MOSCOW - U.S. State Department spokeswoman Victoria Nuland has announced that Washington would close the United States Agency for International Development (USAID) offices in Russia.

Nuland said that it was the Russian government forcing the closure, a charge the Kremlin denies. “Like all foreign agencies that provide financing to Russian NGOs, USAID needs to follow the laws of the Russian Federation," said Dmitri Peskov, press secretary for the Russian President. "As long as the Americans follow the applicable laws, we can’t make any decisions about terminating their activities on Russian territory.”

The departure of USAID is the biggest showdown in the past five years between Moscow and the West over the monitoring of democracy and human rights in Russia. The last time a similarly high-profile foreign organization pulled out of Russia was in 2007, when the British government closed the British Council, which the Russian government had accused of not paying taxes and of breaking Russian law. (In the UK and throughout the West, the ban was seen as low point in the diplomatic dispute over the murder in London of ex-KGB defector Alexander Litvinenko.)

The current showdown began after actions of USAID in Russia had attracted criticism from United Russia, the ruling party, and pro-Kremlin youth movements. The attacks on the organization became much louder after the December parliamentary elections in Russia, and the opposition protests that followed. USAID was accused of giving grants to human rights organizations, as well as the election monitoring organization “Golos.”

USAID has spent $51.9 million in Russia this year, including $31.8 million on projects promoting democracy and human rights. The USAID Russian mission is in 40th place in terms of the amount of money spent there compared to other countries.

In a large part to restrict the activities of organizations that receive USAID grants, last June the Duma adopted a new law on non-profit organizations considered to be “foreign agents.”

According to the new law, NGOs that receive financial or property support from foreign governments, international or foreign organizations or foreign citizens, that engages in political activity must register as foreign agents with the Justice Department and to announce its status as a foreign agent whenever there is information about the NGO in the media or on the internet; NGOs who do not comply are threatened with a stiff fine, and the directors of repeat offenders risk getting thrown in jail for up to three years.

A source close to the U.S. government said that there is a direct connection between this new law and the State Department’s decision to pull USAID out of Russia.

Spillover effects

Representatives from several NGOs said that the end of USAID’s work in Russia is a blow for many other human rights organizations in the country. The director of Transparency International, Elena Panfilova, said that her organization received funding from USAID although they never did any projects directly. “Of course, the agency’s exit will affect our work. There will be less financing possibilities, so we will have to look for other options,” she said. According to Panfilova, USAID was already winding down activities in Russia, and has been slowing reducing the amount of aid.

But Pavel Chikov, head of the human rights organization Agora, doesn’t believe in the end off all of USAID’s activities in Russia. “First of all, most of the projects they have financed are several-year-long projects. And projects that have already been approved will be finished,” he said. “Secondly, I don’t believe that the U.S. government will refuse to finance any programs in Russia. So I think this is more like a declarations of intentions then a final decision.”

Russian government officials could barely hide their satisfaction with the U.S. decision. “USAID’s departure is a logical, objective and long overdue step. Equivalent institutes in Russia, whether it is in the domains of economics, healthcare or democracy, have strengthened and are more than able to function without foreign aid,” said one source in the Russian government.