THE NEW YORK TIMESBy David M. Herszennhorn and Ellen BarrySeptember 18, 2012
MOSCOW — Russia has ordered the United States to end its financial support for a wide range of pro-democracy, public health and other civil society programs here, in an aggressive step by the Kremlin to halt what it views as American meddling in its internal affairs.
The Kremlin’s provocative decision to end two decades of work in post-Soviet Russia by the United States Agency for International Development — with little warning ahead of an Oct. 1 deadline — was announced on Tuesday by the State Department in Washington. The move stands to cut off aid that currently totals about $50 million a year, a relatively small sum but a potentially devastating blow for groups that came to rely on foreign money as domestic controls over politics tightened.
American officials, who were informed of the decision earlier this month, quickly pledged to maneuver around the Kremlin. The Obama administration last October proposed the creation of a new $50 million fund– essentially an endowment for a private foundation established under Russian law — for Russian civil society groups, and one senior administration official said work on that project would speed up.
The Kremlin has taken a number of actions in recent months to bring pressure on nongovernmental groups and clamp down on political dissent, including a new law requiring any organization receiving aid from abroad to register with the justice manager as “acting as a foreign agent.” Russia also increased the penalties for libel and slander — a step that seemed intended to intimidate critics of government officials.
Russia is not alone in its resentment of United States-led democracy building efforts. Those have become a sore point for a number of countries in recent years, including allies like Egypt and Pakistan, which have objected to outside groups telling them how to run their affairs. The aid agency’s cold war history of providing a front for American intelligence agencies is still fresh in the memories of foreign officials, many of whom have never fully dropped their suspicions.
The abruptness of Russia’s announcements represents a sour new turn in relations between the countries, which have been touch-and-go since Mr. Putin returned to the presidency in May. While Mr. Putin has rebuffed overtures from President Obama for international action on Syria, he has also praised him as “a very honest man” who could possibly conclude a missile defense deal in coming years.
Mr. Putin also undoubtedly would prefer to deal with the devil he knows rather than the one he does not — the Republican presidential nominee, Mitt Romney, whom Mr. Putin has criticized for characterizing Russia as America’s greatest geopolitical foe.
Reaction was swift in Washington to what was widely perceived as an affront, with Senator John McCain, the Arizona Republican, urging the White House to condemn the Kremlin. “The Russian government’s decision to end all U.S.A.I.D. activities in the country is an insult to the United States and a finger in the eye of the Obama administration, which has consistently trumpeted the alleged success of its so-called reset policy toward Moscow,” Mr. McCain said in a statement.
But the State Department spokeswoman, Victoria Nuland, suggested that if Russia did not want American assistance, the money could be better spent elsewhere. “It’s their sovereign decision to make,” she said. “There are many countries around the world who would like to have more AID funding and help.”
Mr. Putin, facing large-scale dissent at home for the first time, has said unrest is being stoked by the State Department, working covertly through nonprofit organizations.
Among the groups supported by the money from Washington is Golos, Russia’s only independent election monitoring group, which last winter enlisted thousands of young Russians as poll-station monitors and posted reports of vote-rigging on its Web site.
Grigory A. Melkonyants, the deputy director of Golos, said it would take at least a year to find alternate financing to replace the American grants, if it was even possible.
“They see us as the source of criticism, and they are trying to halt that source,” Mr. Melkonyants said. “Many people are already scared to talk about the problems that exist today. The press is already frightened. Now they are trying to shut up civil organizations.”
The news filtered through Moscow’s human rights circles, already battered by new sanctions on political activities.
“What is the list of other countries that have expelled U.S.A.I.D.?” said Yelena A. Panfilova, the head of the Moscow branch of Transparency International. “It’s not about money — we can cope somehow — the problem is about this whole feeling that we have been brought together with Venezuela, Somalia and Belarus.”
As a practical matter it was unclear how many of the programs could continue without financing or support staff on the ground. The American aid agency employs 13 Americans in its Moscow headquarters, as well as a Russian staff of 60.
Officials said that the Russian foreign minister, Sergey V. Lavrov, informed Secretary of State Hillary Rodham Clinton of the decision on Sept. 8, when they met in Vladivostok in Russia’s Far East during the Asia-Pacific Economic Cooperation summit meeting.
Formal notice was then sent to Washington, through the American ambassador, Michael A. McFaul, in a memorandum dated Sept. 11, officials said.
The American-financed programs played a crucial role in helping Russia recover from the collapse of the Soviet Union, and included efforts to build the country’s capital markets and financial system and its mortgage-lending industry. The United States also supported an array of health programs, including efforts to combat tuberculosis and the spread of H.I.V.
But as Russia’s economy was buoyed by oil and gas revenues, the agency swung more than half of its portfolio to democracy and human rights programs, among them prominent critics of government policy. Since the fall of the Soviet Union, the programs have cost American taxpayers $2.7 billion, with about one-third of the yearly funding now going to health programs.
In recent years, however, Russia has bridled at the foreign aid flowing across its borders, in part because it views itself as a world power, a member of the Group of 8, and therefore more appropriately positioned to dole out assistance than to receive it.
Underscoring this view, Russia said on Tuesday that it was forgiving nearly all of North Korea’s accumulated foreign debt, which Russian officials have valued at roughly $11 billion, dating back to the closer relationship between them during the Soviet era.
The forgiveness step, which has been in the works for many months, would help clear the way for Russia to make new investments in North Korea — a development that runs counter to American-led efforts to economically ostracize the North over its expanding arsenal of nuclear weapons.
Mr. Melkonyants of Golos said he could not understand why American aid agency’s work rankled the Kremlin so. “Free elections are not an American goal — that is absurd,” he said. “They are a Russian goal.”
Steven Lee Myers contributed reporting from Washington, Rick Gladstone from New York and Andrew Roth from Moscow.