Albania Armenia Azerbaijan Belarus Bosnia & Herzegovina Bulgaria Croatia Cyprus Georgia Ireland Kyrgyzstan Kazakhstan Moldova Former Yugoslav Republic of Macedonia Romania Russia Tajikistan Turkmenistan Ukraine Uzbekistan Federal Republic of Yugoslavia   Kosovo   Montenegro   Serbia Central Asia Republics Regional Central and Eastern Europe Regional Eurasia Regional Hungary Regional Abbreviations and Acronyms Glossary Previous Years' Activities 2000, 1999, 1998, 1997 Wednesday, 07-Feb-2001 16:13:57 EST

Introduction

U.S. National Interests

The United States’ commitment to maintaining peace and stability in the Europe and Eurasia (E&E) region was strongly reaffirmed in 1999. USAID’s quick response to the humanitarian crisis in Kosovo and its support for post-conflict recovery throughout Southeast Europe helped bring stability to the region within a very short timeframe. As the crisis exposed more starkly the vulnerabilities of these countries to the economic shocks it created, it underscored how far these countries still need to go in their transition to market-led democracies. The crisis and its aftermath also highlighted the high degree of interdependence among these countries and the importance to regional stability of continuing to help them move toward closer integration with Western Europe. In Eurasia, the challenge was to maintain a steady course focused on advancing reform, tailoring assistance programs as needed to take advantage of opportunities to work with reformers at all levels. Consolidating the gains of transition-oriented economic and democratic reforms throughout Europe and Eurasia to assure the irreversibility of change remains an issue of vital interest to the United States.

National Security

The precarious situation of regional hot spots such as Bosnia and Kosovo, and the multiple yet-unsettled or latent conflicts throughout the Caucasus and Central Asia pose very real threats to U.S. national security. The potential for proliferation of weapons of mass destruction in the region remains a key concern. Other concerns are nuclear power plant safety and reducing the risks of another Chornobyl accident, and securing commercial access and viable outlets for Caspian oil and gas resources. The timely entry of Poland, Hungary and the Czech Republic into the North Atlantic Treaty Organization (NATO) in 1999 was possible in part because of the success of the post-communist transition in those countries. As NATO members, Poland and Hungary played important stabilizing roles in containing the repercussions of the Kosovo crisis.

Economic Prosperity

Growing economies provide increased opportunities for trade, with direct implications for the growth of high paying, export related jobs at home. Particularly for the Central and Eastern European (CEE) countries, trade has increasingly been re-oriented to the West. The proportion of trade between CEE and advanced economies has increased from 40% of exports in 1989 to over 70% in recent years. However, growth of exports from the E&E region has slowed following the onset of the global financial crisis in mid-1997, falling from 20% in 1995-1997 to roughly 10% in the Northern-Tier countries in 1998-1999, and stagnating or contracting overall during these later years in Southeast Europe and Eurasia. The lion's share of foreign direct investment (FDI) continues to go to a handful of CEE Northern-Tier countries, and the global financial crisis served to strengthen this trend. For the region as a whole, more than half of all FDI flows since 1989 have occurred since 1997. Yet, FDI per capita since 1989 has been more than eight times higher in the Northern-Tier countries than in Eurasia, demonstrating conclusively that investment follows meaningful reform. For many of the transition countries, the ability to attract FDI remains far below potential.

Rule of Law

Crime and corruption continue to be major issues, with cross-border implications in Southeast Europe as well as in Eurasia. USAID programs are working to improve transparency, the rule of law, and the commercial legal frameworks that are needed to establish international investor confidence. In addition to improving formal legal systems and demonstrating the commitment of the authorities to rule of law, these programs will also address the importance of engendering respect for the rule of law among the citizenry and build citizens’ confidence that disputes will be settled fairly. Transfers to the State Department and Justice Department are aimed at improving law enforcement skills and technologies.

Democratic Expansion

Democracy continues to take root in most E&E countries, though there has been backsliding in some cases, particularly in Eurasia where both formal and informal democratic institutions are still in the early formative stages. An estimated 150,000 non-governmental organizations (NGOs) now exist across the E&E region, advocating for pressing social, economic, political and environmental issues and opening up the political process generally. However, organizational maturity and sustainability for NGOs remains a long-term challenge. Continued efforts are also needed to deepen citizens’ understanding of democracy and the underlying values that make it work; and to broaden citizen participation in all aspects of civic affairs. The role of independent media in this process is crucial.

Global Issues

The Agency will continue using Support for Eastern Europe Democracy (SEED) and FREEDOM Support Act (FSA) resources to support the President's Global Climate Change initiative, with activities focused on countries with significant greenhouse gas emissions (e.g., Russia, Ukraine, the Central Asian Republics and Southeast Europe). USAID will work with these countries to reduce carbon dioxide (CO2) emissions and increase carbon absorption through energy efficiency improvements, energy sector regulatory reform, and better management of forests. E&E will continue to promote increased use of modern contraception as an alternative to abortion in Albania, Armenia, Azerbaijan, Belarus, the Central Asian Republics, Georgia, Moldova, Romania, Russia, and Ukraine. Programs to reduce the spread of sexually transmitted diseases and HIV/AIDS exist or are being developed for Armenia, Kazakhstan, Romania, Russia, Ukraine, and Uzbekistan. The growing threat of drug-resistant tuberculosis is being addressed through programs in Kosovo, the Central Asian Republics, Russia and Ukraine.

Development Challenge

The development challenge in E&E remains one of transforming previously authoritarian, centrally planned societies into market-led democracies with vibrant economies, open political systems, and a strong civil society. After a year-long stocktaking of the results achieved during the past ten years, and strategic analysis of outstanding issues in the region, it is clear that only the first wave of countries – those in the Northern Tier of Central and Eastern Europe – are in fact now able to continue the transition without further bilateral assistance from the United States. By the end of FY 2000, all eight of these countries will have graduated. The challenge for USAID with regard to this group is to define new relationships, relying much more on the countries’ own resources and on the private sector, to make sure that support is available when and if needed in specific instances to sustain the progress of transition. At the same time, it is important to help these countries find ways in which they can provide lessons learned from their transition to the rest of the region.

The problems affecting the countries of Southeast Europe and of Eurasia differ in intensity, but in general include the following:

• In many countries of the region there is a fundamental lack of understanding and acceptance of the values (including mutual trust, respect for human rights, respect for laws and contracts, etc.) that underpin a market democracy, and how these values must be practiced. Furtherchanges are needed in the attitudes and behaviors of individuals, and indeed of whole societies, in order to sustain economic and political transition.

• Critical obstacles to establishing the rule of law include limited political will, elites with vested interests, lack of judicial independence, and corruption. Corruption undermines democratic processes, erodes public confidence in institutions, and scares off investors critical to revitalizing the economies of the region. Without reform of existing systems, prospects for sustainable economic transition are questionable.

• Democratic systems, local governance, independent media, and a participatory civil society are in their infancy. By and large, the institutions, traditions, and values, such as balance of powers or respect for the rights of the individual, needed to support liberal democracies are lacking.

• With incomplete reform implementation, growth is lagging, exposing poor public finance policies and unequal sharing of the costs and benefits of reform among social groups. Endemic corruption combines with these factors, resulting in a deterioration of public health services and other social support systems. Particularly in Eurasia, this has led to declining support for reform among citizens that poses a threat to transition prospects. Slow growth also entails continued risk of ethnic conflict, in the Balkans as well as throughout the Caucasus and in Central Asia.

• Both men and women have suffered during the transition. Domestic violence and trafficking are on the rise in Southeast Europe and Eurasia. Young men in Central Asia are more at risk of poverty than women-headed households. Integrating gender considerations throughout USAID programs will accelerate and deepen the economic and political reform process.

• Finally, ethnic rivalries throughout countries of the former Yugoslavia compound the problems identified above, and continue to pose a severe threat to stability, and retard prospects for engaging in meaningful, self-sustaining transition.

Regional Strategy: Linkages to USAID Strategic Goals

E&E’s regional strategic framework addresses Agency goals in economic growth and agricultural development, including critical energy and environmental constraints to sustainable growth; building sustainable democracies; and social issues such as protecting human health, responding to the humanitarian dimension of crises, and mitigating the adverse social impacts of the transition process. This last area represents a new focus, responding to evidence that poverty and income inequality are pervasive throughout the region. Ethnic issues are addressed throughout country portfolios on a crosscutting basis, where relevant.

Economic Growth: E&E supports USAID’s goals in Economic Growth and Agricultural Development in all 24, country programs active in FY 1999. As can be expected given E&E’s strong focus on development of market systems, performance in this area is particularly strong--evidenced by growth of trade and increase in foreign direct investment. The private sector now accounts for about 60% of GDP throughout the region. The setbacks of the Russian financial crisis in 1998 and the Kosovo conflict in 1998-99 have had repercussions, limiting overall per capita income growth in E&E. While there is evidence that unfinished reforms and slow growth have helped to perpetuate and even increase poverty in certain countries, there is also substantial evidence of successful reform on a country by country basis in key areas such as banking, fiscal management, and adoption of international accounting standards. E&E support for reform of economic policies and systems, including on energy and environmental issues is closely coordinated with International Monetary Fund (IMF) and World Bank initiatives. E&E’s programs also support development of micro, small and medium enterprises.

Democratic Transition: The overall goal of E&E democracy programs is to foster democratic societies and institutions through empowerment of citizens, independent media, rule of law, and good governance. These programs address all of USAID’s democracy objectives. In 1989, democratic institutions were essentially non-existent at the national or local levels in most E&E countries. Since then, generally free and fair elections have been held in 16 countries; and activists in over 80 political parties throughout the region have received training in political process issues. Significant reforms of legal systems have been approved. NGOs are active throughout the region. Local governments have greater authority and independence from the center and, in 17 countries, are becoming more responsive to the needs of their constituents. Indeed, E&E has found that working at the local level to build synergies among government, citizens, NGOs and businesses can yieldfruitful results. In 13 countries, independent media are operating relatively free of government control. Yet, even with such successes, reform-minded governments face institutional and human resource constraints that appear to be more fundamental than previously recognized. Corruption in particular is a severe problem that USAID will address on a crosscutting basis throughout all programs.

Social Transition: E&E supports Agency health priorities in HIV/AIDS and infectious disease control and mother and child health. E&E programs strongly support USAID’s humanitarian assistance goal, dealing primarily with complex emergencies in Bosnia, Kosovo and other countries. In these post-conflict situations, E&E works with the Office of Foreign Disaster Assistance and Office of Transition Initiatives in USAID’s Bureau of Humanitarian Response, to ensure smooth integration of programs started with a relief focus into the mainstream of transition programs focused on economic and political reform. E&E is also, increasingly, building conflict prevention concerns into programs in countries at risk such as in the Balkans, the Caucasus, and Central Asia.

Social sector issues in the E&E region differ from those in most developing countries. In a number of countries, the realities of transition are creating a new class of chronically poor rather than the large and stable middle class that the shift to market systems was expected to engender. Many citizens have lost benefits (such as housing and utilities) previously provided by the State and social services such as education and health care have deteriorated. An estimated 50% of Eurasia’s population and 24% of the Southern Tier were living in poverty in the mid-1990s, compared with 4% and 5% respectively in the late 1980s. Those countries that have experienced the largest and most sustained drops in GDP and have been slowest to regain their 1989 income levels have also suffered the biggest increases in income inequality. These losses, combined with limited employment opportunities, create resentments that threaten social cohesion and prospects for continued transition. It is essential to deal with social issues in order to build support for economic and political change. Beginning in FY 2000, E&E will be addressing selected social issues more strategically.

External Debt.

For most of the Europe and Eurasia region, the volume of external debt remains manageable. Debt servicing continues to be modest (roughly 10% of exports overall). However, the ratio of total external debt to exports has been increasing recently in many countries, particularly in the Southern Tier and Eurasia. In 1998, six countries were "severely" indebted by World Bank standards (Albania, Georgia, Armenia, Bosnia-Herzegovina, Turkmenistan, and Bulgaria) and seven had "moderate" external debt levels (Kazakhstan, Russia, Tajikistan, Moldova, Croatia, Kyrgyzstan, and Poland). Several countries (including Russia, Ukraine, Kyrgyzstan, and Romania) faced short-term debt repayment challenges in 1999. USAID remains committed to working hard both directly and with other donors to foster economic reforms, including fiscal reforms, which will stimulate investment and growth, in order to help these countries better manage their debt burden and end the cycle of heavy borrowing for current consumption.

Program and Management Challenges

There is a vast disparity between three groups of countries in the Europe and Eurasia region: the graduated reformers of the CEE Northern Tier, who have a sufficient level of institutional capacity and commitment to reform but still need supportive encouragement to pursue further reforms; most of the Southeast European and some Eurasian countries, who have undertaken basic reforms but have not yet moved systematically to the institutional and structural changes that are needed to continue the reform momentum and to stabilize economies; and those, particularly in the Balkans, who lag considerably behind, with only minimal economic and political liberalization, and where ethnic rivalries may strongly undermine prospects for sustainable reform.

To meet this challenge E&E is implementing a three-pronged programming approach, guided by the vision that, for a lasting benefit, the SEED and FSA programs must be complemented by an overarching effort to ensure that the United States’ investment in the region is sustained in the longer term. To this end, E&E seeks to establish sustainable partnerships between the United States and the countries of Europe and Eurasia, between these countries and other regions of the world, and among the countries themselves. Such partnerships are both an evolving way of doing business during the transition period and a vision for enduring relationships among countries, institutions, and peoples as assistance programs are phased down. USAID’s role is to help countries develop the sustained capacity to enter into fruitful economic, political and social relationships with others, at all levels of society, long after bilateral assistance has ended. This approach, for FY 2000 and beyond, includes: (1) legacy mechanisms that sustain partnerships and generate resources from the private sector for countries that have graduated from USAID assistance, but where new systems remain fragile; (2) strong country-specific programs that continue to meet the needs of those who are struggling with transition and to encourage those who have barely begun; and (3) regional programs, generally available to graduates on a cost-sharing basis, that complement country programs by disseminating best practices and contributing to stronger linkages with the world economy. Such regional programs will be particularly important in Southeast Europe.

CEE Northern Tier: Maintaining the Legacy through Sustainable Partnerships.

In the Northern-Tier countries (Slovenia, Slovakia, the Czech Republic, Hungary, Estonia, Latvia, Lithuania, and Poland), USAID has begun to implement several legacy and regional mechanisms that foster lasting and meaningful ties between the United States and CEE graduates, as well as between the countries themselves. The legacy mechanisms are endowments managed by private foundations. The Baltic-American Partnership Fund, established jointly by the U.S. Government and the Open Society Institute, provides support for NGOs in the three Baltic countries to involve citizens in political and economic decision-making. The Fund will complete its first cycle of grants in early 2000.The Polish-American Freedom Foundation began operations in late 1999 and will finance activities in support of private sector development. Regional, SEED-funded programs are other types of post-presence initiatives. One such is the Electricity Management Development Institute, which U.S. and CEE utility companies are supporting under the sponsorship of the U.S. Energy Association. The ECOLINKS program promotes regional environmental partnerships. This effort is helping to open Northern-Tier markets to U.S. environmental businesses while also addressing issues of environmental abuse. Barely six months into its first year, it has already facilitated business linkages and the formation of a joint partnership to test an innovative wastewater treatment system. The Partners for Financial Sustainability program is available on a case-by-case basis to bolster past economic reforms and help improve local institutional capacity to deal with external financial shocks.

Southeast Europe: Forging Regional Ties Based on Strong Foundations

The Kosovo crisis brought new resolve in Western Europe and the United States to accelerate Southeast Europe’s integration into the Euro-Atlantic mainstream. Leaders at the Sarajevo Summit on July 30, 1999 endorsed the Stability Pact for South Eastern Europe, an international body comprising the EU countries, the frontline states (Croatia, Bosnia, Albania, Macedonia, Bulgaria, Hungary, and Romania), Russia, Slovenia, the United States, the World Bank, the IMF, the European Bank for Reconstruction and Development (EBRD), and a variety of other international institutions including Organization for Security and Cooperation in Europe, the Organization for Economic Cooperation and Development (OSCE), and the Council of Europe. Initiated by the European Union with strong support from the United States, the Stability Pact serves as an international clearinghouse for countries working together to promote political and economic reform, sustainable development, and enhanced security in the region, with an emphasis on establishing the necessary conditions for increased trade and investment. A number of new SEED-financed regional activities will contribute to this pan-regional effort.

The IMF estimates that the Kosovo crisis resulted in a 2% drop in GDP in the economies of the six most affected neighboring countries, Albania, Bosnia-Herzegovina, Bulgaria, Croatia, Macedonia, and Romania. This was a severe blow to countries already suffering from the impact of economic sanctions on Serbia, the economic center of the region. While the rapid return of refugees to Kosovo was a welcome development, the strain of hosting hundreds of thousands of people severely taxed Albania and Macedonia. Perhaps most damaging, the crisis exacerbated the historic reluctance of the international business community to bring long term investment capital into the region. These events helped confirm growing concerns that the countries of this region need more time to complete the transition process. Economic and democratic systems are still weak, reforms are incomplete, and the capacity to meet citizens’ needs is both rudimentary and hampered by issues of ethnicity. Accordingly, bilateral programs will continue to be the backbone of USAID’s efforts. USAID will work with reformers to pursue systemic changes, spur sustainable and equitable economic growth, and build a supportive civil society.

Within the remnants of the Federal Republic of Yugoslavia (Serbia, Montenegro, and Kosovo), development challenges vary greatly and call for differing program approaches. The challenge in Kosovo is to establish a viable legal framework and spur economic growth. We are committed in particular to seeing the temporary United Nations Mission in Kosovo (UNMIK) replaced by a representative and capable local government. In Montenegro, the emphasis must be on strengthening economic independence and growth in a republic that serves as a democratic model, without pushing it into the pursuit of sovereign independence. In Serbia, the principal objective is to help the democratic opposition mount a credible and effective challenge to the present government.

In Bosnia, a combination of intransigent hard liners in the Republika Srpska and reluctant reformers in Sarajevo has slowed progress getting past the reconstruction phase to the establishment of true political pluralism and sustainable market systems. Ethnic aspirations and political cronyism still rule, by and large, and a precarious peace is maintained only thanks to UN forces and continued heavy donor investment. However, there are encouraging signs that the people of Bosnia-Herzegovina have tired of the political stand-off and increasingly support implementation of the reforms needed to recover economic growth. In Croatia, the elections of January 2000 and the presidential run-off election in February 2000 clearly illustrate that the electorate strongly favors political and economic reform. USAID and other donors are making plans for robust programs in democracy and economic growth to hasten Croatia’s recovery from the arrested development and economic mismanagement of the Tudjman era.

In Macedonia and Albania, the challenge is to reestablish transition momentum following recovery from the Kosovo refugee crisis and its attendant economic disruptions. For Romania and Bulgaria, the emphasis will be on staying the course with structural reform of the economy and development of the institutional and legal systems that underpin a market economy and a democratic society.

Eurasia: Staying the Course.

Progress on democratic transition and economic restructuring in Eurasia continues to be mixed, bearing witness to the difficulties of implementing the fundamental changes required in this region. The challenge is to maintain a steady course focused on advancing reform, tailoring assistance programs as needed to take advantage of opportunities to work with reformers at all levels. But support for reform among national leaders and the public is uneven. In FY 1999, Georgia stood out with its landmark introduction of qualifying examinations for the judiciary, free and independent parliamentary elections, and initiation of land titling, as well as its accession to World Trade Organization. Ukraine’s appointment of one of the most reform-minded leaders in Parliament as Prime Minister, following President Kuchma’s recent re-election, and prospects for a constructive majority coalition in Parliament, offer hope of renewed vigor for its reform program. Armenia held its fairest elections to-date, and made progress in moving toward a resolution of the Nagorno-Karabakh situation, but internal political turmoil continues to undermine public confidence in the political process. In Russia, GDP growth of 1.5% does not begin to recoup the losses due to the 1998 financial crisis, and the government still has not implemented the reform measures needed to take advantage of the potential for local business growth.

Faced with such mixed situations, USAID is increasingly emphasizing grass-roots efforts with non-governmental organizations, regional and local programs, and partnerships between local and U.S. organizations or among organizations within the region. Policy dialogue at the central government level remains critical, but, especially in the larger countries, reform programs dependent on central government action are a less prominent part of the portfolio since meaningful program results are far more likely to take place at the local level. To the extent possible, USAID will retain flexibility in programming to respond to new opportunities with central governments, if they arise. Greater attention to the social impacts of the transition will be reflected in expanded health programs and technical advice for countries to put their social benefits and services onto a sustainable financial footing. Anti-corruption efforts will receive greater attention. A major U.S. initiative begun in 2000 to reduce the risk of proliferation of technology and weapons of mass destruction will receive continued significant funding.

Staffing and Operating Expenses

Many of the lessons learned by the Bureau over the last ten years point to the need for greater resources, both programmatic and human, to achieve U.S. objectives in the region. Ultimately, the financial and human resources of the Bureau are limited. Program resources fluctuate in their ability to address increasing funding requirements, and U.S. direct-hire (USDH) levels are expected to decline. During the last few years, the E&E Bureau has launched a number of initiatives to achieve greater efficiencies in the use and management of these resources.

The Bureau has reorganized. Budget and program authorities have been devolved to the field to improve program effectiveness and to increase cooperation with local partners. To accommodate this shift, the Bureau has reduced USDH staff in Washington more rapidly than in the field. To take better advantage of economies of scale, the Bureau has established a Regional Support Center in Budapest to serve CEE countries, sub-regional missions in Kiev, Tbilisi and Almaty, and specialized technical support teams in Washington. The Bureau has also formed teams to address critical concerns such as combating corruption and coordinating local development activities. To reduce the acquisition and assistance workload, the Bureau has improved planning and scheduling of procurement actions and introduced the concept of leadership/associate grants and cooperative agreements. A Bureau-wide financial reporting database has been developed to manage activity pipelines effectively. This has enabled the Bureau to monitor and reprogram unliquidated funds to improve overall performance. Increasingly, contract and grant management has been devolved to the field and activity managers have been trained to improve their effectiveness. There is greater use of FAA Section 632(a) transfer agreements with other USG agencies, thereby eliminating USAID’s management of those activities more appropriately implemented by these agencies. The E&E Bureau is also refining and applying criteria for assessing progress towards the achievement of program objectives.

Other Donors.

Donor coordination is an increasingly important tool in the E&E region, used both to maximize the impact of USAID assistance and to catalyze greater resource flows from other donors and the international financial institutions (IFIs). USAID often finances the technical assistance needed to unlock major structural adjustment and sector lending by the World Bank.

Principal partners include the European Commission’s (EC’s) programs for technical assistance to transition countries in Europe (PHARE) and Eurasia (TACIS), the World Bank, EBRD, European bilateral donors, and Japan. Based on latest available information for official development assistance (1998), the United States stands out as the largest bilateral donor in Eurasia, followed by Japan and Germany. USAID also partners with the Asian Development Bank on activities in the Central Asian Republics. In Europe, the EC is far and away the largest donor, with a contribution about four times that of the United States which is the second largest bilateral donor after France. In 1999, European donors stepped up their assistance to Southeast Europe considerably, in the wake of the Kosovo crisis. To address concerns of regional stability, USAID has been actively engaged with the EC and the World Bank in planning a strong regional program in support of the Stability Pact for Southeast Europe. In Bosnia-Herzegovina, the international community—represented by bilateral donors, the IFIs, and other international organizations such as the United Nations, OSCE, and NATO--works closely together implementing the Dayton Peace Accords at a variety of levels. Regular meetings by members of the Peace Implementation Conference help establish priorities and implementation objectives.

FY 2001 Program

The FSA request level for Eurasia totals $830 million to fund continuing programs of USAID and other agencies supporting economic and democratic transition. It also provides funding for the Expanded Threat Reduction Initiative, started in FY 2000, aimed at reducing the risk of proliferation of weapons of mass destruction and regional tensions. This program addresses significant USG security concerns but inevitably reduces funding for USAID initiatives in countries which need substantial help in building the foundations for their democracies and markets. USAID’s share of FSA funding drops from 61% in FY 1999 to just under 54% in FY 2001.

The SEED Act request level for Central and Eastern Europe totals $610 million, with the bulk of funding focused on the Balkans. This request will enable the U.S. Government to continue substantial new peace and economic stabilization efforts in Kosovo and Montenegro; to maintain, though at a reduced level, commitments of the Dayton Peace Accords in Bosnia; to respond to new opportunities for democratic development in Croatia; and to encourage pro-democracy forces in Serbia. Macedonia, hard hit by the Kosovo crisis as well as by years of hardship due to the trade embargo on the Federal Republic of Yugoslavia, will receive increased support. Bulgaria, two years into a serious commitment to broad-based reform and also hard hit by trade disruptions due to bombing of bridges over the Danube River in Serbia, will see its funding levels maintained, as will Romania and Albania. At the same time, USAID will support new opportunities for regional programming in the context of the Stability Pact for Southeast Europe, along with other donors. No funding will be provided bilaterally to Northern-Tier countries. However, selected regional programs, and the few legacy mechanisms such as the Baltic-American Partnership Fund and the Partners for Financial Sustainability, will make funding and/or services available to Northern-Tier countries.

Under the Economic Restructuring and Growth goal, USAID proposes $142.7 million for SEED and $206.8 million under FSA to foster the emergence of competitive, market-oriented economies in which the majority of economic resources is privately owned and managed. Increasing emphasis will be placed on partnerships, assistance to small and medium enterprises, and sub-national initiatives. Under the Democracy and Governance goal, USAID proposes $112.5 million in SEED funds and $76.6 million under FSA to support the transition to transparent and accountable governance and the empowerment of citizens through democratic political processes and freedom of information. Under the Social Stabilization goal, USAID proposes $117.0 million in SEED funds and $78.4 million under FSA to respond to humanitarian crises and strengthen our capacity to respond to the human dimension of transition to market-oriented democracy. Funding for economic reconstruction and other activities in Bosnia comprises about 15% of the total FY 2001 SEED request, a dramatic indication that the program is phasing down and will move to a more conventional transition mode. In FY 1999, Bosnia funding accounted for 42% of SEED resources (or 33% if the SEED, Supplemental funding for FY 1999 is included). In Kosovo, about two-thirds of FY 2001 SEED resources will go to the State Department to support human rights, the Yugoslav War Crimes Tribunal, UNMIK, police training and other costs of civilian administration and security.

USAID proposes $237.8 million for SEED and $468.2 million under FSA under crosscutting and special initiatives. Examples of crosscutting efforts include training programs and activities with the Eurasia Foundation that channel small grants to grassroots organizations under both the economic restructuring and democracy rubrics. Expanded programs that relate to reducing the risks of proliferation of weapons of mass destruction also would be included under this rubric. In addition, funding under this category includes other USG agencies participating in technical cooperation programs through inter-agency transfers from USAID, such as the Departments of State, Justice, Energy, Treasury, Agriculture, and Commerce, Environmental Protection Agency, etc.

Other Accounts

ESF. USAID also proposes use of $34.6 million in Economic Support Funds (ESF) in the region in FY 2001, including $19.6 million for Ireland and $15.0 million for Cyprus.

Turkey. Turkey is not covered under either the SEED or FSA acts. Since 1975, USAID has implemented a population assistance program in Turkey that has been centrally managed by USAID’s Global Bureau in recent years. This program is in its final phase. The approved closeout plan provides for Development Assistance funding of $1.5 million in FY 2000 and $ 1.0 million in FY 2001. USAID investment in the program will have resulted in contraceptive self-reliance for operations managed by the Ministry of Health and the Social Security Institute, use of sustainable models for post-abortion family planning, and improved NGO advocacy skills. Turkey will have the capacity to be a strong partner in providing technical assistance to other countries in the region.

Through OFDA, USAID provided a total of $4.4 million in FY 1999 and plans to allocate $2.0 million in FY 2000 to respond to the earthquakes of August 19, 1999, and November 12, 1999. OFDA will also provide modest funding to the Federal Emergency Management Agency (FEMA) to help FEMA work with Turkish authorities on developing an emergency management capacity in Turkey.