In course correction, Russian foreign aid program turns inward

After a brief period as one of the biggest recipients of foreign aid in the world, Russia is firmly back in the donor club. Last year, Russia’s official development assistance reached $714 million, a drop in the bucket when compared with Soviet levels, but still a sevenfold jump from 2006. Russia’s donor comeback has been nearly a decade in the making. It was from his perch as chair of the G-8 in 2006 that President Vladimir Putin gave notice that a resurgent Russia was ready to assume the roles and responsibilities of a respected global power. “It is clear that Russia’s growing economic potential is enabling it to play an increasingly important role in global development,” said Putin, who at the time struck a cooperative tone with his G-8 colleagues. In the years that followed, Russia looked to the World Bank, the U.S. Agency for International Development and other Western donors for funding and expertise to help rebuild its aid regime. Drawing a contrast with its BRIC peers, the fledgling donor then made a deliberate decision to channel the bulk of its aid spending through multilateral organizations — at least for the time being. Russia is also believed to have considered membership in the Development Assistance Committee of the Organization for Economic Cooperation and Development, the donor grouping for industrialized countries. Two years after USAID’s expulsion from Russia and months into the standoff over Ukraine — Moscow has been suspended from the G-8 as a result — the Russian government has set in motion a change of course in its foreign aid strategy. In a bid to raise the profile of its aid engagement abroad, Moscow now plans to increasingly channel its aid spending on a bilateral basis to partner countries. “Certainly, the image and visibility also matters and we better be honest about that,” Konstantin Kosachev, director of the Russian Cooperation Agency, the lead agency for Russian bilateral aid, elaborated. “As it often happens with assistance provided via trust funds and multilateral channels, nobody in partner countries knows that it comes from Russia.” In an exclusive interview with Devex, Kosachev reiterated that slowing growth at home has not deterred Russia’s donor ambitions. Yet as Western sanctions over Ukraine begin to take a toll on the Russian government’s balance sheet, there is considerable skepticism over whether Moscow will be able to sustain the massive increases in its aid spending. Just last week, Russian officials predicted that the country’s economy will fall into recession next year. “The obvious pressure to decrease aid volume is just the money is becoming tight. Oil prices going down, sanctions, all signs indicate that Russia is headed for some pretty tough economic times,” said Judy Twigg, senior associate with the Russia and Eurasia program at the Center for Strategic and International Studies. Tending to the neighborhood Back when Russia was just beginning to revive its donor ambitions, Moscow left little doubt that its foreign aid program had global aspirations. Not to be outdone by its G-8 counterparts, Russia announced in 2005 the cancellation of $11.3 billion in debts owed by African countries at the historic G-8 summit in Gleneagles. Over the years, Russian aid would reach as far as the island nations of the South Pacific, prompting accusations of “checkbook diplomacy” from Canberra. As Putin’s tug of war with the West over Ukraine drags on, Russian officials have given every indication that they are now more eager to tend to their neighbors in the Commonwealth of Independent States — a move seen as an effort to consolidate Russia’s sphere of influence in the region. CIS is the loose association of former Soviet republics. “We will primarily devote our attention to our neighbors in the Commonwealth of Independent States,” Russian Foreign Minister Sergey Lavrov said in an April 2014 speech on Russia’s role in global development. In 2013, 31 percent of Russian ODA was directed to the CIS, unchanged from the year before. The largest Russian aid recipient for two years in a row, CIS member Kyrgyzstan claimed more than a tenth of Russian ODA in 2013. In addition to the CIS countries, ideological or political allies like North Korea, Syria and Cuba also rank among the major recipients of Russian ODA. “I could imagine a conversation in the Ministry of Foreign Affairs where they’re saying things like this whole mess in Ukraine would not have happened if they had a more robust development assistance relationship with Ukraine,” Twigg said. Kosachev contends that the Russian aid program’s sharper focus on the CIS isn’t motivated by foreign policy considerations — at least not entirely. “Actually here, the Russian internal understanding of where our system should go exactly matches the international development cooperation effectiveness agenda. We should not diffuse our efforts,” Kosachev emphasized. Whether Russia’s aid pivot to the CIS is politically driven or not, few disagree that its deep-seated cultural, educational and linguistic ties to the region means that the CIS might be the logical place for Moscow to beef up its bilateral aid program. Russia’s aid engagement in the CIS has had a heavy focus on social sectors — health, education and food security — a trend expected to hold given Russia’s strengths in these areas. “These are historic relations. It seems obvious. It seems natural,” said Patty Gray, a professor from the National University of Ireland who has studied Russia’s international cooperation extensively. “So were a Russian bilateral program to deliver some kind of health-related aid in Central Asia, it probably could be more effective than say an American one. I actually really think it would.” For now, Russia continues to channel an outsized share of its assistance to the CIS through several trust funds administered by the World Bank — including the $32 million Russia Education Aid for Development Trust Fund (2008-2014). Russia is typically the only donor to these trust funds and insists on the right to select recipient countries. Despite Russia’s push for direct aid, both Twigg and Gray expressed optimism that Moscow’s participation in these World Bank trust funds, even if not nearly as robust as in the past, should continue. On the other hand, health cooperation between the U.S. and Russian governments in the CIS, a promising prospect early in the Obama administration, seems off the table following further deterioration in U.S.-Russia relations. Tellingly, U.S. government funding for the U.S.-Russia Bilateral Presidential Commission, a joint working group designed to promote U.S-Russia cooperation, has been redirected toward U.S. assistance efforts in Ukraine. “My earlier optimism about the possibility of U.S.-Russia collaboration in third areas to deal with health challenges in the developing world — Ukraine just pretty smashed that. It’s hard to imagine that sort of thing happening now,” Twigg said. Aid regime a work in progress As Russia pushes to channel its assistance directly to partner countries particularly in the CIS, it will inevitably assume more of the logistical and administrative burden for its aid program. Despite a decade of international assistance to rebuild Moscow’s donor capacity, there is reason to believe that the Russian aid regime may not be ready for prime time just yet. Aid advocates as well as officials within the Russian government call attention to the fact that for the most part, Russia has lacked the basic elements of an effective aid program, including a coordinating structure, strategic planning and monitoring and evaluation mechanisms. In 2011, Russia did become the first and thus far only BRIC donor to report aid statistics to the OECD-DAC. “Correcting mistakes along with defining best and worst practices are not conducted with any regularity, while hardly any funds are ever allocated to evaluating self-run programs,” reads a 2013 analysis co-authored by Elena Yatsenko, who was later appointed head of the international development division of the Russian Cooperation Agency. In his interview with Devex, Kosachev hinted that he was attuned to these concerns and made clear that the Russian aid regime remains a work in progress. Kosachev revealed that the Russian government is considering the implementation of several reforms to its aid program: country strategies for priority recipients, a “fully fledged” monitoring and evaluation system, as well as an information support system. Strikingly, these are all hallmarks of OECD-DAC donors — early signs that Russia still intends to abide by global aid effectiveness standards despite its dismissive posture toward the West. Kosachev also confirmed that the Russian government is planning to introduce a coordinating body for Russian aid called the “Commission of the Russian Federation for International Development Assistance.” “I think that it will help to overcome the duplication, fragmentation and incoherence that can be sometimes seen nowadays,” Kosachev said of the commission. “Up to now, the system of decision-making has been based on a single decision per single project.” Whether the Russian government’s latest aid reform proposals will gain traction anytime soon remains to be seen. Kosachev was noticeably noncommittal on a timetable for setting up the commission. After all, it was back in 2007 when Putin first signed off on plans to modernize Russia’s aid program — only to see them bogged down by false starts and bureaucratic infighting. For years, officials from the Ministry of Finance had floated the idea of a USAID-style Russian Agency for International Development that would manage Russia’s bilateral aid program. Putin’s designation of a division within the Ministry of Foreign Affairs, the Russian Cooperation Agency, as the lead bilateral Russian aid agency last year has effectively put that idea to rest. Comprising various government agencies, including the ministries of foreign affairs, finance, health and emergency situations, Russia’s reemerging aid program has been highly fragmented throughout its short history. Despite the elevation of the Russian Cooperation Agency, however, the bureaucratic turf wars between these agencies seem far from over. “I think there is still fundamental disagreement on the most basic aspects of how aid should be organized, prioritized, administered [and] carried out,” Gray said. “To put this in perspective, the history of aid administration in the U.S. is even messier than this.” Previously, the Russian Cooperation Agency had been designed solely to promote cultural and educational exchanges in the CIS and beyond. By Kosachev’s own account, the agency remains underfinanced. With only roughly 20 people in its international development division, the Russian Cooperation Agency is also arguably understaffed — casting further doubt on whether Russia’s evolving aid regime is up to the task. A role for civil society? Short on staff and funding for his agency, Kosachev believes it is imperative for the Russian foreign aid program to tap into the expertise and experience of civil society organizations at home. “We would like to see more nongovernmental organizations implementing Russian development projects and engaging in many other ways. We are considering now how to facilitate this,” said Kosachev, who added that capacity-building activities for partners are in the pipeline. As of yet, partnerships with Russian civil society have been few and far between — in no small part because there are no regular solicitations set aside for CSOs. Instead, Russian CSOs, which number as many as 136,000, have been tapped by the Russian aid program on an ad hoc basis. “We would be happy as other civil society organizations to be involved in such work,” Elena Dmitrieva, director of the Moscow-based Health and Development Foundation, said. “We have really great programs to leverage in Central Asia but up to now, we haven’t had such contact or invitations.” Yet two years after Putin signed off on a law requiring foreign-funded NGOs involved in political activities to register as foreign agents — one of a series of restrictive measures on Russian civil society — Kosachev’s overtures to Russian CSOs don’t seem entirely in tune with pronouncements coming out of the Kremlin. Gray, for one, believes Kosachev is sincere in his commitment, citing the appointment of Elena Yatsenko, formerly president of the nonprofit Eurasia Heritage Foundation, as his right-hand woman for international development assistance at the Russian Cooperation Agency. Despite concerns that the foreign agents law may have defined “political activities” too broadly, it doesn’t seem to have seriously obstructed the work of the social sector CSOs that would be logical partners for the Russian aid program — even if these groups receive foreign funding. Foreign-funded CSOs that engage in political activities haven’t been so fortunate. “There are NGOs that have continued to work in the health sector and have continued to receive Western funding. And yet still continue to be able to operate relatively smoothly within the Russian political environment,” Twigg said. The Health and Development Foundation, which counts Johnson & Johnson as a sponsor, is one of these groups. Dmitrieva told Devex there has been no change in the group’s operations or reporting requirements as a result of the foreign agents law. On the surface at least, prior receipt of foreign funding also doesn’t seem to impose additional burdens or barriers on social sector CSOs. In fact, AIDS Infoshare, a former USAID grantee, is one of the Russian aid program’s most prominent CSO partners in the CIS — an early indication that Western ties are not necessarily a roadblock to partnership with the Russian government. The Health and Development Foundation also received USAID funding for some time before 2007. As Russia’s aid regime structure continues to take shape, Twigg stressed that Russian CSOs keen on working with Russian aid should seize the initiative and reach out. “If you are good about cultivating positive professional relationships with your logical partners in the Russian government, if you’re smart about making good contacts in the Ministry of Health, then it seems to be the case that you can operate in this new environment successfully,” Twigg said. Check out more insights and analysis provided to hundreds of Executive Members worldwide, and subscribe to the Development Insider to receive the latest news, trends and policies that influence your organization.