A Decade 

of Change

Profiles of USAID Assistance to Europe and Eurasia
The historic transformation of

the countries of the former

Soviet bloc into democratic, independent states with market economies is

now only 10 years old. For some countries, the process has resulted in great

progress and high hopes. For others,

the result of this change is less clear.

Still, a decade of change is a worthy period to contemplate, so that the next

decade will build on the successes and

lessons of the first.

In 1989, and again in 1992, the leaders

and people of Central and Eastern

Europe and Eurasia called out to the

Western world for help—to make the 

transition to market-oriented democracies.

The United States was at the forefront

in responding to that appeal. Many

parts of the U.S. government and

American populace eagerly joined the

effort to show these new independent

states how to become market democracies.

This publication focuses on the programs

and partnerships of the United States

Agency for International Development

(USAID), the agency that delivers U.S.

economic and humanitarian assistance

around the world. 

Central and Eastern Europe and the

republics of the former Soviet Union

were a new frontier for USAID in 1989.

As a result, USAID had to try new

approaches, move quickly, and constantly

adjust to changing circumstances.

History will tell how USAID ultimately

made a difference and whether its role

in the sweeping transformation that

took place during the last decade had 

a lasting impact. This presentation looks

at these issues after only a decade of

change, from the perspective of the people

who benefited from USAID programs. 

Their stories, and USAID’s story, 

cannot be captured fully in these few

pages. However, we hope that these

accounts of real people overcoming

tremendous obstacles with the help 

of USAID will provide readers with 

a deeper understanding of the progress

that has been achieved and the challenges

that remain. We want the American

people to recognize the economic,

political and social issues facing the

region. We want American taxpayers

to know that, on their behalf, USAID

has been active in this part of the

world—helping people, providing 

know-how, supporting change, and,

most important, sustaining the hope

that, someday, we will all be partners in a shared future of freedom

and promise.

Donald L. Pressley

Assistant Administrator, USAID

Bureau for Europe and Eurasia

Preface

USAID
After the Wall, 

Facing the Challenge of Change. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Towards a 

Market Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

From Dictatorship 

to Democracy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Helping 

People in Need . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

The Challenges 

of the Next Decade.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

Table of Contents

AP/Wide World Photos

Young people celebrate on top of the Berlin Wall in November, 1989.
A Decade of Change After the Wall, Facing the Challenge of Change 1

To people who grew up during the Cold

War, the events that took place in Central

and Eastern Europe and Eurasia from

1989 to 1991 still seem hard to believe. In

less than two years, the once-powerful 

Soviet bloc collapsed. The satellite countries of Europe, which had lived under

Soviet-backed dictatorships for some 45

years, declared independence. They were

followed by the collapse of the 70-yearold Soviet Union itself, which gave rise to

yet another diverse group of independent

nations, some of which had not ruled

themselves for hundreds of years.

The first reaction of the people and

around the world was euphoria, 

symbolized best by the young people 

who danced in front of the Brandenburg

Gate and on top of the Berlin Wall the

night of November 9, 1989. And it was 

no wonder.

For almost half a century, most of the

people of Central and Eastern Europe

and Eurasia had been denied the 

freedoms the people in the West take 

for granted. They were isolated from 

the economies of the West, and their

rulers made every effort to cut off ties to

Western ideas and culture. The people

living in the Soviet Union had been 

shut off from the West even longer, and

government control of almost every

aspect of their lives was more complete.

As controls were lifted and isolation

ended, however, the euphoria began to

change—first to concern, and then to a

mixture of hope and fear. A hated 

authoritarian system was gone, but what

would replace it? From one end of the

former Soviet bloc to the other, nation

after nation faced serious challenges to its 

economy, capacity to govern, and ability

to meet the social needs of its people.

After the Wall, 

Facing the Challenge 

of Change

Gunter Schabowski, the East Berlin Communist leader and Party spokesman . . .

pulled his glasses and a document from an inside pocket and began to read:

“Private travel . . . can be applied for without the prerequisite travel permission . . . 

the permit will be issued promptly.” 

By now everyone in the room was leaning forward or examining translation devices

to be sure they had not been invaded by an alien force. Reporters began to look to

each other for affirmation that they were hearing the same words. ‘’Does this

include West Berlin?’’ ‘’Yes, yes . . . permanent exit can take place through all border

crossings of the G.D.R., to the Federal Republic of Germany or West Berlin.” The wall

was open . . . . By midnight, East Germans were pouring through border checkpoints. 

—Tom Brokaw, Anchor and Managing Editor of NBC Nightly News
A Decade of Change After the Wall, Facing the Challenge of Change 2

MOLDOVA

GEORGIA

AZERBAIJAN ARMENIA

UZBEKISTAN

KYRGYZSTAN

KAZAKHSTAN

TAJIKISTAN

TURKMENISTAN

ESTONIA

LATVIA

LITHUANIA

POLAND BELARUS

UKRAINE

RUSSIA

CZECH REPUBLIC

SLOVAKIA

HUNGARY

SLOVENIA

BOSNIA

CROATIA

ROMANIA

BULGARIA

ALBANIA

MACEDONIA

KALININGRAD

(Russia)

Northern Tier Europe

Southern Tier Europe

Eurasia

Geographical Subregions

MOLDOVA

YUGOSLAVIA

FED. REP. OF

2

Transition Countries 

in Europe and Eurasia
A Decade of Change After the Wall, Facing the Challenge of Change

Economies in Shambles

Even before the final collapse of the Soviet

system, the economies of the region were

reeling under the effects of decades of

centralized control and mismanagement.

Bloated bureaucracies and huge subsidies,

which were used to keep the command

economies afloat, had driven most of the

region close to bankruptcy. The end of

Communism pushed country after 

country over the edge.

The countries of Central and Eastern

Europe and Eurasia were not prepared 

to build market economies and compete

in the international economic system. 

For decades, almost all the factories,

banks, utilities, natural resources and

other productive assets in the region were

owned and operated by the state. Private

business was either nonexistent or illegal.

Few managers, government officials,

entrepreneurs or private citizens knew

how to organize and operate a 

free-market economy. And, thanks 

to years of indifference to the 

environment, the region’s air, soil 

and water were severely polluted. 

Democratic Futures at Risk 

To keep themselves in power, the 

authoritarian rulers of the region had spent

decadesstamping out all traces of civil

society. There were few functioning 

democratic institutions or processes, at

either the national or local level.

Judiciaries were controlled by the 

government. Parliaments acted as rubber

stamps for the Executive. Governments

routinely violated civil and human rights.

In fact, most people of the region had

lived a lifetime without basic democratic 

freedoms—independent political parties

and nongovernmental organizations, free

elections, freedom of religion, free speech

and the right to challenge government

policies. As a result, most of the countries

of the region lacked the most basic building blocks needed to create democratic

rule. At the same time, the new governments were facing economic and social

problems that would have challenged

even the most well-established democracies.

A Fraying Social Safety Net 

By 1989, health, education and social protection systems in the region were largely

bankrupt. They continued to deteriorate

during the 1990s as the struggling new

governments, strapped for resources, cut

spending on social benefits. Unemployment

and poverty increased in much of the region,

with social services and benefits unable to

keep pace. In many countries, life expectancy

fell, while infant and child mortality

increased. Health problems such as 

tuberculosis and HIV/AIDS grew rapidly.

3

The Challenges

“However profound and indelible

the changes that have swept their

nation and the rest of Eastern

Europe, theirs was a disappointment

and disillusionment that could be

felt to varying degrees from the rusty

shipyards of Gdansk in Poland to the

frequently darkened streets of

Timisoara in Romania. All through

the region, newly liberated people

face recession, unemployment and

insecurity. Obsolete industries crumble on exposure to free markets,

energy shortages loom with the

shrinking of Soviet supplies and the

crisis in the Persian Gulf, and

Western investments are slow in

coming.”

—New York Times Report,

Fall 1990

Building in ruins at beginning of decade.

World Bank
A Decade of Change After the Wall, Facing the Challenge of Change 4

USAID: Facing the Challenge

The U.S. Stake 

As the people of Central and Eastern

Europe and Eurasia struggled to 

overcome the legacy of Soviet rule, it

quickly became clear that the United

States had compelling interests in 

promoting economic stability and 

peaceful democratic change. The region’s

27 countries, which cover one-sixth of the

globe and are home to 400 million 

people, could play a critical role in the

global economy. The region’s nuclear and

other weapons of mass destruction were a

major concern. Finally, the United States

wanted to respond to the humanitarian

needs of the millions of people who

became victims of civil conflicts and 

natural disasters.

A strategy for U.S. assistance to the

region crystallized. Helping these 

countries develop private enterprises 

and enter global markets would expand

opportunities for U.S. trade and investment. Encouraging the development of

stable democracies would underline the

historic U.S. commitment to democracy

and human rights, and promote U.S.

national security by decreasing the 

likelihood of war and diversion of nuclear

weapons. Moreover, developing 

economic and political alliances with the

new governments and their people would

make it easier to address global challenges

such as environmental pollution and the

spread of infectious diseases. 

A Historic Opportunity,

a Dramatic Response

Seizing a historic opportunity to support

economic freedom and energize democratic change, the U.S. Congress passed

two pieces of legislation to authorize

funding for innovative programs: the

Support for East European Democracy

(SEED) Act in 1989 and the Freedom 

0

500

1000

1500

2000

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

USAID Funding to Europe and Eurasia

USAID funding peaked in 1994, then leveled off during the second half of the decade.

Millions of U.S. Dollars

$4

$93

$310

$549

$742

$1,769

$1,060

$866 $872

$1,043

$945

00

USAID Funding to Europe and Eurasia

USAID funding peaked in 1994, then leveled off during the second half of the decade. Carl Mabbs-Zeno, USAID

Private automobiles were introduced to Albania only in 1991.

Source: USAID financial information system
for Russia and Emerging Eurasian

Democracies and Open Markets 

(FREEDOM) Support Act in 1992. 

The U.S. government responded with the

most far-reaching agenda for change in

Europe since the Marshall Plan. Between

1989 and 1999, the United States funded

economic assistance programs to Central

and Eastern Europe and Eurasia totaling

$14 billion. USAID managed 60 percent

of this total. Drawing on years of experience, but ready to innovate, USAID

moved quickly to assist the region with its

historic transformation. USAID initiatives

in the economic, democracy, and social

sectors complemented one another and

promoted national policy change while

strengthening local grassroots organizations and businesses. The overarching

goal was to create lasting change so that

the countries of the region could move

beyond U.S. assistance, stand on their

own, and become partners in the 

international arena.

Linkages for Change 

USAID has engaged many U.S. grantees

and contractors, as well as other U.S. 

government agencies, to implement 

programs in the region. USAID has

helped nongovernmental organizations

(NGOs) across the United States link

with counterparts in Central and Eastern

Europe and Eurasia to establish the broad

range of grassroots organizations that are

the basic building blocks of democracy.

USAID cooperated closely with other

parts of the U.S. government, including

the Departments of State, Commerce,

Energy, Agriculture, Treasury, Labor and

Justice; the Export-Import Bank; the

Overseas Private Investment Corporation

and the Environmental Protection

Agency. In addition, USAID has 

collaborated with international donors

and multilateral institutions, such as the

European Commission, the World Bank,

the European Bank for Reconstruction 

and Development and the International

Monetary Fund, as well as public and 

private donors from Europe and Japan.

These wide-ranging relationships have

helped leverage additional assistance

funds. In 1997, U.S. assistance made up

roughly 13 percent of total donor aid to

the region. 

Telling USAID's Story 

This brief publication cannot describe 

the thousands of activities USAID supported over the last decade. Instead, the

pages that follow tell the human stories 

of USAID’s impact. The individuals and

organizations vary, but the themes are

similar: USAID programs have been a

potent catalyst for change, helping 

dedicated men and women contribute 

to a historic transformation. 

While these pages show that a great deal

remains to be done, almost every country

moved forward in some areas during the

1990s. And important lessons were

learned throughout the region. With

those lessons firmly in mind, USAID 

will continue to adapt its support for the

nations of Central and Eastern Europe

and Eurasia as they progress toward 

freedom and economic prosperity.

A Decade of Change After the Wall, Facing the Challenge of Change 5

Social Sectors

12%

Humanitarian

Assistance

18%

Democracy and

Governance

11%

Economic

Restructuring

59%

USAID Funding to Europe and Eurasia by Sector

Source: USAID financial information system

USAID Funding to Europe and Eurasia by Sector

“The interesting thing about USAID assistance to the

Ministry of Industry and Trade is that the experts didn’t

just walk in and start giving advice. We created close 

working teams. . . . The effect was synergistic and very

productive.”

—Jaroslav Borak, Former Director, 

Ministry of Industry and Trade, the Czech Republic

Source: USAID financial information system
A Decade of Change Towards a Market Economy

Towards 

a Market Economy

Opposite Page: Economies on the move in Central Europe.

From the reviewing stand in Moscow’s

Red Square, visitors can now gaze

across the cobblestones, where Soviet

tanks and missiles once rumbled by

during the Cold War, and see a new

row of privately-owned shops. The

once-sleepy downtown of Vilnius,

Lithuania, is bustling with commercial

activity. In Sofia, Bulgaria, young

stockbrokers are making trades on the

new stock exchange, where listings

went from one company to 31 in its

first year. 

From Poland and Slovenia in the

west, to Kazakhstan and Russian

Siberia in the east, the economic

changes in Central and Eastern

Europe and Eurasia during the

1990s were profound and, in some

cases, astonishing. In 1989, the 

state controlled almost every aspect 

of economic activity—bureaucrats 

set prices, established production 

quotas for factories and farms, 

decided which companies got credit

and how much, and determined

wages and working conditions. 

Governments owned not only utilities

and public transportation, but almost 

every other economic enterprise as well.

Private businesses were banned or

severely limited. The region was

filled with factories employing 

thousands of workers they didn't

need, to produce shoddy goods that 

no one wanted. For years, the whole

system was propped up by subsidies

and noncommercial trading 

relationships and sustained by wasteful

use of energy that polluted the land,

air and water.

That system crumbled when the Berlin

Wall fell and the Soviet Union imploded.

Today, the countries of the region are

moving—some quickly, and some far

too slowly—toward open, market-driven

economies. Prices have been freed.

State-owned enterprises have been

sold to private owners. New economic

institutions are leading to improved

economic policies and management. 

A commercial law framework is being

put in place and enforced. Sound banking

systems and practices are beginning to

emerge. Commercial lending to productive private enterprises is growing.

Governments are encouraging small

and medium enterprises by reducing

red tape and improving their tax policies.

In the 1990s, USAID supported and

accelerated these dramatic changes

through the transfer of expertise, best

practices and experience. In so doing,

USAID built lasting partnerships

with the men and women of the

region who took the risks and did the

hard work needed to transform their

countries from old to new economies. 

USAID

Programs

■ Privatization

■ Fiscal Policy

Reform

■ Financial

Sector Reform

■ New Enterprises

■ Energy &

Environment

1
A Decade of Change Towards a Market Economy

‘The land belongs to me’

In the former Soviet Union, 

agriculture was dominated by huge

collective farms, where farmers

worked as employees of the state.

USAID helped Moldova's government break up these collectives,

transforming them into smaller

farms owned by the people who

once labored on the massive, 

state-owned farms. Eighty-nine

percent of the former collective

farms were broken up, and today,

730,000 Moldovan farmers are the

proud owners of two million 

individual land parcels. The success

of this program was replicated by

USAID in Georgia, where all the 

collective farms are now gone.

USAID followed up by helping to

register some one million agriculturFOUNDATIONS FOR A NEW SYSTEM

Creating a private sector in a former command economy starts with transferring state-owned enterprises into private

hands and encouraging the growth of new businesses. For the private sector to succeed, however, a series of changes are

required. Laws must be clearly written and fairly enforced by a competent judiciary. Burdensome regulations must be eliminated and competition fostered. Fiscal systems must be reformed to reduce budget deficits and encourage investment. Private

businesses need uniform accounting systems in order to prepare financial statements which shareholders and banks can

understand. Citizens must gain confidence in financial institutions to promote savings and productive lending. And, good

macroeconomic policies and management practices must be adopted to promote non-inflationary growth. During the

1990s, USAID helped transfer thousands of state-owned businesses, farms and housing into private hands.

Voucher programs gave many citizens the opportunity to become shareholders of privatized companies. To encourage

private sector expansion, USAID supported new legal frameworks, better-functioning government ministries,

new tax codes and budget systems, sound financial institutions and professional associations.

Statistics for the region are impressive. Twenty-three of the 27 countries have either completed the privatization of stateowned enterprises or have privatization programs well under way. Private enterprises in nine countries have adopted

international accounting and auditing standards and two regional federations are promoting the acceptance of such standards in member countries. Modern banking systems have been developed in 21 countries. Fiscal reform, has improved

tax collection in 13 countries, and seven have cut their budget deficits to below three percent of GDP.

0

10

20

30

40

50

60

70

Europe and Eurasia

Source: EBRD Transition Report (1999) % of Private Sector Share of GDP

Northern Tier Southern Tier Eurasia

1990 1995 1999

Source: EBRD Transition Report (1999)

2
al land parcels, prompting one

Georgian land owner to remark,

“From now on the land belongs to 

me. I have five children and six 

grandchildren. They work the land,

and it will provide for us now.”

Best Accountant of the Year 

Ms. Valentina Bezhina, who lives in

Kazakhstan’s large industrial Karaganda

region, works for the Mediton Corp. 

In 1999, Mediton attempted to convert 

its accounting systems to new marketoriented standards, but lacked training or

technical support. After this conversion

attempt failed, Ms. Bezhina took 

USAID-sponsored training in financial

and managerial accounting. Soon after,

she began to provide numerous useful

ideas that improved Mediton’s financial

performance, making her a key part of her

company’s decision-making process. She

became a consultant to several companies,

and she won Kazakhstan’s national 

competition for Best Accountant of the

Year. USAID efforts to reform accounting

in Central Asia have not only had a positive impact on economic development,

but have improved the quality and dignity

of the lives of thousands of people like

Valentina Bezhina. 

A Decade of Change Towards a Market Economy 3

Ms. Bezhina wins national accounting competition 

in Kazakhstan.

Carana Corporation

“Only private property can turn ‘agricultural workers’

brought up in a communist spirit into farmers like our

ancestors used to be, with their careful attitude toward

land, agricultural equipment, and quality work...”

— Nicolae Jechiu, Director 

Colnarg-Agro Limited Liability Company, Moldova

Northern Tier

FDI Per Capita 1999 (U.S. Dollars)

Southern Tier Eurasia

0

50

100

150

200

Economic Reform Attracts Foreign Investment

On average, the countries that have advanced the most in economic reform have

attracted the highest rates of foreign direct investment.

Source: EBRD Transition Report (1999)
A A A Decade of Change Towards a Market Economy

Restoring Confidence 

in Latvia's Banks

In early 1995, Latvia’s largest bank 

collapsed, leading to political and 

economic turmoil and eroding public

confidence in the banks and the 

government. Within days, USAIDfunded banking experts provided 

assistance to design and set up a depositor

pay-out system. This allowed for the

orderly and timely repayment of over

13,000 household depositors. Over the

longer term, these experts helped the

Central Bank establish a bank supervision 

system based on international standards

and provided practical assistance to

upgrade the on-site inspections of the

remaining banks. USAID also helped

enact regulations that tightened bank risk

management and put in place a complete

training process for bank examiners.

Numerous risky banks lost their licenses.

Bad loans dropped significantly. By 1998,

Latvia’s banks were on the right track.

Foreign banks were investing in the 

banking system, a sure sign of progress.

Public confidence returned, with deposits

by individuals and companies rising 85 

percent between 1995 and 1998.

Stopping a 

Phony Share Sale

In April 2000, the management of

Ukraine’s Stirol Chemicals Plant told 

the company’s minority shareholders that

management wanted to issue new shares

worth 10 percent of the company’s stock

price to raise new capital to buy plant

equipment. But the move was really a

ploy to increase management ownership

of the company. The new shares were on

sale for only 24 hours, on a first-come,

first-served basis and could be purchased

only on the premises of the chemical

plant. Management grabbed all the

shares. The minority shareholders turned

to Ukraine’s Securities and Stock Market

State Commission, a regulatory body set

up with USAID assistance. The 

commission canceled the phony share

sale, denounced it as a violation of 

minority shareholder rights and declared

that the law required minority shareholders to have a fair chance to buy into new

stock offerings. Shareholder rights were

protected thanks to USAID-supported

development of new laws and institutions

that ensure the proper functioning of

securities markets and increase public

awareness and investor understanding.

Effective protection of shareholder 

rights is a basic building block of private

economic growth. 

The Northern Tier countries,

which introduced the most

wide ranging economic

reforms, enjoyed a high

average annual growth rate

of 5 percent between 1996

and 1998.

U.S Securities and Exchange Commission

Security exchange professionals from Eurasia complete regional training seminar on financial market operations, regulation, and oversight. Over 12,000 financial sector professionals have been trained in Eurasia.

4
A Decade of Change Towards a Market Economy

Twelve Hundred 

Loaves a Day 

When the Communist system collapsed,

Lidiya Tsukrenko’s family almost did too.

Ms. Tsukrenko, who lives in the little

town of Veprik, Ukraine, about 50 miles

south of Kiev, lost her income when the

government-owned company she worked

for couldn’t make payroll. To earn the

cash the family needed, Ms. Tsukrenko

got financing from a local source, bought

used equipment and started the VITA

Bakery in 1995, milling flour in the barn

of her small farm and baking bread in her

kitchen. She was soon making 300 loaves

of bread a day, but realized she had to

expand to survive. In 1997, Ms.

Tsukrenko applied for a $12,000 loan

from a USAID-financed loan company. 

That loan helped her buy a larger flour

mill. Before long, she had more than 

doubled her production of flour and

boosted her bread production to 1,200

loaves per day. The bakery now employs

10 people, and Ms. Tsukrenko has never

missed a loan payment. 

The collapse of authoritarian rule left most citizens unprepared to operate in a private, market economy. After so

many years of state control, it was hard to find people in the region who knew much about starting a business, 

managing a banking system, investing in a company, figuring out profit and loss, or any of the other basics of a 

market-based economy. The countries were short on cash as well as knowledge; almost all needed outside investments 

to get their economies back on their feet. Throughout the decade, USAID helped people who wanted to become 

entrepreneurs gain the financing, training, new technologies, expertise and experience they needed to build vibrant

growing businesses, the cornerstone of a strong market economy.

HELPING ENTREPRENEURS

5

ACDI/VOCA

U.S. volunteers help small entrepreneurs, such as these Eastern European bakers, expand marketability of goods through management and production improvements.
A A A Decade of Change Towards a Market Economy

The ‘Dream’ Bank

While Kyrgyzstan’s bazaars look colorful

and inviting, they can be a hard place to

make a living. In 1996, Ryla Primvirdieva

began selling rice in the bazaar of Osh, a

small market city. At first, she earned a

profit of just $2 per day, barely enough to

buy bread and tea for herself and the two

young daughters and daughter-in-law she 

was supporting. Then she heard about the 

FINCA Village Banking program.

Financed through USAID, the program

helps women like Ms. Primvirdieva with

small loans, as well as training, advice and

a savings program. 

Ms. Primvirdieva seized the opportunity,

and with 11 other women she organized a

village bank called Kyigal (‘Dream’). Her

first loan allowed her to buy one to two

sacks of rice each week, doubling her

profits. She qualified for a second FINCA

loan of $57, plus $25 borrowed from the

bank members’ collective savings. The

new financing has allowed her to increase

her inventory again, boosting her daily

profit to $6. She now has savings, and her

additional income allows her to purchase

luxuries she could not afford only a few

months earlier—butter, sugar and meat. 

Sewing Success

As she worked at the state sewing factory

in Khabarovsk in the Russian Far East,

Olga Asmolina dreamed of owning her

own dress shop. When private businesses

began to sprout up, she realized she had a

golden opportunity. She started by renting

a small room with sewing machines. In

1998, Ms. Asmolina decided that she

would need a loan to survive and grow.

She went to Working Capital Russia, a

USAID-sponsored program to help new

businesses, and received a $1,000 loan.

Soon she had enough business to hire

nine employees, including two of the

town’s best tailors. When the financial 

crisis hit Russia in August 1998, Ms.

Asmolina had to reschedule her payments,

but she managed to pay off the loan by

the end of the year. She now has three 

tailors working for her, has added a fashion

salon and fitting room, and has upgraded

her equipment and product line. Her

dream is a reality. 

Support Services

Reach Entrepreneurs

USAID has helped small and

medium-sized businesses across

the region grow and develop. In

Bulgaria, for instance, a 

consortium of USAID-funded

organizations has trained more

than 10,000 entrepreneurs and

created or saved over 14,000 jobs. 

Nine Business Service Centers in

Ukraine and Moldova have

reached over 35,000 entrepreneurs. Thirty-five percent of those

clients have been women. 

Since 1989, ten Enterprise

Funds supported by USAID

have invested $900 million

in 16 countries, helping to

preserve or create 150,000 jobs.

Small herbal tea business in the Russia Far East purchases new equipment with grants available for non-traditional 

timber products

Linda Whitlock-Brown, USAID

6
A Decade of Change Towards a Market Economy

Volunteering to Help

When Mitch Kam, a 33-year-old

American volunteer with the MBA

Enterprise Corps, arrived in Kielce,

Poland, in 1994, he knew he had his 

work cut out for him. Revenues at the

Piasecki Company, a 300-person, 

family-owned construction company,

were declining. Mr. Kam stayed a year,

advising senior management on 

marketing, management, strategic

planning, finance and organizational 

design issues. By 2000, Piasecki had

grown to more than 800 employees 

with annual revenues of more than 

$60 million, making it the seventhlargest general contractor in Poland.

Piasecki now is traded on the Warsaw

Stock Exchange.

The Dairy 

Improvement Campaign 

In Albania, USAID has worked with

Land O’Lakes, Inc., to aid rural women,

who are traditionally in charge of the family

cows. USAID and Land O’Lakes teamed

to create the Dairy Improvement Campaign,

which helps women learn how to produce

more and better cow's milk. The campaign provided information and training

on cow nutrition, disease prevention,

reproduction and sanitation. As a result,

women are earning more money and

enjoying higher status. In addition to the

economic and food security impacts of the

campaign, other organizations are using

the new dairy producers’ network, which

has grown to over 8,000 women, to deliver

information to women on a wide range of

health and social issues.

World Trade Organization (WTO) Membership

Becoming a member of the WTO lowers barriers to trade and provides

increased opportunity for economic growth through exports. WTO

membership indicates that a country's trade and investment laws

encourage foreign investment and promote domestic entrepreneurs. 

To date, USAID programs have helped 11 countries achieve full 

membership: Czech Republic, Hungary, Romania, Slovakia, Poland,

Slovenia, Bulgaria, Kyrgyzstan, Estonia, Latvia, and Georgia.

Albanian women learn new milk filtering techniques

Land O’ Lakes, Inc.

A USAID-supported NGO 

set up micro-loan institutions

that created over 40,000 jobs

in the region. More than half

the loans have gone to women.

7
A A A Decade of Change Towards a Market Economy

Metering Natural 

Gas for Conservation

During the Soviet period, the price of

natural gas was kept so artificially low

that Russians joked it was cheaper to

leave a gas stove on all the time than 

to waste matches lighting it. The result,

of course, was that huge amounts of

natural gas were wasted. Although the

wholesale price of gas rose after 1991,

consumers did not conserve, mainly

because most Russian apartments do

not have individual gas meters. A

USAID program that links a U.S. 

utility and Russian counterpart is helping

to change that. Vladmiroblgaz and

Brooklyn Union Gas have conducted 

a pilot residential metering project

designed to determine how best to

improve revenue collection and conserve

energy. With USAID financing, 500

meters were purchased and installed 

in apartments just east of Moscow.

Natural gas consumption dropped 

dramatically. Since then, the pilot 

program has been expanded. The

Vladmiroblgaz-Brooklyn Union Gas

program and others like it are now

helping conserve natural resources in

cities across Russia. 

ENERGY AND ENVIRONMENT

One of the best kept secrets during the Soviet era was the environmental toll of decades of authoritarian rule:

rivers and lakes fouled by industrial plant runoff and raw sewage, poisoned soil, polluted air and the threat of

exposure to nuclear waste. Much of the damage was caused by the inefficient production and wasteful use of energy,

encouraged by the lack of economic value placed on natural resources. Poorly managed energy monopolies as well

as artificially low prices set by government contributed to pollution. The damage was compounded by government

indifference and suppression of public opinion. The green movements in the countries of Central and Eastern

Europe during the 1980s were among the first attempts at citizen participation. USAID built on this momentum

and supported new government agencies and private groups working to raise public awareness about the environment,

address existing environmental “hot spots,” and reduce the possibility of additional environmental damage. As

part of a U.S. Government team, USAID has worked tirelessly to promote nuclear safety in the region. USAID

has improved energy efficiency through restructuring, commercialization and privatization of the energy sector

and the development of appropriate regulatory oversight for these new market-oriented systems.

Representatives from Kyivenergo, a local utilities company in Ukraine, discuss safety performance issues with their U.S.

partners at the PP&L, Inc. power plant in Allentown, PA.

United States Energy Association

The New 

Energy Regulators 

Breaking apart old energy monopolies and replacing them with

market-oriented systems required

a new approach to regulation and

oversight in the energy sector. In

addressing this challenge, USAID

has supported the creation of

independent energy regulatory

bodies in 14 countries. These 

new entities operate according to

modern and transparent regulatory

practices, including increased 

public participation and less 

political interference. With help

from USAID, the new regulators

have developed a regional network

to discuss common concerns and

link to the U.S. regulatory community. 

8
A Decade of Change Towards a Market Economy

New Technologies 

to Treat Wastewater

A high-tech Hungarian environmental

engineering firm plans to float a revolutionary new wastewater treatment

plant on the Danube River in 2001,

thanks to USAID’s environmental

partnership program, EcoLinks.

Managed by the Institute of International

Education, this program helps businesses

and municipalities develop market-based

solutions to environmental problems.

The Hungarian firm, Organica

Ecotechnologies, received the first

EcoLinks Quick Response Award of

$5,000 and used it to visit an 

environmental company in Vermont,

Ocean Arks International, which had

developed a system to use biological

technology to treat wastewater.

After the U.S. visit, Organica executives

applied for and won a $50,000 challenge

grant from EcoLinks to prepare a feasibility study to assess the new technology. A

joint venture of international investors

heard about the program and decided to

invest in Organica. With its new funding,

Organica is planning to install its own

treatment plant on a 176-foot-long barge.

The floating wastewater facility will treat

more than 8,800 cubic feet of raw sewage

every day.

Promoting Nuclear Safety

The devastating explosion at the

Chernobyl nuclear power plant in

Ukraine, in 1986, released high levels 

of radiation which eventually killed construction workers at the plant. Airborne

contamination spread to parts of Europe,

Eurasia, and the Middle East, causing

considerable damage to soil and vegetation,

natural fauna, and livestock. It exposed the

local population to elevated levels of

radioactivity, resulting in the evacuation of

over 100,000 people from the Chernobyl

area. Twelve years after the accident, 

significant health problems continue to

emerge, including thyroid cancers and

childhood birth defects. 

The imperative to avoid another

Chernobyl accident has been a vital factor

behind the commitment of Western 

leaders and the international community

to address nuclear safety in the region.

USAID has worked closely with the U.S.

Departments of State and Energy and the

National Regulatory Commission to

mobilize resources from 30 countries

to support safer procedures and structures

at operating plants and decommission

high-risk nuclear reactors. USAID has

collaborated on multilateral efforts,

such as the Nuclear Safety Account

and the Shelter Implementation Fund at

the European Bank for Reconstruction

and Development. As a result of this

work, commitments have been made by

Ukraine, Lithuania, Bulgaria and Slovakia

to close their oldest nuclear reactors.

Chernobyl is scheduled to shut down 

by the end of 2000. 

Improved Environmental

Management

Citizen organizations were among

the first to call attention to environmental issues in the region. By

joining forces with independent

media these groups became a

strong voice for change. Citizen

advocacy combined with USAID

technical assistance has helped the

development and adoption of new

laws and policies in resource management. Sound environmental

frameworks are now in place in

many countries, including Estonia,

Hungary, Poland, Romania, and

Slovakia. Groundbreaking forestry

codes have been adopted in

Russia. The Czech Republic and

Poland have produced unprecedented levels of investments in

environmental improvements.

9

The introduction of a water filtration and leakage control system in Novokuzretek, Russia, reduced pollution and saved

the city money.

USAID/Russia
A Decade of Change From Dictatorship to Democracy

On August 19, 1991, leaders of the

Soviet military sent hundreds of tanks

rolling through Moscow’s streets, seizing

strong points throughout the city and

declaring a state of emergency. From

the Kremlin, the new Soviet leadership

banned protest meetings and closed

independent newspapers as it moved 

to reestablish hard-line control. 

The events were all too familiar to

people who had lived through the

crushing of the Hungarian Revolution

of 1956 and the Prague Spring of

1968. But this time, something very

different happened. After three days

of huge protest rallies and civil 

disobedience, the people prevailed,

pushing the region forward into a

decade of historic, political change.

For more than 40 years, dictatorships

dominated by the Soviet Union ruled

most of the people of Central and Eastern

Europe and Eurasia. Elections were a

sham. Parliaments had no real power.

Basic democratic freedoms–free speech,

the freedom to assemble and organize,

the right to form independent parties

did not exist. Governments trampled

human and civil rights. Vaclav Havel,

Lech Walesa and other opposition leaders

were harassed or imprisoned. 

Since the fall of the Berlin wall, new

political parties have sprung up, wooing

voters in elections in 18 countries.

Independent television stations and

newspapers have allowed dissenting

voices to be heard. New nongovernmental organizations have helped

citizens press their governments for

change. Independent judiciaries have

strengthened the rights of private citizens.

Local governments have developed new

powers and responsibilities. A new 

generation has been coming to power 

in many countries in the region. Despite

considerable progress, however, moving

from dictatorship to democracy has not

been easy, especially in nations that have

no history or tradition of democratic rule.

Setbacks and reversals continue to

hinder progress, especially in Eurasia

and Europe’s Southern Tier. 

Still, the overall political trend in

Central and Eastern Europe and

Eurasia has been toward increased 

freedom and democratic practices. 

U.S. government agencies, working

with a wide range of organizations in

the region and the United States, as

well as with international institutions,

have supported these changes and the

people who made them. During the 

past decade, USAID has been in the 

vanguard, forming lasting linkages

with courageous people to sow the

seeds of a democratic, civil society.

USAID

Programs

■ Democratic

Elections & Process

■ Nongovernmental

Organizations

■ Independent

Media

■ Transparent

Legal Systems

■ Anticorruption

Initiatives

■ Local

Governance

From Dictatorship

to Democracy

Opposite Page: Thousands of demonstrators celebrate in Nori Sad, Serbia.

15
A Decade of Change From Dictatorship to Democracy

Slovakia and Croatia

Turn Toward Democracy

In the fall of 1999, Juraj Mesik, Pavol

Demes and Peter Huncik, each the head

of an NGO in Slovakia, were honored

by USAID and the German Marshall

Fund of the United States for putting

themselves and their organizations on

the line for free elections. The year

before, democracy in Slovakia was

under siege. Although elections were

scheduled, the authoritarian government

in power was using strong-arm tactics

to bully opponents and consolidate

control. With USAID support, Mr.

Mesik, Mr. Demes, Mr. Huncik and the

leaders of eight other NGOs formed a

coalition, Obciankska Kampan (OK 98),

to campaign for free and fair elections.

The campaign coordinated almost 

60 separate activities, carried out by 

hundreds of pro-democracy Slovaks, 

all designed to encourage people to

stand up and vote. In the face of

repeated attacks from the statecontrolled media and other attempts 

at intimidation, OK 98 triumphed. 

On election day, the people voted the 

autocrats out and put Slovakia on the

path to reform.

CITIZENS IN ACTION

To survive and succeed, democracy needs civil society—a broad base of active citizens able to influence decisions

that affect their lives. Citizens must be able to choose their political leaders at the ballot box, hold their elected

governments accountable, and exert pressure on their governments to shape policies that meet the people’s

needs and priorities. Democratic societies need vibrant political parties and a free and independent media to

engage in public debate of issues and policies. They need strong nongovernmental organizations (NGOs)

working for social, economic, and political change. As these citizen groups flourish, they provide vital services

to their constituents and become advocates for reform. In a region with little history of democratic practices

and institutions, USAID worked with individuals, groups and governments to develop the skills, traditions

and institutions that put the people in charge. Since 1989, more than 500,000 NGOs have been created

across the region

Democratic Freedoms Have Increased 

During Ten Years of Reform

Democratic freedoms include political and civil liberties. Ratings are from 1 to 5, wiith

5 representing the greatest freedoms.

Freedom House, Freedom in the World (May 1999)

Democratic Freedoms

Northern Tier Southern Tier Eurasia

0

1

2

3

4

5

1998

1989

“If you want to know why democracy works in

some places and not others, de Tocqueville was

right . . . it's the strength of civil society.”

— Russ Edgerton, President, 

American Association for Higher Education

Democratic freedoms include political and civil liberties. Ratings are from 1 to 5, with 5 representing the greatest freedoms.

Freedom House, Freedom in the World (1999)

2
A Decade of Change A From Dictatorship to Democracy

In early 2000, USAID activities 

contributed to a similar result in

Croatia. The entrenched ruling party,

which had a firm grip on power during

the 1990s, was ousted by a resurgent 

coalition of democratic opposition 

parties. This was the culmination of five

years of USAID assistance to reformminded groups in Croatia. A broad

network of organizations and citizens

formed a NGO to monitor voting and

ensure transparency in the election

process. In a parallel effort, 140 NGOs

and trade unions organized a massive

get-out-the-vote campaign. The energy

and enthusiasm of so many citizens

made a difference. The thoughts of

Croatian volunteers were captured by

one election monitor, Teuta Krasniqi, a

student from Split: “I want to volunteer

because I want to build a just country.” CEE and Eurasia

Political Participation

Note: Data is not available for Belarus, Macedonia, Kyrgyzstan, Moldova and Turkmenistan.

Percent Voter Turnout

U.S. Germany

Voter turnout in recent elections is, on average, 16 percentage points

higher in the region than in the United States, but trails other

Western countries.

0

20

40

60

80

100

Sources: Elections Around the World website; The Center for the Study of Public Policy website.

Norway

USAID Grantees Support

Democratic Elections

The National Democratic Institute

and the International Republican

Institute have trained political

party activists in the region in

campaign techniques, voter 

education and election monitoring. The International Foundation

for Electoral Systems has strengthened the capacity of election 

commissions at national and local

government levels. Due to these

and other efforts, 18 countries

held multiparty elections by the

end of 1999. More than half the

countries in the region conducted

elections characterized as generally

free and fair by international 

observer organizations.

Voter casts ballot in first-ever local elections in Georgia.

International Foundation for Electoral Systems

Note: Data are not available for Belarus, Macedonia, Kyrgyzstan, Moldova and Turkmenistan.

Sources: Elections Around the World website; The Center for the Study of Public Policy website.

3
A Decade of Change From Dictatorship to Democracy 4

An NGO Fights for 

Azeri Women

The women of Azerbaijan have been hit

much harder than men by the collapse of

the Soviet Union. Many more women

are unemployed, and men continue to

hold a large majority of the country’s

higher-paying jobs. Women have also

lost social benefits, and the country is

staggering under the burden of tens of

thousands of refugees displaced by a bitter conflict with Armenia. Novella

Djafarova is trying to help. She chairs

the Women’s Rights Protection Society

of Azerbaijan, an NGO devoted to

meeting women’s needs. In 1997, she

came to the United States to attend the

Development of Women NGO/ PVO

Leadership program. The USAIDfunded program provided training and

gave Azeri activists the chance to meet

with American NGOs focusing on

women’s issues. For Ms. Djafarova, the

program gave her a broader vision of

what her organization could accomplish.

Once home, she organized training 

programs for other women and pursued

grants for new women’s rights activities.

Most recently, she received funding

from the Canadian Embassy to continue

her activities in support of women 

in Azerbaijan. 

A Resource for 

Russia’s NGOs

In 1995, the Agency for Social Information (ASI) was just a small bulletin 

that Elena Topoleva and her husband,

Andrei Topolev, published through the

news agency where they worked. Then

ASI acquired a grant from the Eurasia

Foundation. That crucial support let 

the Topolevs hire correspondents and

expand the range of their bulletin. It also

helped them attract funding from other

donors. By the end of the decade, the

bulletin had grown into a major source of

information and public relations support

for Russia’s burgeoning NGO community.

In 1999, the bulletin went to over

500 regional media outlets, promoting

the work of NGOs across the country. ASI hosted NGO conferences,

published reference guides about

NGO activities for the news media,

organized press interviews for NGOs

and arranged meetings between NGOs

and government officials with radio

and TV coverage. Explains Ms.

Topoleva, “We are trying to get people

to look beyond the state and do 

something for themselves by showing

them what other people are doing.”

With help from USAID, the Eurasia Foundation has invested in citizens

throughout the former Soviet Union. From 1993 to 1999, it made over

4,700 small grants, totaling $94.5 million, in support of civil society, 

private enterprise development and public administration and policy. 

International Foundation for Electoral Systems

These citizens demonstrate the spirit of NGO

volunteerism at Fun Fair 2000 in Yerevan, Armenia.
A Decade of Change A From Dictatorship to Democracy

NGO Sustainability in 1999

USAID tracks progress in civil society development throughout the region. Sustainability is a 

composite measure of seven dimensions of the NGO sector: legal environment, 

organizational capability, financial viability, advocacy, public image, service provision, and

NGO support organizations.

Northern Tier

Southern Tier

Eurasia

Early Transition Mid-Transition Advanced

NGO Sustainability in 1999 “Heroic is the word that

comes to my mind when

I try to describe the

efforts of local NGOs.

They are operating out 

of dilapidated buildings,

personal apartments, and

with little to no office

equipment. Most receive

no salary—they are 

simply volunteers...”

— USAID staffer, from a 

field visit to World Learning

Source: The 1999 NGO Sustainability Index. Sub-Grantees in Russia

East – East Visit Yields

Helping Hearts 

The campaign "Generous Heart" started on a rainy April day in Ruse, a town

of 200,000 people on the Danube River.

The rain did not stop the 150 volunteers

committed to raising funds for the local

hospital. The campaign resulted from a

USAID training course which took the

Bulgarian organizer, Jordan De Meo, to

Poland, where he witnessed a nationwide campaign gathering funds for

children with kidney disease. Hundreds

of volunteers crisscrossed the streets of

Warsaw, presenting those who gave

even a small amount of money with a

big red heart. Jordan was so impressed

he promised to repeat the campaign in

Ruse, his hometown, on one of the

biggest Bulgarian holidays, Tsvetnitsa,

the day of the flowers. 

Despite the poor weather, 5,000 people

wore paper hearts that day, and 12,000

lev were collected and donated to the

local hospital. Four NGOs helped

organize the event, and two Ruse 

businesses donated stickers, special

shirts, and collection boxes for the 

volunteers. With the donations, the

local hospital leased life–saving medical

equipment. The first public fundraising

campaign in Bulgaria was covered by

regional and national media and

touched the hearts of many Bulgarians.

Jordan, who is president of the "Forum

for Democratic Revival," a Ruse NGO,

and a member of a volunteer advisory

board to the USAID Democracy

Network program, is full of hope and

eager to repeat the fundraising event

with even greater success.

5
A Decade of Change From Dictatorship to Democracy 6

Taking on 

Terrorism in Bosnia

In 1999, one of Bosnia-Herzegovina’s

leading independent daily newspapers

in the city of Banja Luka, Nezavisne

Novine, published articles detailing

local war crimes. On October 22 of

that year, a bomb went off in the car

of the paper’s editor, Zeljko Kopanja,

costing him both legs and nearly killing

him. To prevent the horrific incident

from intimidating investigative journalism, USAID sponsored a conference

in Banja Luka on the protection of

journalists shortly after the attack.

Representatives from all over 

Bosnia-Herzegovina, along with 

representatives from international

organizations supporting reporters,

came to protest the terrorism. A

USAID-funded organization provided

Kopanja with a laptop computer so

he could keep writing from his hospital

bed in Vienna. Nezavisne Novine

kept publishing.

Before 1989, governments controlled the newspapers their people read, the radio broadcasts they heard and television

programs they watched. In the 1990s, the newly independent media were some of the most powerful voices for and

protectors of reform. And it’s no surprise that those who wanted to bring down democracy put the media squarely in

their crosshairs. USAID has spent a decade supporting people who fought to keep the media independent and effective.International Resources and Exchanges Board

Young journalists develop skills in electronic research at the Information and Press Center in Kiev, Ukraine.

INDEPENDENT MEDIA

More than 10,000 media

professionals from the

region received USAID

training in objective, 

fact-based reporting.
A Decade of Change A From Dictatorship to Democracy

The Power of the Eco-Press 

In 1994, a group of independent

journalists in Moldova had an idea

that would have landed them in jail

during Soviet times: start an 

independent magazine about the

environment and raise the alarm

about threats to the air, land and

water. The magazine, Gazeta Natura,

won small grants from USAID to buy

printing equipment and expand the

magazine’s reach to Romania and

Ukraine. Natura quickly proved that

it was a new breed of magazine. In

1995, its reporters uncovered an

explosive story: Moldova’s government

had secretly drafted a contract to sell

7,000 hectares of the Silva forest to a

foreign firm. Natura’s editors rushed

the story into print. The government

threatened to shut Natura down, but

it was too late. Citizen groups bombarded the government with demands

for public hearings and a parliamentary

investigation. The public pressure

worked. The sale was canceled, and

the old growth forest was preserved.

A TV Choice in Croatia 

Some 85 percent of Croatian adults

get their news from television. Until

1999, the only news was government

propaganda from the state-controlled

Croatian Television. But the government information monopoly has been

broken. As part of a USAID-funded

program, media experts in Croatia

worked with an association of local

independent television stations to

form a new network, the centerpiece

of which is Vijesti (literally, “news”),

an independently produced evening

news program. Since its debut in

December 1999, Vijesti has received

critical acclaim and provided Croatian

viewers with alternative viewpoints.

The Organization for Security and

Cooperation in Europe called Vijesti

the most credible source of broadcast

news available in Croatia. 

Partly Free Free

Albania

Armenia

Bosnia &

Herzegovina

Macedonia

Georgia

Moldova

Romania

Russia

Ukraine

Not Free

Press Freedom in 1999

Bulgaria

Czech Rep.

Estonia

Hungary

Latvia

Lituania

Poland

Slovakia

Slovenia

Azerbaijan

Belarus

Croatia

Kazakhstan

Kyrgystan

Fed. Rep. of

Yugoslavia

Tajikistan

Turkmenistan

Uzbekistan

Source: Freedom House, Press Freedom in the World 2000

Prior to 1989, media in the region were under the control of their central

governments. By 1998, the press was rated free in one-third of the countries.

Press Freedom in 1999

Institute for Sustainable Communities

A regional television station airs a panel discussion on the role of environmental reporting, as part of

National Journalists’ Day in Ukraine.

Source: Freedom House, Press Freedom in the World 2000

7
A Decade of Change From Dictatorship to Democracy 8

A strong democracy requires a strong rule of law, both to protect individual rights and personal freedoms and to combat

corruption. Rights and freedoms are the essence of representative government, while corruption corrodes public support

for democracy and breeds cynicism and apathy. USAID programs have reached out to support parliaments as they

strengthen their capacity to conduct open hearings and enact new laws responsive to the needs of their society. USAID

has been a significant resource in strengthening judicial understanding of market economy and democratic principles,

modernizing court administration, and joining with people in every country who are willing to fight corruption. 

Simple Justice in Georgia

Kibar Kalbashi is the manager of a

company that distributes household

products in Georgia. In October 1999,

one of his trucks was involved in a

traffic accident with the driver of a

new Volkswagen Golf. The Golf was

damaged beyond repair, but all 

witnesses agreed it was the driver’s

fault. Nevertheless, the driver was a 

well-connected Soviet-era lawyer,

confident that bribes and connections

could extract a huge financial settlement

from a company. 

Kalbashi took his case to a young

lawyer who had received training

under a USAID grant with the

American Bar Association’s Central

and Eastern European Law Initiative

(ABA/CEELI). The lawyer

succeeded in getting the case transferred to the capital, Tbilisi. There, a

judge who had recently passed the

judicial exams administered by

ABA/CEELI, presided over the 

hearing. The newly qualified judge

heard the arguments and threw 

the VW driver’s case out of court. 

Lessons from Mississippi

Kairat Ospanbekov, an attorney

fighting to establish due process and

individual rights in Kazakhstan, calls

it a “defining moment.” Thanks to

USAID-sponsored training through

the Academy for Educational Development, he was part of a delegation of

lawyers from former Soviet countries

who were dinner guests at the

Mississippi home of Unita Blackwell,

a lawyer who was active in the civil

rights movement of the 1960s. 

“She won 26 cases and set 26 legal

precedents,” said Mr. Ospanbekov.

“She showed me how an ordinary

person can change the system.” 

Back in his home town of Almaty,

Mr. Ospanbekov changed the system

by mounting a campaign against 

government officials who were using

public posts for private gain. He says

he learned an important lesson from 

FIGHTING CORRUPTION AND ESTABLISHING 

THE RULE OF LAW

USAID Attacks Corruption

on Many Fronts

• Reducing government 

regulations and licensing

• Training lawyers and judges

• Training business, government 

and legal associations on ethics

• Developing investigative 

journalism

• Teaching NGOs to monitor 

government and fight corruption

• Opening government to citizen 

involvement

• Supporting anticorruption public 

education and advocacy

• Helping establish clear and 

fair tax codes

Carl Mabbs-Zeno, USAID

Hungarian Parliament building now houses a democratic legislature.
A Decade of Change A From Dictatorship to Democracy

American civil rights veterans: “Kings

and czars will not give you rights.

History is made by ordinary members

of society who fight for them.”

A Whistleblower in Trouble

In 1995, the captain of a Ukrainian

cargo ship in the Azov Fleet blew the

whistle on several fleet officials who

allegedly were embezzling funds to 

their private bank accounts outside of

Ukraine. The officials turned these 

allegations around, accused the captain

of wrongdoing and took him to court.

The court sentenced him to five years 

in prison, confiscated his assets and

fined him. 

From prison, the Captain contacted the

USAID-sponsored Citizens Advocacy

Office, an independent source of legal

support for people with grievances

about corrupt officials. It provides 

free legal advice, representation and 

research help. Lawyers from the 

advocacy office reviewed the captain’s

case and successfully appealed it in

October 1999; the allegations against

the captain were dismissed entirely, and

all previous sentences against him were

canceled. The Citizens Advocacy Office 

then began working to build a case

against the fleet officials.

Anti-Corruption Efforts

Produce Results

"Zero tolerance for corruption" has

become an important theme in Bulgaria.

In December 1999, ten out of 16

Bulgarian cabinet ministers were

removed from office, thanks to the

efforts of Coalition 2000, an anti-corruption alliance of government

organizations and NGOs. The coalition

raised public awareness through a

sophisticated campaign that included

regional and municipal Anti-Corruption

Councils, a national media campaign,

telephone hot lines, public meetings 

and a wide range of books, newsletters

and brochures. 

Coalition 2000’s small grants to community-based NGOs have made a clear

impact. Local initiatives have resulted in

investigations and prosecution of 

corrupt practices in public service 

provision. Independent media has

helped raise public awareness of the

issues by making corruption a frequent

headline topic. The Coalition’s

Quarterly Monitoring Surveys are now

demonstrating that public tolerance of

corruption has decreased significantly. 

USAID has trained over

7,500 judges, academics

and legal professionals

from 22 countries.

ABA/CEELI

Participants take written test as part of the judicial qualification examination process in Tbilisi, Georgia.

9
A Decade of Change From Dictatorship to Democracy 10

A Voice in the City Budget 

Until 1995, the people of the Romanian

city of Piatra Neamt had never had any

say in their city’s budget. Then the

town's mayor, Gheorghe Ocneanu,

decided to get citizens involved. With

the help of USAID and the International

City and County Management

Association, he organized the first 

community meetings on the budget 

and opened up the budget process to 

citizen review.

The mayor and other city officials 

prepared extensive documents and

detailed presentations that explained the

city finances to residents. When the 

meeting opened in February 1995, the

residents who attended didn’t need much

prodding to become actively involved.

They suggested 11 new city-funded

projects and clamored for more public

meetings. That first meeting and the

ones that followed have changed the

political culture in the city, opening a

new era of citizen involvement while

strengthening local government. 

Today, most major cities in Romania

have organized public hearings to

debate municipal budgets.

Democracies grow from the ground up. To survive and develop they need vigorous local governments where citizens

and organizations can participate in decisions that affect their lives. USAID programs have fostered working 

relationships between local governments, citizen groups, and the business community to expand economic opportunity,

mobilize local resources, deliver municipal services, and address social welfare issues. These relationships have 

produced innovative approaches to solving problems at the local level. At the national level, USAID has helped lay

the foundation for intergovernmental relationships, including revenue sharing and local tax authority.

COMMUNITY INITIATIVES 

Research Triangle Institute

Regional Conference brings local government practitioners together to discuss municipal development issues and share

lessons learned

Empowering Local

Governments

Municipal governments need the

ability to generate revenue if they

are to carryout their responsibilities. USAID has helped establish

the legal framework for revenue

sharing, local tax authority, and

the development of municipal

credit systems. In some instances,

USAID forms strategic alliances

with other donors in preparing the

conditions for municipal sector

loans. This was the case in

Romania, where USAID helped

formulate policy changes in

municipal finance as conditions to

EBRD’s loan for municipal infrastructure improvements. The new

laws established transparency in

Romania’s fiscal transfer system

and gave greater taxing authority

to local governments.
A Decade of Change A From Dictatorship to Democracy

Community Development

in Armenia 

In Armenia, local governments lacked

the resources to meet their communities’ needs. USAID responded by

initiating the Community

Development Project. Through a

small grants program managed by

Save the Children, rural towns and

villages come together to discuss

problems, set priorities and determine a course of action.

The 185 inhabitants of Ltsen—a small

village in southern Armenia—have

learned the importance of community

action. Although located in an agriculturally rich area, the people were

unable to farm because they lacked

irrigation. With a community development grant in hand, the village

bought 2,500 meters of pipeline in

1996 and provided the labor to dig

ditches in order to tap into the irrigation

system of a neighboring village. The

new water system allowed farmers to

grow new crops, increasing average

household income by $100 per year.

Two years later, the people of Ltsen

joined together again to rehabilitate a

local health clinic and establish a

revolving fund to ensure adequate

stocks of common drugs at the health

facility. 

Technology Makes a

Difference

Ninety percent of Hungary’s towns 

and villages are small, rural communities where unemployment was high

in the early 1990s, and local 

governments struggled to provide

such basic services as education and

public health. With help from

USAID, however, Hungary’s villages

got a new tool—called telecottages—

to help economic development, 

education and local NGOs.

A telecottage is a community office run

by NGOs and a cadre of volunteers,

equipped with Internet-connected

computers, a copier, a fax machine and

often a small library. Telecottages offer

tremendous help to the unemployed.

As one staff member said, “In villages,

people didn't even have a private

phone to get information on jobs. 

If they saw an ad in the local paper,

they had no way to make a call, write

a resume or fax it in. Telecottages

provide all these possibilities.”

Students use telecottages to learn

computer and Internet skills. Local

NGOs use them as a meeting place

or to publish newsletters. This 

technology makes it possible for 

rural people to telecommute.

USAID funded 37 telecottages from

1995 to 1998 through the Democracy

Network program. They were so successful at reinvigorating rural

communities that Hungary’s government stepped in to continue support.

By 2000, the number of telecottages

had grown to more than 100. 

Telecottages also have helped refugees.

At the Debrecen and Bekescsaba

refugee camps in Hungary, USAID

sponsored a public-private partnership

to set up telecottages. The technology

provides refugees access to newspapers

in their own language, allows them to

search for lost relatives, and improves

their language and job skills. The U.N.

High Commission on Refugees was so

impressed with the results, it is supporting the effort and looking for ways

to replicate telecottages elsewhere.

Democracy Network, USAID/Hungary

Young students take their turn at the computers in the Internet room at Debrecen Refugee Camp in Hungary.

11
Creating market economies and establishing democracy offer the people of

Central and Eastern Europe and

Eurasia the best long-term hope for

higher living standards and a better

quality of life. In the short and medium

term, however, the weight of change has

taken a heavy toll on social services and

benefits and caused unemployment and

poverty to rise. At the same time, the

region has been torn by armed conflicts,

causing complex emergencies in the

former Yugoslavia and its neighbors,

as well as in Armenia, Georgia,

Azerbaijan and Tajikistan. 

Health, education, and social 

protection systems—of mediocre 

quality and largely bankrupt even in

1989—have continued to deteriorate

as governments in the region balance

competing demands on tight budgetary resources. The transition from a

state-controlled system based on

broad consumer subsidies to a market

economy has resulted in 

economic and social pain. Inadequate

social services and benefits have

emerged as serious issues. Only 

the Northern Tier countries have 

recovered and exceeded the standards

of living in place at the end of the

1980s, although some of their 

population groups remain 

vulnerable without some form of

help. Many citizens in Southern

Tier and Eurasia countries continue

to suffer as living standards remain

below 1989 levels as a result of

incomplete reform.

USAID has been a leader, both in

responding to crises and in establishing

social programs that make a lasting

difference. USAID has worked closely

with international donors to meet the

region's emergency needs for food,

shelter, fuel and medical supplies. 

A range of cooperating organizations

have laid the foundation for in-depth

solutions to the region’s social 

problems, by helping groups and 

communities develop the skills, resources

and expertise needed to address these

challenges. USAID also has worked

with governments to improve the 

policy and institutional structure for

social services. Through this work

U.S. assistance has demonstrated ways

to improve the quality and availability

of health care while cutting costs; put

in place improved systems to fight

infectious disease; and worked to

restructure social benefits.

USAID

Programs

■ Humanitarian 

Assistance

■ Health

■ Social Safety Net

Helping 

People in Need

1

1989 = 100

60

80

100

120

Northern Tier CEE

Southern Tier CEE

Eurasia

1989 1999199819971996199519941993199219911990

Recovery of Living Standards in Europe and Eurasia

Note: Living standards as measured by an index of real GDP, where 1989 GDP = 100.

Source: EBRD, Transition Report (1999).

A Decade of Change Helping People In Need
A Decade of Change Helping People In Need

FROM CRISIS TO RECOVERY 

The region's social problems were compounded and intensified by the many conflicts and natural disasters

that took place during the 1990s. Particularly hard hit were the nations in the Caucasus, as well as those

that were part of or bordered on pre-1989 Yugoslavia, where people suffered from ethnic violence, economic

collapse and the breakdown of social welfare, education, health and public safety institutions. USAID coordinated with other U.S. agencies, private relief organizations and other developed nations to provide the

massive assistance needed not only to respond to crises, but also to help people in the region get back on their

feet. Humanitarian assistance is a twofold approach to helping people. First, basic supplies of food, shelter, fuel and

medical supplies are provided to stabilize emergency situations. Second, community-based, self-help projects lay the

foundation for economic recovery, democracy, and improved social welfare. Since 1992, USAID has helped millions

of people in the region survive crises and reconstruct normal lives.

Chris Hondros for USAID

Delivery of Humanitarian assistance packages for Kosovar refugees staying at camps in Albania 

and Montenegro.

USAID Humanitarian 

Assistance in Kosovo

• Food and temporary shelter 

for refugees during the conflict

• Emergency health care

• Clean water and sanitation 

for conflict-affected population 

• Shelter kits to winterize 

one-fourth of all seriously 

damaged, repairable homes

• Agriculture support to help 

farmers start producing again

• Grants to rebuild communities

• Partnerships to jump-start 

a market economy and lay 

the foundations for democracy

In all, 1.3 million refugees 

and internally displaced 

persons have been reintegrated. 

Soon after the conflict ended,

Kosovars were moving beyond

emergency response to achieving

normalcy and building an 

economic and political system

that affords increased choices and

opportunities.

2
A Decade of Change Helping People In Need 3

A Bridge in Bosnia

Parents in the Bosnian villages of

Zavrsje and Zagorica are breathing

a sigh of relief since USAID reconstructed the bridge that connects the

two villages with the main road to

nearby towns. “The children who

must cross the bridge to catch the

school bus on the main road can do

so without the fear of falling into the

river,” says Rada Lijesnica, a mother

of two. The bridge was so badly 

damaged by heavy fighting during

the war in Bosnia that vehicles could

not use it. Pedestrians, including 

Ms. Lijesnica’s children and other 

students, had to inch their way across

on narrow, wobbly wooden planks.

Zavrsje is a primarily Croat village,

while Zagorica is home to Croats, 

Serbs and Muslim Bosnians. Most 

of the families in the area left during

the war, but many have returned. 

The bridge is helping village life

return to normal.

Helping the Victims 

of Violence

Following an outbreak of violence 

in Khojand, Tajikistan, Diloram

Atabaeva, the manager of the local

NGO Support Center assisted by

USAID grantee Counterpart

International, organized 20 NGOs

into a coalition to aid people displaced

by the fighting. Within two months,

the coalition provided assistance to

children and the elderly. The NGO

group also organized a celebration 

to lift community spirits and demonstrate broad-based support for those

most affected by the violence. Today,

the Khojand NGO Support Center

continues to strengthen the community’s NGO network through

training, consultations, and information dissemination.

TV Promotes Tolerance 

in Macedonia

As the bombs started in Kosovo, the

first production meeting was taking

place in Macedonia on a children’s

television show designed to reduce

ethnic hatred, the source of many 

of the region’s humanitarian crises.

The Kosovo conflict didn’t slow the

production, and the weekly program,

Nashe Maalo “Our Neighborhood”,

went on the air in October 1999.

Nashe Maalo is a collaboration of

USAID-funded organizations, 

Search for Common Ground and 

the Children’s Television Workshop

(CTW), and other donors, that

worked closely with Macedonian

writers and producers. The show is

aimed at children, aged 

7 to 12 in multiethnic societies, and 

is currently telecast in Macedonian,

with a soundtrack dubbed in Albanian,

Turkish and Roma. Each edition 

features stories of cooperation and

understanding among children of

diverse ethnic and religious groups.

Viewership is high, with one survey

of 1,200 children showing that 85

percent watched it.

Victims of civil war in Tajikistan care for each other in a local hospital.

U.N. Office for Project Services

Throughout the decade,

more than 18 percent of

USAID resources in the

region have been used 

to provide humanitarian

assistance.
A Decade of Change Helping People In Need

Faced with economic crises at the beginning of the decade, virtually all governments in the region cut back on

national budgets for health. These reduced resources have caused the continued deterioration of mediocre systems.

With the collapse of healthcare, epidemics have increased and health indicators related to infant and child

mortality and life expectancy have worsened in many instances. USAID has helped countries cope with these

conditions. Pilot programs and U.S. health partnerships have helped local health-care providers learn the

latest techniques, solve problems in innovative and cost-effective ways, and put scientific research into practice,

saving lives and improving the quality of life throughout the region. 

BETTER HEALTH CARE

Saving Children in

Chelyabinsk

The letter to the staff of City Pediatric

Hospital No. 8 in Chelyabinsk, Russia,

was short and heartfelt: “The greatest

thanks to all medical personnel of the

resuscitation department for saving the

life of my little son, Alosha. It is wonderful

that such departments exist where the

lives of children can be saved, and where

children can receive such qualified help

and care.... You give life to children and

happiness to their parents. Thank you!”

Alosha was born with complications 

that required intensive care in a little

town 170 kilometers from the hospital.

Thanks to a partnership between the

Russian hospital and three facilities in

Tacoma, Washington, Alosha received

the care he needed. Under a USAIDsponsored program, Tacoma physicians

had come to Chelyabinsk to train their

counterparts in the best ways to transport,

treat and resuscitate at-risk newborns

when needed. The Tacoma hospital 

also donated five pulsoximeters

(portable devices to measure and control

the bloods oxygen content) to their

Russian counterparts, more than doubling

the number available to the city’s healthcare workers. On the night Alosha came

into the world, Chelyabinsk doctors

used their new skills and the donated

equipment to ensure the little boy lived.

Improved 

Reproductive Health

During the Soviet era, women in Eurasia

routinely used abortion to control the

size of their families, often at risk to the

mother's life. Since 1991, USAID-funded

programs have promoted access to and

knowledge about modern contraceptive

methods through mass media campaigns,

changes in medical curricula, new 

training programs for health-care

providers and health education for

young people. 

• In Central Asia, use of modern 

contraceptives increased 20 percent.

Rates of induced abortion declined 

by 27 percent in Kazakhstan and 50

percent in Uzbekistan and Kyrgyzstan. 

• In Russia, USAID has extended 

modern family planning information

and services to more than four million women. Annual abortion rates in

USAID-assisted areas dropped more

than 11 percent, while remaining

constant at control sites.

USAID-funded vaccinations

of more than 500,000 

children in Central Asia

have prevented epidemics

of measles and other 

childhood diseases.

Young women of the former Yugoslavia write a plan of action

for women’s health during a training session.

STAR Network of World Learning

Through the American

International Health Alliance,

USAID has supported more than

80 U. S. health partnerships with

the region. The U.S. partners—

physicians, nurses, administrators

and technical personnel from

more than 25 states—donate

their time, effort, needed supplies and equipment. Volunteer

hours and donations add up to

nearly $3 for every $1 invested

by USAID. 

4
A Decade of Change Helping People In Need

Health Care 

with a Human Face 

Like other Central Asian countries,

Kyrgyzstan inherited a health-care 

system that relied heavily on costly 

in-patient hospital care at specialized

facilities. Through USAID's effort, the

emphasis shifted from treating patients

after illness strikes to primary preventive

care through networks of Family Group

Practices. As part of this transition, more

than 1,500 specialized physicians were

retrained as family physicians, and their

clinical skills were upgraded. 

One of them, Dr. Makenbaeva, used to

work as an obstetrician providing a narrow range of care to a limited group of

patients. She became a member of a

family group practice, treating everyone

from babies to grandparents. “The idea

of family medicine was brought to us by

life itself,” she says. “We would see

fathers and children with their wives and

mothers. It was unfortunate, because

they could not receive care, since we

were limited to caring for women only.”

Care by family physicians has resulted in

earlier diagnoses and treatment of common conditions. In October 1999, First

Lady Hillary Rodham Clinton presented an award to the Kyrgyz health

reformers for their achievements. 

5

More than 700 family

group practices in Central

Asia are reaching over

2.6 million people as a

result of USAID activities

in community-based,

primary health care.

A family physician treats both mother and child at a community-based, primary health care facility in Kyrgyzstan. Harriett Destler, USAID

Health Reform Redirects Scarce Resources

in Kyrgyzstan

Previous 

Health System

New

System

25% of Resources

to Community-Based Care

50% of Resources

Hospital Care

75% of Resources

to Hospital Care

50% of Resources

to Community-Based Care

Health Reform Redirects Scarce Resources

in Kyrgyzstan
A Decade of Change 6

A hallmark of the old socialist system was the provision of a basic level of social protection to all its citizens,

including universal subsidies for housing, utilities, and social services, and income after retirement, irrespective

of need. By 1989, central and local governments could no longer afford to subsidize populations to the same

degree as before. During the past decade, USAID has worked with several countries to improve pension system

design, financing, and administration and to meet the near-term needs of people through the development of

targeted subsidy programs.

RESTRUCTURING SOCIAL BENEFITS

Pension Reform 

in Kazakhstan 

In 1996, five years after independence,

Kazakhstan was in trouble. Its old,

inefficient Soviet pay-as-you-go 

pension system was bankrupt. USAID’s

Pension Reform Project sent a Kazakh

team to Chile to study the Chilean

private pension system model. The

team concluded that privatizing

Kazakhstan’s pension system could

spark the development of capital 

markets and spur the development of

private life insurance products, such 

as annuities, to pay private pensions.

Kazakhstan put a new pension system

in place in 1998. Workers now contribute 10 percent of their wages to a

private pension fund of their choice.

This fund, through an asset management

company, invests the contributions to

build savings for retirement. 

As a result of the reform, the pension

system is functioning well, and all

pensioners are receiving their monthly

payments on time. Moreover, the new

private pension system accumulated

$650 million in assets, which has been

used to purchase corporate bonds.

These bonds, in turn, enable Kazakh

businesses to raise the capital they

need to expand and modernize. 

Targeted Subsidies 

in Ukraine

Early in the decade, the Ukrainian

Government recognized that it had

to take a close look at government

spending levels and begin to tackle

the issue of universal subsidies. In close

coordination with local governments,

Ukraine initiated a policy which

introduced the recovery of real costs

for housing and utilities while also

protecting the neediest. Universal

subsidies for communal services were

replaced with financial assistance 

targeted to help the poor. USAID

provided technical expertise to help

the municipalities conduct income

surveys and objectively determine 

cut-off points for government aid.

Three months after enactment of the

enabling legislation, the national 

housing subsidy program opened 750

offices across the country. As many

families started to pay for housing 

and related services, those in the low

income brackets received subsidies.

By 1999, over four million families

were being helped with targeted 

subsidies and the government was

realizing a net budget savings of 

$1.2 billion. The success of this 

program demonstrated that economic

reform could be compatible with

social protection and laid the

groundwork for other targeted social

assistance programs in the region.

Older woman in Georgia benefits from the Winter Heating Assistance Program which targets single pensioners, 

living alone.

USAID/Georgia

Helping People In Need
A Decade of Change Helping People In Need 7

Hubert Humphrey once said that a society may be judged by the way it treats its most vulnerable citizens.

During the 1990s, children throughout the region—especially orphans and those with special needs—bore

a heavy burden from the collapse of the countries' economies and social safety nets. Women and the elderly

were also vulnerable, as were ethnic and religious minorities. Throughout the decade, USAID has worked

with governments and NGOs to assist those who needed help the most.

Help for Disabled Youth 

in Belarus

In 1991, Ludmila Veko, the mother 

of a mentally retarded child, started 

the Belarusian Association of Assistance

to Handicapped Children and Young

People (BelAPDI YP) to help mentally

and physically disabled children and

youth. With the help of USAIDsupported Counterpart International,

BelAPDI YP expanded its work to

include 57 chapters in all six regions 

of Belarus. The organization provides

activities for disabled youth and support

for their parents, and has been responsible for many success stories. A young man

once branded unfit for work by the state

learned to compose his own music; 

children once considered by state 

educational institutions to be incapable

of learning have done poetry readings;

and previously isolated aggressive youth

learned to work as a team. BelAPDI YP

has also encouraged the government to

change key social policies, allowing 

disabled young people to attend state

summer camps and physically disabled

youth to attend state secondary schools.

New Hope for 

Romania’s ‘Orphans’

One of the most serious challenges facing

Romania’s newly established democracy

in the early 1990s was child welfare;

more than 100,000 children lived in

deplorable conditions in state-run 

institutions. This was a well-known 

fact when Ana, a 20-year-old Romanian

woman, learned she was about to become

a single mother. Having grown up in 

an orphanage, Ana wasn't sure where to

go. She had no family to help her and

she couldn’t go back to the orphanage.

Finally, Ana did find help at the Maternal

Center in Cluj, run by USAID-supported

World Vision International. 

The Maternal Center is a shelter for

new mothers who are at risk of abandoning their children. It has two main

goals: to help the mother feel responsible

for her child's care and to strengthen the

bond between mother and child. The

Center is part of a larger USAID effort

focused on keeping children out of 

institutions by addressing child welfare

issues at the community level. The staff

at the Maternal Center in Cluj gave Ana

a place to stay and parenting skills to use

with her new born child. Best of all, they

gave her hope for the future.

ASSISTING THE MOST VULNERABLE

“Thanks to participation

in USAID projects, we took

our first steps towards

changing the lives of

people with handicaps

and assisting their 

integration into society.”

—Michaela Frycova, 

Director of the Czech

Republic's Foundation 

for the Integration of the

Mentally Handicapped

USAID/Hungary

American toys help children with Down’s Syndrome develop coordination of small motor movements.
A Decade of Change Helping People In Need

Bringing Domestic 

Violence out of the Shadows

Thanks to USAID’s help, Russian 

television is shining a spotlight on a 

dark subject: domestic violence. USAID

helped sponsor a series of grants for

national television programs that added

coverage of domestic violence to existing

programming. One of the grant winners,

Russian Public Television, devoted a

popular program to the work of women’s

crisis centers around the country. The

television show had an immediate effect.

Natalia Sereda, director of the Women’s

Alliance Crisis Center in the town of

Barnaul, reported that the local government organized a special domestic 

violence awareness campaign, complete

with public service announcements and

radio jingles. The local legislature

stepped up funding for abused women,

and the local government agencies started

coordinating more closely with the 

crisis center. “From our perspective,”

Ms. Sereda said, “it is very important to 

support similar projects all over Russia

for the purpose of attracting attention 

to the problem of domestic violence in

general and supporting the activities of

regional crisis centers in particular.”

Advancing Gender and

Youth Issues 

• A USAID Central Asia study

found that for general health

needs, men go to hospitals

(expensive) and women to local

clinics (less costly). Wanting to

expand access to more costeffective health care, primary

health clinics are creating outreach

programs focused on men, which

in turn should reduce overall

health care costs.

• Drawing on World Bank

research, USAID is developing

special programs in Kyrgyzstan

to meet the needs of young,

unemployed, rural males. Seeing

no hope for the future, these

young men have been driven

toward anti-social behaviors

such as crime and drug trafficking.

• Alienated youth are a rich

recruiting ground for extremist

groups. In Uzbekistan—where

57 percent of the population is

under 25 years of age—USAID

targets youth in its efforts to

promote a democratic culture.

USAID bolsters youth participation and activism through civic

education, student associations,

neighborhood cleanups and

healthy lifestyle campaigns. 

NGOs teach vocational and craft skills to young men in Central Asia, helping them earn a living.

Counterpart International

8
A Decade of Change Helping People In Need 9

NGOs Help Provide Social Services

Increasingly, NGOs are developing the capacity to fill a critical social 

service gap left by underfunded local governments.

N t N th Ti t i i l d H Lith i P l d d Sl ki S th Ti t i i l d

Northern Tier

Southern Tier

Eurasia

Early Transition Mid-Transition Advanced

Filling a Critical Gap

Local NGOs make a real difference in

their communities. Across the region

groups are forming to respond to the

needs and priorities of their constituents. Increasingly, these

organizations are emerging as the

"third sector" -- working with government and private business to solve

problems, share and distribute information, and deliver services to vulnerable

groups. Their involvement in social

issues also creates an advocacy base for

future reforms. 

The types of social services provided by

NGOs range widely, including homeless shelters, soup kitchens, health and

nutrition support, substance abuse rehabilitation, legal protection, and basic

skills training. They help mobilize

resources to improve schools, playgrounds and community centers. 

With assistance from USAID-funded

grantees, indigenous NGOs are deepening their roots in their communities

and becoming more entrepreneurial.

They are learning to broaden their base

of resources to include domestic public

sources, domestic private philanthropic

sources, and earned income from economic activities. The work of these

voluntary organizations in the social

sectors serves not only the people who

need it the most, but strengthens the

fabric of civil society for everyone. 

Source: The 1999 Sustainability index.

Lasting Service

Project Hope began its life in the Czech

Republic with USAID financing. The

program focused on finding ways to

improve the health of infants, children

and women by helping local health

facilities and professionals do a better

job of providing services. From 1991 to

1993, USAID funds helped Project

Hope support nursing education, cancer

screening for women, and health-care

management. In Prague, for example,

Project Hope supplied training and

equipment for breast and cervical cancer

treatments. In Brno, the program

opened a clinical unit that served as a

model for patient management and

practice. But the goal was always to

make Project Hope a long-lasting 

program that could sustain itself, 

without USAID. That goal was

achieved by 1994. Project Hope found

other sources of funds, including 

donations from private corporations. 

In February, 1996, the program won the

congratulations of President Havel for

its lasting contribution to the well-being

of Czech infants, children, and women.
The world is a different place ten years

after the fall of the Berlin Wall. Each of the

former Soviet bloc countries are now going

in their own direction and changing at

widely varying paces. The initial exuberance that once led people to dance in the

streets of Berlin has been tempered by 

the reality of change. The path to achieving

strong, market-oriented economies and

open, democratic societies—where the

majority have access to adequate 

housing, nutrition, health care and 

education—cannot be traversed quickly 

or without setbacks. 

Throughout the 1990s, the many 

organizations and individuals that worked

on USAID’s behalf have shared in the

determination of the people of the region

to meet the challenges of reform. This hard 

work has paid off. By the end of 2000,

USAID will have closed bilateral assistance

missions in eight of the 27 countries, all in

the Northern Tier: Czech Republic,

Estonia, Hungary, Latvia, Lithuania,

Poland, Slovakia, and Slovenia. The wideranging reforms implemented by these

countries have generated solid economic

growth and achieved significant democratic

freedoms. Their success sustains the belief

that it is possible to achieve lasting reform

in this part of the world. 

Progress in the rest of the region is mixed.

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. Years of ethnic violence have

threatened stability and slowed the 

transition to democracy and private sector

growth, particularly in Europe’s Southern

Tier. Many of the nations in Eurasia remain

tied to the past without sufficient will or

momentum to move forward. It will take a

lot longer than originally thought for these

countries to join the global economy. 

A large and stable middle class–a keystone

to enduring democratic systems and

dynamic private economies–still needs to

develop. In too many cases, these 

societies are polarized between a few very

wealthy beneficiaries of change and a great

number of people who have been unable to

access the benefits of reform. At the same

time, social services are woefully insufficient,

adding to the burden of the common citizen.

Toward the end of the decade, one-half of

Eurasia’s population and one-quarter of

Southern Tier citizens were living in poverty.

The turmoil and pain resulting from

incomplete reforms have discouraged citizens

and led many to long for the certainty of

the old Soviet days

A Decade of Change The Challenges of the Next Decade 1

The Challenges 

of the Next Decade

“We seek a trans-Atlantic partnership that is broad and open in scope, where

the benefits and burdens are shared, where we seek a stable and peaceful

future not only for ourselves but for all the world.”

—President William Jefferson Clinton 

Albania

Belarus

Ukraine

Moldova Macedonia

Latvia Lithuania

Slovenia

Czech Republic

Poland

Hungary

Estonia

Slovakia

Bulgaria Croatia Romania

Kyrgyzstan

Yugoslavia Kazakhstan

Azerbaijan

Uzbekistan

RussiaArmenia

Georgia

Turkmenistan

Tajikistan Bosnia-Herzegovina

Democratic Freedoms

Country Progress in Transition: Europe and Eurasia, 1999

Economic Policy Reforms

1

1

3

4

5

2

2 3 4 5

Note: Ratings are based on a 1 to 5 scale, with 5 representing most advanced.

Sources: Freedom House, Nations in Transit (1998) and Freedom House, Freedom in the World 1998-1999 (1999);

EBRD, Transition Report (1999).
As the world moves into the 21st century,

USAID will continue to be a catalyst for

change in Central and Eastern Europe and

Eurasia. To meet the challenges of the

next decade, USAID is modifying its

approach in ways that will build lasting

relationships that sustain and further

progress long after formal assistance

programs have ended. USAID calls this

approach Sustainable Partnerships. 

Simply put, USAID believes that partnerships between nations, communities, 

institutions and individuals, are the best

way to help this region overcome the 

isolation of the past and participate fully 

in international markets and institutions.

When partnerships are established—

between Poland and Ukraine, for example,

or Hungary and Armenia—they become

the cornerstone for future progress. 

The countries of the region have much

to learn from one another, and much to

teach one another. With USAID’s 

support, the peoples of the region and

the United States can develop new

forms of cooperation that replace 

bilateral assistance and advance 

freedom and prosperity.

Fifty years ago, the Marshall Plan assisted

a devastated Western Europe. In turn,

those nations became America’s greatest

allies and partners. Today, the United

States has an opportunity to do the 

same for the countries of Central and

Eastern Europe and Eurasia. As already

demonstrated by countries like Poland,

Czech Republic, and Hungary—the nations

of this region can become America's allies

and trading partners.

The first 10 years after the end of the

Soviet system have ushered in change 

and progress to an area that had long 

been stagnant. The vibrant political 

parties, activist NGOs, and bustling 

private businesses now existing in this part

of the world are a tribute to the people of

the region and the people of the United

States who supported them. In the first

decade of the 21st century, USAID will

continue its commitment to change in the

region through U.S. and regional partnerships which advance the development of

market economies, private business, 

democratic practices and social equity. 

A Decade of Change The Challenges of the Next Decade

Opening session of the Partners in Transition conference, held October 3-5, 1999 in Warsaw, Poland.

USAID

USAID

Looking to the Future

USAID

2
During the 1990s USAID supported well

over 300 partnerships between institutions

in the United States and their counterparts

in the region. These efforts have demonstrated that when people and organizations

with mutual interests are brought together,

they can resolve problems and form 

enduring relationships. Partnerships have

been promoted in many areas of the

USAID program, including agribusiness,

local government, health, environment,

energy, higher education and training, and

real estate. 

Sustaining Progress in 

the Baltic Countries

In 1998, USAID partnered with the Soros

Foundation Open Society Institute to create the Baltic American Partnership Fund.

With matching $7.5 million grants from

USAID and Soros, the Fund links Baltic

NGOs with their American counterparts

and enables them to be a force in sustaining

the transition to market democracies.

Energy Partnerships: 

An Ongoing Success Story

U.S. utilities and regulators from 

19 States and the District of Columbia 

are helping their counterparts in the 

region turn state-owned energy companies

into competitive, commercial businesses.

As a result, energy efficiency has

improved dramatically and the pace of

privatization has accelerated. In turn,

the U.S. utilities participating in the

program gain long-term opportunities

for increased sales and market growth.

By the year 2000, the U.S. Energy

Association had facilitated 34 energy

partnerships in 15 different countries.

Generally, funding for an energy partnership is shared equally between

USAID and the participating partners.

In 1999, however, a new regional energy

partnership in Europe only required 20

percent funding from USAID, with the

understanding that USAID support

would end after three years.

Supporting Cooperation

Between Countries in 

the Region

Poland’s per-capita gross domestic product,

once roughly equal to Ukraine’s, has nearly

tripled. In 1998, USAID helped launch a

new partnership, the Poland-AmericaUkraine Cooperation Initiative (PAUCI) 

to bring Poland’s lessons to Ukraine.

PAUCI provides small grants to Polish 

and Ukrainian organizations for collaboration on business development, local

government reform, and macroeconomic

policy development. 

Investing in the Environment

USAID’s Environmental Partnership

Grants Program, EcoLinks, promotes

practical, market-based solutions to urban

and industrial environmental problems.

Managed by the Institute of International

Education (IIE), the program links businesses, local governments, and associations

in the region with counterparts in the

United States or in other countries. In two

years, the EcoLinks program has awarded

106 grants and involved 74 U.S. groups

from 28 different states and the District 

of Columbia. These partnerships help 

participating organizations identify and

remedy environmental issues, adopt 

modern technology and best practices, 

and increase trade and investment in 

environmental goods and services.

A Decade of Change The Challenges of the Next Decade 3

An Enterprise Fund Builds A Legacy for the Future

In 1999, the Polish-American Enterprise Fund (PAEF) created a new kind of partnership. With earned proceeds, the Enterprise Fund started the Polish American

Freedom Foundation, a private, nonprofit organization that uses income from investments to promote economic and democratic reform without further USAID

assistance. As noted by Zbigniew Brzezinski, national security advisor under

President Jimmy Carter, ‘the Freedom Foundation is USAID's legacy in Poland.’

• USAID Grant to PAEF $256 million

• Loans and Investments Made $700 million

• Jobs Saved or Created 100,000

• Small Businesses Supported 9,000

• Projected Returns to U.S. Treasury $120 million

• Projected Returns to Foundation $180 million

Groundwork for the Future
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Ties That Bind:

USAID–Supported Partnerships between the United

States and the Region, Located by State and Country
MOLDOVA

GEORGIA

AZERBAIJAN

ARMENIA

UZBEKISTAN

KYRGYZSTAN

KAZAKHSTAN

TAJIKISTAN

TURKMENISTAN

ESTONIA

LATVIA

LITHUANIA

POLAND

UKRAINE

BELARUS

RUSSIA

CZECH REPUBLIC

SLOVAKIA

HUNGARY

SLOVENIA

BOSNIA

CROATIA

ROMANIA

BULGARIA

ALBANIA

MACEDONIA

KALININGRAD

(Russia)

MOLDOVA

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