REGIONAL ACTIVITIES IN CENTRAL AND EASTERN EUROPE

	FY 1998 Actual	FY 1999 Estimate	FY 2000 Request
Support for East European Democracy	$58,933,000	$63,300,000	$60,000,000
FREEDOM Support Act	---	---	$10,000,000

Introduction.

Since its inception in 1989, USAID assistance to Central and Eastern Europe (CEE) has evolved from a regional program to a country-specific one. Initially the regional approach gave the United States the flexibility to respond quickly to varying needs across countries in a rapidly transforming environment. The program has matured. Country-specific programs within Central Europe are described earlier in this presentation. Described below are activities that still operate regionally, across countries.

In addition, USAID is developing innovative post-presence mechanisms to manage remaining activities and reinforce the sustainability of results in countries graduating from USAID assistance. These mechanisms include regional activities managed out of Washington, the Regional Service Center in Budapest, and the establishment of public-private partnerships to facilitate the financial sustainability of local civil society organizations.

FY 2000 Program.

Strategic Goal: Economic Restructuring

USAID seeks to foster the emergence of a competitive, market-oriented economy in which the majority of economic resources is privately owned and managed.

Privatization, Financial Sector, Fiscal Reform: Regional funds are requested to support special economic restructuring needs across the region. More recent initiatives include commercial law and anti-corruption concerns. Funds are allocated to: Washington-based technical advisors who support field missions in activity design and implementation; service contracts that assist USAID with a variety of non-technical support functions; inter-agency service agreements, such as those with the Securities and Exchange Commission and the Department of the Treasury, and contracts, such as that with the National Securities Clearing Corporation, which help in performance monitoring, assessment and rapid response to fiscal and capital markets related needs across the region; and collaboration with other donors on anti-corruption initiatives in targeted countries. Funds will also be used for workshops to share lessons learned among countries in topics such as bank supervision, accounting reform and privatization. On a cost-sharing basis, USAID plans to provide targeted short-term assistance or training to government or market institutions in graduated, or soon to be graduated countries to enable them to continue and solidify their transition to market economies. This assistance will be implemented through large and small grants with nongovernmental and voluntary organizations, technical assistance and training from other U.S. government agencies, and contracted technical assistance.

Environmental Management: USAID has broadened its environmental focus beyond reducing health risks, placing greater emphasis on developing environmental management capacity to support sustainable economic growth. This shift reflects growing evidence that environmental policy initiatives and reforms need to be fully integrated into the economic reform and restructuring process at an early point to ensure that the transition takes full account of long-term environmental costs and benefits in a market environment. USAID encourages reliance on market mechanisms to the maximum extent possible in promoting higher environmental quality, while also recognizing that environmental costs and benefits are never fully internalized in a market system, and governmental agencies at both national and local levels have important regulatory roles to play. To implement this approach, USAID has developed a new Environmental Partnership Program (ECOLINKS). ECOLINKS will foster partnerships between U.S. and regional entities aimed at finding market solutions to environmental problems and promoting application of U.S.-based environmental expertise, best practices, goods and services as part of those solutions.

Private Sector: USAID will assist in establishing better cross-border linkages in trade in critical regions in order to reduce regional tensions and integrate national economies to the World Trade Organization/ world trading system. USAID will also support regional self-regulatory organizations in auditing and accounting in order to promote regional development, integration and harmonization of auditing standards and practices, training, education and certification of professional accountants and auditors and development of regional accounting and audit professional associations in support of accounting reform in the region.

Enterprise Funds: The Baltic-American Enterprise Fund budget remains regional, since it funds investments in Latvia, Estonia and Lithuania. An evaluation of ENI enterprise funds is planned to assess impact of the program on private sector development in the region.

Energy: Given the international character of energy supply systems, USAID facilitates regional energy cooperation and trade/investment. Activities in FY 2000 will focus on: (1) developing regional power pools in the Baltic region; and the southern tier; (2) promoting private sector development and investment in energy efficiency and supporting efforts aimed at reducing emissions and improving environmental performance as part of the Agency's environmental priorities; (3) facilitating competitive power systems and independent energy regulatory agencies through regional workshops and training programs and partnerships in utility management.

Strategic Goal: Democratic Transition

Under this goal, USAID supports the transition to transparent and accountable governance and the empowerment of citizens through democratic political processes.

Trust for Civil Society in Central and East Europe (Trust): A proposed Trust is a visionary idea in that long after the SEED program ends, the United States will have an opportunity to promote deeper and more sophisticated civil societies in former totalitarian countries. While there is ample evidence of the transition from command to market economies and while there are many symbols and indicators of democratic society in most Eastern and Central European countries, the remaining challenge is the institutionalization and deepening of democratic institutions and open, transparent economies. To accomplish this, traditional bilateral assistance at the governmental level may diminish, but direct assistance to a panoply of philanthropic organizations, advocacy groups, professional societies and other non-governmental organizations will ensure citizen activism and governmental accountability -- the hallmarks of a sound democracy.

By leveraging private contributions through a public-private partnership with major American foundations, the USG will have added resources and expertise to sustain transitions to democratic, market-driven countries even beyond the period of direct bilateral assistance.

Rule of Law: Funds are provided for regional training, exchanges and technical assistance programs of the American Bar Association - Central and Eastern European Legal Initiative for key legal reformers and members of the judiciary. Funds are also provided for an enhanced anti-crime and corruption program being implemented by various U.S. government law enforcement agencies, including the FBI, Treasury and the Criminal Justice Division of the Department of Justice.

Local Government: Regional funding supports the creation of a region-wide network which will provide experience-based information to local government officials, municipal association members and relevant national officials for solving municipal problems and will improve their responsiveness to citizens' needs. USAID will support the full array of technical areas integral to the effective, transparent functioning of local governments and the continued enhancement of decentralization. These include municipal credit, local environmental planning, citizen participation, urban service delivery and infrastructure, local economic development, municipal budget and finance, condominium formation and maintenance, property and asset management, housing policy and finance.

Independent Media: Under USAID's ProMedia program, regional funds will support journalist exchanges within the region, regional workshops for journalists in participating countries, and regional training for resident advisers in the region.

Political Process: Funds will be set aside for unanticipated requests for election assistance, training of labor leaders, and possible assistance in conflict resolution.

Non-Government Organization (NGO) Development: Under the Democracy Network Program to strengthen NGOs in the CEE Region, USAID manages two regional programs: a legal reform program through the International Center for Not-for-Profit Law (ICNL), to improve the regulatory and legal environment vis-a-vis NGOs, and a regional networking program run by Freedom House, to increase collaboration and coordination among local NGOs in CEE - - through exchanges, regional workshops, U.S. and cross-border internships, and publication of a quarterly newsletter.

Strategic Goal: Social Stabilization

Under this goal, USAID assistance focuses on the human dimension of the transition to democracy.

Labor Market Transition: The Department of Labor maintains regional training programs for all countries in the region and supports World Bank social sector reform initiatives.

Health: USAID provides support for technical assistance, training and special studies to build cross-cutting initiatives in health such as financing, management, service delivery reform, partnerships, and infectious diseases. These funds also provide support for regional conferences that promote best practices, lessons learned, and dissemination of success stories in the CEE region.

Cross-cutting and Special Initiatives.

South Balkan Development Initiative: This program helps Albania, Former Yugoslav Republic of Macedonia and Bulgaria, front-line countries most severely affected by the conflict in the former Yugoslavia. With normal trade routes to Serbia cut off, the resultant economic setback has threatened the survival of these nascent democracies. In coordination with and with funds leveraged from other donors, the initiative will improve links among the South Balkan nations, encourage regional integration and promote cooperation.

Southeast Europe Cooperation Initiative: This program promotes regional cooperation on common environmental and economic problems among the countries of Southeast Europe with the goal of achieving regional stability. Activities include joint cooperation to improve border crossings, creation of a cross-border crime information sharing center; development of joint approaches to energy efficiency and waterways clean-up (the Danube).

Training: Funds are set aside for regional participant training and the Georgetown University scholarship program. Evaluation and project development and support also are funded here.

Performance Funds: In a changing political environment, U.S. interests are best served by having a modest level of Performance Funds available for new or accelerating reform, such as in the Bulgaria financial sector and the Croatia refugee return program.

CEE REGIONAL

FY 2000 PROGRAM SUMMARY*
(in thousands of dollars)

Deputy Assistant Administrator for the CEE: John Tennant

Strategic Objectives	Economic Restructuring	Democratic Transition	Social Stabilization	Cross-cutting / Special Initiatives	Total
Privatization	200	--	--	--	200
Fiscal Reform	--	--	--	--	--
Private Enterprise	2,300	--	--	--	2,300
Financial Reform	3,900	--	--	--	3,900
Energy	700	--	--	--	700
Environmental Management	2,400	--	--	--	2,400
Citizens' Participation	--	17,645	--	--	17,645
Legal Systems	--	2,530	--	--	2,530
Local Government	--	200	--	--	200
Crises	--	--	--	--	--
Social Benefits	--	--	800	--	800
Environmental Health	--	--	--	--	--
Cross-cutting/ Special Initiatives -- SEED -- ESF	-- --	-- --	-- --	29,325 10,000	39,325 [29,325] [10,000]
TOTAL	9,500	20,375	800	39,325	70,000
* Unless otherwise noted, Support for East European Democracy (SEED) Act funds

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