the independence of states that, 
in the worst circumstance, could prove to be the building 
blocks of a hostile, regional empire reproducing the threat and 
tensions of the Cold War. The Silk Road Strategy Act is an 
active step toward a much brighter alternative in the region.

                          II. Committee Action

    The Silk Road Strategy Act of 1998 was introduced by 
Senator Sam Brownback, Senator Gordon Smith, and seven 
cosponsors on October 30, 1997. On June 23, 1998, the Committee 
on Foreign Relations debated and ordered reported an amendment 
in the nature of a substitute to the bill by a voice vote. 
Prior to final passage of S. 1344, the following action was 
taken:

      Brownback amendment in the nature of a substitute 
        (including technical amendments and 4 Sarbanes 
        amendments) was unanimously agreed to.
      2 Sarbanes amendments defeated by a vote of 8-10 (Yeas: 
        Biden, Sarbanes, Dodd, Kerry, Robb, Feingold, 
        Feinstein, and Wellstone; Nays: Helms, Lugar, 
        Coverdell, Hagel, Smith, Thomas, Grams, Ashcroft, 
        Frist, and Brownback).

Several hearings were held in the Committee on Foreign 
Relations to assess United States policy in the South Caucasus 
and Central Asia.

April 24, 1997

Full Committee hearing: Hearing on the Conventional Armed 
    Forces in Europe (CFE) Treaty, Revisions of the Flank 
    Agreement.

      The Honorable Lynn Davis, Undersecretary of State for 
        Arms Control and International Security Affairs.
      The Honorable Walter Slocombe, Undersecretary of Defense 
        for Policy.
      General Gary M. Rubus, Deputy Director for International 
        Negotiations, Joint Chiefs of Staff.
      Dr. Sherman Garnett, Senior Associate. Carnegie Endowment 
        for International Peace.
      Dr. Paul Goble, Director, Communications Department, 
        Radio Free Liberty/Radio Liberty.

May 5, 1997

Subcommittee on European Affairs hearing: The Foreign 
    Assistance Program to the Former Soviet Union and Central 
    and Eastern Europe. 

      The Honorable Richard L. Morningstar, Coordinator, Office 
        of U.S. Assistance to the Newly Independent States.
      Mr. James H. Holmes, Coordinator, Office of Eastern 
        European Assistance.

July 21, 1997

Subcommittee on European Affairs and Subcommittee on Near 
    Eastern and South Asian Affairs joint hearing: U.S. Foreign 
    Policy Interests in the South Caucasus and Central Asia.

      The Honorable Stuart E. Eizenstat, Undersecretary of 
        State for Economic Affairs.
      The Honorable Caspar Weinberger, Chief Executive Officer, 
        Forbes, Inc.
      Lt. Gen. William E. Odom, USA (ret.), Director of 
        National Security Studies, Hudson Institute.
      Mr. Paul Goble, Director, Communications Department, 
        Radio Free Europe/Radio Liberty.
      Dr. Martha Brill Olcott, Senior Associate, Carnegie 
        Endowment for International Peace

October 22, 1997

Subcommittee on International Economic Policy, Export and Trade 
    Promotion hearing: U.S. Economic and Strategic Interests in 
    the Caspian Sea Region: Policies and Implications.

      The Honorable Sam Brownback (R-KS), United States Senate.
      The Honorable Stuart E. Eizenstat, Undersecretary of 
        State for Economic, Business and Agricultural Affairs.
      The Honorable Lawrence S. Eagleburger, Senior Foreign 
        Policy Advisor, Baker, Donelson, Bearman and Caldwell.
      Mr. Charles J. Pitman, Chairman and President, Amoco 
        Eurasia Petroleum Company.

February 24, 1998

Subcommittee on International Economic Policy, Export and Trade 
    Promotion hearing: Implementation of U.S. Policy on 
    Construction of a Western Caspian Sea Oil Pipeline. 

      The Honorable Robert W. Gee, Assistant Secretary of 
        Energy for Policy and International Affairs.
      Mr. Jan Kalicki, Counselor to the Department of Commerce.
      Mr. Lawrence R. Fisher, Vice President Production and 
        Pipelines, Fluor-Daniel Incorporated.
      The Honorable Charles William Maynes, President, The 
        Eurasia Foundation.

June 16, 1998

Subcommittee on International Economic Policy, Export and Trade 
    Promotion hearing: Implementation of U.S. Policy on 
    Construction of a Western Caspian Pipeline 

      The Honorable Marc Grossman, Assistant Secretary of State 
        for European and Canadian Affairs.
      The Honorable Stephen R. Sestanovich, Special Advisor the 
        Secretary of State for the New Independent States.
      The Honorable Zbigniew Brzezinski, Counselor, Center for 
        Strategic and International Studies.
      Dr. Martha Brill Olcott, Senior Associate, Carnegie 
        Endowment for International Peace.
      Mr. Van Krikorian, Chairman, Board of Directors, Armenian 
        Assembly.

                    III. Section-by-Section Analysis

Section 1--Short Title

    This Act may be cited as the Silk Road Strategy Act of 1998

Section 2--Findings

Section 3-- Policy of the United States

    Section 3 establishes that it shall be the policy of the 
United States in the South Caucasus and Central Asia to promote 
and strengthen independence, sovereignty, democratic 
government, and respect for human rights; to promote tolerance, 
pluralism, and understanding and counter racism and anti-
Semitism; to assist actively in the resolution of regional 
conflicts and to facilitate the removal of impediments to 
cross-border commerce; to promote friendly relations and 
economic cooperation; to help promote market-oriented 
principles and practices; to assist in the development of 
infrastructure necessary for communications, transportation, 
education, health, and energy and trade on an East-West axis in 
order to build strong international relations and commerce 
between those countries and the stable, democratic and market 
oriented countries of the Euro-Atlantic Community; and, to 
support United States business interests and investments in the 
region.

Section 4 U.S. Efforts to Resolve Regional Conflicts in the South 
        Caucasus and Central Asia

    Sense of the Congress that the President should use all 
diplomatic means practicable, including the engagement of 
senior United States Government officials, to press for an 
equitable, fair and permanent resolution to the conflicts in 
the South Caucasus and Central Asia.

Section 5--Amendment of the Foreign Assistance Act of 1961

    The Silk Road Strategy Act of 1998 authorizes the provision 
of assistance to countries in the South Caucasus and Central 
Asia to promote reconciliation and recovery from regional 
conflicts; to foster economic growth and development, including 
the conditions necessary for regional economic cooperation; to 
secure borders and implement effective controls necessary to 
prevent the trafficking of illegal narcotics and the 
proliferation of technology and materials related to weapons of 
mass destruction; and to promote institutions of democratic 
government and create the conditions for the growth of 
pluralistic societies, including religious tolerance and 
respect for internationally recognized human rights.
    The Silk Road Strategy Act restricts assistance to 
countries in the South Caucasus and Central Asia on the exact 
same eligibility requirements that are otherwise currently 
applied to those countries under Foreign Assistance Act of 
1961. Specifically, except as provided in the waiver contained 
in this section (also identical to that contained in the 
Foreign Assistance Act of 1961), assistance may not be provided 
under this chapter for the government of a country of the South 
Caucasus or Central Asia if the President determines and 
certifies to the appropriate congressional committees that the 
government of such country:

          (1) is engaged in a consistent pattern of gross 
        violations of internationally recognized human rights;
          (2) has, on or after the date of enactment of this 
        chapter, knowingly transferred to another country--
                  (A) missiles or missile technology 
                inconsistent with the guidelines and parameters 
                of the Missile Technology Control Regime; or
                  (B) any material, equipment, or technology 
                that would contribute significantly to the 
                ability of such country to manufacture any 
                weapon of mass destruction(including nuclear, 
                chemical and biological weapons) if the 
                President determines that the material, 
                equipment, or technology was to be used by such 
                country in the manufacture of such weapons;
          (3) has repeatedly provided support for acts of 
        international terrorism; or
          (4) is prohibited from receiving such assistance by 
        chapter 10 of the Arms Export Control Act or section 
        306(a)(1) and 307 of the Chemical Biological Weapons 
        Control and Warfare Elimination Act of 1991

Section 6--Annual Report

    The annual reporting requirements under section 104 of the 
Freedom Support Act are revised to include specific analysis on 
progress toward implementing the policies of the Silk Road 
Strategy Act of 1998.

Section 7--Conforming Amendments

    Conforming amendment to the Freedom Support Act (PL-102-
511).

                           IV. Cost Estimate

    In accordance with rule XXVI, paragraph 11(a) of the 
Standing Rules of the Senate, the Committee provides the 
following estimates of the cost of this legislation prepared by 
the Congressional Budget Office.
                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, July 13, 1998.
Hon. Jesse Helms,
Chairman, Committee on Foreign Relations,
U.S. Senate, Washington, DC.

Dear Mr. Chairman: The Congressional Budget Office (CBO) has 
prepared the enclosed cost estimate for S. 1344, the Silk Road 
Strategy Act of 1998.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Joseph C. 
Whitehill, who can be reached at 226-2840.
            Sincerely,
                                   June E. O'Neill,
                                                  Director.
Enclosure

cc: Hon. Joseph R. Biden, Jr.,
     Ranking Minority Member.

                              ----------                              


               Congressional Budget Office Cost Estimate

                             July 13, 1998

                                 S.1344

                     SILK ROAD STRATEGY ACT OF 1998

  As ordered reported by the Senate Committee on Foreign Relations on 
                             June 23, 1998

    S. 1344 would state U.S. policy on various economic and 
political matters related to countries of the South Caucasus 
and Central Asia. Although the bill would authorize several 
broad categories of assistance to the region, it would not 
authorize specific amounts, and the authorizations would 
overlap with more general authorizations in current law.
    Because the bill would not substantially expand the 
Administration's authority to provide assistance, either 
geographically or programmatically, CBO estimates that spending 
targeted at the region would continue at the current rate--
approximately $460 million in economic assistance, security 
assistance, food aid, and export financing. That spending would 
be subject to appropriation.
    S. 1344 would not affect direct spending or receipts; thus 
pay-as-you-go procedures would not apply. The bill contains no 
intergovernmental or private-sector mandates as defined in the 
unfunded Mandates Reform Act, and would not affect the budgets 
of state, local, or tribal governments.
    The estimate was prepared by Joseph C Whitehill, who can be 
reached at 226-2840. This estimate was approved by Paul N. Van 
de Water, Assistant Director for Budget Analysis.

                   V. Evaluation of Regulatory Impact

    In accordance with Rule XXVI, paragraph 11(b) of the 
Standing Rules of the Senate, the Committee has concluded that 
there is no regulatory impact from this legislation.

                      VI. Changes in Existing Law

    In compliance with paragraph 12 of Rule XXVI of the 
Standing Rules of the Senate, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

                     Foreign Assistance Act of 1961

           *       *       *       *       *       *       *

CHAPTER 11--SUPPORT FOR THE ECONOMIC AND DEMOCRATIC DEVELOPMENT OF THE 
             INDEPENDENT STATES OF THE FORMER SOVIET UNION

           *       *       *       *       *       *       *

CHAPTER 12--SUPPORT FOR THE ECONOMIC AND POLITICAL INDEPENDENCE OF THE 
            COUNTRIES OF THE SOUTH CAUCASUS AND CENTRAL ASIA

SEC. 499. UNITED STATES ASSISTANCE TO PROMOTE RECONCILIATION AND 
                    RECOVERY FROM REGIONAL CONFLICTS.

    (a) Purpose of Assistance.--The purposes of assistance 
under this section include--
            (1) the creation of the basis for reconciliation 
        between belligerents;
            (2) the promotion of economic development in areas 
        of the countries of the South Caucasus and Central Asia 
        impacted by civil conflict and war; and
            (3) the encouragement of broad regional cooperation 
        among countries of the South Caucasus and Central Asia 
        that have been destabilized by internal conflicts.
    (b) Authorization for Assistance.--
            (1) In general.--To carry out the purposes of 
        subsection (a), the President is authorized to provide 
        humanitarian assistance and economic reconstruction 
        assistance for the countries of the South Caucasus and 
        Central Asia to support the activities described in 
        subsection (c).
            (2) Definition of humanitarian assistance.--In this 
        subsection, the term `humanitarian assistance' means 
        assistance to meet humanitarian needs, including needs 
        for food, medicine, medical supplies and equipment, and 
        clothing.
    (c) Activities Supported.--Activities that may be supported 
by assistance under subsection (b) include--
            (1) providing for the humanitarian needs of victims 
        of the conflicts;
            (2) facilitating the return of refugees and 
        internally displaced persons to their homes; and
            (3) assisting in the reconstruction of residential 
        and economic infrastructure destroyed by war.
    (d) Policy.--It is the sense of Congress that the United 
States should, where appropriate, support the establishment of 
neutral, multinational peacekeeping forces to implement peace 
agreements reached between belligerents in the countries of the 
South Caucasus and Central Asia.

SEC. 499A. ECONOMIC ASSISTANCE.

    (a) Purpose of Assistance.--The purpose of assistance under 
this section is to foster economic growth and development, 
including the conditions necessary for regional economic 
cooperation, in the South Caucasus and Central Asia.
    (b) Authorization for Assistance.--To carry out the purpose 
of subsection (a), the President is authorized to provide 
assistance for the countries of the South Caucasus and Central 
Asia to support the activities described in subsection (c).
    (c) Activities Supported.--In addition to the activities 
described in section 498, activities supported by assistance 
under subsection (b) should support the development of the 
structures and means necessary for the growth of private sector 
economies based upon market principles.
    (d) Policy.--It is the sense of Congress that the United 
States should--
            (1) assist the countries of the South Caucasus and 
        Central Asia to develop policies, laws, and regulations 
        that would facilitate the ability of those countries to 
        join the World Trade Organization to enjoy all the 
        benefits of membership; and
            (2) consider the establishment of zero-to-zero 
        tariffs between the United States and the countries of 
        the South Caucasus and Central Asia.

SEC. 499B. DEVELOPMENT OF INFRASTRUCTURE.

    (a) Purpose of Programs.--The purposes of programs under 
this section include--
            (1) to develop the physical infrastructure 
        necessary for regional cooperation among the countries 
        of the South Caucasus and Central Asia; and
            (2) to encourage closer economic relations and to 
        facilitate the removal of impediments to cross-border 
        commerce among those countries and the United States 
        and other developed nations.
    (b) Authorization for Programs.--To carry out the purposes 
of subsection (a), the following types of programs for the 
countries of the South Caucasus and Central Asia may be used to 
support the activities described in subsection (c):
            (1) Activities by the Export-Import Bank to 
        complete the review process for eligibility for 
        financing under the Export-Import Bank Act of 1945.
            (2) The provision of insurance, reinsurance, 
        financing, or other assistance by the Overseas Private 
        Investment Corporation.
            (3) Assistance under section 661 of this Act 
        (relating to the Trade and Development Agency).
    (c) Activities Supported.--Activities that may be supported 
by programs under subsection (b) include promoting actively the 
participation of United States companies and investors in the 
planning, financing, and construction of infrastructure for 
communications, transportation, including air transportation, 
and energy and trade including highways, railroads, port 
facilities, shipping, banking, insurance, telecommunications 
networks, and gas and oil pipelines.
    (d) Policy.--It is the sense of Congress that the United 
States representatives at the International Bank for 
Reconstruction and Development, the International Finance 
Corporation, and the European Bank for Reconstruction and 
Development should encourage lending to the countries of the 
South Caucasus and Central Asia to assist the development of 
the physical infrastructure necessary for regional economic 
cooperation.

SEC. 499C. BORDER CONTROL ASSISTANCE.

    (a) Purpose of Assistance.--The purpose of assistance under 
this section includes the assistance of the countries of the 
South Caucasus and Central Asia to secure their borders and 
implement effective controls necessary to prevent the 
trafficking of illegal narcotics and the proliferation of 
technology and materials related to weapons of mass destruction 
(as defined in section 2332a(c)(2) of title 18, United States 
Code), and to contain and inhibit transnational organized 
criminal activities.
    (b) Authorization for Assistance.--To carry out the purpose 
of subsection (a), the President is authorized to provide 
assistance to the countries of the South Caucasus and Central 
Asia to support the activities described in subsection (c).
    (c) Activities Supported.--Activities that may be supported 
by assistance under subsection (b) include assisting those 
countries of the South Caucasus and Central Asia in developing 
capabilities to maintain national border guards, coast guard, 
and customs controls.
    (d) Policy.--It is the sense of Congress that the United 
States should encourage and assist the development of regional 
military cooperation among the countries of the South Caucasus 
and Central Asia through programs such as the Central Asian 
Battalion and the Partnership for Peace of the North Atlantic 
Treaty Organization.

SEC. 499D. STRENGTHENING DEMOCRACY, TOLERANCE, AND THE DEVELOPMENT OF 
                    CIVIL SOCIETY.

    (a) Purpose of Assistance.--The purpose of assistance under 
this section is to promote institutions of democratic 
government and to create the conditions for the growth of 
pluralistic societies, including religious tolerance and 
respect for internationally recognized human rights.
    (b) Authorization for Assistance.--To carry out the purpose 
of subsection (a), the President is authorized to provide the 
following types of assistance to the countries of the South 
Caucasus and Central Asia:
            (1) Assistance for democracy building.
            (2) Assistance for the development of 
        nongovernmental organizations.
            (3) Assistance for development of independent 
        media.
            (4) Assistance for the development of the rule of 
        law.
            (5) International exchanges and advanced 
        professional training programs in skill areas central 
        to the development of civil society.
            (6) Assistance to promote increased adherence to 
        civil and political rights under section 116(e) of this 
        Act.
    (c) Activities Supported.--Activities that may be supported 
by assistance under subsection (b) include activities that are 
designed to advance progress toward the development of 
democracy.
    (d) Policy.--It is the sense of Congress that the Voice of 
America and RFE/RL, Incorporated, should maintain high quality 
broadcasting for the maximum duration possible in the native 
languages of the countries of the South Caucasus and Central 
Asia.

SEC. 499E. INELIGIBILITY FOR ASSISTANCE.

    (a) In General.--Except as provided in subsection (b), 
assistance may not be provided under this chapter for the 
government of a country of the South Caucasus or Central Asia 
if the President determines and certifies to the appropriate 
congressional committees that the government of such country--
            (1) is engaged in a consistent pattern of gross 
        violations of internationally recognized human rights;
            (2) has, on or after the date of enactment of this 
        chapter, knowingly transferred to another country--
                    (A) missiles or missile technology 
                inconsistent with the guidelines and parameters 
                of the Missile Technology Control Regime (as 
                defined in section 11B(c) of the Export 
                Administration Act of 1979 950 U.S.C. App. 
                2410b(c); or
                    (B) any material, equipment, or technology 
                that would contribute significantly to the 
                ability of such country to manufacture any 
                weapon of mass destruction (including nuclear, 
                chemical, and biological weapons) if the 
                President determines that the material, 
                equipment, or technology was to be used by such 
                country in the manufacture of such weapons;
            (3) has repeatedly provided support for acts of 
        international terrorism; or
            (4) is prohibited from receiving such assistance by 
        chapter 10 of the Arms Export Control Act or section 
        306(a)(1) and 307 of the Chemical and Biological 
        Weapons Control and Warfare Elimination Act of 1991 (22 
        U.S.C. 5604(a)(1), 5605).
    (b) Exceptions to Ineligibility.--
            (1) Exceptions.--Assistance prohibited by 
        subsection (a) or any similar provision of law, other 
        than assistance prohibited by the provisions referred 
        to in paragraphs (2) and (4) of subsection (a), may be 
        furnished under any of the following circumstances:
                    (A) The President determines that 
                furnishing such assistance is important to the 
                national interest of the United States.
                    (B) The President determines that 
                furnishing such assistance will foster respect 
                for internationally recognized human rights and 
                the rule of law or the development of 
                institutions of democratic governance.
                    (C) The assistance is furnished for the 
                alleviation of suffering resulting from a 
                natural or man-made disaster.
                    (D) The assistance is provided under the 
                secondary school exchange program administered 
                by the United States Information Agency.
        (2) Report to congress.--The President shall 
        immediately report to Congress any determination under 
        paragraph (1) (A) or (B) or any decision to provide 
        assistance under paragraph (1)(C).

SEC. 499F. ADMINISTRATIVE AUTHORITIES.

    (a) Assistance Through Governments and Nongovernmental 
Organizations.--Assistance under this chapter may be provided 
to governments or through nongovernmental organizations.
    (b) Use of Economic Support Funds.--Except as otherwise 
provided, any funds that have been allocated under chapter 4 of 
part II for assistance for the independent states of the former 
Soviet Union may be used in accordance with the provisions of 
this chapter.
    (c) Terms and Conditions.--Assistance under this chapter 
shall be provided on such terms and conditions as the President 
may determine.
    (d) Relationship to Other Laws.--
            (1) Superseding existing law.--The authorities 
        contained in this chapter and in chapter 11 to provide 
        assistance for the countries of the South Caucasus and 
        Central Asia shall supersede the FREEDOM Support Act 
        (22 U.S.C. 5801 et seq.).
            (2) Available authorities.--The authority in this 
        chapter to provide assistance for the countries of the 
        South Caucasus and Central Asia is in addition to the 
        authority to provide such assistance under the FREEDOM 
        Support Act (22 U.S.C. 5801 et seq.) or any other Act, 
        and the authorities applicable to the provision of 
        assistance under chapter 11 may be used to provide 
        assistance under this chapter.

SEC. 499G. DEFINITIONS.

    In this chapter:
            (1) Appropriate congressional committees.--The term 
        `appropriate congressional committees' means the 
        Committee on Foreign Relations of the Senate and the 
        Committee on International Relations of the House of 
        Representatives.
            (2) Countries of the south caucasus and central 
        asia.--The term `countries of the South Caucasus and 
        Central Asia' means Armenia, Azerbaijan, Georgia, 
        Kazakstan, Kyrgyzstan, Tajikistan, Turkmenistan, and 
        Uzbekistan.

 Freedom for Russia and Emerging Eurasian Democracies and Open Markets 
                          Support Act of 1992

                          FREEDOM Support Act

           *       *       *       *       *       *       *

                      TITLE I--GENERAL PROVISIONS

           *       *       *       *       *       *       *

SEC. 102. PROGRAM COORDINATION, IMPLEMENTATION, AND OVERSIGHT.

    (a) Coordination.--The President shall designate, within 
the Department of State, a coordinator who shall be responsible 
for--
            (1) * * *
            (2) ensuring program and policy coordination among 
        agencies of the United States Government in carrying 
        out the policies set forth in [this Act] this Act and 
        the Silk Road Strategy Act of 1998 (including the 
        amendments made by [this Act] this Act and the Silk 
        Road Strategy Act of 1998);
            (3) * * *
            (4) ensuring that United States assistance programs 
        for the independent states are consistent with [this 
        Act] this Act and the Silk Road Strategy Act of 1998 
        (including the amendments made by [this Act] this Act 
        and the Silk Road Strategy Act of 1998);
            (5) * * *

           *       *       *       *       *       *       *

SEC. 104. ANNUAL REPORT.

           *       *       *       *       *       *       *

            (3) an assessment of the effectiveness of United 
        States assistance in achieving its purposes; [and]
            (4)an evaluation of the manner in which the 
        ``notwithstanding'' authority provided in section 
        498B(j)(1) of the Foreign Assistance Act of 1961, and 
        the ``notwithstanding'' authority provided in any other 
        provision of law with respect to assistance for the 
        independent states, has been used and why the use of 
        that authority was necessary[.]; and
            (5) with respect to the countries of the South 
        Caucasus and Central Asia--
                    (A) identifying the progress of United 
                States foreign policy to accomplish the policy 
                identified in section 3 of the Silk Road 
                Strategy Act of 1998;
                    (B) evaluating the degree to which the 
                assistance authorized by chapter 12 of part I 
                of the Foreign Assistance Act of 1961 has been 
                able to accomplish the purposes identified in 
                those sections; and
                    (C) recommending any additional initiatives 
                that should be undertaken by the United States 
                to implement the policy and purposes contained 
                in the Silk Road Strategy Act of 1998.

           *       *       *       *       *       *       *
   VII. MINORITY VIEWS OF SENATORS SARBANES, KERRY, ROBB, FEINGOLD, 
                        FEINSTEIN, AND WELLSTONE

    Through the Freedom Support Act, the United States over the 
past six years has encouraged the transition to democracy and 
free markets in the New Independent States of the former Soviet 
Union (NIS). In providing assistance under the Act, the 
President must take into account the extent to which each 
government is committed to, and making progress toward, such 
goals as the establishment of a democratic political system and 
a market-based economy, respect for internationally recognized 
human rights, adherence to international law and obligations, 
cooperation in seeking peaceful resolution of ethnic and 
regional conflicts, implementation of responsible security and 
non-proliferation policies, and protection of the international 
environment. All the countries of the South Caucasus and 
Central Asia currently receive U.S. aid under this program, 
amounting to nearly $300 million in FY 1998. In addition, most 
of the countries receive assistance through the Partnership for 
Peace program, the Peace Corps, the Trade and Development 
Agency, and multicountry enterprise funds.
    The ``Silk Road Strategy Act'' (S. 1344) repudiates the 
fundamental principles of the Freedom Support Act. It exempts 
eight of the thirteen former Soviet republics from the 
requirements of the Freedom Support Act while authorizing new 
forms of aid for them, thus creating two classes of states: 
those who must comply with the law, and those who are outside 
it. By providing aid to certain NIS countries without requiring 
progress toward the goals of the Freedom Support Act, S. 1344 
will undermine the long-term goals and abiding principles of 
U.S. foreign policy.
    As reported by the Senate Foreign Relations Committee, S. 
1344 would have several unfortunate consequences.
    First, it would reward the Government of Azerbaijan with 
expanded assistance despite that Government's dismal human 
rights record, its lack of progress toward democracy, and its 
continuing economic blockade against Armenia and Nagorno-
Karabakh. According to the State Department's most recent 
Country Report on Human Rights Practices for Azerbaijan,

          The Government's human rights record continued to be 
        poor, and the Government continued to commit serious 
        abuses. Police beat persons in custody, and some 
        beatings resulted in deaths. Police also arbitrarily 
        arrested and detained persons; conducted searches and 
        seizures without warrants; and suppressed and refused 
        to allow peaceful public demonstrations. In most 
        instances, the Government took no action to punish 
        abusers. In a variety of separate incidents, the 
        Government arrested at least 19 members of the 
        opposition Azerbaijan Popular Front Party. Prison 
        conditions remained harsh. The entire judiciary is 
        corrupt, inefficient, and subject to executive 
        influence.

    The current political situation in Azerbaijan makes the 
timing of this measure particularly inopportune. After the 
overthrow of Azerbaijan's democratically-elected president in 
1993, former Soviet Politburo member Heidar Aliyev assumed 
power and proceeded to restrict the independence of the 
legislature and judiciary. There were severe shortcomings in 
the conduct of parliamentary elections in 1995, and power 
became increasingly concentrated in the hands of an 
authoritarian ruler. With the adoption of a seriously flawed 
election law, the pattern appears to be repeating itself in the 
Presidential elections that are planned for October of this 
year. To expand the Government's eligibility for assistance at 
this juncture would serve to legitimize and strengthen an 
undemocratic regime at the very time U.S. pressure is needed to 
ensure that elections are conducted in a free and fair manner.
    In its foreign policy, the Government of Azerbaijan has 
similarly thwarted U.S. attempts to promote peaceful conflict 
resolution and regional economic integration. For the past nine 
years, the government of Azerbaijan has prevented the transport 
of food, fuel, medicine, and other vital commodities to Armenia 
and Nagorno-Karabakh, causing immense human suffering. Most 
Armenian industries have been forced to close down, crippling 
the economy and producing widespread unemployment and poverty. 
The blockade has been particularly devastating because it is 
also enforced by Turkey, and because of the civil conflict that 
makes transport through Georgia difficult. Since Armenia is 
entirely landlocked, this leaves Iran as Armenia's only 
possible outlet--the very outcome that S. 1344 is purported to 
discourage.
    Under section 907 of the Freedom Support Act, which S. 1344 
would abrogate, United States assistance may not be provided to 
the Government of Azerbaijan until the 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. Section 907 does not apply to humanitarian assistance 
for refugees, displaced persons and needy civilians affected by 
the conflicts in the Southern Caucasus. It does not apply to 
aid that is channeled through non-governmental organizations. 
Nor does it apply to programs that support democracy, 
nonproliferation and disarmament, border security, or to 
activities of the Trade and Development Agency and the Foreign 
Commercial Service. Because of the many exceptions to section 
907, Azerbaijan has received a total of $80 million in U.S. aid 
since 1994.
    We wish to emphasize that eligibility for United States 
foreign assistance is not an entitlement. The placing of 
conditions upon foreign aid is both reasonable and appropriate, 
for policy as well as budgetary reasons, and should not be 
considered an economic ``sanction''. In order to lift section 
907, all Azerbaijan must do is to ``take demonstrable steps to 
cease all blockades against Armenia and Nagorno-Karabakh.'' 
This is an entirely reasonable expectation, especially given 
the basic purpose of S. 1344, which is to promote trade and 
economic cooperation between the countries of the region. To 
nullify the requirements of section 907 in the absence of any 
progress toward a resolution of the Nagorno-Karabakh issue 
would thus constitute an undeserved subsidy for the Government 
of Azerbaijan and remove a major incentive for good-faith 
negotiation from one side in the conflict.
    Second, we are concerned by what we perceive as the bill's 
excessive focus on oil and gas interests. While the U.S. has a 
strategic interest in maintaining adequate supplies of energy 
at reasonable prices from diverse sources, pipeline politics 
should not be permitted to overshadow some of the larger issues 
and concerns of U.S. policy. The United States has a 
fundamental interest in promoting basic American values and 
principles, such as respect for human rights, democracy and the 
rule of law. In their absence, the long-term goals of peace and 
stability, security and prosperity are often unattainable or 
meaningless.
    These values and principles must serve as a starting point 
for U.S. policy in the South Caucasus and Central Asia. Yet S. 
1344 would take the reverse approach. By increasing the 
availability of U.S. assistance for countries that have failed 
to demonstrate a commitment to democratic principles, the bill 
sends the message that economic interests will dominate U.S. 
policy decisions. It was precisely this orientation that led 
Human Rights Watch to assert in its 1998 report, ``The 
international community largely glossed over Azerbaijan's poor 
human rights record in order to protect oil interests.''
    Not only does the bill provide assistance to eight 
governments regardless of their compliance with the Freedom 
Support Act, but it also provides a waiver of other U.S. laws 
designed to promote cooperation on human rights, 
counterterrorism, and nonproliferation of weapons of mass 
destruction. The new section 499E, which the bill would add to 
the Foreign Assistance Act of 1961, allows the President to 
furnish assistance notwithstanding any other provision of law, 
if he determines that it is important to the national interest, 
or that it will foster respect for internationally recognized 
human rights and the rule of law or the development of 
institutions of democratic governance.
    While most current restrictions on assistance contain a 
national interest waiver, the standard contained in this bill 
is weaker in several instances. For example, the prohibitions 
in current law on assistance to governments supporting 
international terrorism can be waived only for national 
security interests or humanitarian reasons. The ban on 
assistance to any unit of the security forces of a foreign 
country if the Secretary of State has credible evidence that 
such unit has committed gross violations of human rights, may 
only be waived if the government of such country is taking 
effective measures to bring the responsible parties to justice. 
We believe the countries of the Caspian Sea basin should be 
held to the same standards of conduct in the areas of human 
rights, proliferation of weapons of mass destruction, and 
terrorism, as every other country that receives foreign 
assistance.
    U.S. willingness to overlook egregious deficiencies in the 
political and economic systems of countries in the Caspian Sea 
basin may also have a negative effect on our relations with 
Russia, China, and other countries for which the transition to 
democracy and free markets is at issue. As Librarian of 
Congress James H. Billington noted in a recent article,

          Russians recognize that they have not created the 
        best conditions for foreign investment. But they feel 
        humiliated that China is now getting more than 10 times 
        as much American investment as their own struggling 
        democracy. They are further aggravated by the spectacle 
        of former high American officials falling all over one 
        another to promote oil development in authoritarian 
        Azerbaijan and Kazakstan rather than the even greater 
        energy resources in Russia.

There is ample cause for concern that enactment of S. 1344 will 
actually result in less funding being available for Russia, 
which has made greater advances toward the rule of law and 
economic reform than any of the beneficiaries of this 
legislation.
    Finally, we are concerned that removing U.S. assistance to 
this region from the context of the Freedom Support Act is 
based on the misconception that stability will flow from oil 
wealth. Providing balance of payments support to governments 
that have not established appropriate oversight mechanisms, and 
encouraging U.S. investment in countries that have not 
established a favorable legal climate, is unlikely to produce 
democratic institutions committed to economic reform and social 
justice. As the Washington Post argued in a recent editorial 
about Azerbaijan's lack of democracy, ``Oil wealth without 
governmental accountability is likely to lead to massive 
corruption and an embittered and impoverished population--not 
circumstances likely to further America's strategic goals in 
the region.''
    For these reasons, we believe this legislation represents 
an ill-advised attempt to shift U.S. policy away from the more 
balanced approach reflected in the Freedom Support Act, with 
potentially serious negative consequences. While constructive 
changes were made to the bill during mark-up, these 
modifications were insufficient to change its overall effect, 
and we regret that a number of proposed corrections which would 
have rectified the bill's most obvious deficiencies were 
rejected.