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. During FY 2004, Freedom House took stock of its experience in the region, findings from its Nations in Transit research program, and consultations with regional partners to target its resources to strengthen the RNP network, increase the sustainability of cross-border networking and linkages, and refocus its program orientation to emphasize key political issues facing Southeastern Europe (SEE) in a Balkan Civic Agenda (BCA). Among the priorities of the BCA are fair democratic practices and procedures, particularly accountability of political actors and transparency of the parliamentary process, as well as transparency and anti-corruption practices and procedures to improve the structural environment to combat corruption through legislative and executive functions.

From 2003 to 2004, Freedom House awarded 10 regional project grants primarily targeted to advance the objectives of the BCA to produce policy analysis, conduct training on reform monitoring to strengthen institutional and interpersonal relationships among think tank leaders, and further to develop the policymaking elite in the region. Institutional strengthening grants were awarded to five key policy and civic action organizations in SEE to allow them to focus strategically, devote greater resources to enhance institutional capacity and sustainability, and engage in regional programming on election process, accountability, and transparency efforts. Freedom House also supported three regional exchanges, including the first CEE, SEE, and Eurasian regional gathering of the Community of Democracies NGO forum in Bucharest to share best practices and address the role of NGOs in promoting good governance and fighting corruption. The meeting resulted in the creation of a working group, which continues actively to address these issues in international forums.

Hungarian American Partnership Initiative (HAPI)

During FY 2004, the Hungarian-American Partnership Initiative (HAPI) continued to provide opportunities for other countries to learn from Hungary’s successful transition to a market economy and democratic society. Since it began to implement HAPI in 2000, the Foundation for Development of Democratic Rights (FDDR) has delivered 52 short-term training programs in Hungary to 600 participants from 14 countries throughout Central and Southeast Europe and Eurasia. Topics have spanned virtually all sectors, including local economic development, NGO advocacy and development, development of small and medium-sized enterprises (SMEs), anti-corruption, education of minorities, and telecenters.

FDDR also supported the Hungarian Government’s (GOH) nascent international development assistance program by conducting mapping missions to Bosnia and Herzegovina, Serbia and Montenegro, and Macedonia, the goal of which was to assess the specific needs of NGOs and to identify potential partners for projects to be funded through the Ministry of Foreign Affairs’ development assistance program, as required for Hungary’s accession to the European Union (EU). Representatives from the Hungarian Ministry of Foreign Affairs welcomed and participated in the missions. FDDR will dedicate its final training programs in early 2005 to sharing with NGOs in these three countries its experiences of successfully transitioning from USAID funding to EU and Hungarian funding.

Balkan Trust for Democracy

The Balkan Trust for Democracy (BTD), a $27 million grant-making initiative to support good governance in SEE, is a unique public-private partnership of the German Marshall Fund of the United States ($10 million), USAID (€10 million sinking endowment), and the Charles Stewart Mott Foundation ($5 million). A €500,000 contribution from the Royal Netherlands Embassy in Serbia and Montenegro was made in June 2004, and a pledge from the Greek Government further strengthens the public-private transatlantic partnerships.

Based in Belgrade, BTD supports the strengthening of democratic institutions, such as civic groups, indigenous NGOs, local and regional government, educational institutions, and media outlets, through two principal programs: Linking Citizens with Government and Regional Cooperation and Collaboration. BTD makes grants in Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Macedonia, Romania, Serbia and Montenegro, and Kosovo.

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

In 2004, BTD made 67 grants totaling $2 million, including a total of 42 in-country grants, 19 cross-border initiatives, and six regional networks involving all or most countries in the Balkan region. About 33 percent of the funded initiatives are to organizations based outside of the capital cities. 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, student, 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 is a four-year regional initiative implemented by Partners for Democratic Change (PDC) and its Centers in the Czech Republic, Hungary and Slovakia. The initiative 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 that counter discrimination. The program also seeks to produce models of integration through cooperative planning and national roundtables in the three countries, with possible replication in other countries with Roma populations and USAID Missions.

Since it began to implement in May 2003, PDC has provided a series of trainings in consensus-building and conflict management to about 200 Roma and non-Roma in eight target communities. PDC has also facilitated cooperative planning processes in these communities with stakeholders from all sectors to identify and advance community priorities. Over $33,000 in funding has supported 22 micro-grants in Chomutov and Pardubice, Czech Republic, and Kezmarok, Slovakia, to implement small-scale pilot programs to improve Roma access to quality education and health services and to improve Roma-majority cooperation on social programs. Although small in scope, the projects are reaching hundreds of Roma and non-Roma beneficiaries through integrated classroom and social activities, assistance with government agencies, and drug prevention programs. Initial results are promising, and stakeholders are preparing for larger-scale initiatives to be launched in 2005.

At the national level, four roundtable dialogues were held in the three participating countries to tackle critical issues impacting Roma in each country. The first roundtable in Slovakia led to a government commitment to increase funding for, and hiring of, field social workers, who are critical to Roma communities throughout the country. The roundtable on education in the Czech Republic facilitated local NGO efforts to increase hiring of Roma teaching assistants in local schools. A roundtable on media in Hungary led to the formation of an inter-sectoral working group to improve coverage of Roma issues in the media. A roundtable on health in Hungary resulted in agreements to improve cultural sensitivity training for health care practitioners and to increase preventative health programs in geographically isolated Roma communities. In addition, the first annual Roma Beneficiaries Meeting was held in Czech Republic to bring together 19 emerging Roma leaders and program managers from the three countries to share best practices and improve collaboration across the region.

The NGO Legal Reform Initiative

The International Center for Not-for-Profit Law (ICNL) continued to work on legal reform to promote the sustainability of the NGO sector in Eastern Europe. ICNL’s technical assistance and regional activities, including publications and workshops, have built on its in-country assistance and influenced the development, passage, and implementation of legislation in several countries. Since 1994, ICNL has directly contributed to the passage of 40 laws supporting NGO activity and the improvement or defeat of six restrictive laws in Albania, Armenia, Bosnia-Herzegovina, Bulgaria, Croatia, Estonia, Hungary, Kazakhstan, Kyrgyz Republic, Macedonia, Poland, Serbia and Montenegro, Tajikistan, Ukraine, and Uzbekistan. Best practices from around the region improve social assistance, strengthening of philanthropic measures through foundations, tax laws, and volunteerism.

To further support long-term development, ICNL is supporting a number of regional educational initiatives, including the introduction of NGO law into legal studies curricula and the creation of an electronic library on NGO law. ICNL has created a network of educators who are knowledgeable about civil society law. Currently 20 universities offer NGO law and an estimated 400 students annually receive education on NGO law in nine CEE and Eurasian countries. ICNL also maintains an electronic, web-based legal library that is a valued resource throughout the region. In addition, ICNL has produced a number of key publications, including two recent surveys of tax laws affecting NGOs in Eurasia and CEE.

As part of its sustainability strategy, ICNL continued to develop the capacity and institutional sustainability of its European-based regional affiliate, the European Center for Not-for-Profit Law, which serves as the center for the development of NGO-related law in SEE and eastwards, and as a catalyst for regional network and cross-border initiatives and a legacy that will continue to provide support to NGO legal reform throughout Europe after USG financial assistance ends.

Freedom House Nations in Transit

Under a grant from USAID, Freedom House publishes Nations in Transit, 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 provides detailed analysis and data on progress in democratization (including electoral process; civil society; independent media; governance; constitutional, legislative, and judicial frameworks; and corruption). The 2004 edition is the eighth and covers events from January 1 to December 31, 2003. This edition was the first to provide disaggregated scores for Serbia, Montenegro and Kosovo and a special narrative addendum for Kosovo. While the overall results reported in Nations in Transit are mixed, the findings show significant and continuing progress in the CEE countries since this publication began. Nations in Transit continues to be a valuable benchmarking resource for assessing progress in the democracy sphere in CEE countries.

Fiscal Decentralization Initiative

The Fiscal Decentralization Initiative (FDI), a multi-donor initiative implemented by Open Society Institute Budapest, has strengthened its impact on local government reform by increasing its activities within Southeastern Europe and, leveraging the lessons learned there, by expanding to the Caucuses and Central Asia. In FY 2004, regional FDI forums were organized in SEE around the specific topics of property taxes and reforming fiscal equalization. Policy awareness forums also took place in Georgia and Armenia. The first regional summer course on Intergovernmental Fiscal Relations and Local Financial Management was held with 26 participants from 18 countries throughout SEE, the Caucasus, and Central Asia. The initial class of the newly launched Masters in Public Policy program got under way, with USAID and OSI providing scholarships for five students focusing on fiscal decentralization.

Local Government Information Network (LOGIN)

LOGIN, an Internet-based information clearinghouse for local government, expanded its network to include Romania (in addition to Bulgaria, Hungary, Latvia, Lithuania, Macedonia, Poland, Russia and Ukraine). In FY 2004, the traffic on LOGIN anchor members’ websites increased 80 percent, exceeding expectations. In addition, during 2004 the content increased by over 25 percent to more than 6,100 full-text documents in nine languages. In the interest of further sustainability, LOGIN launched a brochure aimed at attracting corporate sponsorships in FY 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 and law enforcement, effective legal representation, and well-defined legal procedures that help ensure uniform, timely enforcement of laws. USAID-funded regional activities complement USAID’s bilateral rule-of-law activities by providing assistance to bolster the sustainability of legal reform organizations in the region. USAID’s regional rule-of-law activities achieved substantial results during FY 2004.

Three in-country institution-building advisors (IBAs), fielded by the American Bar Association's Central European and Eurasian 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 has moved toward greater indigenization by staffing the Regional Institutional Building Advisor (RIBA) Program in the field entirely by local hires. One of its recent, high-profile projects has been providing extensive start-up assistance to the Regional Secretariat Liaison Office of the Stability Pact Anti-Corruption Initiative, based in Sarajevo. In addition, the RIBA program has increased its assistance to NGO networks in the region, thereby multiplying its impact there.

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 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. Other activities that support these objectives include: support to regional television news reporting; support to regional investigative journalism; an annual media conference to discuss lessons learned, best practices, and hotspot issues, (e.g., media in repressive countries); and through a program of Media Law Reform, via SEED funding for initiatives under the umbrella of the Stability Pact for South Eastern Europe, where national working groups are supported in SEE that provide support for media law reform.

U.S. Department of Labor

In FY 2004, the U.S. Department of Labor (USDOL) completed its USAID-funded work in the SEED region, implementing exit and sustainability plans in two remaining countries, Bulgaria (the "Pledge" Program) and Macedonia (the "Prisma" Program). USDOL successfully transferred responsibility for the Pledge program to the World Bank, which will continue to fund and expand the local economic development component. Honoring its commitment to sustainability, USDOL’s implementing partner has posted country manuals, evaluation tools, public relations/advocacy training materials, and project-specific job creation results on a consolidated website to expand awareness of best practices achieved through the Integrated Community Adjustment Program, which operated between 1997–2004 in Bulgaria, Hungary, Macedonia, Poland and Romania.

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.

With USAID support, the Microfinance Center (MFC) in Warsaw, Poland, has become the premier provider organization in the region. The sixth Annual Conference of the Microfinance Institutions in Central and Eastern Europe and the Newly Independent States, held in Moscow in May 2003, demonstrated the Center’s capabilities and leadership skills. 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 Center’s work even more effective. A narrative of the conference, including the issues it dealt with, can be found on the MFC 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 (MUNEE)

This project addresses the critical issues of heat supply and energy efficiency in municipalities and housing (with an emphasis on vulnerable populations) in Eastern Europe and Eurasia. These issues are of critical importance to specific budgetary and balance-of-income payments problems of the E&E countries, and provide a way to mitigate the impacts of broader energy sector reforms. A network of local NGO energy efficiency centers, municipalities and municipal associations, and private companies has been created. The network seeks to develop effective approaches for increasing commercial financing and investment for municipal and household energy efficiency projects. It is designed to transfer successful examples from post-presence countries to countries in Southeast Europe and the former Soviet Union about how municipalities can cut heat and energy costs and devote increased resources instead to providing essential public services. The regional work is supplemented by detailed country-specific activities funded by USAID Missions.

In 2004, the Alliance helped draft new laws dealing with heat and energy efficiency in Armenia, Moldova and Lithuania. In Ukraine, MUNEE assistance helped the Lviv regional government prepare and implement an energy management policy among the region’s 1,500 schools. In Ukraine, MUNEE helped city officials prepare an analysis of how metering and energy efficiency can lower heat subsidy payments needed for low-income households. MUNEE has held regional conferences and workshops within individual countries for municipal leaders. These workshops have provided general energy management information; detailed training on business plan development; leak detection and repair strategies for city water managers; financing sources for energy efficiency projects; support for ESCOs; and residential energy improvements.

MUNEE has worked to develop and expand innovative methods for municipal financing (including leasing, municipal loan funds for households, ESCO contracts, vendor credits, and carbon trading), leading to financing projects in Latvia and Ukraine. The goal of this work was not just to develop energy efficiency upgrades but also to move the market, helping municipalities learn how to use innovative financial tools to improve their infrastructure. Examples include wastewater treatment in Ukraine and wood waste for district heating in Lithuania. MUNEE has developed municipal energy efficiency committees and mayors’ networks, prepared databases of city contacts, and established formal relationships with municipal associations. This "infrastructure" provides an education channel directed at key local officials, creates the means to recruit city leaders for workshops, and provides a vehicle for disseminating informational materials with ease to almost every city in a country.

Regional Energy Regulatory Network and Association

The Energy Regulators Regional Association (ERRA), legally established in Budapest in April 2001, by 14 Founding Members, now has 22 full member national energy regulatory agencies and four affiliate members. It is guided by a seven-member Presidium and Secretariat. ERRA’s objectives include improved energy regulation in member countries, increased cooperation, communication and exchange of information, access to U.S. and other practices, and promotion of training opportunities. ERRA’s work contributed to increased tariffs for over half of the member regulatory bodies last year and to the sub-regional regulatory cooperation needed for regional electricity market development. The ERRA members represent all E&E sub-regions. Azerbaijan and Serbia and Montenegro could also become members in the future.

ERRA has established itself as a recognized international leader in international energy regulatory matters. It has taken significant steps to establish a base of activities that support its objectives including: two active, productive technical committees on Tariffs and Licenses/Competition that foster exchange of information and experience including numerous technical papers and interaction with U.S. and West European regulators; ad hoc working groups; basic regulatory training; specialized workshops; and a collegial Presidium and excellent Secretariat. ERRA has grown to its present size as countries in the region have established new regulatory bodies and have recognized the value of learning from others in the region.

In FY 2004, ERRA continued to demonstrate responsiveness to its members needs. The ERRA Annual Meeting, combined with the its Energy Regulation and Investment Conference, was attended by over 200 from industry, the investment and banking community, and regulators in and outside the E&E region. The Monitoring/Performance Standards Working Group worked together on an area of increasing importance: data collection, monitoring and development of performance benchmarks. Similarly, the EU Accession Working Group, having contributed to the preparation of ERRA members for accession, continues to be a conduit for dissemination of EU practices and experience. ERRA held for the first time a meeting of the regulatory lawyers to present and compare legal issues and practices. U.S. regulatory lawyers and the Council of European Energy Regulators (CEER) participated. ERRA’s work has contributed to the members’ ability to put in place economic tariff arrangements. Over half of the members increased tariffs in the last year, with several moving to an incentive-based approach. The Tariff Committee Workshop on Cost of Service vs. Incentive Regulation fostered this. The website reflects ERRA’s objective of information sharing. In the last 10 months there have been over 60,000 hits and almost 150,000 downloads. Finally, the on-going professional relationships have clearly enabled the regulators in the region to work together on difficult issues such as the establishment of the South East Europe Regional Electricity Market.

Stability Pact for Southeastern Europe: Regional Electricity and Gas Markets Initiative

The purpose of this initiative is to create the Energy Community for Southeast Europe (ECSEE), integrated with the EU by 2007. Such an integrated system, which would allow electricity and gas imports/exports from anywhere in Europe, will increase trade, private investment, financial transparency, competition, efficiency, and reliability of energy, and thus promote better allocation of national economic resources. It will also contribute to reduced emissions and climate change by fostering more efficient energy generation, transmission, and consumption. The initiative had many achievements in 2004. A revised formal memorandum of understanding (MOU) was signed in Athens, in December 2003, by Ministers and Deputy Prime Ministers of nine countries and Kosovo, with sponsorship of the Stability Pact and the European Commission (EC), with Austria, Hungary, Italy, Moldova and Slovenia as observers, to establish regional electricity and gas markets integrated into the EU’s Internal Energy Market by 2007. Later in 2004, Slovenia joined as a full member. The EC obtained a Negotiating Directive from the European Council to pursue a formal Treaty that would make the SEE countries subject to EU Energy Directives and full members of the Internal Energy Market by 2007. This initiative will lead to expansion of the gas distribution networks in the SEE region, where access to gas is still limited or non-existent. It will also open natural gas markets to supplies from sources other than Russia, particularly to Caspian gas, through new pipelines being built for this purpose. The U.S. has a strong interest in furthering this SEE market for Caspian gas, and funds are being allocated in 2004/05 to address gas market development in Southeast Europe. A CBT (crossborder trade) facilitation mechanism has been developed by the Working Group of the Transmission System Operators and will go into effect after selected outstanding issues are resolved.

The Regional Generation Investment Study is progressing, and the World Bank is preparing an initial $500 million Horizontal Program Adjustment Loan to support priority regional projects. With USAID assistance, progress has been made on putting in place energy legislation and regulatory frameworks. An energy regulatory agency has been established in Montenegro, and an energy law was passed in Serbia; Kosovo passed three new laws for the energy sector; and State and entity-level regulatory agencies and a State-level Transmission System Operator were established in Bosnia. All signatories of the Athens MOU will now have energy regulatory agencies established by legislation. Revised laws have been passed in Bulgaria, and Macedonia is in the process of drafting a new law. USAID is working on a set of regional regulatory standards that all countries must meet, as well as assisting in national and regional market design, restructuring, and social impact analysis. Progress has been made in strengthening the transmission system and in transmission and teleinformation system planning and development. The U.S. and other donors working in Bosnia succeeded in achieving the reform conditions that led to the critical World Bank Power III loan.

Stability Pact for Southeastern Europe: Regional Energy Efficiency Initiative

This Stability Pact initiative has worked to promote a regional financing approach to energy efficiency in the Southeast Europe region, with a focus on leveraging commercial and international financial institution (IFI) financing for municipal projects (including heating systems). These projects include hospitals, schools, public buildings, housing, and improvements in the supply and use of heat; they will help reduce the significant operating expense burden of heat and energy costs on municipal budgets (typically 10 to 30 percent in this region).

In 2004, this initiative provided technical assistance in support of World Bank and European Bank for Reconstruction and Development (EBRD) loans testing models for private sector participation in district heating (Bulgaria), and loans for energy efficiency improvements in public facilities and to households (Macedonia and Serbia), for potential applicability throughout SEE. The initiative developed and piloted other innovative methods for municipal financing with applicability throughout the region, including bonds, loan funds for households, vendor credits, and carbon trading; prepared potential DCA projects to provide commercial financing models for the region (Bulgaria, potentially Croatia and Romania); prepared energy plans (at national and local levels) to examine cost-effective strategies for obtaining heat and energy services through traditional supply sources, alternative sources, and more efficient end-use; and helped develop national policies to promote energy efficiency (laws, strategies, codes, and standards) in Albania and Macedonia, applicable to other countries in the region. Under the RENEUER framework, the Alliance is working with the MUNEE partners to develop model programs that use energy efficiency as a tool to protect low-income consumers from rising energy prices. MUNEE analyzed the impact of rising energy costs on low-income population in Albania, Bulgaria, Macedonia, Romania, and Serbia, and initiated discussions with relevant government ministries.

Balkans Regional Infrastructure Program

The Regional Infrastructure Project (RIP) is a USAID technical assistance initiative under the Stability Pact for South East Europe. RIP facilitates infrastructure projects in the region, while improving regional capability for sustainable management in water, energy, and transportation services. Designed to leverage European and multilateral lending institutional resources, RIP’s key results in 2004 included final ratification by Bosnia, Croatia, Serbia, and Slovenia of a treaty creating the Sava River Basin Commission to manage navigation, flood control, and water quality, as well as approval by the International Finance Corporation (IFC) Board and Austria, Greece, Italy, the Netherlands, Norway, and Switzerland to finance a $10 million revolving fund (Balkans Infrastructure Development or BID Facility) to prepare public infrastructure projects in water, transport, and energy for private sector investment.

While many RIP activities were concluded at the end of FY 2003, a loan officer seconded to EBRD’s Zagreb office continued through summer 2004, and three legacy institutions are being supported during FY 2004/2005. The first is the BID Facility, a revolving fund to develop public infrastructure projects in water, transport, and energy for private sector investment, which will begin operating under IFC management in fall of 2004; a USAID grant of $1.5 million is to supply 15 percent of the capital, with the balance being supplied by the IFC and six European donors. The second is a Balkans Infrastructure Investment Guarantee (BIIG) Facility applying Development Credit Authority to support private sector infrastructure investment. The BIIG Fund design assumes the $3 million subsidy will come from 33 percent E&E regional funds, combined with 66 percent E&E Mission buy-ins. The third legacy mechanism is the Sava River Basin Commission, which has been allocated SEED regional funds in FY 2003 and FY 2004 and is also being supported by the Netherlands and the Global Environment Facility for managing navigation and flood control. Also during FY 2004, obligated resources in the EBRD Advisors Fund will be used to initiate an analysis of the Balkan nations’ enabling environment for private sector investment in infrastructure -- highlighting the status of laws and regulations, the quality of implementation, methods used to address the weaknesses, and articulating an agenda of needed reforms.

Partnership for Environmentally Sustainable Economies (ECOLINKS)

USAID's flagship ECOLINKS program actively fosters environmental technology transfer, market-based partnerships, and environmental best practices to address critical environmental problems in municipalities and industries in Europe and Eurasia. Since 1999, ECOLINKS offices in CEE countries have facilitated in excess of $82 million in environmental technology trade and leveraged additional investments of over $90 million in environmental infrastructure in the region. In FY 2004, a pivotal year for the program, ECOLINKS Technical Representatives facilitated more than $13 million in direct technology sales and services between U.S. environmental and energy firms and municipalities and firms in the SEED countries, primarily in the water infrastructure, waste management, and clean energy sectors.

Over the past five years, ECOLINKS offices located in U.S. Embassies in Bulgaria, Croatia, Czech Republic, Hungary, Poland, and Romania have collaborated with local industry and municipal and central government agencies to identify environmental infrastructure and technology needs and match them with U.S. and regional technology expertise and financing mechanisms to bring business partnerships to fruition. FY 2004 was a pivotal year for the program, as the ECOLINKS portfolio in EU-entrant countries (the Czech Republic, Hungary and Poland) was transferred to the U.S. Department of Commerce. Following this phase-out, ECOLINKS has narrowed its focus to the Bulgaria and Romania and Central Asia.

In FY 2004, a final tranche of ECOLINKS Quick Response Awards was disbursed to assist CEE firms in developing environmental partnerships with U.S. suppliers and experts. Through these awards, private sector delegations from Bulgaria, Czech Republic, Hungary, and Poland were able to attend major U.S. environmental partnering events in the renewable energy and water sectors and meet face-to-face in facilitated meetings with prospective project partners. Over the past five years, ECOLINKS has provided grants to develop environmental partnerships in other SEED countries including Bosnia and Herzegovina, Estonia, Latvia, Lithuania, Macedonia, and Serbia and Montenegro, and also to selected countries in Eurasia.

ECOLINKS also assists SEED countries in meeting the infrastructure requirements for EU accession by identifying project financing from other USG and EU sources, most notably the U.S. Trade and Development Agency (USTDA), the Polish EcoFund, EBRD, and the World Bank.

Global Trade and Technology Networks/Southeast Europe (GTN/SEE)

The Global Trade and 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 to 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

The Partners for Financial Stability Expanded (PFS-E) recognizes the tight linkage between sound well-functioning financial sectors and greater economic growth and prosperity, as well as reduced crime and corruption. The focus of this program, which includes all countries in the EE region, is on accelerating financial market integration in the region leading to greater trade and capital flows, as well as reduced financial crimes. The emphasis of PFS Expanded is on practical ways to harmonize financial market laws, policies, and practices in the region, based on international standards. The primary focus of PFS-E activities will be mortgage finance, financial crimes, anti-money laundering, SME finance, corporate governance (particularly as it relates to SME growth and development), risk management, municipal finance, pension reform, and bank supervision/restructuring. Through regional workshop and assessments, the establishment of regional working groups and networks, knowledge management and the promotion of regional private sector funds, PFS-E is designed to catalyze private and public financial sector actors and institutions in the EE region. The work will be designed to complement and increase the efficacy of the country-specific work in financial markets of the bilateral Missions. This new activity builds on two current regional activities: (1) the initial PFS, which has had a tremendous impact in promoting more efficient and sound financial markets in the Northern-Tier, allowing greater SME and household access to finance; and (2) the success last year of two regional activities under Competitive Financial Markets (corporate debt and mortgage finance). These activities would continue under the PFS-E umbrella.

In FY 2004, assessments were performed in several SEE countries to determine gaps and priorities in the financial sector that lend themselves to improvement through regional approaches, and to determine the interest among financial sector counterparts in participating in regional activities. An assessment of all the SEE countries will be completed in the first quarter of CY 2004, and a conference/workshop will be held to discuss the findings of the assessments and how to proceed with an SEE PFS program. The assessments to date have evoked much interest from local counterparts and institutions in such an approach, particularly using experts from the new EU members. The areas of highest interest so far have been in strengthening non-bank regulatory institutions, corporate governance as it relates to improved firm competitiveness, and ability to meet international standards, particularly as it relates to SMEs, anti-money laundering and financial crimes, and bank supervision and Basle II capital accords.

SEAF Trans-Balkan Equity Fund

The purpose of this initiative is to support the creation of a trans-Balkan small and medium-sized enterprise (SME) equity fund, which will provide equity and quasi-equity financing in combination with active business assistance and trade linkages to SMEs in the former Yugoslavia and neighboring Balkan states. The program now operates in Bulgaria, Croatia, and Romania. Small Enterprise Assistance Funds (SEAF), together with six other investors, has committed capital of $21.8 million.

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.

SEAF has continued its research on the developmental impact of SME investments in the countries of the region, provided technical assistance for SME investment clients, provided performance reporting, and calculated a net internal rate of return analysis for each investment. The value of investments in 2001-2003 appreciated by 21 percent, and valuation increases are expected to continue.

Stability Pact Anti-Corruption Initiative (SPAI): Regional Secretariat Liaison Office

As part of the USG contribution to the Stability Pact, the American Bar Association’s Central European and Eurasian Law Initiative (ABA/CEELI) provides technical and financial assistance to the Stability Pact Anti-Corruption Initiative’s Regional Secretariat Liaison Office (SPAI-RSLO). This office, located in Sarajevo, Bosnia and Herzegovina, serves as a concrete and visible demonstration of the commitment of the SPAI regional states (Albania, Bosnia-Herzegovina, Croatia, Macedonia, Moldova, Romania, Serbia and Montenegro) to the continuing, concerted, and coordinated fight against corruption in SEE. Within three months of the onset of the activity in FY 2004, the RSLO was established as a separate entity and was fully operational in Sarajevo, with the Government of Bosnia and Herzegovina contributing office space. In addition to serving as an information clearing house, RSLO has organized training programs for member country delegates around key issues related to anticorruption. Initial programs in FY 2004 included regional workshops on Conflict of Interest at Local Government, co-organized at the request of Open Society Institute, and the UN Convention on Anti-corruption, and held in conjunction with the United Nations Center in Vienna. RSLO has signed an MOU with the SEE Cooperation Process to play a substantial role in this forum’s fight against corruption. SPA-RSLO has launched a newsletter to keep all partners and interested parties informed.

Stability Pact: Cross-Border Cooperation and Reconciliation

USAID supports ethnic reconciliation and regional stability in the Western Balkans through the Cross-border Cooperation and Reconciliation (CBCR) project, implemented by Catholic Relief Services. The project advances interethnic reconciliation and local democracy by supporting cross-border activities determined jointly as priorities by communities straddling a border. In each of the initial four pilot sites linking eight communities in five countries, ethnic tensions and violence have severed the communication and cooperation that existed previously. The first four pilot pairs of communities are: 1) Srebrenica, BIH/Bajina Basta, Serbia; 2) Knin, Croatia/Drvar, BiH; 3) Gjilan/Gnjilane, Kosovo/Kumanovo, Macedonia; and 4) Ilok, Croatia/Backa Palanka, Serbia. Cross-sectoral, ethnically balanced crossborder committees and working groups have been formed at each of these sites, all of which have successfully organized initial activities. Those activities have included joint soccer tournaments, riverbank cleanup, a youth media camp, and cultural events. In virtually all of the cases, this was the first time since the war that there was participation in these activities from communities across the border. Catholic Relief Services (CRS) has facilitated the reconciliation process by providing training in conflict transformation skills for the people from the local NGOs, municipalities, businesses, and youth that plan and participate in the local activities.

The NESsT Venture Fund

The aim of the NESsT Venture Fund, implemented by Non-profit Enterprise and Self-sustainability Team, is to foster an innovative, alternative investment mechanism to support social enterprises in the Czech Republic, Hungary, and Slovakia. Borrowing principles from the private sector, NESsT has "invested" in a small portfolio of social enterprises, the final step in an increasingly narrow and intense, customized support process reaching hundreds of NGOs. By the end of FY 2004, NESsT had provided introductory-level training to over 300 nonprofits in CEE. It had supported over 60 social enterprises in organizational assessments and in development of pre-feasibility studies. It had supported 29 social enterprises in developing feasibility studies, and had provided venture planning grants to 17 social enterprises. Finally, atop this pyramid of increasing levels of support, NESsT has provided venture grants and extensive capacity building support to a later stage portfolio of seven social enterprises. In FY 2004 NESsT’s Business Advisory Network grew to include 39 top corporate professionals.

Strengthening the Youth Sector and on Joint History and Reconciliation

SEED funds supported the International Youth Foundation and its affiliate, the regional Balkan Children and Youth Foundation, in strengthening youth programs in SEE through national and regional grants and workshops. In FY 2004, 238 NGOs who serve youth participated in regional capacity-building training, and 25 grants, totaling $283,000, introduced 38,000 children and youth and 1,300 teachers and partners to activities or best practices for youth employment, health, civic and vocational education, and information technology. In FY 2004, the Center for Development and Reconciliation in SEE (CDRSEE) held three successful workshops developing two regional concepts for youth and reconciliation (a multi-ethnic Balkan café franchise concept and a positive image Balkan Caravan Fest concept). CDRSEE, also through the Joint History and Reconciliation Project, continued its multinational process to prepare the English version of modern teaching packs on four chapters of Balkan history. These teaching materials are guides for primary and secondary school levels and will be published in January.

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

Through the Baltic Sea Network of Excellence (NOE), USAID strengthened NGO efforts to prevent the spread of HIV/AIDS and fostered greater collaboration at the national and regional levels in Estonia, Latvia, Lithuania, and St. Petersburg and Kaliningrad, Russia. In FY 2004, six small grants were awarded to two governmental and four non-governmental organizations in the Baltic countries. In Estonia, Latvia and Lithuania, grants were provided to local groups to facilitate information sharing with peer organizations working on HIV/AIDS in the Baltic Sea region. The groups used the grants to redesign their websites to provide up-to-date HIV/AIDS information and epidemiological and programmatic information specific to their countries, placing special attention on issues related to people living with HIV/AIDS and most at-risk populations. In addition, the Lithuanian AIDS Center, one of the grant recipients, hosted a regional technical meeting to discuss improvements for information exchange via the Internet and publications. Support also continued to two NGOs in St. Petersburg and a governmental body in Kaliningrad to provide preventive and care services to highly vulnerable groups in both oblasts. The three groups in St. Petersburg and Kaliningrad also received funds to improve their websites and facilitate information exchange. USAID funding for this program ended on September 30, 2004. Since then, the individuals and NGOs involved have continued their work and have committed to maintain the network in the future without USAID support.

Europe Regional HIV/AIDS Initiative: Southeastern Europe RiskNet

RiskNet is working to reduce HIV/AIDS and Sexually Transmitted Infections (STI) among the most at-risk populations in Bosnia, Bulgaria, Croatia, Macedonia, and Romania. RiskNet is improving the reach and effectiveness of services to these groups by building the capacity of existing NGOs that already serve them. During FY 2004, the network expanded from six to 10 active organizations, increasing the number of new clients served in the network by nearly 160 percent and building sustainable local capacity. Targeting "gatekeepers" extends reach; people who have influence over and access to hard-to-reach segments of the at-risk population, with behavior change programming. This past year, more than 50 gatekeepers have been used to facilitate contact with more than 5,000 beneficiaries each month.

RiskNet is taking the lead in introducing innovative and new evidence-based models for behavior change programming. For example, RiskNet recently launched the region’s first quantitative research study about transitions in drug use. The results of this assessment will help RiskNet design an intervention to prevent or delay the transition to injecting drugs. In addition, RiskNet is piloting a new intervention targeting young Roma males to provide education about sexual and reproductive health. This intervention will have been rolled out to all RiskNet countries by the end of FY 2005. The 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. The effect is reinforcement of HIV/AIDS prevention efforts across borders and throughout the region.

Advances in Control of Multi-Drug-Resistant Tuberculosis (MDR-TB) in the Baltics

On November 22, 2004, the World Health Organization (WHO) formalized its recognition of the USAID-supported Latvian Center of Excellence for the Treatment and Management of MDR-TB as a WHO Collaborating Center. MDR-TB poses a severe national, regional, and global threat because it is both very difficult and extremely expensive to treat. The Center is the result of a joint effort by USAID, the Department of State, the U.S. Centers for Disease Control (CDC), and the Latvia National TB Program, dating back to September 1999. At the time, the alarming rate of MDR-TB in Latvia (an astonishing 14.4 percent of new TB cases—the highest proportion in the 35 countries surveyed) prompted USAID to supply more than $700,000 between 1999 and 2004 for this important work. Since then, the Center has grown into a regionally and internationally important training and consultation facility, with expertise in MDR-TB diagnosis and treatment, TB surveillance systems, and infection control strategies. It houses the National TB Control Program, the National TB Reference Laboratory, other diagnostic and treatment facilities, and patient wards. The Center has made and continues to make an important contribution to the containment and reduction of the MDR-TB problem in Latvia, where the proportion of MDR-TB among new patients has decreased to about 8 percent in 2004. In addition, doctors, nurses, TB program managers, social workers, laboratory staff, health workers, and engineers from Belarus, Egypt, Estonia, Kazakhstan, Kyrgyzstan, Lithuania, Moldova, Nepal, the Philippines, Romania, Russia, Ukraine, and Uzbekistan, have been trained at the Center. It was profiled in the April 2004 issue of Science magazine.

Recognizing the need to build capacity internally to make the Center’s work sustainable, USAID has also supported technical assistance through the American International Health Alliance, since 2002, to establish long-term financial stability for the Center, including a management training program, development of a business plan, and an upgrade of its existing training courses. Its recognition as a WHO Collaborating Center is another positive step in its progress toward a sustainable, high-quality MDR-TB training facility, providing much-needed services to medical professionals worldwide.

Strategic Technical Assistance for Results with Training (START) Participant Training Program

In FY 2004, the E&E Bureau START Regional Participant Training Program (PTP) trained 3,800 participants from the government, non-government, and private sectors from Albania, Bosnia, Bulgaria, Croatia, Kosovo, and Macedonia. Of these, 1,710 were women (45 percent). There were a total of 276 training events carried out; nearly half of the training events took place in-country (112), with the remainder in the U.S. or in third countries. This year has also seen the implementation and roll out of the "Human Institutional Capacity Development" process, along with long-term in-country training activities, involving a series of interventions-workshops, follow-up, and other activities.

This is an exciting time because of the past and on-going achievements of this program. Small grants under the Participant Training Program (PTP) were offered in four countries, with 52 grants awarded and a total of $295,083 disbursed. The training and support of local organizations to become training providers continued, through the Third-Country Training program. Across the region, training to support the development of local associations continued. Twelve participants from Bulgaria representing the Board of Directors of the National Association of Municipalities of the Republic of Bulgaria were sent to the U.S. for training. These participants were introduced to various systems related to local governance and exposed to the management of a local government association within the U.S. and the major local government association with a strong board of directors in a European country. This program was unique because it allowed the participants from Bulgaria to see the differences between two local government associations simultaneously. In September 2004, 11 participants, including judges, attorneys, and other reform-minded individuals from Bosnia-Herzegovina, attended a training event in the Republic of Ireland. During the event the participants were introduced to Commercial Dispute Resolution (CDR)/mediation mechanisms. In addition, follow-on activities are extremely important to each training program. For example, this year 110 participants from 70 municipalities and 40 environmental NGO’s in BiH completed five workshops in Environmental Impact Assessment. These types of interventions allow the participants to build on previous training.

Third-country training has expanded beyond Central Europe. Recent programs have been held in South Africa, Latin America, and Western Europe. Cross-border training programs and third-country training (TCT) continued as a major catalyst for regional cooperation. Italy hosted a two-week training event; the event was conducted in three cities for an Albanian group, which was represented by municipal and regional social service officials, as well as representatives from non-profit organizations who are working to fight the trafficking of children. Since their return, they have established an effective system of coordination among social services, police, and non-profits to protect children at risk. The Director of social services in the region of Elbasan provides the following praise, "We never worked together before, and this coordination that is so effective in protecting children is a direct result of the training USAID provided us in Italy." In April, the E&E Bureau held a workshop in Dubrovnik, Croatia, during which it introduced the "Human Institutional Capacity Development" Model and celebrated 10 years of successful participant training.