Critics Charge AID With a Record of Waste

The U.S. Agency for International Development has left a mixed record of pricey successes and even pricier failures, critics say, after disbursing an unprecedented sum of more than $1.3 billion in assistance this year to Russia


The projects all "look fine on paper," one former employee of an AID contractor said, like many declining to be named. "It's just a shame that so much money gets wasted."


AID awarded $1.27 billion for technical assistance programs in Russia to more than 200 consultancies and other organizations. It also spent millions more on operational expenses involving Russia, its largest program in the former Soviet Union.


Jim Norris, director of the Moscow office of AID, said the budget for 1995 would decline sharply to $287 million at most, near its 1993 level of $234 million. But Norris added that funds may be cut further unless AID convinces a new Congress dominated by Republican critics of foreign aid that the money allocated to Russia has been well spent.


Republican Mitch McConnell, head of the Senate's foreign operations subcommittee that deals with assistance, last week even proposed the abolition of the agency.


Western and Russian critics, some inside AID, say the agency's approach in Russia, awarding large grants quickly to consultants and organizations with little experience in Russia, has backfired.


"There are a lot of hitches," one AID official said. "Some programs are just an enormous headache, with problems in Washington and problems down here. Some take 12 to 18 months to get rolling."


Norris and other AID officials point to Russia's massive privatization program as one example of how limited AID funds have greatly benefited the efficiency of the Russian reforms.


But then there are consultants like ARD/Checchi, a newcomer in Russia that was awarded $12.2 million last year to help reform Russia's legal system. After one year, it has spent a third of its budget but has little to show for its efforts.


Lev Khaldeyev, a dean at the prestigious Presidential Law Academy in Moscow, said ARD/Checchi agreed to provide $500,000 for eight legal reform programs this summer.


By mid-December, only $60,000 had come through, to finance repair of the academy's main lecture hall.


"There were very many meetings, very many negotiations and very many delegations," Khaldeyev said. "And then it all ground to a halt. I don't even know if we will cooperate with ARD in the future at all."


David Bronheim, ARD/Checchi project leader in Washington, insisted that his program was on schedule. "To measure success in this area, you can't go out and count bricks," he said. "Could we have done it faster? Maybe. Could anyone have done it better? I doubt it."


But even Norris, at AID, acknowledged that ARD/Checchi officials "were a little slower in starting up th we would have liked."


One source who declined to be named said: "It's all done by people who know nothing about Russia. They have no expertise in this area, but they know how to deal with AID."


Another consultant that is frequently criticized is ABT Associates, which was awarded $44 million to help reform Russia's health system. In the first year of the contract, it failed to submit grant-making proposals. Norris said AID sharply cut ABT's budget this fall.


Critics point to the way AID awards such contracts as the reason that inexperienced or uncommitted consultants scoop up major contracts.


Attacked for taking two years to set up programs in other parts of the world, AID in Russia pushed through unusually large grants in only six months, Norris said. There were only 45 days between the date when a contract was put up for bidding and the day applications were due.


"No one can put a decent proposal together that quickly," one former AID employee said. "That obviously leads to mistakes."


Most contractors, and AID itself, are criticized for spending too much on themselves: on overhead, offices, apartments, hardship pay and fees for visiting U.S. consultants.


"The amount of money spent on U.S. experts is a challenge to common sense," said Sergei Karaganov, who wrote a report on foreign aid for the Russian government.


Visiting consultants receive up to $443 a day in salary plus a $188 per diem fee for expenses. "I know people who have been here for a year on per diem," one employee of an AID contractor said. "It's outrageous."


Contractors receive up to 8 percent of the contract as a fee, plus what is termed indirect expenses. These expenses can be twice as large as the funds spent directly on programs, Norris said.


AID this fall awarded $10 million to Internews to support independent electronic and print media. AID insisted that a whole new office be created, with three top-salary expatriates and seven Russian staff to oversee the program. A quarter of the initial $2 million allotted was overhead. "They are spending lots of money to make sure we don't spend lots of money," a source close to Internews said.