Note: This document may not always reflect the actual appropriations determined by Congress. Final budget allocations for USAID's programs are not determined until after passage of an appropriations bill and preparation of the Operating Year Budget (OYB).
UKRAINE
FY 1998 Assistance to the NIS Request . . . . . . . . . . . . . . . . . $225,500,000 Introduction
Ukraine's transition from a centrally planned economy to one that responds to the dynamics of the marketplace has been slow and difficult, as have political and social change. But more than ever before in the five year history of independent Ukraine there is reason to be optimistic about the prospects for lasting economic, political and social transformation.The United States and Ukraine have a shared interest in Ukraine's independence, stability and prosperity. Straddling East and West, Ukraine is trying to assert its national identity while at the same time establishing and balancing relationships with Russia, its fellow newly independent states, and the rest of the world. In regard to the latter, over the past several years, Ukraine has taken important steps that have led to greater global security and furthered economic and political integration with the West. Of critical importance were the decisions to rid itself of nuclear weapons and to become a leading member-state in the Partnership for Peace. Further demonstrating its position as a member of the world community, Ukraine has also participated in peacekeeping efforts in Bosnia-Herzegovina. On the economic side, Ukraine has successfully kept pace with an ambitious and politically difficult economic reform program negotiated with the International Monetary Fund (IMF) and supported by the donor community. Although much remains to be accomplished, considerable strides have been made, including monetary stabilization, trade liberalization and a substantial reduction in inflation. Recently, Ukraine has undertaken to broaden and deepen its efforts with the introduction of a comprehensive economic reform program. If this is successfully implemented, Ukraine will have made substantial headway toward achieving a sustainable and stable market-based economy. Furthermore, with the recent passage of a new constitution and Ukraine's determination to use the occasion as impetus for further economic, political and social change, Ukraine's stability and its role as an important new member of the world community are greatly strengthened.
The Development Challenge
The transformation of Ukraine's economic and social structure is a daunting task, requiring steadfast support both from within the country and from the international community. USAID is assisting Ukraine to put in place the basic building blocks of a market-oriented economy, involving the transfer of a significant proportion of command-controlled assets to private ownership and comprehensive change in economic policies and supporting institutions. Another enormous challenge for the Government of Ukraine (GOU), however, is to maintain popular support for the reform effort. As long as the quality of life continues to deteriorate for most Ukrainian citizens, the promise of a brighter future associated with economic reform will ring hollow. Therefore, USAID is assisting Ukraine in building political and civil institutions that will supplement and balance the efforts of government. Attention is also being given to restructuring basic social protection programs so that government social service expenditures are targeted to the most needy and can become sustainable within the confines of Ukraine's budgetary strictures.A strong impetus for undergoing radical reform is Ukraine's enormous debt burden, which now stands at close to $9.9 billion, or about 26% of GDP. More than half is owed to countries of the former Soviet Union, mainly Russia, for oil and natural gas. The GOU well understands the importance to its future solvency of reducing this drain on the economy.
Just two years into its serious economic reform program, Ukraine has far to go in its journey. While the pace of privatization has picked up considerably, that is only the first step in the larger process of enterprise restructuring to adapt to a market-oriented economy. Critical to the functioning of the transformed economy is the establishment of a business environment conducive to enterprise development and domestic and foreign investment. This includes a supportive legal and regulatory environment, a sound financial infrastructure, and full integration into world markets through accession to the World Trade Organization (WTO). It also includes addressing such serious constraints as corruption and moving forward in areas that have been slow to undertake reform, most notably agriculture. Continued progress in energy sector reform is fundamental to achieving Ukraine's economy and security objectives, as is action to reverse the legacy of environmental mismanagement to promote sustainable development.
In terms of Ukraine's democratic transition, the enactment of a new constitution was a ground-breaking first step. Implementing legislation is now required in many areas, and a new legal system will have to be instituted to secure a democratic future. Developing effective and accountable local governments and strengthening civil society institutions are critical to the proper functioning of a democracy as well. Ensuring the long-term viability of independent media is also key.
The scope of Ukraine's social transition has yet to be fully defined, but is crucial for sustaining popular support for the transition to a free market and democracy. If affordable methods are not developed to protect Ukraine's most vulnerable citizens from the fall in real incomes, and to arrest the deterioration of basic public services, political support for economic reform in Ukraine will evaporate.
Given Ukraine's progress on reform so far, it will both participate in the cooperative activities of the Partnership for Freedom (PFF) initiative and continue to receive technical assistance in support of its transition to a market economy. Already, U.S. assistance provided to date is reaping tangible results. More than 3,500 large enterprises have been privatized to date. Seventy-five percent of Ukrainians have either picked up their certificates or opened a privatization account, and over 13 million certificates have been traded for shares in privatized companies. An over-the-counter (OTC) trading system and a self-regulatory organization to govern it have been established and live trading began in July 1996. With USAID support, Ukraine has registered a self-regulatory organization of accountants, a giant step toward the adoption of international accounting standards, which is critical to promoting business and investment. USAID has helped establish four Farm Service Centers to supply U.S. technology and inputs and provide a private alternative to state systems for marketing output.
Ukraine's energy sector has seen the break-up of monopolies and the establishment of a decentralized power system including four joint stock generating companies that now compete with one another in a wholesale market. There are also 27 local joint stock electricity companies to distribute and sell electricity to consumers and an independent National Electricity Regulatory Commission. Under a USAID-designed pilot project, 16 cities have registered condominiums and 59,000 units in 14 cities now have private maintenance contracts. The USAID-supported housing subsidy program has enabled Ukraine to target benefits to low-income families while raising prices for housing and communal services and reducing the budget deficit by $600 million in 1995 and by an estimated $1 billion in 1996.
USAID provided substantial support to the development of Ukraine's constitution, from materials on comparative constitutional systems to a public education campaign on the constitutional process. Finally, USAID humanitarian assistance has substantially helped the most vulnerable members of society. For instance, more than $11 million worth of medical supplies and relief items was supplied in commemoration of the tenth anniversary of the Chernobyl Nuclear Power Plant explosion, and the 32 million doses of vaccine provided to support Ukraine's campaign to combat the diphtheria epidemic have contributed to a significant reduction in this disease.
Other Donors
In addition to the United States, major donors to Ukraine include the World Bank, the European Union (EU), the European Bank for Reconstruction and Development, the United Kingdom, Germany and Canada. USAID maintains close contact with the major multilateral and bilateral donors working inUkraine. Collaboration on determining and implementing conditionality is especially strong. Effective donor collaboration has resulted in the increased pace of mass privatization, a well-coordinated multi-donor effort to strengthen central bank functions, complete restructuring of the power sector, a monthly multi-donor forum aimed at increasing the effectiveness of local government assistance efforts, and a coordinated approach to helping Ukraine mitigate impacts of the economic reform program on health, housing, and other social factors.FY 1998 Program
In FY 1998, the USAID program in Ukraine will continue to assist in the fundamental restructuring of Ukraine's economic and political system and support the efforts of the government to alleviate the privations imposed on the most vulnerable members of society during the economic transition. The Partnership for Freedom's new programs to encourage economic growth and develop links between Ukrainians and Americans also will begin in FY 1998.Strategic Goal: Economic Restructuring
Economic growth is critical to Ukraine's future as a stable and prosperous country, but growth requires investment. Without the transfer of assets to the private sector and the appropriate policy, legal and regulatory framework conducive to broad-based competition and private sector growth, Ukraine will not be able to foster investor confidence and attract meaningful investment. Also key to successful economic and social stability are efficient and safe energy systems and environmentally sound practices and environmental sustainability. As a result, Ukraine has committed itself to a comprehensive economic reform program, and USAID is playing a significant role with a multi-faceted assistance program to foster these reforms. Specifically, USAID is assisting Ukraine in privatization of enterprises, land and housing; creation of capital markets; development of macro-economic and monetary policies; reform of financial and fiscal systems; development of sound commercial law; restructuring the energy sector; fostering new business development and investment; reinvigorating agriculture; and promoting environmentally sustainable growth.To date, Ukraine has privatized approximately 30,000 small companies and over 3,500 medium and large enterprises. Progress in implementing mass privatization has picked up considerably, with new share packages in over 400 enterprises offered each month for privatization and compensation certificates (which compensate citizens for lost savings due to hyperinflation). The challenges for the future involve continuing the momentum for mass privatization until the process is complete, including the agro-industrial sector; encouraging citizens to pick up and use their compensation certificates; and ensuring that the share registrar process devolves to a private, independent function.
Capital market infrastructure development is being sequenced to reflect the needs of the market. To date, USAID technical assistance has supported the development of a broad strategy for the long-term evolution of capital markets, a self-regulating organization of independent registrars, a securities commission and an over-the-counter trading system, which opened with 40 firms operating an on-line system out of four cities in Ukraine with trading volume of approximately $320,000. In addition, under USAID auspices, more than 450 directors of private enterprises have received training on the principles of shareholder rights. The next steps involve the strengthening of the securities commission as the sole regulatory authority, the establishment of a stronger legal requirement for the use of independent share registrars, and the institution of depository, clearing and settlement and transfer agent functions.
Over the past year, USAID technical assistance has been instrumental in the development of the legal and regulatory framework for land privatization and land market creation. USAID-supported local demonstration projects also provide technical assistance to cities and collective farms for designing and implementing pilot urban land auctions, tenders, zoning projects, titling and registration pilot projects, and agricultural land privatization projects. Over the next two years, USAID technical assistance will enable Ukraine to hold up to 75 land auctions/tenders and establish a routine auction process and permanent auction staff in ten cities. Additionally, a national land title and registration system is slated to be approved, and legislation based on market-oriented principles contained in three draft laws (land code, titling and registration, and territorial planning) is expected to be enacted. The GOU is expected to begin privatizing land on which enterprises and condominiums are located, and a land taxation system will be designed by the GOU. Procedures for agricultural land privatization will be replicated throughout Ukraine, and land mortgage procedures will be developed, tested and adopted by banks for nationwide use.
USAID's housing privatization program integrates national and local efforts to encourage the private ownership of housing units and to improve the delivery of maintenance and communal services. The country's housing stock is being privatized to further lessen the drain this sector has placed on local and national government resources and to improve the sector's responsiveness to local needs. Assistance includes work on national policy issues, as well as local projects in four regions to demonstrate ways to carry out reform. To date, 60 cities have passed resolutions to implement the condominium program and more than 33,000 households are participating in the conversion process in 20 cities. Twenty-six cities have held transparent pubic bids to contract out maintenance services for more than 140,000 apartments to private companies. The challenge for the future is to increase the rate of housing privatization, in part through the enactment of a real estate tax law.
With USAID's technical support, the National Bank of Ukraine (NBU) has moved forward in developing the infrastructure for a safe and sound banking sector. With recently developed guidelines, Ukrainian bank inspectors are beginning to examine banks in a systematic way. An off-site early warning system will soon be functional, as will a new organizational unit to systematically deal with problem banks. The NBU/Bankers Association National Center for the Training of Bankers is one of the premier institutions in the region, with more than 2,000 bankers trained to date. An innovative train-the-trainers program has begun in association with the International Management Institute in Kiev, which will result in roughly half the National Center courses being taught by Ukrainian graduates of the Institute's program. Finally, Ukraine is acknowledged to have one of the most sophisticated electronic funds payment systems in the entire region. Hardware and software for this system was funded by USAID. Work in the coming year will focus on the development of the NBU's capacity to analyze and monitor risk and enforce prudent regulations; revision of banking law and NBU regulations; and the development of a system for government securities issuance and management. USAID will also focus on further development and strengthening of bank supervision, funds transfer and accounting systems, and the government securities market. New training courses will address critical areas such as problem loan management and accounting.
A significant start has been made in fiscal reform efforts. A national training center for tax collection officials has been established; a budget policy and macroeconomic analysis unit has been created within the Ministry of Finance; monthly budget reports on major revenue and expenditure items are issued and widely circulated within and outside of the Ministry of Finance; electronic databases have been established and are being used in the government budgetary process; and an intergovernmental fiscal model has been developed for use in analyzing different revenue and expenditure arrangements between central and local governments. In the future, USAID assistance will focus on tax legislation, taxpayer assistance, and tax law enforcement; further development of databases and models for budget preparation, analysis and monitoring, including the development of analytic tools to assess the "underground economy" and its budgetary implications; and improving fiscal arrangements between oblast and central government levels. USAID has begun providing technical assistance to senior level Ukrainian ministers in the development of economic policy, focussing on macro-economic policy, monetary policy implementation, and tax and budget policies.
A legal and regulatory environment that nurtures the growth of businesses and ensures the security of savings and investments will be of great benefit in promoting long-term growth. USAID assistance has helped Ukraine make some progress toward adoption of international accounting standards and the formation of self-regulatory organizations among business groups, as well as in improving anti-monopoly enforcement, developing a functioning bankruptcy system, and bringing Ukrainian customs practice to World Trade Organization standards. Over the next few years, USAID will continue to work with Ukraine to develop a civil code, reshape the bankruptcy system, strengthen the Anti-Monopoly Committee, develop an open trade regime and promote Ukraine's integration into world markets. Under the PFF, Ukraine will also be a participant in a new Trade and Investment Facility designed to promote the international links necessary for economic growth.
Energy sector reform is critical to achieving macroeconomic objectives. Power sector reform is well along, coal reform is starting, and oil and gas reform is needed. With USAID assistance, Ukraine's thermal power sector has been dramatically transformed from monopolies to a decentralized, competitive system. USAID's assistance for the new system focusses on four joint stock generating companies, 27 electricity supply companies and an energy market regulator. The wholesale energy market --phasing in since April 1996-- will give generators strong incentives to reduce costs, improve performance and reduce prices. For the future, USAID will focus assistance on commercialization of the generation and distribution companies and preparation for privatization, and the strengthening of the regulatory agency. USAID will also work in conjunction with the World Bank on helping Ukraine to restructure its coal sector, given the important economic, political and social issues involved.
USAID will continue to be actively involved in the effort to assist Ukraine in closing the Chernobyl Nuclear Power Plant by 2000 pursuant to the Memorandum of Understanding signed by the G-7 countries and Ukraine in December 1995. Among the areas addressed by this program, in addition to power sector restructuring, are energy investments, a significant energy efficiency initiative, thermal power, nuclear safety and the social impact of closing Chernobyl. The United States considers the initiative to close Chernobyl to be of major importance and will continue to play a prominent role in the context of the G-7 to assist Ukraine in this complex and difficult undertaking.
Experience shows that the small and medium-sized enterprise (SME) sector is the primary contributor to economic growth and job creation. Through a variety of vehicles, USAID is assisting SMEs to improve business skills while providing services and access to information that will strengthen their competitiveness. With USAID support, three Ukrainian business service centers have been established to provide SMEs with technical assistance, training and education, information, research and introduction to modern business practices, and other assistance in conducting business in a market economy. Linkages to USAID-funded venture capital and lending programs, such as the Western NIS Enterprise Fund and the Eurasia Foundation, are also being established to complement the full range of business services. USAID is also working with such other donors as the European Union, the International Finance Corporation and the World Bank on activities to promote SME development in Ukraine.
Representing nearly 30% of GDP and 20% of employment, a reformed and strong agriculture sector is critical to the success of Ukraine's new market economy. USAID supports U.S. private sector investment in Ukraine's agricultural production, marketing and input supply via farm service centers created through partnerships between Ukrainian and U.S. concerns. These centers, providing private, profit-oriented alternatives to the old system of state monopolies, have introduced new cultivation methods to Ukraine, increasing yields in the areas served by the centers, saving energy, and reducing pesticide runoff. Even more importantly, they have introduced a new model of doing business. To address other important constraints to increased agriculture production, USAID is also assisting Ukraine in the privatization of collective and state-owned farms and in increasing capital for investment.
A major focus of USAID's environmental program is improved management of natural resources as the foundation for economic development. USAID is strengthening environmental institutions within government, the private sector, and the non-governmental organization (NGO) community to create an institutional framework that will support a transition to a market economy that is environmentally sustainable. One element of USAID's program involves identifying investor costs, obligations (including potential liability) and opportunities in a number of industries across Ukraine to enable and facilitatethe privatization process. Other activities include environmental assessments for heavy industry in Donetsk to identify opportunities to reduce waste and improve efficiency, and eco-efficient business development in Ivano-Frankivsk, focusing on sound resource management to enable long-term, sustainable economic development.
Strategic Objective: Increased transfer of state-owned assets to the private sector
Strategic Objective: Increased soundness of fiscal policies and fiscal management practices
Strategic Objective: Accelerated development and growth of private enterprises
Strategic Objective: A more competitive and market-responsive private financial sector
Strategic Objective: A more economically sound and environmentally sustainable energy system Strategic Goal: Democratic Transition
The development of democracy is key to the success of sustained economic and social reform in Ukraine. A stable democracy in Ukraine requires transparent and accountable governance and the empowerment of citizens through democratic political processes and civil society institutions. As decision-making is decentralized and democratization proceeds, Ukraine's citizens will increasingly assume the responsibilities and reap the benefits of participation in the political, economic and social decisions that form their society. The success of this process will depend on the existence of appropriate institutions, laws, and processes, as well as the availability of relevant information.USAID's democracy program in Ukraine is focused on strengthening these building blocks of democracy. USAID's programs help develop competitive and fair political processes, including elections; promote the active participation of citizens in political and economic decision-making through NGOs; strengthen independent media; put in place laws and legal institutions that support democratic processes; and strengthen local government to make it effective, responsive and accountable to its citizens.
Improving the relationship between the citizens and their representatives --especially central legislators and local governments-- is fundamental to establishing a stable democracy in Ukraine. USAID assistance is helping political parties in Ukraine's new multi-party system to strengthen coalition building and improve political party and election campaign management skills. USAID is also supporting the development of civic action groups and NGOs working in public policy. For the future, USAID will assist with the development of new draft legislation, including laws that facilitate the work of NGOs and improve election law shortcomings. Another area of emphasis will be to help Ukraine ensure better independent news coverage, as well as stronger, self-sustaining independent media. Independent media are critical to building and maintaining a strong democracy.
The move from an authoritarian past to a democracy has required many fundamental changes in Ukrainian political institutions, procedures and attitudes. One such essential change was accomplished with the June 28, 1996 adoption of a new constitution. The U.S. Government's programs in Ukraine contributed significantly to the development of the new constitution by sponsoring town meetings to encourage wide public debate; providing lawmakers with information on comparative constitutional systems; assisting Ukraine's independent media, which provided extensive coverage, analysis and opinions throughout the Constitution's development and adoption; and supporting a public education campaign on the constitutional process. Passage of the Constitution was only the first step in ensuring the rule of law in Ukraine. Implementing legislation is required in many areas, and USAID has agreed to provide assistance in developing it. Specifically, USAID will be working in the following areas: drafting new criminal and civil codes, empowering and increasing the independence of the court system and rationalizing procedural codes for all courts; increasing citizen participation in the legal system; permitting and strengthening non-government organization advocacy capabilities; and educating the population about the substance of the new Constitution. As part of the Partnership for Freedom, emphasis will be given to cooperative activities --such as partnerships and exchanges-- which promote democracy and civil society.
USAID has been working with the Parliament and local governments to make them more efficient and responsive to their constituents. USAID-supported activities have provided members of Parliament with research and analysis on draft laws, and have helped establish computer-based systems that streamline municipal operations. USAID has also assisted the Ukrainian Association of Cities to become an effective advocate of municipal governments. As a result of a bus maintenance project that USAID plans to replicate elsewhere, public transportation capacity in the city of Ternopil increased by 40%, while increased fares produced revenue increases that will promote the sustainability of the system. Using mechanisms such as more open budgeting, town meetings, citizen task forces, constituency outreach and local government watchdog groups, local governments, with USAID assistance, are becoming the venue for the development of democratic leaders and governance. USAID will continue these efforts, with the overall objective of helping develop more effective, responsive and accountable local government.
Strategic Objective: Increased, better-informed citizens' participation in political and economic decision-making
Strategic Objective: Legal systems that better support democratic processes and market reforms
Strategic Objective: More effective, responsible, and accountable local government Strategic Goal: Social Stabilization
The objective of USAID's assistance in this area is to help make social services work for the Ukrainian people, both during and after the country's economic and political transition. USAID support for social sector restructuring is designed to protect the most vulnerable members of society during the economic transition, reduce government budget expenditures in the social sector, and facilitate the price increases necessary to improve social service quality. Political support for economic reform in Ukraine will evaporate if affordable methods are not developed to shelter the poor from rapid price increases, falling incomes, and the deterioration of basic public services. USAID activities are designed to address the urgent humanitarian needs of the people of Ukraine, support the government in moving from universal price subsidies to those based on income, and to lay the foundation for a sustainable system of social insurance. They are also designed to reduce the public health risks caused by environmental mismanagement.USAID provides humanitarian assistance to address critical needs of the most vulnerable groups and to respond to emergency situations. Ukraine has benefited greatly from the distribution of excess U.S. military supplies. Since 1993, USAID assistance has facilitated the distribution of roughly $25 million worth of these supplies to the needy through local Ukrainian NGOs. USAID has also assisted in the provision of humanitarian aid to orphanages and boarding homes for the elderly and disabled throughout Ukraine.
USAID has been the largest donor of vaccine to combat the diphtheria epidemic in Ukraine, providing 32 million of the 50 million doses needed and related technical assistance. This campaign is showing dramatic results in decreasing the incidence of diphtheria throughout Ukraine. The program has also demonstrated that Western vaccines work, that mass campaigns work, and that Ukraine can safely modify its immunization protocols. Pursuant to the provision of a one-year supply of insulin for Ukraine's child diabetics, USAID is now focused on assisting Ukraine in such areas as identifying alternative methods of controlling juvenile diabetes and reducing the costs associated with diabetic care.
Since Ukraine's independence, NGOs increasingly have found important roles to play - as social service providers, catalysts for the development of civil society and promoters of continued economic and political reform. The number of NGOs has grown markedly, from roughly 40 in 1990 to an estimated 5,000 in 1995, with almost half working to provide social services that the government may no longer be able to afford or chooses not to provide. USAID programs have trained over 1,000 NGO leaders, partnered U.S. private and voluntary organizations with Ukrainian NGOs, and provided critical support to social service, public policy, human rights, and women's NGOs and civic organizations. Recently, USAID launched a new program to strengthen social service and advocacy NGOs and to improve the legal and regulatory environment for NGOs.
To promote social sector restructuring, USAID is providing technical assistance to help refine and build support for the new income-based benefits program on housing and utilities, and to help develop a broader program of means-tested benefits for the needy. Since November 1995, over four million families (out of eight million families paying for housing and communal services) have received subsidies. Two and a half million people currently receive subsidies, over half of whom are pensioners. This program has enabled the GOU to raise prices to cover actual costs and has resulted in a savings of $600 million in 1995 and a projected $1 billion in 1996.
USAID is the only international donor providing significant technical assistance to improve the sustainability of the health care system and improve the health care being delivered to its citizens. Since 1994, USAID has supported technical assistance and training in U.S.-based health care management, finance, and information to enable Ukrainian counterparts to use existing resources more effectively and to generate new revenues for the health sector. Health care finance and service delivery reform is focused at local level structures, including intensive demonstration sites in Lviv and Odessa, where USAID is working to reduce the cost of health care by supporting reorientation of health care delivery away from long hospital stays and toward clinic visits, and by introducing market incentives. Reducing health care costs is also a goal of the reproductive health project, which aims to reduce the rate of abortion through physician training in modern family planning methods. As a result, Lviv and Odessa have instituted user fees for some services and over 100 doctors have been certified in family medicine.
In addition to addressing the economic implications of Ukraine's environmental problems, USAID's environment program also focuses on the public health risks caused by Ukraine's deteriorating municipal infrastructure. For example, in the city of Lviv, where water quality does not meet minimum U.S. health standards, USAID is helping the city re-engineer its water utility and establish consumption-based billing and cost-recovery for sustainable system maintenance. This is expected to lead to the city's eligibility for a World Bank loan based on demonstrated ability to generate revenue to repay bank loans. USAID is also providing technical assistance to improve the registration, safe use, transportation and storage of agrochemicals, as well as working with enterprises on waste minimization and energy efficiency. Finally, USAID is coordinating with other donors to address social, environmental and energy efficiency issues related to the closure of the Chernobyl Nuclear Power Plant.
Strategic Objective: Reduced human suffering and crisis impact
Strategic Objective: Improved sustainability of social benefits and services
Strategic Objective: Reduced environmental risks to public health
Cross-cutting and Special Initiatives
Under this category, funding is provided for targeted training and exchanges between American and Ukrainian organizations. USAID also funds a number of discrete initiatives which address key problems and support a number of activities that complement USAID programs.The Eurasia Foundation is an independent, grant-making organization which uses public and private resources to foster the process of economic and political reform in the New Independent States. Eurasia's USAID-supported small grants program complements USAID's larger development program in Ukraine, specifically in the areas of economic and government reform, small business lending, nonprofit sector support, media and communications. Key objectives of U.S. support for the Eurasia Foundation are to reach a wide range of groups quickly with targeted assistance and to increase the number and diversity of groups receiving U.S. Government funds.
USAID sponsors five medical partnerships in Ukraine under a cooperative agreement with the American International Health Alliance. Each partnership has its own area of specialty, including obstetrics/gynecology, surgery and infection control, ophthalmology, paramedic programs, and emergency medical services. Partnerships focus on quality improvements and results dissemination. USAID support is aimed at addressing significant mortality and morbidity issues, improving health care organization and introducing market-oriented solutions to hospital and health system delivery and finance problems.
The Women's Reproductive Health Initiative is designed to respond to the high maternal/infant mortality and morbidity in Ukraine. Approximately 45% of maternal mortality is caused by obstetrical conditions and the dependence on abortion rather than contraceptives for fertility control. This activity seeks to improve the access and quality of Ukrainian reproductive health services through the introduction of modern contraceptives to medical providers and women clients as safer, more effective alternatives to abortion. Activities focus on the training of trainers, curriculum development, clinical training, service delivery management and increased public awareness to assist the oblasts to expand and institutionalize reproductive health services beyond the centers and into other oblasts. Assistance in safe maternity care practices and improved breast-feeding practices, which reduce infant and maternal mortality and morbidity, is also provided.
Where activities implemented by other U.S. agencies do not directly support USAID's strategic objectives, but warrant U.S. assistance support --such as the State Department Science Centers program-- they are also included as a special initiative.
UKRAINE
FY 1998 PROGRAM SUMMARY*
Strategic Objectives
Economic Restructuring Democratic Transition
Social Stabilization Cross-cutting / Special Initiatives Total Privatization 8,250,000 -- -- -- 8,250,000 Fiscal Reform 5,750,000 -- -- -- 5,750,000 Private Enterprise 75,500,000 -- -- -- 75,500,000 Financial Reform 10,000,000 -- -- -- 10,000,000 Energy 49,900,000 -- -- -- 49,900,000 Citizens' Participation -- 17,700,000 -- -- 17,700,000 Legal Systems -- 11,500,000 -- -- 11,500,000 Local Government -- 2,600,000 -- -- 2,600,000 Crises -- -- 3,350,000 -- 3,350,000 Social Benefits -- -- 1,000,000 -- 1,000,000 Environmental Health -- -- 4,700,000 -- 4,700,000 Cross-cutting / Special Initiatives -- -- -- 35,250,000 35,250,000 TOTAL 149,400,000 31,800,000 9,050,000 35,250,000 225,500,000 *FREEDOM Support Act (FSA) Funds
USAID Mission Director, Gregory Huger
ACTIVITY DATA SHEET
PROGRAM: UKRAINE
TITLE: Privatization, 110-S001.1
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 1998: $8,250,000 FREEDOM Support Act
INITIAL OBLIGATION: FY 1994; ESTIMATED COMPLETION DATE: FY 1999
Purpose: Increased transfer of state-owned assets to the private sector.
Background: Economic reform in Ukraine began in earnest with the administration of President Leonid Kuchma. Key to this reform is the privatization of industries, housing and land. While mass privatization got off to a slow start, USAID, the World Bank and the EU have worked closely with the GOU to successfully accelerate the pace of the program. Agro-industrial privatization remains a major hold-out, but the GOU has made a commitment to move forward in this area. On the other hand, the small-scale privatization program has largely been completed, with the pace starting to abate as remaining enterprises are being sold through the slower, more transparent auction process. The housing privatization program, while poised for further growth, is somewhat hampered by lack of a housing code, inconsistencies in other laws and the lack of incentives which the government could provide to encourage people to privatize their apartments. Land privatization, urban and agricultural, remains a major challenge, with the impetus for change residing largely at the local level.
USAID Role and Achievements to Date: USAID has worked very closely with the Government of Ukraine and other donors to develop a certificate privatization program that is rapid and transparent, and that elicits popular participation and support. Forty-eight million privatization certificates and 205 million savings certificates were designed, printed and delivered to Ukraine for use in the program. Close to 84% of the population has either picked up their certificates or opened a privatization account. Twenty-seven auction centers operate around Ukraine, reliably processing auction results nationwide, and over 1,000 bid collection centers are providing widely distributed chances to the public to participate in the auction process. The number of enterprises auctioned each month has tripled, from an average of 114 per month during September-December 1995 to an average of 375-400 during February-November 1996, by which time over 3,500 companies had more than 70% of their shares sold. This number should increase to 5,000 by early 1997.
USAID supports small-scale privatization in 25 cities in 22 oblasts throughout Ukraine, and most USAID-funded cities have privatized between 50%-90% of available small-scale objects. Approximately 33,000 businesses have been privatized to date, with the rest to be auctioned through a fully functioning auction system.
USAID has also developed and is helping implement procedures for competitive privatization of urban land parcels, titling and registration, and zoning procedures. Sixteen cities have held 27 auctions; one city has been zoned and a second is in process. Five pilot sites will receive equipment to set up title and registration offices, of which two municipalities will be assisted in setting up agricultural land titling and registration systems. To date, seven pilot collective farms have issued land certificates to individual members and reorganized into "Western" structures. Another eight farms in each of six oblasts are slated to undergo the same process. The program is expanding to include a component for developing enterprise land privatization mechanisms.
With USAID support, 60 cities have passed resolutions to implement the condominium program and more than 33,000 households are participating in the conversion process in 20 cities. To generate additional interest, 200,000 information flyers are being distributed. Twenty-six cities have held transparent public bids to contract out maintenance services in buildings covering more than 140,000 apartments to private companies.
Description: The United States is the principal source of funding and technical assistance for implementing Ukraine's privatization program. USAID finances and provides technical assistance to 1) operate a nationwide network of enterprise auction centers and bid collection centers, 2) prepare state enterprises for auction, 3) calculate and disseminate auction results, 4) advise the State Property Fund (SPF) and its regional affiliates on a wide range of issues regarding improving the implementation of the privatization program, 5) assist local government to carry out small scale privatization, 6) roll out pilot privatization of agricultural land to 70 collective farms, 7) improve procedures for the privatization of housing units and formation of condominiums, and privatization and development of urban land, and 8) inform and advise the public about privatization and market reform.
Host Country and Other Donors: USAID activities in privatization are coordinated with the World Bank, the technical assistance arm of the European Union (EU-TACIS), and the Government of Ukraine.
Beneficiaries: The participating Ukrainian public benefits from the privatization program through direct ownership in the country's productive and commercial capacity. The GOU and local governments benefit by being able to eliminate subsidies to state industries and increase revenues from privatization auctions and increased tax revenue.
Principal Contractors, Grantees, or Agencies: USAID implements its activities through the International Finance Corporation (IFC), Price Waterhouse, Gavin Anderson, Bancroft/Planning and Development Collaborative International (PADCO) and RONCO Consulting Corporation.
Major Results Indicators: Baseline TargetGDP generated by private sector 37% (1995) 65% (1999)
Medium/large companies at 0 (1995) 10,000 (1998) least 70% privatized
Urban land privately used (land 40 (1995) 400 (1999) parcels)
Privately-owned agricultural land 0 (1995) 15 (1999) used by collective farms (hectares, millions)
Surplus land sold or leased by 0 (1995) 160 (1999) state-owned enterprises to private companies (land parcels)
Condominiums registered with 7 (1995) 1,000 (1999) local governments
Small-scale companies privatized 2,000 (1995) 35,000 (1997)
ACTIVITY DATA SHEET
PROGRAM: UKRAINE
TITLE: Fiscal Reform, 110-S001.2
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 1998: $5,750,000 FREEDOM Support Act
INITIAL OBLIGATION: FY 1994; ESTIMATED COMPLETION DATE: FY 1999
Purpose: Increased soundness of fiscal policies and fiscal management practices.
Background: Development of a market economy in Ukraine requires fundamental changes in the approach to government taxation and expenditure. The tax system must be restructured to encourage economic activity and taxpayer compliance and also to ensure fairness and consistent application. Modern techniques of macroeconomic forecasting and budget preparation are needed, along with budget analysis to promote efficient use of resources and efficient budget execution. Technical assistance under this strategic objective aims to make the process of fiscal reform more comprehensive, systematic and transparent so that informed policy level decisions will be made and implemented and the implications of these decisions will be clear to all. The intent is to strengthen the fiscal sector and the institutions involved with it, including the Ministry of Finance, Ministry of Economy, relevant committees of the Parliament (Rada) and units of local government. Over the past year, modest progress has continued in efforts to institute macroeconomic and revenue forecasting; reform intergovernmental finance; improve tax law, policy and administration; and gain tighter control over the budget in order to reduce budget deficits and meet other fiscal targets set by the IMF as a condition for continuing to receive financial assistance. If proposals for major reforms in tax law and budget expenditure are adopted and supported by needed technical assistance, this progress should be accelerated.
USAID Role and Achievements to Date: With advice from USAID and U.S. Treasury advisors, the GOU is creating a tax system that will encourage economic growth and reduce the tax burden on businesses through pending reforms in the value-added tax, corporate income tax, payroll tax and other taxes to reduce rates, broaden the tax base by removing exemptions, and encourage compliance. More cost-effective and user-friendly tax administration systems are being created by putting taxpayer services departments in local tax offices, assigning taxpayer identification numbers, creating a broader range of enforcement tools to shrink the shadow economy, and establishing a national tax training center to instruct tax officials in new laws and techniques on an on-going basis. USAID has provided training to officials of the State Tax Inspectorate of the Ministry of Finance in the areas of tax collection procedures, tax law enforcement, audit and internal control mechanisms. The Ministry of Finance is improving its budget preparation and reporting processes with the help of revenue forecasting, expenditure and intergovernmental finance models developed by USAID advisors and assistance with database formation and computerized monthly reporting of revenue and expenditure results. The Parliamentary working group on tax law reform has received advice and assistance, while the Parliament's budget committee has been helped to strengthen its capabilities in creating and adopting a national budget.
Description: USAID's fiscal program focuses on improving overall tax structure and administration, developing tools for budget preparation, analysis and monitoring, formulating alternative approaches to inter-governmental finances, and strengthening the ability of institutions, particularly the Ministry of Finance, to function effectively in a market economy.
Host Country and Other Donors: USAID activities are coordinated with the IMF, the World Bank, EU- TACIS, German Technical Assistance, and the Soros-Asland Group.
Beneficiaries: The Ministry of Finance, the State Tax Administration and the Parliamentary tax and budget committees are the immediate beneficiaries, and by extension the tax payers and voters of Ukraine.
Principal Contractors, Grantees, or Agencies: USAID activities are implemented by KPMG/Barents and Harvard Institute of International Development (HIID). In addition, USAID-funded advisors from the U.S. Department of Treasury are advising counterparts in the Government of Ukraine.
Major Results Indicators: Baseline TargetGOU meets IMF deficit targets No (1995) Yes (1996) Reduced number of budget 3 (1995) 1 (1999) revisions due to inaccurate budget forecasts
A taxpayer identification number 0 (1995) 19 (1996) system established, and number 26 (1997) of taxpayers in the system 30 (1999) (cumulative, millions)
Law establishing Audit Control Drafted (1995) Enforced (1998) Chamber (milestones)
ACTIVITY DATA SHEET
PROGRAM: UKRAINE
TITLE: Private Enterprise, 110-S001.3
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 1997: $75,500,000 FREEDOM Support Act
INITIAL OBLIGATION: FY 1994; ESTIMATED COMPLETION DATE: FY 1999
Purpose: Accelerated development and growth of private enterprise.
Background: Business development in Ukraine is essential to create jobs, generate income, expand the availability of goods and services, increase tax revenues and achieve other economic benefits, especially at the local level. However, Ukrainian entrepreneurs have difficulty exercising the business skills required for a market environment and getting together with investors. Support services, especially financial services, are inadequate. The regulatory and local political environment does not yet encourage the growth of competitive businesses. Agriculture remains a major contributor to production in Ukraine, comprises nearly 30% of GDP and 20% of employment, and is a major export earner. Agriculture was central to the structure and functioning of the previous planned economy and its transformation is critical to creating a successful market economy. Elsewhere, the economy is marked by a high level of insolvency, yet the country lacks a bankruptcy system that provides for reorganization of enterprises. In all sectors, Ukraine is making mixed progress in developing a framework for institutionalizing rules regarding property relations, and an enforcement system for ensuring that contracts are adhered to. In the area of antimonopoly and unfair competition, the Anti-monopoly Committee (AMC) of Ukraine has moved aggressively to develop necessary statutes, internal and investigative procedures, and enforcement mechanisms, gaining international recognition for its progress. Ukraine is moving toward accession to the World Trade Organization (WTO) yet has recently raised a number of tariffs and taken other protectionist measures that are inconsistent with the goal of WTO accession.
USAID Role and Achievements to Date: USAID is promoting entrepreneurship through the establishment and support of three regional Business Services Centers (BSCs), which are staffed by Ukrainians and provide a wide range of business consulting services and training, as well as access to a computerized business information network for its clients. USAID is also assisting local business advisory organizations in their efforts to improve the business environment and, in collaboration with the Ministry of Economy, has established a National Small and Medium Enterprise (SME) Policy Task Force to develop effective and productive SME support structures on the national and regional levels. USAID has a second program to develop and establish new business centers to support small businesses in Ukraine. This second effort features three main services targeted to small business owners: business training, information services and business consulting. In addition, the project Central Coordinating Unit coordinates the activities of the business centers, including providing training and information resources and contacts with central government officials.
Four Farm Service Centers have been established to provide an alternative to state-run input supply and marketing with strong U.S. private sector participation, and a private farm finance company is under development. Ten more service centers and 20 agro-processing enterprises will be established in the next three years. Nine commodity exchanges, as well as an exchange association, have been established. Volume from the exchanges is being reported via the Internet to Reuters in exchange for information on trade volumes and prices in other markets.
In real estate, four regional and two national associations have been established, and training in ethics and advocacy is being initiated. USAID has also supported the development of regulations and procedures to form condominium associations of privatized housing owners, as well as the private provision of housing maintenance and management services.
A self-regulating, self-sustaining Ukrainian accounting and auditing association has been formed and officially registered in September 1996, the first of its kind in the former Soviet Union. This association anticipates a membership roster of 1,000 by December 1996. USAID has also helped introduce international accounting standards into five pilot enterprises and these are serving as models for other enterprises in Ukraine.
USAID is continuing assistance to the AMC, which it has helped in drafting anti-trust legislation and procedural and administrative laws and regulations, and in initiating several hundred cases of violations of monopoly statutes, unlawful agreements, unfair competition and discrimination by state agencies and executive authorities in restraint of competition. USAID is also continuing its work to assist Ukraine complete the remaining prerequisites for admission to the WTO.
With USAID assistance, seven pilot collective farms have been restructured and the program will be expanded to about eight farms in each of 10 oblasts. The Phase II Agribusiness Partnership Program continues the successful marriage of U.S. and Ukrainian firms to reinvigorate Ukrainian agriculture, with a new aspect requiring each partner firm to make special efforts to reach small, private farmers.
As part of an effort to develop environmentally sound small businesses, including eco-tourism, an action plan has been developed identifying barriers to developing businesses in wood processing, energy, agro-products and tourism. The next phase will target several of these areas for further enterprise development.
The West NIS Enterprise Fund has booked some $12 million in investments to date, and the pace is expected to accelerate. Through June, the Eurasia Foundation funded 10 loans through its small business loan program for a total of $370,000.
Description: Business Services Centers will continue to provide advisory services directly to enterprises. This activity works in collaboration with other USAID-funded activities such as the Enterprise Fund. Through the Small Business Loan Program and the Micro-Lending Program of the West NIS Enterprise Fund, enterprises will receive loans and equity financing. Other USAID activities will work with organizations such as the Association of Cities and the Council of Regions, under the President of Ukraine, to support policy development and improve the environment for business. The Association, and potentially other Ukrainian institutions, will also use USAID assistance to promote a private housing market, including condominium formation. Ukraine's Realtors' Association will tap USAID support to promote the management and maintenance of multiple occupant buildings by private firms. USAID will also continue to support the development of market driven, private sector agricultural production, including private marketing and input supply and farm supply centers, which provide farmers with alternative sources of inputs and marketing channels, new technology and technical and managerial support. USAID has initiated a bankruptcy reform program to provide the legal infrastructure for the restructuring of insolvent enterprises and to conduct one or more pilot restructurings. Ukraine will also be a major participant in a new Trade and Investment facility designed to promote the investment and trade links necessary to economic growth.
Host Country and Other Donors: GOU participants include the AMC and the State Customs Committee. The British Know How Fund has provided certain short term assistance to the AMC, as has the World Bank. The bankruptcy program will directly foster compliance with planned conditionality for bankruptcy reform to be included in the IMF's medium term facility expected in 1997.
Beneficiaries: Proprietors and employees of small and medium-sized businesses benefit from the various firm-level assistance activities described above. The business community at large will benefit from bankruptcy reform and the introduction of restructuring procedures for insolvent businesses. The business community and the public at large will benefit from vigorous antitrust enforcement being promoted by USAID assistance to the AMC. All participants in Ukraine's international trade will benefit from WTO accession. Producers and consumers benefit from agricultural activities under the program.
Principal Contractors, Grantees, or Agencies: The contractor for the bankruptcy program is IRIS. Assistance to the AMC is being provided under an Interagency Agreement with the Federal Trade Commission and Department of Justice. Other contractors and/or grantees include: the Alliance, DAI, the Department of Commerce, the World Council of Credit Unions, the Eurasia Foundation, the Eastern Europe Real Property Foundation, and the International Finance Corporation.
Major Results Indicators: Baseline Target Growth of legally registered firms 240,000 (1996) 20% increase (1999) Number of businesses assisted 400 (1996) 1,200 a year (1997-99) through networks% increase in yields from land areas 30% (1996) 50% (1999) using new technologies
Number of foreign joint ventures 50 (1995) 700 (1999)
Anti-monopoly enforcement: cases 31 (1995) 120 (1999) decided in favor of preserving competition
Collective farms 0 (1995) 3,000 (1999) restructured/rationalized
Private housing maintenance 4 (1995) 100 (1999) contracts
ACTIVITY DATA SHEET
PROGRAM: UKRAINE
TITLE: Financial Reform, 110-S001.4
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 1998 $10,000,000 FREEDOM Support Act
INITIAL OBLIGATION: FY 1994; ESTIMATED COMPLETION DATE: FY 1999
Purpose: A more competitive and market-responsive private financial sector.
Background: The National Bank of Ukraine (NBU) has made some progress in developing the infrastructure for a safe and sound banking sector in which banks are able to play a true intermediation role. Specifically this means development of bank supervision capacity, accounting and reporting, the legal infrastructure and government securities markets. This work is critical to developing a larger number of viable banks as opposed to the current fragmented situation in which many of the banks may not be solvent and some serve as little more than adjuncts to company treasuries. A key law governing the extent and institutional responsibilities for government oversight of capital markets was passed by the Parliament. It eliminates the dispersed and overlapping responsibilities of many Ministries and agencies, concentrating sole authority in Ukraine's recently-established Securities Commission. Under its agreement with the IMF, Ukraine is keeping its budget deficit in a manageable range -- a condition crucial to support market reform by dampening expectations of inflation. A major impediment still to be overcome is the Government's use of the banking system to sustain state enterprises that are not financially viable.
USAID Role and Achievements to Date: The law governing oversight of capital markets was drafted largely with USAID assistance. USAID is assisting the NBU in issuing government securities and in several bank supervision areas: on-site inspections, off-site early identification of problem institutions, licensing rules and regulations, developing a Troubled Bank Unit for merging or liquidating troubled banks, and enforcement mechanisms that can be implemented without changes in legislation. This is important, as the implementation of such mechanisms would meet the conditionality that is expected to be tied to upcoming World Bank loans. The NBU's Interbank Payment System (EFPS), partially funded by a USAID grant, is fully functioning, and technical execution of payments is now minutes rather than weeks. Approximately 2,000 bank employees from over 100 banks have attended training at the National Center for Training Bank Personnel, which was created with substantial investment and support from the NBU. Also, the Governor of the NBU is receiving macroeconomic advice and assistance. A collateral law program has been initiated to provide the legal infrastructure for rational secured credit transactions. A collateral registry has been launched. The Association of Investment Businesses has been established, uniting 140 investment funds and trust companies that subscribed to its code of conduct. Temporary share registries compiling initial shareholder lists are operating at 26 privatization auction centers around Ukraine, and over 50 private, independent share registries are now established, as is a registrar support center. Work to improve the operations of nine share registrars has been completed. More than 450 directors of private enterprises have received training on the principles of shareholder rights. A major campaign to inform shareholders of their rights and to explain corporate governance principles is underway with USAID support. An over-the-counter stock trading system opened in 1996 with USAID financing.
Description: USAID is assisting the new Securities Commission with development of its regulations and oversight capacity with the support of full time legislative regulation drafting, monitoring and enforcement advice. USAID is also providing it with up to date information and market analyses through the Capital Markets Monitoring Unit. Most of its board members are also receiving specialized training courses in the United States and in other NIS countries along with a program that provides ongoing support to the Commission via a cooperative program of orientation and training with the U.S. Securities and Exchange Commission. USAID is also providing technical assistance, training and equipment establishing independent share registries in Ukraine, educating managers of privatized enterprises and the public on shareholder rights, and establishing a national over-the-counter share trading system, owned and operated by a broker/dealer self-regulatory organization.
Host Country and Other Donors: Financial reform activities are coordinated with EU/TACIS, the World Bank, the IMF, the British Know How Fund, the National Bank of Netherlands and the GOU.
Beneficiaries: The entire private financial sector will benefit directly from these activities, as will, by extension, shareholders, bank account holders and the people who need and use capital to finance the economy's growth.
Principal Contractors, Grantees, or Agencies: USAID's activities in financial reform are implemented by KPMG-Barents, Financial Markets International, Intrados, Ukrainian Center for Certificate Auctions, IRIS and Financial Service Volunteer Corps.
Major Results Indicators: Baseline TargetInvestment in private sector (as 36% (1995) 55% (1999) % of total investment)
Capital of largest private banks 35% (1995) 68% (1999) (as % of capital of former and current state-owned banks)
Securities market capital (as % of GDP) 0% (1995) TBD (1999)
Continued adherence of GOU to IMF Yes(1996) Yes (1999) quantitative performance criteria
ACTIVITY DATA SHEET
PROGRAM: UKRAINE
TITLE: Energy, 110-S001.5
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 1998: $49,900,000 FREEDOM Support Act
INITIAL OBLIGATION: FY 1995; ESTIMATED COMPLETION DATE: FY 1999
Purpose: A more economically sustainable and environmentally sound energy sector
Background: Ukraine inherited inefficient industries from the former Soviet Union that require enormous energy consumption; fully 60% of all energy produced is consumed by industry. Ukraine depends heavily on foreign sources, particularly Russia, for fuel, importing more than 80% of its gas and more than 95% of its oil; the costs of importing so much fuel are a serious drain on the economy. Nuclear energy plays an important role in Ukraine electricity systems and the G-7 and Ukraine have signed a Memorandum of Understanding for a program to close Chernobyl by 2000. Restructuring of the important coal industry also is critical, and the government introduced policy changes to accomplish this; the policies must now be implemented. Ukraine's Ministry for Environmental Protection and Nuclear Safety needs to revise environmental regulations and standards to those of a free market economy. Ukraine's power sector is rapidly transforming from a state-owned and operated regionalized monopoly system into a reconfiguration of privately-owned and operated companies, reorganized to maximize the play of free market forces.
USAID Role and Achievements to Date: Ukraine's eight former vertically-integrated regional monopolies, which had combined the basic utility functions of power generation, transmission and distribution, have been reconfigured into over 33 companies with the aim of pulling out the naturally competitive elements of the industry into separate competing companies, while retaining and corporatizing the system's natural monopolies. With the break up of the monopolies, four new power generating companies (GENCOs) were formed with USAID assistance in a wholesale market leading to increased operating efficiencies and lower electricity costs for the country. Competition at the retail end - sales and distribution of electricity to consumers - is now being provided by 27 local companies, of which 12 are receiving USAID assistance to improve their structures and operations. A new entity, Energomarket, has been created to operate the wholesale competitive market and serve as a national financial clearing house/electricity dispatch center for the reconfigured system. USAID assistance has helped leverage a planned $300 million loan from the World Bank for power sector development. A National Electricity Regulatory Commission (NERC), the first of its kind in the NIS, is now fully operational with USAID assistance. Its purpose is to oversee fair competition in the GENCOs and to ensure an equitable system of retail tariffs. USAID has a major role in designing an action plan to ameliorate the social impact on Ukraine of the Chernobyl facility's closure. USAID also is rendering support to ensure an ecologically-sound sarcophagus at Chernobyl, safety parameter display systems, and increased nuclear energy efficiency. In the coal sector, assistance is being provided to strengthen the industry's viability and to address environmental and regulatory problems.
Description: In concert with the Ministry of Power and Electrification, the World Bank and other donors, USAID developed an energy program for Ukraine focused on (I) energy sector restructuring, including power, coal, oil and gas; and (2) improving energy production and efficiency through the introduction of new practices and technologies and assistance in applying market principles. Power sector assistance, specifically, is helping transform the power sector from a vertically integrated monopoly to a market system, with separate, competing components, a national regulatory body to set tariffs and grant licenses in response to market costs and efficiencies, and a national dispatch center to oversee power distribution based upon financial bids.
Host Country and Other Donors: USAID works with the Ministry of Power and Electrification of Ukraine, and coordinates with the activities of the British Know How Fund, the EU, the World Bank,the European Bank for Reconstruction and Development, and the EU-TACIS. The governments of Switzerland, the Netherlands, Canada and Japan also provide energy assistance.
Beneficiaries: USAID energy reform assistance benefits newly corporatized electric generating and distribution companies, the NERC, industrial and municipal energy users and the coal industry.
Principal Contractors, Grantees, or Agencies: Hagler-Bailly and Partners in Economic Reform (PIER) are USAID's energy activities implementors, with support from USAID-funded advisors from the U.S. Department of Energy.
Major Results Indicators Baseline TargetElimination of budgetary subsi- No (1995) Yes (1999) dies for power and energy resources production
Foreign energy debts ($ billions) 7.5 (1995) 6 (1999)
Revenue collection 50% (1995) 95% (1999) (% of amount owed)
Private investment in sector 0 (1995) 750 (1999) ($ millions)
Adequate fuel reserves at primary 30% (1995) 90% (1999) plants (as % of 30 days' reserves)
GOU costs of social impact of TBD(1996) TBD(1999) Chernobyl accident (as percent of GDP)
ACTIVITY DATA SHEET
PROGRAM: UKRAINE
TITLE: Citizens' Participation, 110-S002.1
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 1998: $17,700,000 FREEDOM Support Act
INITIAL OBLIGATION: FY 1995; ESTIMATED COMPLETION DATE: FY 2001
Purpose: Increased, better-informed citizens' participation in political and economic decision-making.
Background: During 1994, free and fair elections were held for the Presidency, the Parliament, and councils at the oblast and local level. However, new legislation governing elections and political parties is needed to improve the political process and the public's trust in it. Scores of independent newspapers, radio stations, and local TV stations now exist, and advertising revenues are increasing to the extent that it will soon be possible for independent media to be profitable. However, the government still exerts considerable influence over the media through ownership of the two national TV channels, legal regulation, licensing oversight, and distribution of vital resources. Non-Governmental Organizations (NGOs) are forming rapidly and the sector is developing with associations of NGOs forming in some cities and with foundations being established to allow businesses to support charitable activities. The lack of legislation concerning taxation and registration of NGOs, as well as the citizens' lack of experience with a civil society, continue to hinder the development of NGOs.
USAID Role and Achievements to Date: Public policy and human rights NGOs are being strengthened through training and small grants. Their activities include: organizing town hall meetings in support of a new constitution, a civil code and other legislation; lobbying the GOU for greater decentralization; investigating human rights violations; conducting regular and well-publicized opinion polls; providing indigenous poll monitors for elections; and publishing a public policy journal and a popular political TV program. Women's NGOs are being fostered and assisted to address key issues involving women such as domestic violence, legal inequality and women's entrepreneurship. A total of 26 press clubs serve as forums for journalists and public officials to periodically dialogue about economic reform issues like privatization, thus enhancing the media's role in a civil society. Weekly meetings at the Kiev Press Club are shown nationally during the main news program on UT-1, providing a very effective means for GOU officials to reach a large audience. A daily television news program, free market economics program, and other informational programs are being produced independently and broadcast nationwide. Independent local TV and radio stations are being supplied with high-quality programs, while a USAID-funded press center provides journalists with access to a wide range of resources including Internet, legal databases, and Ukrainian and Western wire services. TV, radio, and print professionals are receiving training in business management, investigative journalism, and other technical areas. A loan fund has been established to support the development of self-sustaining and independent media-related enterprises. Independent trade unions receive training and information in areas such as collective bargaining, and pension reform. Political party activists have received training in areas such as campaign management, coalition-building, and fund raising, and have been supported in their efforts to be informed participants in the constitutional debate and the drafting of new election laws. Democratically-elected officials hold office in all branches of government throughout Ukraine, an achievement to which comprehensive USAID support contributed.
Description: USAID is promoting the active participation of citizens in political and economic decision-making through support to civic action groups, public policy NGOs, political parties, and democratic free trade unions. USAID assists government entities with improving election administration, drafting electoral legislation, and educating the public about the democratic process. USAID supports the production of non-state daily and weekly news programs which are broadcast nation-wide. With the support of a USAID grantee, Ukrainian independent TV stations are in the process of forming the country's first independent television network. As part of the Partnership for Freedom, funds also will be provided to make change permanent by endowing key U.S. and Ukrainian institutions.
Host Country and Other Donors: USAID works in concert with the Central Election Commission, committees of the Parliament (Rada), the Eurasia Foundation, EU/TACIS, United Nations Development Program (UNDP) and the Canadian International Development Agency (CIDA). The Renaissance Foundation is also active in citizen participation activities.
Beneficiaries: The Central Election Commission, Ukrainian NGOs, political parties, independent media and trade unions all benefit from USAID support for and promotion of citizen participation and education activities.
Principal Contractors, Grantees, or Agencies: USAID programs in this area are implemented by Freedom House, Internews, the Free Trade Union Institute, the National Democratic Institute, the International Republican Institute, IREX, Eurasia Foundation and the International Foundation for Electoral Systems.
Major Results Indicators: Baseline TargetCitizens who understand the 28% (1994) 36% (1999) political process (percent of citizens)
Citizens who participate in NGO TBD (1995) TBD (1999) activities (percent of citizens)
Citizens who believe their 12% (1995) 35% (1999) elected official represent them
Citizens who believe that 40% (1994) 49% (1999) elections are free, fair, transparent
TV exposure of citizens to non- 0 (1994) 25 (1999) government and politically- unaffiliated news sources (hours per week)
ACTIVITY DATA SHEET
PROGRAM: UKRAINE
TITLE: Legal Systems, 110-S002.2
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 1998: $11,500,000 FREEDOM Support Act
INITIAL OBLIGATION: FY 1995; ESTIMATED COMPLETION DATE: FY 2001
Purpose: Legal systems that better support democratic processes and market reforms.
Background: The June 28, 1996 adoption of Ukraine's new constitution marked a critical turning point in the country's efforts to proceed with economic and democratic reforms. The ongoing challenge is to draft, revise and adopt laws under the new constitution dealing with every aspect of Ukrainian life, including the criminal justice system, the economy, and civil society. The Parliament is still passing laws without adequate analysis and research, although the quality of debate and of new laws continually improves. It is generally agreed that the leaders of the court systems and the new Minister of Justice are committed to the independence of the judiciary, upholding new laws and protecting individual rights. But due to antiquated technology, poor training and resistance to change in the regional and local courts outside of Kiev, Ukrainian citizens still do not think of the courts as the venue to redress grievances or press for respect for their rights. Furthermore, citizens are not fully aware of their rights and responsibilities under the new constitution.
USAID Role and Achievements to Date: The term "rule of law" was difficult to translate three years ago; now it is a basic tenet. USAID programs supported the drafting process which led to the adoption of the new constitution. Policy-makers, legislators, students and the general public were kept informed of the drafting process through USAID-supported conferences, publications, and TV shows. Students, teachers, and professors are learning about the new constitution through a comprehensive public education program supported by USAID. USAID-supported activities have provided Rada members with research and analysis on draft laws, and an information system was designed for and delivered to the Parliament to increase access by lawmakers and the public to information, connect Ukraine with the Internet, and improve research and analysis of information. An analysis of the 1996 draft budget of Ukraine was prepared for the Parliament and distributed to MPs. The five largest law schools, representing 80% of law students, have each received in-house publishing equipment so that their curricula can be revamped and students will have post-Soviet material to study. A Ukrainian Law Student Association has been established and plans for an Association of Law Schools are underway. The Supreme Court and Supreme Arbitration Court have established in-house continuing education for all judges. USAID programs have supported the work of NGOs that monitor human rights, and helped to initiate and win court cases to protect the environment and the rights of workers.
Description: USAID programs provide technical assistance, training and access to information, and to a lesser extent commodities, to counterparts in the Ministry of Justice, the courts, Ukraine's top law schools, the Rada, including key committees and political factions, the Presidential Administration, legal associations, and municipal governments.
Host Country and Other Donors: The Ministry of Justice, Presidential Administration, Council of Advisors of the Rada and the courts are all actively engaged in the reform process. USAID coordinates its activities with those of EU-TACIS, the Government of the Netherlands, Canadian International Development Agency, the Ukrainian Legal Foundation, and other international donors. USAID is also coordinating efforts with the World Bank to ensure complementarity with the Bank's planned Legal Reform loan.
Beneficiaries: The Ministry of Justice, Supreme Court, Higher Arbitration Court, law schools, students, judges, lawyers, legislative drafters, and the Rada all directly benefit from USAID's activities in legal system reform. The common citizen when dealing with the legal system also benefits from systemimprovements and more knowledgeable jurists and lawyers.
Principal Contractors, Grantees, or Agencies: USAID's legal system reform activities are implemented by Associates in Rural Development (ARD), Checchi, American Bar Association/Central and Eastern Europe Law Initiative (ABA/CEELI) and the US - Ukraine Foundation/Indiana University.
Major Results Indicators: Baseline TargetAdministrative Law Code estab- No (1995) Implemented (1998) lished (milestones)
Laws on municipal revenue generating TBD (1995) TBD (1999) authority are rationalized (Civil Code sections corrected)
% of Citizens familiar with pri- TBD (1995) 50% over base (1998) vatization laws
Filing of criminal charges of common TBD (1995) 30% over base (1999) theft and fraud (as % of all criminal charges)
ACTIVITY DATA SHEET
PROGRAM: UKRAINE
TITLE: Local Government, 110-S002.3
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 1998: $2,600,000 FREEDOM Support Act
INITIAL OBLIGATION: FY 1995; ESTIMATED COMPLETION DATE: FY 2001
Purpose: More effective, responsive, and accountable local government.
Background: Ukraine is a highly centralized country and oblasts are currently administrative units designed to facilitate central government administration. This highlights the need for developing a transparent, consensus-based intergovernmental system that ensures revenue-expenditure balance and an independent revenue privilege. There are therefore two considerations to address: the need for local governments to be autonomous in order for power to be decentralized, and the need for new local government laws to be passed and enforced defining national-local relations and decentralization in order to reinforce democratic practices at the level most accessible to citizens. Currently, the law on Local Self Government is being drafted by a working group appointed by Parliament and is expected to be debated in Parliament in early 1997. In addition to this Law, the Law on State Administration and State Power needs to be re-written and passed by Parliament in order to clarify the jurisdiction and powers of local government. Currently, municipal governments consist of an elected Council of People's Deputies acting as the legislature and having general oversight of the management of city affairs; a city administration headed by an elected Head of City Council ("mayor") in which executive powers are vested; and a Presidential appointee, Head of Oblast State Administration, which administers state executive power. Nearly all local government officials lack knowledge and experience in public administration, e.g. human resource management and financial management. Local governments are responsible for many municipal services, such as transportation, housing, health, and education. However, all staffing, office and administrative expenses of the finance departments in cities are financed directly by the national government, in the budget of the Ministry of Finance. Thus, municipal finance systems lack incentives for effective, cost sensitive program budgeting and monitoring.
USAID Role and Achievements to Date: Local governments are becoming the venue for the development of democratic leaders and governance, through the introduction of a variety of mechanisms such as more open budgeting, town meetings, citizen task forces, constituency outreach and local government watchdog groups. The Ukraine Association of Cities (UAC), modeled after the U.S. National League of Cities, is composed of mayors from over 80 cities lobbying the central government for greater decentralization with an agenda covering local level policy, intergovernmental relations and municipal service. The UAC represents the needs and concerns of Ukrainian cities at the national government level as well as in different Ukrainian and international organizations. With USAID assistance, municipal governments are improving their financial management while becoming more transparent and accountable to their citizens. For example, Kharkiv marked the centennial of its very first municipal bond issue with its first post-Soviet bond sale. The bond issue totaled approximately $800,000, appealing to both individual small investors and businesses looking for a tax-exempt, interest bearing security. Proceeds from the bond sale are at work to improve heating service in at least five districts. In Ternopil, an Economic Development Office was chartered to: assist small business and entrepreneurs to start new ventures; assist existing businesses as they privatize and seek new markets; help manufacturers achieve the quality in production necessary for global competition; secure joint venture partners for local enterprises; and create a legal and regulatory environment to allow business to prosper. In addition, public transportation management and services in four new western cities will be improved in 1997, replicating a USAID-funded project in Ternopil which improved public transportation management and increased capacity by 40% in 1996. In Lviv, computer literacy among the city employees has improved and the city approved a proposal to earmark funds to finance computer training. In addition, 24 U.S. - Ukraine Community Partnerships plan to be electronically linked.
Description: USAID originally developed pilot projects in three Ukrainian cities (Lviv, Kharkiv, and Ternopil) which focused on municipal finance management, improving municipal administration and increasing transparency. In 1996 this program was rolled out into six additional cities. USAID's program also supports the UAC, which advocates on behalf of municipal governments, especially with regard to new local government legislation being considered by Parliament. Additionally, USAID supports training local politicians on the importance of and techniques for responding to constituents' problems. Finally, Ukrainian cities have been partnered with U.S. cities for educational and training exchanges.
Host Country and Other Donors: EU-TACIS has a technical assistance project in the area of self government and a city twinning program focusing on cooperation between cities and the EU; the UN Habitat II program conducts training courses for self-governance leaders in management; the World Bank reviews intergovernmental finances and sector loans and has an Urban Transportation Project; The Canadian International Development Agency assists the Ukrainian Academy of Public Administration in becoming a self-sustaining institution; Pylyp Orlyk Institute for Democracy supports local government officials in Ukraine under a Pew Grant; and the British Know How Fund is planning to strengthen regional government focusing on Crimea in 1997.
Beneficiaries: Mayors, city administrators, local government officials and policy makers are the primary beneficiaries of these programs through increased local authority and improved management. The secondary beneficiaries are the citizens through improved services and greater transparency of government operations.
Principal Contractors, Grantees, or Agencies: USAID's activities in local government reform are implemented by the Research Triangle Institute. USIS conducts a Community Connections exchange program; the Academy for Educational Development conducts training under the NIS Exchanges and Training program for local government officials; IREX has a partnership program between the University of Georgia and Uzhorod State University, which created a center for public administration reform and assistance; USIA and Eurasia Foundation funded a Public Policy Program in Odessa with an exchange program sponsored by the University of Maryland at College Park and the Johns Hopkins University School of Advanced International Studies; and ACCELS conducts a Muskie Fellowship program including public administration.
Major Results Indicators: Baseline TargetPublic approval of local government TBD (1995) 30% over base (1999) (as % of population)
Budget deficits of municipalities (%) TBD (1995) TBD (1999)
Locally generated revenues (as TBD (1995) 20% over base (1999) % of all municipal revenues)
Citizen participation in planning 0 (1995) 24 (1999) (number of the 27 target cities using such participation)
Public archival information of 0 (1996) 12 (1999) local government operations (number of cities in which volume of information increases)
ACTIVITY DATA SHEET
PROGRAM: UKRAINE
TITLE: Crises, 110-S003.1
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 1998: $3,350,000 FREEDOM Support Act
INITIAL OBLIGATION: FY 1995; ESTIMATED COMPLETION DATE: FY 2001
Purpose: Human suffering and negative consequences of crises are reduced.
Background: Upon Ukraine's independence from the Soviet Union in 1991, the government was no longer able to provide adequate social services for the population and an emergency situation ensued. The international community, including USAID, responded by providing critical humanitarian assistance to temporarily sustain the population. A nationwide diphtheria epidemic and seasonal outbreaks of cholera are a continuing threat to the nation's health. Flooding in Kharkiv in July 1995 resulted in a breakdown in sewage and water treatment systems. The poor state of public health is seen as potentially undermining Ukrainian stability.
USAID Role and Achievements to Date: The number of social service NGOs in Ukraine has increased from a handful in 1990 to approximately 5,000 in 1996, many of which are providing urgently needed social services. USAID has provided over $25 million worth of DOD excess property and in-kind donations as humanitarian assistance through local NGOs and social service providers to meet the critical needs of vulnerable populations. Critical supplies provided include medical supplies, basic living supplies and capital goods. In response to the floods in Kharkiv in Summer 1995, chloride disinfectant was provided to render household water potable and five cargo planes of U.S. excess military supplies were distributed as emergency relief through local NGOs. During the Spring 1996 floods, USAID provided humanitarian relief items to assist the Civil Defense Department to respond to the disaster. In order to maximize emergency preparedness, USAID has trained government officials and NGO staff members in the United States working in this area and created a stockpile of emergency supplies. The Ukrainian National Emergency Medical and Disaster Medicine Training Center, supported by the hospital partnership program, opened in December 1995. Over 1,000 budding NGO leaders have received training in basic NGO management and sustainability. The Ukrainian campaign against diphtheria has been provided with 32 million doses of American vaccine and related supplies. USAID also provided a year's supply of insulin for diabetic children who otherwise would receive no treatment.
Description: In order to help make social services work for the people during and after the country's very difficult economic and political reform, USAID supports the institutional development of local NGOs whose efforts are critical as part of the private sector network of organizations providing social protection services. Furthermore, in order to alleviate to the extent possible the hardships imposed on the most vulnerable populations during the country's difficult transition, USAID has continued to provide humanitarian assistance through local NGOs and social services to meet the critical needs of these groups.
Host Country and Other Donors: Activities to help Ukraine develop a sustainable NGO sector are on the agenda of many international donors and organizations active in Ukraine. NGO donor coordination meetings are held regularly to discuss different aspects of NGO development in Ukraine. Participants include USAID, EU-TACIS, Canadian Government, British Know How Fund, SOROS Foundation and MOTT Foundation. Recent examples of donors combining and leveraging resources to address needs in the NGO sector are activities to improve NGO legislation and to develop regional NGO resource centers.
Beneficiaries: Ukrainian NGOs and charity organizations, hospitals, orphanages, invalids, the elderly, and most other vulnerable groups benefit in some way from USAID activities in this area.
Principal Contractors, Grantees, or Agencies: Major providers under this strategic objective are Counterpart Foundation, World Learning, Eurasia Foundation, Program for Appropriate Technology in Health (PATH), and American International Health Alliance (AIHA).
Major Results Indicators: Baseline TargetVulnerable target populations served 0 (1991) 20,000 (1999) by NGOs in selected oblasts (number of elderly and disabled persons)
Government social service institutions 454 (1995) 1,300 (1998) receiving USAID support (number of institutions)
Adults vaccinated against 44% (1995) 90% (1999) diphtheria (percent) Continuing response by USAID to national 100% (1994) 100% (1999) disasters (percent of disasters responded to)
ACTIVITY DATA SHEET
PROGRAM: UKRAINE
TITLE: Social Benefits, 110-S003.2
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 1998: $1,000,000 FREEDOM Support Act
INITIAL OBLIGATION: FY 1995; ESTIMATED COMPLETION DATE: FY 2001
Purpose: Improved sustainability of social benefits and services.
Background: President Kuchma and Vice Prime Minister Victor Pynzanek have proposed radical economic reforms for Ukraine for 1997. The proposed reform package, which is likely to be adopted, will require a wide variety of reforms in the social protection system to ensure the fiscal sustainability of benefits and services and protect the neediest citizens. General subsidies to the population are to be replaced in large part by targeted, means-tested subsidies for low income families. Price increases for government services and utilities are scheduled to be increased from 80 to 100% by mid-1997. The government has also set a goal of reforming the system of social insurance; in September 1996 it resubmitted a fundamental law on social insurance to the Parliament, and debate has begun. The government also plans to establish a regulatory system for private pension funds. A law on health insurance is being debated within the GOU, and its provisions may be tested through health insurance demonstration projects. The GOU has taken the first steps toward making its health care system more efficient, but substantial additional reform is needed. Political support for economic reform in Ukraine will evaporate if affordable methods are not implemented to shelter the poor from rapid price increases, falling incomes and deteriorating basic public services.
USAID Role and Achievements to Date: In May 1995, an income-based housing subsidy program was implemented and 754 housing subsidy offices opened around Ukraine. USAID provided 355 computers to the GOU to computerize the housing subsidy application process. The GOU expects that, by the end of 1996, five million Ukrainian families will be receiving subsidies for part of the cost of their housing and utility bills. In 1996, the GOU raised prices of housing and related services from 40 to 80% of costs. Though the new Constitution promises free health care to all Ukrainians, in late August the Cabinet issued a decree making clear those services for which fees may be charged. The decree included abortion and other voluntary procedures as services that are expected to officially become fee-for-service on a national level.
Aspects of USAID's special initiatives in medical partnerships and reproductive health also support this strategic objective. The Kiev partnership hospital, the Center for Maternal and Child Care, has reduced the mortality rate for newborn babies by 62% since 1993. The cost of health care has been reduced at partnership hospitals through 45% to 65% reductions in the length of hospital stays. A hospital partnership neonatal program was adopted by the Ministry of Health for national dissemination, thereby providing Ukrainians increased access to neonatal care. Additionally, the Ministry of Health adopted a national infection control program based on the hospital partnership activity which serves to reduce nosocomial infection and related expenditures in facilities throughout Ukraine, thus allowing reallocation of scarce resources. As part of the hospital partnership program, an Emergency Medical Training Center opened in December 1995 and trained 500 health professionals to respond to emergency medical situations in its first year. As a result the Ministry of Health adopted emergency medical service guidelines that have been disseminated throughout Ukraine allowing for improved emergency medical care for Ukrainians.
Demonstration sites for training and delivery of family planning services were established in Odessa, Donetsk, and Lviv. In Donetsk, the length of postpartum hospital stays was reduced by 42% for normal and caesarian births, representing substantial progress in cost containment. Donetsk and Odessa regions report nearly 100 percent rooming-in (mother and newborn in the same room) at major regional facilities resulting in improved infant health, fewer complications, and reduced reliance oninfant formula. This success was accompanied by a Ministry of Health decree in January 1996, declaring that rooming-in and breast feeding is recommended for good maternal and child health and is cost-effective. The Ministry of Health attributed to USAID assistance in family planning, an 8.6% decrease in abortion from the first half of 1995 to the first half of 1996. As a clear demonstration of second generation training, family planning training activities spontaneously spread through out Odessa and Donetsk regions and into neighboring regions.
Description: USAID is providing technical assistance to help refine and build support for the new income-based subsidy program on housing and utilities, and to help develop a broader program of means-tested subsidies for the needy. The health financing reform project is working to reduce the cost of health care by supporting reorientation of health care delivery away from long hospital stays and toward clinic visits, and by introducing market incentives. Reducing health care costs is also one goal of USAID's special initiative in reproductive health, which aims to reduce the rate of abortion through physician training in modern family planning methods. In 1991, the Ministry of Health estimated that the cost of treating abortion complications was four times that of supplying the population with contraceptives. Other activities of the USAID program also contribute to the goal of reducing health care costs. Partnerships between U.S. hospitals and hospitals in Kiev, Lviv, Donetsk and Odessa are focusing on improving the prevention and treatment of disease, the reduction of nosocomial infection, improved hospital management, and cost containment. In early 1997, USAID will initiate a breast cancer assistance program which aims to improve screening, diagnosis, and treatment of breast cancer among women in Ukraine, including those affected by the Chernobyl accident in 1986. USAID assists social service NGOs throughout Ukraine that help the disabled, large families, women, orphans, the elderly, Chernobyl victims, and HIV/AIDS sufferers.
Host Country and Other Donors: Price increases for housing and communal services are a requirement of Ukraine's agreement with the IMF; EU-TACIS has a two year social protection assistance project; the Government of Germany is working in Ukraine on pension and other social insurance legislative reform.
Beneficiaries: Low-income Ukrainian children, and adults (especially pensioners) at selected sites in Lviv, Odessa, Donetsk and Kiev are among the beneficiaries. The social sector health activities impact all levels of society, particularly women and children, in the above mentioned regions.
Principal Contractors, Grantees, or Agencies: USAID social protection activities are implemented through Chemonics, Planning and Development Collaborative International, Smith-McCabe, Abt Associates, American International Health Alliance (AIHA), AVSC International, Johns Hopkins Population Communication Services, JHPIEGO, Social Marketing for Change Project (SOMARC) and the POLICY Project at The Futures Group International, MotherCare/John Snow Incorporated, and the Centers for Disease Control and Prevention.
Major Results Indicators: Baseline TargetGOU spending on social sector 24.5% (1995) 20% (1999) (as percent of GDP)
Legislative reform: fundamental No (1995) Yes (1999) law on social insurance (law enacted)
Public support for targeting 45% (1995) 70% (1999) subsidies for the poor vs. all citizens
Number of pension funds registered 0 (1995) TBD (1999)
Cost recovery for utilities and 4% (1994) 100% (1999) housing (as % of total cost)
ACTIVITY DATA SHEET
PROGRAM: UKRAINE
TITLE: Environmental Health, 110-S003.3
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 1998: $4,700,000 FREEDOM Support Act
INITIAL OBLIGATION: FY 1994; ESTIMATED COMPLETION DATE: FY 1999
Purpose: Increased capacity to deal with pollution as a threat to public health.
Background: A legacy of the former Soviet Union was complete disregard for the environment, a lack of social awareness of the costs of natural resources, and an inability to manage natural resources as the foundation for economic development. The major environmental risks to public health in Ukraine -- identified by Ukrainian counterparts and U.S. experts alike -- are unsafe water, waste, and agricultural chemicals. Chernobyl is a prime example of resource mismanagement that has resulted in environmental degradation and significant human health and economic costs.
USAID Role and Achievements to Date: USAID has established a Ukraine-U.S. Council and Work Group Program to Promote Sustainable Development. The program includes six work groups on: urban water and waste water; industrial environmental management; sustainable agriculture; energy efficiency; environmentally sound business development; and international cooperation and biodiversity. It has been adopted by the Gore/Kuchma Commission on Sustainable Economic Development as the vehicle for identifying and addressing environmental and energy issues. One example of the results of the Council's work is that proposals to reduce barriers to improving Lviv's water supply and quality are being developed for action by the Cabinet of Ministers. Related to this, USAID is also providing equipment and technical assistance to significantly improve water delivery (from three hours or less a day to 24 hours a day) and quality to 35,000 residents of the Pasichna district of Lviv, and to indirectly improve water services to 70,000 more in the neighboring district. USAID's housing program is collaborating on this project to advance the privatization of condominium maintenance to further reinforce and institutionalize incentives for residents to pay for improved water and other residential services. This project is also assisting the City of Lviv water utility to qualify for a World Bank loan for operational and capital improvements, and provides a model for replication in the other 64 water utilities in Ukraine. As a result of other assistance activities, a mobile radiation laboratory is being delivered to Ukraine to improve the availability and access to reliable data on radioactive and other contamination. A comprehensive project is providing training and a range of technical assistance to improve Ukraine's pest and pesticide management. USAID is also assisting with waste minimization in Donetsk oblast, the largest industrial center in Ukraine; a pilot program has provided four enterprises with control and monitoring equipment resulting in estimated annual reductions in emissions of pollutants into water of 86,300 tons and reductions into air of 3,400 tons, as well as a return on investment ratio of 8:1 with an average pay back period of four months. USAID is also assisting in the dissemination of information on industrial waste minimization and management and pollution prevention, as well as assisting the citizens of Ukraine to communicate concerns and aspirations regarding environmental issues. Local line production of water purification units has begun based on two prototypes designed and installed with USAID support. USAID is assisting Ukraine to increase investment in environmentally sound small business. One example of this is the "Green Carpathian" journal. USAID is also assisting in identifying opportunities for and barriers to developing businesses in wood processing, energy, agribusiness and eco-tourism. Finally, USAID is helping Ukraine address the social impact of closing Chernobyl by the year 2000; an Action Plan was completed in December 1996, and includes an assessment of the health and ecological status of the town of Slavutych, where Chernobyl workers and their families live.
Description: USAID is strengthening environmental institutions within government, the private sector, and the NGO community to create an institutional framework that will support Ukraine's transition to a market economy. Activities include environmental assessments for heavy industry in Donetsk toidentify opportunities to reduce waste and improve efficiency, eco-efficient business development in the Carpathian region focusing on sound resource management for sustainable economic development, and lowering the environmental impact of agriculture through improved pesticide and herbicide technologies, training and regulations. In addition, USAID is helping with the re-engineering of the City of Lviv's water utility, including focusing on consumption-based billing and cost-recovery to enable long-term system maintenance. USAID is also assisting Ukraine to effectively manage the closure of Chernobyl as outlined in the G-7 comprehensive program.
Host Country and Other Donors: USAID coordinates with the Ukraine-U.S. Council and Work Group Program to promote sustainable development for Ukraine. Council members are drawn from the Government of Ukraine, including six Cabinet Ministers, and from local and international private sector companies, NGOs, and the international community. USAID cooperates with the World Bank on the upgrade of Lviv's water supply and industrial waste management in Donetsk. EU-TACIS is a partner on the Chernobyl Social Impact Study.
Beneficiaries: In this phase, the citizens of Lviv, Donetsk, Dnipropetrovsk, Kiev, Crimea, Slavutych, Ivano-Frankivsk, Kharkiv, and Odessa are the primary beneficiaries.
Principal Contractors, Grantees, or Agencies: CH2M-HILL is USAID's principal implementor, with assistance from USAID funded advisors from the U.S. Environmental Protection Agency and the Department of Energy. Other implementors include Virginia Tech, City University of New York, Planning and Development Collaborative International, World Environment Center, Hagler Bailly, Winrock, Management Systems International, ISAR, Burns & Roe, Alliance to Save Energy, and Biodiversity Support Project.
Major Results Indicators: Baseline TargetEnvironmental laws and 0 (1995) 7 (1999) regulations include market incentives
Number of environmental NGOs 80 (1995) 200 (1997) that have effectively influenced policy
Increased access to potable water 0 (1995) 1,000 (1999) by hospitals and other public services in pilot areas (# of units)
Number of environmental education 1 (1995) 4 (1998) centers established
Number of independent energy 0 (1995) 20 (1999) efficiency and waste reduction organizations
![[USAID Home]](/images/usaid.gif)
[USAID Home]
[CP 98 Home]