III. Regional Program--U.S. Agency for International Development (USAID)

U.S. Government Assistance to Eastern Europe under the Support for East European Democracy (SEED) Act
Bureau of European and Eurasian Affairs
January 2004
Report

In FY 2003, as in previous years, the overwhelming majority of assistance activities implemented by the U.S. Agency for International Development (USAID) were conducted bilaterally. They are described in the 15 country assessments in Part II of this Report. However, some activities involved two or more Central and Eastern European (CEE) countries and therefore were regional in nature.

The development challenge in CEE in FY 2003 remained one of sustaining momentum in the movement of formerly authoritarian, centrally planned societies toward becoming participatory democracies with strong market economies. Policy reform, institutional development, and broad-based citizen participation are central to USAID's regional programs.

USAID regional assistance focuses on cross-border cooperation and regional integration in the health, financial development, infrastructure development, micro-enterprise, environment, energy, anti-corruption, and rule of law areas. USAID's cross-border approaches to address critical obstacles and changing circumstances in CEE include: 1) developing ethnic conflict mitigation programs to contribute to a better climate for reform; 2) creating social sector initiatives to broaden the benefits of reform; and 3) fighting corruption on many fronts. The following are examples of regional activities USAID is implementing in SEED-eligible countries to achieve those objectives.

Freedom House Regional Networking Program

The Regional Networking Program (RNP) aims to strengthen the capacity of non-governmental organizations (NGOs) through cross-border projects to inform public opinion and influence public policy in order to accelerate and help secure the region's transition to open political and economic systems. RNP grants and exchanges have been highly successful in helping NGOs throughout the region establish partnerships and networks and to share experience and knowledge. Between October 1, 2002, and September 30, 2003, Freedom House awarded 42 project and exchange grants totaling $355,517 to the Center for Free Elections and Democracy (Serbia), Center for Peace Studies (Croatia), European Institute (Bulgaria), Institute for Regional and International Studies (Bulgaria), and other organizations. The purpose was to share Serbian experience in public awareness-building campaigns, monitor public attitudes toward NATO accession in the former Yugoslavia, and conduct assessments of NGO influence in policy-making in western Black Sea states. Complementary exchanges allowed NGO activists to establish direct contacts with their counterparts in Southeast Europe (SEE) and the Newly Independent States (NIS) of the Former Soviet Union. This aspect of the program brought a Belarusian expert from a Minsk NGO to Belgrade to study think tank operations in repressive environments; allowed a Macedonian civic monitoring institution to launch a new project encouraging citizen participation in parliamentary affairs, as a direct result of an exchange spent in Croatia; and gave an up-and-coming Bosnian think tank invaluable insights into the organizational and project development experience of one of Bulgaria's most advanced policy institutes.

Hungarian-American Partnership Initiative

The Hungarian-American Partnership Initiative (HAPI) is a training activity, which provides opportunities for countries in the Europe and Eurasia region to learn from Hungary's successful transition to a market economy and a democratic society. HAPI is designed to involve the Hungarian government in the implementation process, with the express purpose of jump-starting a Hungarian assistance program, required for EU entry. Such a program would contribute to the stability and development of the region, with priority being given to the Stability Pact member states. In FY 2003, USAID provided $150,000 SEED-funded grant to the Foundation for the Development of Democratic Rights.

Since it began in 2000, HAPI has delivered short-term training programs to 507 participants in 45 groups, from seven CEE and six NIS countries in investment promotion, municipal government strengthening, taxation systems, community development and outreach, SME development, NGO financial management, anti-corruption, pension reform, privatization of the energy sector, multi-ethnic governance, establishing brokerage companies, regional health reform, Roma community development, and telecottages.

Balkan Trust for Democracy

The Balkan Trust for Democracy, a $27 million ($10 million from USAID and the German Marshall Fund) grant-making initiative to support good governance in SEE, is a unique public-private partnership of the German Marshall Fund of the United States (GMF), USAID, and the Charles Stewart Mott Foundation. The Government of Greece has made an additional contribution.

The Balkan Trust for Democracy, based in Belgrade, supports the strengthening of democratic institutions in SEE through two principal programs: Linking Citizens with Government and Cooperation and Collaboration. The Balkan Trust makes grants in Albania, Bosnia-Herzegovina, Bulgaria, Croatia, Macedonia, Romania, Serbia and Montenegro, and Kosovo.

The Balkan Trust has been operational since June 2003, and began grant making in August. It is working to respond to the needs of each country, support innovative and high-quality projects, and attain a relative balance of support among all recipient countries. Staff of the Balkan Trust have cooperated closely with USAID and have developed good communication and cooperation with other donors and international organizations as well. The Balkan Trust works with a regional Advisory Board, comprised of experts from various sectors and countries, which met first in July 2003 to offer the Balkan Trust guidance before it began operations. It will meet again, in late February 2004, to discuss the Trust's progress in its pilot phase and offer strategic guidance for the coming years.

The Balkan Trust has made 35 grants to date -- 23 in-country grants, 10 cross-border initiatives, and two regional networks involving all or most countries in the Balkan region. About 43 percent of the funded initiatives are to organizations based outside of the capitals. The grants awarded have addressed a range of issues, including citizen advocacy and political participation, development of youth leadership, analysis and improvement of participatory decision-making methods, reconciliation and public administration in ethnically diverse areas, strengthening of youth and media networks around SEE, as well as a number of other issues related to the consolidation of democracy in the Balkans.

Roma Integration Program

The Roma Integration Program (RIP) is a $2.8 million 4-year regional program in the Czech Republic, Hungary, and Slovakia, which aims to expand access to services and leadership opportunities for Roma at the community level and to contribute to a change in perception of Roma through public awareness programs to counter discrimination. The program also aims to produce models of integration that can be replicated in communities within the three countries, with possible implementation in other countries with Roma populations and USAID Missions.

The RIP is a new activity, implemented by Partners for Democratic Change. During the initial months of the program, Partners has completed an assessment and selected target Roma communities in the three countries; hired key staff to manage all elements of the program; established advisory boards for the program in the three countries; and begun a training series in conflict management, leadership, and advocacy. In the future, participants will utilize these skills in community-level programs, in cooperation with local government, social service agencies, and other sectors.

International Center for Not-for-Profit Law

The International Center for Not-for-Profit Law (ICNL) continued to work throughout CEE to develop an enabling legal environment that promotes sustainability of the NGO sector in the region. ICNL's technical assistance and regional activities, including publications and workshops, have bolstered ICNL's in-country assistance and influenced the development and passage of legislation in several countries. An example is a groundbreaking new law passed in Hungary, in June 2003, to set up a National Civil Fund that will provide institutional support to Hungarian NGOs. Through ICNL's regional educational initiative, which is well underway in Hungarian, Serbian, and Macedonian universities, more than 400 students are studying NGO law each year at 11 universities in eight European and Eurasian countries. ICNL also maintains an electronic, web-based legal library that is a valued resource throughout the region.

In June 2003, ICNL's Budapest office became registered as the European Center for Not-for-Profit Law (ECNL), a Hungarian public benefit organization, serving as the center for the development of NGO law in SEE and eastwards and as a catalyst for regional networking and cross-border initiatives. As an ICNL affiliate, ECNL will coordinate its future activity with a growing network of NGO legal experts to help ensure a lasting capability in the region.

Nations in Transit

Under a grant from USAID, Freedom House publishes a comprehensive annual progress report on the status of political reforms in 27 emerging democracies and transitional countries of CEE and the former Soviet Union, including the 15 SEED countries. The report, called Nations in Transit, provides detailed analysis and data on two main topics: democratization (including electoral process, civil society, independent media, and governance) and rule of law (including constitutional, legislative and judicial frameworks, and corruption). The 2003 edition is the seventh and covers events from January 1 to December 31, 2002. The 2004 edition, covering calendar year 2003, will be released in spring 2004. While the overall results reported in Nations in Transit are mixed, the findings show significant progress in the CEE countries in the time since this publication began.

Fiscal Decentralization Initiative

Jointly funded by USAID and the OECD, UNDP, Council of Europe, Soros Local Government Initiative, Danish Ministry of Interior, and Czech Ministry of Foreign Affairs, the Fiscal Decentralization Initiative (FDI) supports the development of task forces in CEE countries and implemented a wide range of capacity-building and policy-development programs in CEE and SEE to educate governments, think tanks, and academic leaders on the major issues of fiscal decentralization.

In FY 2003, FDI supported a research program measuring the progress of decentralization in CEE and the development of indicators for assessment of decentralization. Surveys and fiscal designs covering the Czech Republic, Estonia, Latvia, Lithuania, Hungary, and Poland were supplemented with similar studies focusing on Bulgaria, Romania, Slovakia, and Slovenia. In addition, FDI supported development of a certified course for local government finance officers in Slovakia. This program, funded by the Open Society Institute (OSI), USAID, and the UK Department for International Development (DFID) and developed jointly by the Chartered Institute of Public Finance (CIPFA), Slovak Association of Local Government Finance Officers and the University of Banska Bystrica, has resulted in the development of curricula covering areas such as public finance, accounting, public investment, public procurement, etc. The program will be launched in January 2004.

Rule of Law

This objective supports the establishment of the rule of law; the protection of civil, political, and property rights; and the limiting of arbitrary government action. The rule of law requires an impartial judiciary, professional and honest prosecutors, effective legal representation, and well-defined legal procedures that help ensure uniform, timely enforcement of laws. USAID-funded activities support legislative drafting, strengthening the independence and accountability of the judiciary, more transparent and efficient administration of cases, judicial training, and association building. USAID's regional rule-of-law activities achieved substantial results during FY 2003.

A regional institution building advisor (RIBA) and three recently hired in-country institution building advisors (IBAs), fielded by the American Bar Association's Central and Eastern European Law Initiative (ABA/CEELI), provided comprehensive organizational development assistance to key legal reform partner NGOs in CEE. There has been significant progress toward organizational and financial sustainability and increased partnership activity by ABA/CEELI's priority partners in the region. ABA/CEELI plans to replace the expatriate RIBA position with an IBA, thereby moving the program toward indigenization.

Regional Media Program

The Regional Media Program, implemented by the International Research and Exchanges Board (IREX), focuses on regional, cross-border activities that support the development of independent media in SEED countries. The program aims to provide an integrated management architecture that facilitates and promotes country-specific and cross-regional learning in the four key areas of media sector development: business management, professional standards, supporting institutions, and legal frameworks. These objectives are met through the following activities:

  • Media Sustainability Index (MSI), which assesses media systems in Europe and Eurasia. The MSI has proven to be a valuable tool for USAID Missions, other donors, media development organizations, and media professionals.
  • Study on Capital Investment Issues Facing Independent Media
  • Support to regional television news reporting
  • Support to regional investigative journalism
  • Annual media conference to discuss lessons learned, best practices, and hotspot issues, e.g., media in repressive countries.
  • Media Law Reform, via SEED funding for initiatives under the umbrella of the Stability Pact for South Eastern Europe, national working groups are supported in SEE that provide support for media law reform.
U.S. Department of Labor

In FY 2003, the U.S. Department of Labor (USDOL) implemented the recommendations of independent evaluations and took strong positive steps to standardize performance measurements and develop exit and sustainability plans in SEED countries. SEED regional program funds helped advance the work of a Regional Task Force of professionals from Bulgaria, Hungary, Macedonia, Poland, and Romania, who met quarterly to exchange information about successful strategies and act as a resource for communities and governments. The Task Force successfully completed a region-wide manual on the implementation of the worker redeployment model, public relations/advocacy training workshops, a certification program for industrial adjustment specialists, and a case study analysis to compare local economic development programs in Bulgaria, Macedonia, and Romania. In winding down its Integrated Community Adjustment Program, USDOL also funded the development of a regional website that features the concrete job creation and business development results by country and community.

Regional Microfinance

The regional microfinance activity has strengthened the ability of USAID's Europe and Eurasia (E&E) Missions modestly to alleviate poverty and promote rapid, sustainable economic growth through efficient, country-specific micro, small and medium-size enterprise (MSME) strategies. The activity has supported the E&E Bureau's objective of promoting private enterprise in the region. Through regional funds, successful microfinance programs were started in Bulgaria, Croatia, Kosovo, Macedonia, and Romania. These programs have served poor, small, mostly female entrepreneurs in the region. Regional SEED funds are dedicated to "best practices" research, training (including workshops and conferences), and practical applications to help E&E Missions on issues such as MSME financing, business services, and policy advocacy; the Microfinance Center (MFC) in Warsaw, Poland, has become the premier provider organization in the Region with E&E Bureau support.

The 6th Annual Conference of the Microfinance Institutions in Central and Eastern Europe (CEE) and the Newly Independent State (NIS), held in Moscow in May 2003, demonstrated the capabilities and the leadership of the Center. The conference attracted 280 participants from across the region to share and discuss the experience of microfinance organizations, discuss research by the Center, and to settle on plans to make the work of the Center yet more effective. A narrative of the conference, including the issues it dealt with, can be found on the MCF web site: www.mfc.org.pl. Support to the MFC has been instrumental in promoting "best practices" in microfinance, such as market interest rates and a plan for sustainability, throughout the region. Also, the MFC has analyzed the legal and regulatory constraints to SME lending. Such studies advance policy dialogues in each country. Training is creating a cadre of microfinance professionals in many places (Bosnia, Bulgaria, Croatia, Kosovo, Macedonia, and Romania), which promotes the development of commercially sustainable microfinance institutions.

Municipal Network for Energy Efficiency

USAID has been working with municipal governments and private/NGO groups to overcome policy and institutional barriers to commercial financing of energy efficiency. Funding support will continue to develop innovative policies and projects and disseminate the results throughout the region through the region-wide Municipal Network for Energy Efficiency (MUNEE) network. MUNEE is implemented under a cooperative agreement with the Alliance to Save Energy, working with NGOs and municipal associations on municipal energy efficiency activities, with a focus on capacity building, information dissemination and policy reforms, including innovative financing approaches and using energy efficiency to help low-income households meet rising energy costs. MUNEE fosters the exchange of experiences in municipal energy efficiency programs, focusing on replication of successful management approaches in district heating systems; the role of energy efficiency to help low-income households meet the rising costs of energy; and more efficient alternatives to electricity for space heating.

Regional Energy Regulatory Network and Association

USAID has supported the establishment of the Energy Regulators Regional Association (ERRA) in the Europe and Eurasia region, designed to strengthen regulatory capacity in the region through the exchange of experience and information and training. ERRA was formally established in Budapest, Hungary, in April 2001, and has grown from 14 to 19 member regulatory bodies from CEE, SEE, the Baltics, and Eurasia. ERRA technical committees on tariffs/pricing and on licensing/competition, including technical experts from the 19 regulatory bodies, met and focused on technical issue papers, including those on electricity and gas tariffs, service standards, interaction of regulators and regulated entities, public service obligations, cross-border capacity allocation methods, and privatization and regulation. ERRA members developed their own summer school course on energy regulatory practices, cost-shared by the Central European University in Budapest and given there. It was presented for new regulatory staff by experienced ERRA regulators and staff. ERRA brought together over 200 investor, utility, finance, and regulatory participants in an energy regulation and investment conference designed to increase the exchange of views and information. Regulatory peer reviews were initiated involving two regulators, who completed their reviews of each, other focusing on the organization, activities, and effectiveness of each. Finally, expanded technical sessions took place that engaged ERRA members with West European and U.S. energy regulators.

Stability Pact for South Eastern Europe: Regional Electricity and Gas Markets Initiative

USAID has worked with ministries, regulators, and utilities in the region to promote electricity sector reforms and lay the basis for a regional electricity market integrated with the larger, liberalizing EU market. On December 8, 2003, Ministers of Energy and Economy from SEE signed a 2nd Memorandum of Understanding (MOU) that builds on the one signed a year earlier, expanding it to include natural gas to the earlier commitment on electricity and aimed at adopting common rules for the operation of regional markets. In meeting the commitments in the 2nd MOU, the SEE countries will be in compliance with revised EU Directives in electricity and natural gas issued in 2003, essentially meeting accession requirements in these sectors. The 2nd MOU was signed by all SEE countries and Turkey, with UNMIK again signing for Kosovo. The EU is now also a signatory. Implementation of the MOU is being undertaken under the "Athens Forum" process. Over the past four years, USAID has been instrumental in laying the basis for this process through its Stability Pact regional program, and continues to work closely with the EU, World Bank, EBRD, Germany, and Canada to carry out the necessary reforms. Working through SEE energy organizations, USAID has focused on developing a sound, consistent legal and regulatory framework, creating competent energy regulators, designing internal electricity markets consistent with a proposed regional electricity market, and identifying from a regional perspective key investment requirements for teleinformation and transmission grid systems. The first loan from EBRD for a high voltage transmission interconnection was signed in 2003, linking Macedonia with Bulgaria. Progress was also made in 2003 in reconstruction of substations destroyed during the war that are essential for reconnection of the former Yugoslavia systems to the main EU grid. Implementation of the USAID-supported plan for developing a modern teleinformation system among national dispatch centers is proceeding very well.

Stability Pact for South Eastern Europe: Regional Energy Efficiency Initiative

USAID continued its support for a regional approach to energy efficiency financing and investment in SEE, addressing improvements to district heating systems; providing more efficient alternatives to electricity for space heating; and examining the role of energy efficiency to help low-income households meet the rising costs of energy. There are three main elements of this approach. First, it is helping to develop bankable municipal energy efficiency for funding by the international financial organizations (IFIs), export credit agencies, or commercial banks and energy service companies. Major activities supported World Bank and EBRD loans in Bulgaria and Serbia, preparing municipal energy plans and investment projects in Croatia, and preparing an energy efficiency strategy for Macedonia. Second, it is developing the region-wide Municipal Energy Efficiency Network (MUNEE), a network of NGO energy centers that carry out coordinated training and policy work on low-income energy efficiency issues and municipal project design and financing. Third, it is implementing a $15 million regional Development Credit Authority program to provide loan guarantees to municipalities or private energy service companies for energy efficiency projects in hospitals, schools, municipal facilities, and heat utilities. The initial agreements with commercial banks in Bulgaria and Croatia are under preparation. These projects will serve as models for other cities in the region and contribute to USAID clean energy and climate change objectives. Contractors are the Alliance to Save Energy and Nexant.

Balkans Regional Infrastructure Program

The Balkans Regional Infrastructure Program (RIP) includes a variety of components, either facilitating individual infrastructure projects throughout SEE or using tools such as innovative project financing approaches and regional cooperation to accelerate the infrastructure agenda in the region. Project Facilitation Activitieseach facilitated one or more projects with identified financing, including a canal rehabilitation project in Romania, two water supply system improvement projects in small Croatian towns, waste system upgrade investments in two large Serbian cities, and assistance to a variety of small and medium Romanian towns for preparing water and wastewater projects for a combination of grant and loan funding. Regional Cooperation Activities concentrated on supporting the Interim Sava River Basin Commission's work toward ratification of a treaty among Bosnia, Croatia, Serbia, and Slovenia. Efforts on inter-basin cooperation in the fields of navigation, flood control, water quality, and other joint concerns are leading to important political concordance and stakeholder involvement, while also preparing key infrastructure investments for IFI review. Innovative Financing Activities were initiated several years ago by recognizing the limitations of grants, as well as the sovereign borrowing capacity of SEE nations to meet the region's need for improved infrastructure. RIP created the Balkans Infrastructure Development Facility (BIDFacility), a revolving fund of $10 million to develop public infrastructure projects in water, energy, and transport for private sector investment, designed to recoup the costs of preparation from successfully financed projects. The International Finance Corporation (IFC) and USAID together pledged the first quarter of the revolving fund and were joined during 2003 by six European donors: Austria, Greece, Italy, the Netherlands, Norway, and Switzerland. A business plan was completed in 2003, with initial activities scheduled in 2004. The second financing activity under RIP will use USAID's Development Credit Authority to attract private sector investment in the water, energy, and transportation infrastructure sectors in SEE through a new Balkans Infrastructure Investment Guarantee Fund.

Partnership for Environmentally Sustainable Economies (ECOLINKS)

USAID's flagship EcoLinks program actively promotes environmental technology transfer, market-based partnerships, and environmental best practices to address critical environmental problems in municipalities and industries in Europe and Eurasia. Since its inception in 1999, EcoLinks offices have facilitated more than $70 million in environmental technology trade in the SEED recipient countries of CEE and leveraged additional investments of over $90 million in environmental infrastructure there. In FY 2003, the program facilitated more than $11.5 million in direct technology sales and services between U.S. environmental and energy firms and municipalities and firms in the SEED countries.

With its technical offices in U.S. Embassies in Bulgaria, Croatia, Czech Republic, Hungary, Poland, and Romania, EcoLinks identifies environmental infrastructure and technology needs and matches them with U.S. and regional expertise for ongoing business partnerships to meet local needs. EcoLinks' offices facilitate Quick Response Awards of up to $4,000 to assist local firms in cementing partnerships. EcoLinks also provides grants to the other SEED countries: Bosnia- Herzegovina, Estonia, Latvia, Lithuania, Macedonia, and Serbia and Montenegro, and also to selected countries in Eurasia. During FY 2003, EcoLinks facilitated the majority of its trade and investment transactions in the wastewater, drinking water, and renewable energy sectors in SEED countries, assisting them in meeting the infrastructure requirements of EU accession.

EcoLinks also facilitates critical environmental infrastructure development in SEED countries by assisting municipalities and industries in finding follow-on project financing from other USG and EU mechanisms, including the U.S. Trade and Development Agency (USTDA), the USAID Development Credit Authority, and the Polish EcoFund. One example is a Hungarian municipality that recently awarded a $44 million contract to a U.S. firm to build a wastewater treatment plant, after EcoLinks helped the municipality locate the U.S. partner and obtain a USTDA grant for a feasibility study.

Global Trade & Technology Network/Southeast Europe

The Global Trade & Technology Network/Southeast Europe program (GTN/SEE) is an Internet-based, trade-lead-matching system to facilitate trade. The program helps small and medium-size enterprises (SMEs) to establish regional and international business partnerships. The initiative complements USAID objectives by strengthening local economies, improving the competitiveness of local firms, and creating links to domestic, regional, and U.S. markets. GTN monitors interactions between interested companies and provides follow-up services to facilitate transactions or business links.

GTN operates in Albania, Bosnia, Bulgaria, Croatia, Hungary, Kosovo, Romania, and Serbia and Montenegro. Operations are coordinated through the Regional Manager in Belgrade, Serbia. The program is in the process of implementing Supply Chain Management services to its clients in the region, which will help SMEs improve their overall competitiveness by gaining visibility and access to global supply chains. In FY 2002, the first year of full operation, GTN representatives in the foregoing countries and territory facilitated 20 transactions with a total value of $1 million. Two-thirds of those transactions involved companies within the region. Examples included a major food products importer and wholesaler in Hungary, who was introduced to several Bulgarian confectionery companies through GTN and now is purchasing from them on an on-going basis. Companies in Bosnia and Croatia have traded food items and related products such as packaging materials. Other sectors in which GTN/SEE facilitated transactions include consulting, information technology, construction, and the environment. In FY 2003, results improved further, with 87 transactions completed with a total value of about $2.5 million. It is anticipated that the supply chain services being offered via GTN in 2004 will have a positive impact on the manufacturing and agriculture sectors.

Partners for Financial Stability

Partners for Financial stability (PFS) focuses on promoting financial sector development through short-term, demand-driven activities closely coordinated with U.S. Embassy priorities. PFS assistance addresses the international standards required by today's competitive global marketplace, as well as helping EU candidate countries in CEE to meet the financial sector criteria for accession. Old age security and fiscal consolidation are still major policy issues throughout the region, and a high level of interest has been expressed in pension and insurance reform assistance. In bank supervision, PFS has continued to deliver regional training and technical assistance directly to senior managers of CEE bank regulatory authorities.

Since the passage of the Patriot Act's anti-terrorism financial measures and in reaction to the collapse of Enron and subsequent events, country counterparts throughout CEE have expressed strong interest in increased training and technical assistance to address a variety of financial crime, money laundering, and corporate governance issues. In collaboration with the U.S. Treasury and the Securities and Exchange Commission, as well as leading private sector financial institutions, PFS has provided regional training seminars and bilateral technical assistance projects in the CEE region to help meet these needs. During FY 2003, 50 projects were conducted under the PFS program: 21 regional training seminars, 23 technical assistance projects, and 6 grants.

Highlights of Regional Training Activities

  • During 2003, the PFS Program continued supporting regional activities to combat financial crimes and money laundering. PFS organized a study tour on prevention of money laundering for the Money Laundering Information Bureau of Estonia, the Financial Intelligence Unit of Latvia, and the Financial Crime Investigation Service of Lithuania. Study tour participants visited a number of institutions in the U.S., including the Financial Crimes Enforcement Network (FinCEN), U.S. Department of the Treasury, and the U.S. Securities and Exchange Commission (SEC), as well as prosecutors and judges, providing participants with theoretical and practical insights into U.S laws and the workings of U.S. financial intelligence gathering agencies. In addition, in cooperation with the Ministry of Justice in Poland, PFS conducted a regional workshop on prevention of money laundering. Prosecutors, judges, and other law enforcement officials from Poland, Slovakia, Slovenia, the U.S., and the United Kingdom participated and presented case studies on a range of issues and experiences in combating money laundering in order to identify best practices.

  • In cooperation with the Association of Latvian Commercial Banks, PFS conducted a seminar on compliance with the Patriot Act. Participants included 72 from Latvia, 10 from Estonia, and 10 from Lithuania. Prevention of money laundering specialists from the UK and the U.S. shared their expertise and the experiences of UK and U.S. banks in complying with this act and other prevention of money laundering legislation.
  • During 2003, the PFS program also organized and co-financed groundbreaking research on a variety of capital markets issues, including corporate governance, corporate social responsibility (CSR), investor relations, and socially responsible investments. The research enabled the PFS program to provide subsequent training on those topics, thus responding to the current specific needs of financial intermediaries, listed companies, securities regulators, and Self-Regulatory Organizations (SROs).
  • In 2003, the PFS program continued to support the National Bank of Poland's regional Training Initiative in Bank Supervision (TIBS), which allows Poland to share its considerable bank supervision expertise with other European and Eurasian countries in order accelerate the implementation the Basel Core Principles of Bank Supervision. During the last year, TIBS conducted three additional week-long seminars on various aspects of bank supervision, risk management, and best practices. Over 60 bank supervision professionals from 20 countries participated.
  • Finally, The PFS program, in close cooperation with the OECD, continued providing valuable support to the International Network of Pension Regulators and Supervisors (INPRS). The Network's aim is to serve as a forum for policy dialogue and co-operation on regulatory, supervisory, and financial issues related to pensions. In 2003, PFS presented the results of a final report on Investment Strategies for Pension Funds in CEE countries at a meeting of the INPRS and trained some 250 participants on pension regulation issues.

A summary of the 50 regional training and technical assistance projects conducted in FY 2003 through PFS, listed by subject matter, appears in the following chart:

Subject Matter

#
Regional Seminars[1]
#
Participants Trained[2]
#
Technical Assistance Projects
#
Grants
Pensions & Insurance
5
305
9
1
Corporate Governance
4
0
0
3
Accounting & Audit
5
208
4
0
Banking
1
47
5
2
Capital Markets Development
2
363
5
0
Financial Crimes & Anti-Money Laundering
2
0
0
0
General Financial Sector Development
2
0
0
0
TOTAL
21
923
23
6

[1]On a select basis, PFS sponsors participation by senior financial sector officials in training courses conducted by non-PFS organizations; and such courses are included herein.

[2]Please note that this figure does not include participants trained through bilateral technical assistance programs.

SEAF Trans-Balkan Equity Fund

The SEAF Trans-Balkan Equity Fund (TBEF) was formed in July 2000, by the Small Enterprise Assistance Funds (SEAF) and five other investors: IFC, Norfund, Black Sea Trade & Development Bank, SECO (Swiss State Secretariat), and the Finnfund. As a regional fund, the TBEF provides investment capital to SMEs in Balkan countries, usually in the form of equity and supplemented by technical assistance and business development support. TBEF's primary approach is to purchase equity shares in both new and existing SEAF-managed Country Funds in the region. The Country Funds make direct investments in a broad range of sectors, with a special emphasis on export and growth-oriented SMEs and entrepreneurs. TBEF is now established in Bulgaria, Croatia, and Romania, with plans to expand to other countries of the region, such as Albania and Bosnia.

TBEF's management is provided jointly by SEAF, a Washington-based non-profit organization, and its offices in Bulgaria, Croatia, the Netherlands, and Romania. The TBEF is capitalized at $21,825,000. Of this amount, $6 million is for the Trans-Balkan Croatia Fund (including the merged SEAF Croatia Fund), $5 million for the Trans-Balkan Bulgaria Fund, and $8 million for the Trans-Balkan Romania Fund. The remaining $2,825,000 was left for future investment directly in Albania and Bosnia. As of September 30, 2003, TBEF had invested a total of $21,825,000 in 31 companies. The total European Venture capital Association (EVCA) valuation as of September 30, 2003 was $12,912,666. USAID's commitment of $6 million ($4 million for capital and $2 million for technical assistance) has now been obligated in full, but as of September 30, 2003, $2,358,255 had not yet been expended by SEAF. USAID's original three-year program has been extended for two years, through July 2005.

TBEF has invested in diverse business sectors, such as school/office products, wine producing, food distribution, supermarkets, electronics, telecommunications, energy, pharmaceuticals, cable TV, and the production and distribution of medical diagnostic products. The Fund has a strong pipeline of investment deals and has made progress toward investing in Albania and Bosnia. In its efforts to expand its activities to Serbia, SEAF is in currently raising capital for a new stand-alone Serbia fund. In addition to supporting individual SMEs, the Fund has established an important development model by providing guidance for the private sector in the following areas: 1) refining investment instruments and methodologies for use by other SME investors; 2) mobilizing loan capital through co-financing with local banks; 3) developing the equity capital market; 4) formalizing business operations within the SME sector; and, 5) providing examples to entrepreneurs and investors of successful private enterprises.

Europe Regional HIV/AIDS Initiative: Baltic Sea Initiative/Network of Excellence

Through the Baltic Sea Network of Excellence (NOE), USAID aims to strengthen NGO efforts to prevent the spread of HIV/AIDS and to facilitate greater collaboration at the national and regional levels in Estonia, Latvia, Lithuania, and St. Petersburg and Kaliningrad, Russia. In FY 2003, an enumeration exercise was completed to help public health officials better understand the potential size of hard-to-reach, vulnerable populations and better target HIV/AIDS interventions in the region. Fifteen small grants were awarded to three governmental and 12 non-governmental organizations in the Baltic States. In Estonia, two peer education and prevention efforts targeted youth, reaching 2,100 youth aged 13-19 in 132 interactive workshops. One intervention targeted young women involved in sex work and other risky behaviors, and two interventions targeted the improvement of life of people living with HIV/AIDS, including those in Estonian correctional facilities. In Latvia and Estonia, training was held to strengthen voluntary counseling and test the capacity of more than 35 specialists. Another grant was used to support the Lithuanian AIDS Center with a region-wide knowledge management system (KMS). The KMS will now serve as a focal point to link HIV/AIDS epidemiological and health promotional information in each country and allow for the documentation and sharing of regional best practices. An international donor group was formed, and small grants assisted in community-level advocacy efforts to support governments with strategic planning, implementation, programming, and monitoring. This initiative also piloted several innovative projects testing new approaches that could later be replicated by host-country counterparts, i.e., HIV voluntary counseling and testing, prevention of maternal to child transmission of HIV/AIDS, and programming for TB/HIV interaction.

Europe Regional HIV/AIDS Initiative: Southeastern Europe - RiskNet

RiskNet, initiated with joint support from USAID and UNFPA, seeks to reduce HIV/AIDS and Sexually Transmitted Infections (STI) among high-risk groups in Bosnia, Bulgaria, Croatia, Macedonia, Romania, and Serbia. RiskNet strengthens the capacity of local NGOs in the region to design and implement effective HIV/STI prevention interventions and promote sexual health through an innovative "gatekeeper" approach that targets people who have influence over and access to high-risk groups. In FY 2003, USAID-funded efforts led to the implementation of six social marketing trainings with 20 NGOs to improve HIV/AIDS implementation capacity. On average, a 25 percent increase was observed in total outreach activities conducted with high-risk, vulnerable groups per NGO included in the RiskNet network. HIV/AIDS interventions included establishment of drop-in and mobile centers for outreach, as well as provision of vouchers to high-risk groups to access local health facilities for testing and treatment. The regional RiskNet network organizes technical workshops and produces a newsletter to share lessons learned across borders. This support has inspired NGOs in-country also to share lessons learned nationally with Global Fund implementation partners and other NGOs. Within Macedonia, for example, seven NGOs now work with 34 "gatekeepers" to reach about 1,000 new and existing clients per month with HIV/AIDS prevention, counseling, and outreach services. Regional efforts across borders have led to the collection of invaluable ethnographic research, which will now be used to guide future programming. All NGOs that are a part of this regional network use similar implementation strategies. These strategies were designed and continue to be improved upon by the partner NGOs at each regional workshop. The effect is reinforcement of HIV/AIDS prevention efforts across borders and throughout the region.

Global Fund to Fight AIDS, Tuberculosis, and Malaria

The Global Fund was established in January 2002, as a financial instrument to complement existing donor programs addressing HIV/AIDS, tuberculosis, and malaria worldwide. The Global Fund's purpose is to attract, manage, and disburse additional resources through public-private partnerships. Several countries in the region have already applied for funding, and have been awarded first-year grants to begin implementation of comprehensive responses. In 2003, using SEED regional funds, technical assistance was provided to Macedonia and Estonia respectively for their applications to the Global Fund. The grant applications were approved for $6.3 million and $10.3 million over five years respectively. USAID/Europe & Eurasia also provided $52,000 to support a regional workshop for all round one and two recipients of Global Fund monies. The workshop prepared a preliminary assessment of the recipients' future technical needs and helped to draft the countries' implementation plans.

Advances in TB Control in the Eurasia Region/Regional TB Evaluation

In 1998, USAID established its first TB control pilot project in the Eurasia region in Almaty, Kazakhstan. By 2003, USAID investments had expanded to include TB control activities in 14 countries across the Europe and Eurasia region, in an effort to assist host governments to effectively and efficiently control TB through implementation of the Directly Observed Treatment, Short-course (DOTS) strategy.

A recent evaluation assessed the impact of USAID'S five-year investment in assistance to TB programs in six countries and one province: Estonia, Kazakhstan, Kosovo, Latvia, Russia, Ukraine, and Uzbekistan. The evaluation results indicated that DOTS has been expanded and performance has been improved, political support for TB control based on the DOTS strategy has increased in all countries, and progress has been made in the management of Multi Drug resistant TB (MDR-TB). Other results of USAID activities include: 1) standardizing TB treatment regimens and increasing the use of sputum smear microscopy in the diagnosis of TB; 2) In Kosovo, DOTS coverage has reached nearly 100 percent, and treatment success has surpassed the WHO target of 85 percent; and 3) in Latvia, where an international MDR-TB electronic surveillance system has been developed and clinical capacity has been built for the management of MDR-TB, acquired MDR-TB has decreased from 54 to 28 percent.

Iodine Deficiency Disorder

Iodine deficiency disorder (IDD) is the world's leading cause of preventable mental retardation. Populations with even modest IDD show reductions in children's IQs of 10-15 percent. Largely through the efforts of UNICEF, Kiwanis, and USAID, 70 percent of the world's people now have access to iodized salt, but in the Europe and Eurasia (E&E) region, only about 28 percent of households use iodized salt. Since FY 2000, USAID has invested $3.9 million in IDD programs in E&E, and the investment is paying off. For example, in FY 2003, Macedonia became the first E&E country to announce the elimination of IDD as a public health problem, demonstrating that IDD can be eliminated in the region.

Reproductive, Maternal and Child Health in Eastern Europe and Eurasia: A Comparative Report

USAID's E&E Bureau provided support to the Division of Reproductive Health at the Centers for Disease Control and Prevention and ORC/Macro International to prepare a comparative report of data from 16 health surveys conducted in 12 countries in Eastern Europe and Eurasia. The report, Reproductive, Maternal and Child Health in Eastern Europe and Eurasia: A Comparative Report, was the first of its kind at USAID and was completed in 2003. The CEE countries studies weretheCzech Republic and Romania. The surveys asked a series of questions of women of reproductive age, producing vital information on the following: fertility rates, abortion rates, contraceptive prevalence, knowledge of HIV/AIDS, percentages of babies breastfed, anemia rates, infant mortality rates, sexual knowledge and behavior of young adults, and extent of intimate partner violence. The data included evidence that in areas with greater prevalence of modern contraceptive method use, abortion was less common. The report provides essential information to policy makers and will influence future programming in family planning, reproductive/maternal health, and child survival.

Women's Wellness Centers

USAID has supported the development of nearly 30 Women's Wellness Centers (WWCs) in countries of the Former Soviet Union and CEE. The centers in the CEE include one each in Albania and Romania, with two new centers being developed through a current project in Kosovo. Each WWC utilizes a client-centered approach and serves women from adolescence through old age. These centers provide a comprehensive array of ambulatory clinical and education services, encompassing primary care, reproductive health, screening and early detection of disease, prevention services, and health promotion. In Tirana, Albania, the work of the WWC to improve the quality of cervical cancer screening and to foster use of screening as a disease reduction strategy has been especially notable.

USAID TB Program - Kosovo

In 2001, through a bilateral program funded with regional SEED funds and managed from Washington, USAID began support to Doctors of the World for implementation of the WHO DOTS strategy in Kosovo. USAID provided assistance for strengthening the TB laboratory system through the purchase of lab equipment and consumables and the implementation of a comprehensive training program for key staff, including pulmonary physicians, family practice doctors, patronage nurses, and health educators. In addition, USAID has supported extensive TB education efforts aimed at patients and a community-wide TB information, education, and communication campaign, using the mass media. Furthermore, USAID has promoted the development of a computer-based TB data recording and reporting system routinely to monitor and evaluate treatment outcomes at the national and district levels. Finally, USAID has supported the expansion of TB program activities beyond the majority Kosovar population into the Serbian and Roma minority areas, training Serbian TB doctors and nurses, general practitioners, and laboratory technicians.

USAID's program has contributed to substantial improvement in human and infrastructure capacity to implement DOTS, as well as to significant improvements in program performance, including: 1) standardization of anti-tuberculosis regimens according to the WHO protocol; 2) development and installation of a computer-based registry in all sites and subsequent entering of 100 percent of new patients into this registry; 3) laboratory quality control performance of nearly 100 percent agreement, and 4) despite extremely difficult circumstances, Kosovo has achieved 100 percent DOTS coverage, and treatment success rates have reached WHO's recommended target of 85 percent. The above-mentioned activities have contributed to a decline in TB cases in Kosovo from more than 1,600 in 2001 to about 1,400 in 2002.

Romania Laboratory Strengthening and Drug Management Activities

Support to WHO/Euro TB Program for laboratory strengthening activities has led to the development of national laboratory quality control guidelines in Romania. Support to MSH/Rational Pharmaceutical Management Plus Project provided assistance for an assessment of TB drug procurement and distribution practices, which led to implementation of a training course for TB specialists based on the results of this assessment. All this has been done by USAID under a Washington-managed bilateral program funded with regional SEED funds.

Strategic Technical Assistance for Results with Training (START)

In FY 2003, the Strategic Technical Assistance for Results with Training (START) program trained 5,913 participants from government, non-government, and private sectors from Albania, Bosnia, Bulgaria, Croatia, Macedonia, and Romania. Of these, 2,947 were women (50 percent). Over three-quarters of the training took place in-country (4,545), with the remainder in the U.S. or in third countries. This year has also seen the development of long-term in-country training activities, involving a series of interventions - workshops, follow-up, and other activities.

The Small Grants program was offered in four countries, with 40 grants awarded and a total of $216,970 disbursed. The training and supporting local organizations to become training providers continued, through the Third Country Training Program and through the support of local organizations, to provide both training and logistical support for in-country training programs. In addition, training-of-trainers continues to be an important component of training programs. For example, this year Bosnia managed two such programs, one in tax administration and the other in solid waste management. Across the region, training to support the development of local associations continued: for example, the Croatian Journalists Association and the Association for Independent Radio Stations, and in Macedonia, the Macedonian Bankruptcy Association, the Macedonian Bar Association, and the Macedonian Judges Association.

Cross-border training programs and Third-Country Training (TCT) continued as a major catalyst for regional cooperation. Bosnia hosted a month-long summer training -- the third such program -- for university accounting professors, which included professors from Macedonia, Kosovo, and Serbia and Montenegro. Also, mayors from Bosnia and Croatia attended separate training programs in Hungary and Slovakia, on the theme of multi-ethnic governance and economic revitalization. Through the Participant Training Program, USAID supported a conference on Corridor 8, the east-west highway that will link Albania, Bulgaria, and Macedonia. Third-Country Training has expanded beyond Central Europe. Recent programs have been held in South Africa, Latin America, and Western Europe. One interesting example was a TCT program in court administration, held in Austria and Slovakia, which provided Bosnian judges and senior court officials with the opportunity to exchange ideas and to establish interregional contacts with USAID-sponsored delegations from Moldova, Romania, and Ukraine.