SEED Assistance Summary 2003
SEED Act
1994 | 1995 | 1996 | 1997 | 1998 | 1999
2000 | 2001 | 2002 | 2003 | 2004
U.S. Strategic Interests
The Czech Republic’s longstanding ties to the United States, the values it shares with the U.S., its membership in NATO and upcoming membership in the EU, and the increasing awareness of the role Prague can play in international affairs make the Czechs excellent allies in joint campaigns against terrorism, and for more openness in countries with oppressive political systems and/or overly restricted markets.
Overview of U.S. Government Assistance
In FY 2003, the U.S. Government (USG) provided an estimated $29.2 million in assistance to the Czech Republic:
- $27.9 million in security, regional stability, and law enforcement programs;
- $835,000 in programs to promote trade with the U.S.;
- $268,000 in democratic reform programs (including Public Diplomacy exchange programs); and
- $140,000 in social sector and economic reform programs.
In FY 2003, a total of 125 Czechs traveled to the U.S. on USG-funded exchange programs.
U.S. Assistance Priorities
Democratic Reform Programs: In FY 2003, the four main goals were: improving the effectiveness of the judiciary; promoting non-governmental organizations (NGOs) and the role of civic groups, particularly outside of the capital; raising the standards and professionalism of the media; and ethnic equality through minority rights. Trafficking in persons (TIP) and anti-corruption projects were also addressed through grants.
Economic and Social-Sector Reform Programs: In FY 2003, the U.S. Trade and Development Agency (USTDA) made three grants worth a total of more than $800,000 to promote the import of U.S. technology, particularly in the environmental field. The Foreign Agricultural Service sent seven Czechs from government and the private sector to the U.S. under a program to open up markets for U.S. agricultural products, introduce new American foods to the Czech Republic, and favorably to influence Czech agricultural policy, particularly during the country’s accession to the EU. USAID, through its Partners for Financial Stability (PFS) and the Financial Services Volunteer Corps (FSVC) programs, advised in bankruptcy legislation and ran training programs on credit management, private pensions, and the regulation of securities markets.
Security, Regional Stability, and Law Enforcement Programs: In FY 2003, U.S. security-related assistance was focused on upgrading the niche capabilities the Czech Republic will contribute to NATO. To this end, the USG provided the Czech Government with $25.9 million in Foreign Military Financing (FMF) and $1,923,000 in International Military Education and Training (IMET) funds for the training of 86 Czechs in the U.S. and the conduct of five seminars in the Czech Republic. In the law enforcement arena, the USG concentrated on efforts to combat the smuggling of drugs and trafficking in people through programs in schools aimed at demand reduction, techniques to detect and investigate money laundering, establishing witness protection programs, and donations of x-ray and other equipment to Czech border guards.
SECTORAL ASSESSMENTS
Democratic Reform
Just over $200,000 was given out in grants in this sector, with SEED funds accounting for just under half of that total.
The democratic and civic institutions and concepts were nonexistent in the communist era, which contributed to a sense of political apathy and low esteem for government and public institutions among Czech people. Even now, after more than a decade of difficult transition, this legacy of political indifference persists. As a result, there is a great need for civic education programs that convey the concepts of tolerance, equality, respect for authority, and personal responsibility. The Embassy’s efforts in this sphere concentrated on making the judiciary more effective, the press more professional, and the NGO sector more influential, particularly in combating corruption and human rights abuses. In some cases, grants were given to individual NGOs, such as those conducting media training or promoting the rights of the disabled. In others, funds were used to establish an association of NGOs or to set up a center for information on non-profit activities. Several grants were given to support the development of local civic groups through cultural and historical restoration projects.
Some observers believe that corruption increasingly threatens democratic development, the functioning of a free market, and, more importantly, faith in public institutions in the Czech Republic. The NGO Greenways received a SEED grant to develop a program to prevent conflicts of Interest at the municipal level. Transparency International also was awarded a grant to promote reform of the Czech judiciary and to inform the public about problems of the judicial process in the country and the possibilities for reform. A third grant went to a group of predominantly young lawyers, who give their free time on a pro bono basis for activities aimed at safeguarding key legal values to will secure better observance of human rights and freedoms. The group will publish a magazine on human and consumers’ rights and will conduct outreach to ordinary citizens across the country.
From a human rights perspective, trafficking in persons remains a major cause for concern in the Czech Republic, a country identified as a place of origin, destination, and transit. There is a need for sustained efforts to stem trafficking and for better care and protection of its victims. Raising public awareness, improving police sensitivity and practices, and providing victims with information and counseling support are required. The NGO La Strada received a grant to educate police and other law enforcement professionals through information-gathering and training; the improvement of practical skills among those in working with female trafficking victims; and through enhanced co-operation between state and non-state bodies, through government participation in training activities. An additional grant will focus on the creation of a network of seven coordinators based throughout the Czech Republic. The project will also include the preparation of regional reports outlining the general situation in trafficking in persons in each Czech region.
The NGO Living Together was given a grant to improve the living conditions of poor and marginalized Roma in Ostrava and to promote social dialogue and assimilation.
Economic and Social Sector Reform
Impending EU accession, its geographic location, and relatively low costs have made the Czech Republic the leader in Central Europe in attracting foreign investment. These inflows, and domestic consumption fueled by rapidly rising wages at a time of low inflation, have kept the Czech economy going, despite mediocre exports to its main markets in Europe. In order to sustain economic growth, the Czechs must continue to accelerate the fight against corruption and improve the business climate further by reforming bankruptcy laws, the government’s anti-monopoly office, and those institutions that regulate utilities, securities, and insurance.
The Czech bankruptcy law is viewed as largely inadequate, particularly regarding creditors’ rights and in providing a constructive solution for financially distressed companies. The current law lacks an effective provision to facilitate reorganizations, comparable to Chapter 11 of the U.S. Bankruptcy Code, and appears to cause protracted liquidations as the only viable way to resolve insolvencies. It widely believed that a lack of creditor protection under the Czech insolvency law adversely impacts the flow of both foreign and domestic capital into the economy. A new bankruptcy bill has been drafted. Before it went to parliament for a vote, three U.S. bankruptcy judges, with a grant from the Financial Services Volunteer Corps (FSVC), provided technical assistance to the Drafting Committee to conduct an intensive section-by-section review and edit of the draft law.
Four officials from the Czech National Bank went to the U.S. on an FSVC program to study the practical aspects of managing credit risks. Czechs also attended programs in Croatia on private pensions and in Estonia on securities markets, through USAID’s Partnership for Financial Stability (PFS) grants. PFS also made a grant to the NGO Leadership Forum to study and promote corporate social responsibility in the Czech Republic.
Security, Regional Stability, and Law Enforcement
In 2003, the Czechs received $25.9 million in Foreign Military Financing (FMF) assistance and nearly $2 million in International Military Education and training (IMET) funds. These two programs account for most of the U.S. assistance funds. The Czech Republic is in the process of reforming its military from a large, conscripted, static defensive force to a professional, modern, flexible, and deployable military. Drawing in large part on NATO's recommendations for lighter, more specialized forces, the Czechs have used a major portion of their FMF assistance to meet the capabilities commitments pledged at the Prague Summit in 2002. In 2003, 86 Czechs received IMET training in the U.S., while five seminars were conducted in the Czech Republic.
The Czech Republic became a member of NATO in 1999. Since then, it has participated in every NATO-led operation, including IFOR, SFOR, KFOR, and ISAF. It also has taken part in every major, U.S.-led, non-NATO operation in the war on terrorism, including Operation Enduring Freedom and Operation Iraqi Freedom. Although the Czech government approved the deployment of a nuclear, biological, and chemical (NBC) unit to Kuwait and field hospital to Iraq, the public opposed Czech participation. Experts believe there is insufficient public debate on security issues in the Czech Republic, as well as a gap in education for the next generation of policy makers on security topics of national, European, and international concern. SEED funds were used to establish the Security Studies Institute, the only cohesive and accredited study program of its kind in the country. Its purpose is to promote dialogue on key issues related to U.S. foreign policy, including the role of NATO in regional security, international efforts to advance a peaceful settlement in the Middle East, and the role of NATO and the international community in addressing the war on terrorism. SEED funds were also used to organize a conference, in October 2003, on NATO and the Middle East. Keynote speakers included Prince Hassan of Jordan, former Czech President Vaclav Havel, former Secretaries of State Madeline Albright and Henry Kissinger, and U.S. Permanent Representative to NATO Nicholas Burns. A separate grant funded a tour by NATO representatives, with accompanying exhibitions and information booths, to six Czech cities
The Department of State/Bureau of International Narcotics and Law Enforcement Affairs (INL) administered funding from its own appropriation in support of a Department of Justice, Office of Overseas Prosecutorial Development, Assistance and Training (DOJ/OPDAT) Resident Legal Advisor (RLA) program, as well as U.S. Marshals Service (USMS) and Internal Revenue Service trainings in the Czech Republic. A major problem with cases of trafficking in persons or drug smuggling is getting those involved to testify against ringleaders. The Czechs wanted to know how the USG deals with this problem. The USMS showed the Czechs how the U.S. program is run.
Both geographic and economic factors render the Czech Republic vulnerable to money laundering. Domestic white-collar crime is believed to be the main source of laundered funds. It is also assumed that proceeds from narcotics trafficking, smuggling, auto theft, arms trafficking, embezzlement, racketeering, prostitution, and trafficking in illegal aliens are laundered there by organized international groups, although that is yet to be proven. Past, cooperation among government law enforcement, intelligence, and administrative agencies was ineffective. The IRS ran two programs on techniques for identifying and investigating money laundering, and demonstrating how different U.S. agencies work together to fight the problem.
The USG contributed both to police drug interdiction efforts and to those of NGOs and schools to reduce demand for drugs through education. Czech Customs officers were trained and equipped through the Department of State’s Export Control and Related Border Security (EXBS) program. USAID made a $150,000 grant to the Lions Club to run programs on demand reduction in Czech elementary and middle schools.
COUNTRY PERFORMANCE MEASURES
Economic Policy Reforms and Democratic Freedoms in Czech Rep., 1991-2002
Ratings based on a 1 to 5 scale, with 5 representing the most advanced.
Sources: EBRD, Transition Report 2003 (November 2003); Freedom House, Freedom in the World 2003 (2003); and (various years).
Economic Structure and Human Development in Czech Rep., 1991-2002
The Human Development Index (HDI) is based on three indicators: longevity, as measured by life expectancy; educational attainment, as measured by a combination of adult literacy and combined primary, secondary and tertiary enrollment ratios; and standard of living, as measured by real per capita GDP ($PPP). The HDI ranges from 0 to 1, with higher values representing greater human development. UNDP, Human Development Report 2003 (July 2003), and previous editions; EBRD, Transition Report 2003 (November 2003), and previous editions.
FY 2003
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