22 July 2009

East European Democracy Initiative Marks 20th Anniversary

SEED program now focusing on six nations in the Balkans

Employees examine designs of Serbian knitwear maker Ivkovic Trikotaza, who was assisted by USAID in bringing his company international.

By Howard Cincotta
Special Correspondent

Washington — Europe and the United States, along with much of the rest of the world, were caught up in a rare state of euphoria after the fall of the Berlin Wall in November 1989, a now-historic moment that marks the symbolic end of the Cold War.

But even as the nations of Central and Eastern Europe celebrated restoration of their national independence and the end of communist rule, they faced a stark question: Now what?

That question grew even more pressing two years later with the dissolution of the Soviet Union, which resulted in formation of 27 separate countries with a total population of more than 400 million people.

CHALLENGE AND RESPONSE

From the vantage point of 2009, it is easy to overlook the monumental challenges facing Eastern Europe 20 years ago.

National economies were bankrupt, civil society fragile or nonexistent and social services on the verge of collapse. There was nothing ordained or inevitable about a democratic future for the region.

“Disappointment and disillusionment could be felt from the rusty shipyards of Gdansk in Poland to the frequently darkened streets of Timisoara in Romania,” states a 1990 New York Times report. “All through the region, newly liberated people face recession, unemployment, and insecurity.”

The United States responded with two landmark pieces of legislation: the Support for East European Democracy (SEED) Act of 1989 and the Freedom Support Act (FSA) of 1992 for Russia and the newly independent states of the former Soviet Union.

“SEED is notable for the flexibility it gave the U.S. government to adapt to changing conditions,” said Daniel Rosenblum, State Department coordinator of U.S. assistance to Europe and Eurasia, in an America.gov interview.

“It began with just Poland and Hungary, then quickly expanded to cover Czechoslovakia, Bulgaria, Romania, and other countries that experienced anti-communist ‘revolutions,’” he said. “Later on, it was able to incorporate all the countries that emerged out of the conflicts that tore apart Yugoslavia.”

SEED'S FIRST DECADE

SEED has funded or supported hundreds of programs and partnerships designed to assist in the difficult transition to political and economic freedom.

Democracy-building initiatives under SEED have included support for free elections, nongovernmental organizations and civil society, independent media, transparent legal systems, anti-corruption measures, and local governance.

Economic programs have supported privatization, fiscal and tax reform, environmental protection, and the development of banking and financial services, small enterprises, and energy.

In the decade from 1989 to 1999, Eastern Europe underwent a remarkable political and economic transformation, although not without setbacks, notably ethnic conflict in the Balkans.

The SEED participants that were grouped in the so-called Northern Tier (Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia, and Slovenia) “generated solid economic growth and achieved significant democratic freedoms,” according to a 1999 report by the U.S. Agency for International Development (USAID).

“Progress in the rest of the region is mixed," the USAID report said. “While promising changes have occurred, reform is far from complete. Key economic and political institutions are still being developed and corruption is a widespread problem.”

Still, it became clear to all that there would be no going back. State Department officer John Boris, whose work with SEED began in the early 1990s, commented, “Our mantra was to make the change irreversible — to help ensure success so that people wouldn't lose faith during the difficult transition period.”

GRADUATED SUCCESS

The SEED program, with total expenditures of $8.8 billion from 1990 to 2009, has continued to provide critical assistance toward achieving the vision of Europe as “whole, free, and at peace.” At the same time, program funding has steadily declined from its peak years — a paradoxical, but dramatic, measure of its success.

“One of SEED's strengths was to set a clear objective that marked success — integration into the Euro-Atlantic community,” said Rosenblum.

Eleven Central and Eastern European nations now have “graduated” from the SEED program; 10 have joined both the European Community and NATO. One, Croatia, is a NATO member but has not yet joined the EU.

These countries, in turn, have become foreign aid donors, contributing to a common EU development-aid fund, and beginning to design their own bilateral programs to assist other nations seeking democratic and free-market reforms.

“SEED has also been remarkably innovative.  It has created new models for economic development,” said Rosenblum, pointing to the creation of U.S. government-backed “enterprise funds” that have provided hundreds of millions of dollars in venture capital to jump-start the region’s nascent private sector.

The 10 enterprise funds have generated $2.3 billion in investments into local businesses and $4.8 billion in new capital and loans, according to a recent USAID report. Most have been privatized and no longer receive any direct SEED funding.

BALKAN EFFORTS

Today, SEED is focusing on six nations — Albania, Bosnia-Herzegovina, Kosovo, Macedonia, Montenegro, and Serbia — with programs and partnerships in the broad areas of peace and security, democratic governance, social services and economic growth.

Albania, for example, has begun operating a joint investigative unit, with a U.S. resident legal adviser, to combat corruption, and already has convicted several high-level officials. SEED has also provided loans and business training for more than 13,000 small businesses.

In Bosnia-Herzegovina, the United States is working to make the courts and legal system more accountable and transparent through programs like the Model Court Initiative in Srebrenica, site of the worst European genocide since World War II.

SEED is assisting Kosovo with the adoption of a new constitution and helping upgrade the Kosovo Electric Corporation through management efficiencies as well as plans for a new 2,000-megawatt electricity plant.

In Macedonia, the United States is promoting a vocal and active civil society in such areas as consumer rights, agricultural policies, combating domestic violence, education, and monitoring of government budgets.

SEED has contributed to increases in participation in national and local elections in Serbia and has strongly supported programs to protect witnesses in cases before the Serbian courts.

“Despite many successes, it's not time for SEED to end,” Rosenblum said. “There is still much more work to do to stabilize the Balkans. But SEED’s ultimate goal remains to go out of business.”

For more information, see FY 2008 SEED Act Implementation Report on the State Department Web site. Also see USAID – Europe and Eurasia and USAID Europe and Eurasia:  An Overview, both on the USAID Web site.