COMMISSION OF THE EUROPEAN COMMUNITIES 
Brussels, 23.03.1995 
COM(95) 57 final 
REPORT FROM THE COMMISSION 
Tacis 
1993 ANNUAL REPORT 
Table of contents 
Executive summary 
Introduction 
Section 1 
Section 2 
Section 3 
Section 4 Tacis sectoral programmes 
Enterprise support services 
Financial services 
Privatisation 
Small and medium-size enterprises 
Productivity Initiative Programme 
Conversion of defence related industries 
Agriculture and food distribution 
Human resources development 
Public administration 
Policy and legal advice 
Social protection 
Training 
Statistics 
Customs 
Democracy programme 
Twinning 
Networks 
Energy 
Transport 
Telecommunications 
Nuclear safety 
Other Tacis activities 
Environment 
Humanitarian aid 
Regional programme 
Tacis information activities 
Legal and operational aspects 
Coordination of assistance 
Tacis committee meetings 
Relations with the European Parliament 
Coordinating units 
Tacis 1993 Council regulation 
Conclusions and future orientations 
Improving programme performance 
Future orientations 
New themes 3 
10 
13 
13 
13 
17 
20 
23 
24 
27 
30 
30 
32 
35 
37 
39 
40 
41 
42 
43 
43 
47 
49 
51 
55 
55 
56 
57 
57 
60 
60 
62 
62 
63 
64 
66 
66 
68 
70 
Executive summary 
Introduction 
Tacis is an initiative of the European Community, acting in the framework of the 
European Union, which provides grant finance to promote, support and sustain the 
process of transformation to market economies and democratic societies in the New 
Independent States and Mongolia. It fosters the mobilisation of know-how and 
expertise through partnerships, links and networks at all levels of society. 
Tacis 1991 
On the basis of a joint assessment of the economic situation and reform process in the 
former Soviet Union, the European Community and the authorities of the former 
Soviet Union decided to concentrate the 1991 Technical Assistance Programme, with a 
total budget of ECU 400 million, on the following five focal sectors: 
training in the public and private sectors 
energy 
transport 
financial services 
food distribution. 
Tacis 1992 
For 1992, Tacis took, where possible, the form of integrated programmes (as opposed 
to individual projects) combining actions in priority sectors in order to attain a clearly 
identified objective or set of objectives. The accelerated development of the private 
sector was given particular priority. The programme in 1992, amounting to ECU 450 
million, covers the following broad areas: 
• support for enterprise 
• human resources development 
• food production and distribution 
• networks (transport, telecommunications and energy, including nuclear safety). 
In addition to the National Programmes, the 1992 Tacis Programme earmarked ECU 
28 million to fund a Regional (multi-country) Programme. 
Tacis 1993 
A new regulation was adopted by the Council on 19 July 1993. In line with the new 
regulation's provisions, the Commission prepared, in consultation and coordination 
with the Authorities of the New Independent States, Indicative Programmes for 
technical cooperation with these countries over the period 1993-1995. The Indicative 
Programmes for 1993-1995 received the favourable opinion of the Tacis Committee in 
June, 1993. 
On the basis of the Indicative Programmes, the Commission services prepared the 1993 
Action Programmes for Armenia, Belarus, Kazakhstan, Kyrgyzstan, "Russian 
Federation (including the newly chosen regions of Western Siberia and the Urals) and 
Ukraine. These Action Programes were submitted to and given favorable opinion by 
the Tacis Committee in October 1993, together with the Regional (multi-country) 
Programme. For the other New Independent States,'the identification missions have 
taken place and the Action Programmes will be submitted to the Tacis Committee in 
March 1994. The 1993 Tacis Programme amounts to ECU 510 million, including 
humanitarian aid. 
Tacis sectoral programmes 
Tacis is the leading cooperation programme for the New Independent States. From 
1991 to 1993, it has committed a total of ECU 1.36 billion, the totality of its three 
annual budgetary provisions. These commitments have been made in the following 
broad areas: 
• Enterprise support services 
Setting up new enterprises and restructuring the old state sector has been a major 
platform of reform. This has involved privatising a large part of the sector and creating 
the conditions in which the newly privatised industries and new enterprises can 
flourish. 
Tacis has focused on working with governments on privatisation strategies and with 
individual companies on privatisation programmes. It assists in the creation of modern 
financial services in both the private and public sectors, including banking, insurance, 
financial markets and taxation. 
Tacis supports small and medium-sized enterprises by setting up agencies to promote 
the sector, provide advice and training, and by promoting links with businessmen in 
the European Union. 
Tacis has also devoted considerable resources towards converting defence-related 
industries to producing civilian goods. 
• Agriculture and food distribution 
Getting agricultural products to market and satisfying consumer demand in the New 
Independent States is a major priority. Tacis has been working at all levels in the chain 
of food production, processing and distribution to help improve the speed and 
efficiency of the system, and thus improve food quality and reduce food shortages. 
Tacis also provides advice to governments on institutional reform. 
• Human resources development 
Public administration reform 
The New Independent States have established as a priority the need to reform the 
public administration system to operate in an environment which is moving away from 
central planning. Tacis works with them to provide advice on creating and 
restructuring administrations and training civil servants to develop new skills. 
4 r 5 
Policy and legal advice 
Tacis is supporting senior New Independent States government figures and institutions 
in their role as actors of reform in the process of transition from a centrally planned to 
a market economy. The philosophy underlining the programme is based on the premise 
that* the transfer of European expertise in the form of advice-to New Independent States 
governments and institutions will provide invaluable background to, and analysis of, 
the policy options open to the New Independent States during this transition period. 
Social protection 
The forms of social security provided under the formerly centrally planned system 
need to be modified or newly introduced to meet the changing requirements of a 
society in transformation to a market oriented social and economic system. Tacis 
therefore works with the partner countries to establish new services in areas such as 
employment and reforming the delivery of health care and other social services. 
Training 
The new societies which the partner countries are creating require a broad range of 
new skills, particularly in the areas of economics and management. Tacis is working 
with many different organisations in the New Independent States to establish an 
education system which provides these skills. This can range from designing new 
curricula, training teachers, to retraining army officers in management techniques. 
Statistics 
The reform process currently underway in the New Independent States entails a strong 
need for the reform of statistical offices. These offices previously focused on the 
massive (but quite different) information requirements of a centrally planned economy. 
In most New Independent States the statistical system was mainly based on data 
collection and did not entail the processing, analysis and the actual use of data. It is 
today clear that the provision of reliable and adequate information is extremely 
important for attaining the objectives of reform in the New Independent States. Tacis is 
contributing to the process of the establishment of adequate statistical systems, and the 
restructuring of the national statistical offices in each New Independent State. 
Customs 
Whereas customs authorities within the individual countries in the former Soviet Union 
had mainly an executive and administrative function, they now are responsible for 
developing an adequate legal framework and the institutional policies necessary to 
adapt the customs services to the needs of a market economy. Policies, legal and 
administrative measures in the field of customs have to be developed which support 
and are in line with overall national, economic and financial policies and the capacity 
of the customs authorities to implement the new laws and regulations must be 
strengthened. Customs operations should also generate revenue for the state. The long-
term objective of the Tacis Customs Programme is to assist the national customs 
organisations of the New Independent State in restructuring their operations to meet the 
needs of a market-driven economy. 
Democracy 
By broadening the base of economic activity in the New Independent State, the 
foundations of a richer and more pluralistic society are being laid. A Democracy 
Programme has been introduced under the 1993 Tacis Programme. 
The programme covers parliamentary practice, but also includes the improvement of 
the transparency of public administration, support for the development of democratic 
structures, the promotion of an independent and pluralistic media, awareness building 
and conflict prevention, promotion of human rights, and the monitoring of security 
structures. 
Twinning 
A programme of city twinning in administration and services is being financed, 
offering practical help to New Independent State local administrators through direct 
exposure in European Union towns, cities and regional authorities. By emphasizing 
twinning, the programme is intended to create limks between administrations which 
can form a nucleus within which a broad range of cooperation between cities and 
regions may grow. 
• Networks 
Under the former Soviet system, infrastructure was developed to meet the requirements 
of what was one country. Transport was basically oriented towards Moscow, and 
communications were designed to serve inner-USSR needs rather than world-wide 
links. Energy was also supplied very cheaply, leading to the inefficient use of energy 
resources. 
Establishing infrastructure that meets the needs of each New Independent State is of 
major importance and Tacis has been working with the partner countries to restructure 
energy, telecommunications and transport networks, as well as introducing efficiencies 
in operation and use of these networks. 
• Nuclear safety 
There is an urgent need to monitor and improve the security of nuclear facilities in the 
New Independent States. However, it is often not feasible to simply shut down nuclear 
power plants because many countries depend on them for a large part of their energy 
needs. 
Tacis is therefore working with the partner countries to reinforce the security of the 
existing reactors and other civilian nuclear facilities. Furthermore, Tacis aims to 
strengthen the responsible supervisory bodies in this area. Tacis is by far the largest 
donor in the world working with the New Independent States to improve nuclear 
safety. 
Other Tacis activities 
Environment 
Tacis builds environmental considerations into its projects across a range of priority 
sectors: It is also providing support to institution building which can contribute towards 
enhanced sustainability as part of the general framework within which economic 
reform takes place. In addition, Tacis provides funding where environmental projects 
are essential to economic reform. 
Regional (multi-country) Programme 
A Regional (multi-country) Programme was included under the 1992 Tacis Programme 
to cover areas where there are advantages in adopting a regional approach, either in 
terms of economy and synergy - in using the same frameworks and models for similar 
activities in different states - or where there are problems of genuinely regional 
dimensions, such as regional transport networks or water resources. The Regional 
(multi-country) Programme is continued under the 1993 Tacis Programme. 
Tacis information activities 
The general aim of Tacis information and communication activities is to increase 
transparency of programme operations and provide information about Tacis to the 
programme's target audiences. 
In 1993, the main task carried out has been the laying of the foundations for the new 
Tacis communications programme. The infrastructure and basic conditions for the 
implementation of a new communications programme have now been created. A 
concrete and complex work programme has been launched and much work has been 
carried out relating to general strategic aspects of Tacis communications 
Legal and operational aspects 
Coordination of assistance to the New Independent States 
Tacis is only one of a wide range of international efforts designed to assist the process 
of economic and democratic reform in the New Independent States. Through effective 
coordination with these other donors, Tacis is able to have an increased effect on 
reform. Tacis works closely with other donors to increase the impact of its projects. By 
funding feasibility studies and preparatory work for the EBRD and World Bank 
investment projects, Tacis is able to contribute directly to investment in the New 
Independent States. Cooperation with the Member States and other bilateral donors is 
also growing. 
Tacis Committee Meetings 
Seven Tacis Committee Meetings took place in 1993. Subjects discussed included, 
amongst others, the new Tacis Council Regulation, coordination of assistance, 
monitoring and evaluation of Tacis programmes, Tacis contracts, commitments and 
payments, as well as the preparation and definition of the 1993-1995 Tacis Indicative 
Programmes and the 1993 Action Programmes. 
Relations with European Parliament 
During much of 1993, discussions were dominated by the issue of the freezing of the 
1994 Tacis budget by the European Parliament. Forty-five per cent of the budget was 
unfrozen in December, 1993. Besides the usual visits to the European Parliament to 
answer questions and the many replies to letters on behalf of constituents, the 
Parliament this year dedicated a full public hearing to Tacis and Phare in order to 
review and critically analyse the effectiveness of the programmes. 
Coordinating units 
Apart from their regular duties relating to the implementation of the 1991 and 1992 
Tacis Programmes and the inception of the 1992 projects, the Coordinating units' 
activities focused on the 1993 Action Programmes. 
Efforts have also been continued towards the improvement of the logistic and staff 
situation in the Coordinating Units. The annual National coordinators meeting took 
place in November 1993. 
Council Regulation 
• The final version of the new 1993 Tacis Council Regulation was sent to the Council 
and to the European Parliament on 15 January 1993. However, during its plenary 
session of July, the European Parliament decided to deliver a negative opinion, 
reflecting its disagreement with the comitology. The Council of Foreign Affairs 
adopted the regulation on 19 July 1993. It was published on 29 July 1993, and 
entered into force on 2 August 1993. 
New elements of the Regulation include 
• the extension of activities to Mongolia 
• multi-annual programming 
• inclusion of triangular operations with Phare countries and Mediterranean 
countries 
• humanitarian aid 
• coordinating the provison of know-how with international finance institutions. 
The Commission has also been requested to introduce a number of transparency 
elements in the new regulation. 
Conclusions and future orientations 
Improving programme performance 
The measures instituted to overcome or circumvent the inevitable constraints and 
difficulties associated with Tacis1 infancy have now started to bear fruit, not least as a 
result of the systematising of all stages of the Tacis project cycle and enhancing 
programme quality through increased cohesion of design and the diversity of 
instruments. Some of the more important measures are 
improved quality, effectiveness and coherence 
measures to accelerate programme implementation 
institutional improvements 
improvement of effective donor coordination 
intensified relations with the European Parliament 
intensified cooperation with other Commission services 
launching of an effective monitoring and evaluation programme 
increasing programme transparency. 
Future orientations 
Tacis is currently focusing on two important elements: 
• The streamlining of the programme's administrative procedures. This is being done 
through a shift to greater decentralisation of programme activities; a greater 
concentration on regions; increased subcontracting to local New Independent State 
companies and experts; and the adaptation of its procedures to meet the needs of 
speedy response and flexibility. 
• The further integration, under Tacis, of horizontal themes such as equal 
opportunities and the environment. 
10 
Introduction 
Tacis 1991 
Oh the basis of a joint assessment of the economic situation and reform process in the 
former Soviet Union, the European Community and the authorities of the former 
Soviet Union decided to concentrate the 1991 Technical Assistance Programme on the 
following five focal sectors: training in the public and private sectors, energy, 
transport, financial services and food distribution. 
On 10 October 1991, the European Union Member States approved the Commission's 
first proposal for an energy sector programme (ECU 115 million). Approval was 
subsequently given on 4 November and 28/29 November 1991, for four additional 
sector programmes: training (ECU 103 million), food distribution (ECU 73 million), 
transport (ECU 43 million), and financial services (ECU 37,5 million). This was 
followed by the Commission's financing decisions of 11 December, 1991 on all five 
programmes. The five Financing Memoranda were signed on 12 December 1991. 
Tacis 1992 
For 1992, Tacis took, as far as possible, the form of integrated programmes (as 
opposed to individual projects) combining actions in priority sectors in order to attain a 
clearly identified objective or set of objectives. The accelerated development of the 
private sector was given particular priority. 
Cooperation in 1992 covers the following broad areas: 
Support for enterprise 
• development of policy, legal and institutional mechanisms supporting the 
creation and the growth of small and medium scale enterprises 
• creation and restructuring of financial institutions (commercial banks, financial 
markets and insurance companies) 
• enterprise restructuring and privatisation 
• advice for the conversion of defence related industries 
• development of policies to attract and regulate foreign investment in support of 
economic recovery. 
Human resources development 
• management and economics training actions in public and private sectors. 
Whenever possible, these actions dovetail with programmes in other sectors. Emphasis 
has been placed on the building of modern and efficient public administrations, and the 
provision of advice to design essential social and education policies in conditions of 
severe budgetary stringency. 
H 
Food production and distribution 
• institutional and policy reforms 
• programmes in agricultural production, agro-industry, storage, transport and 
the wholesale and retail sectors. 
Networks 
Measures to improve management systems, and the organisational, legal and regulatory 
framework in 
• energy (including nuclear safety) 
• transport and telecommunications. 
Whenever possible, national projects in those areas dovetail with regional initiatives in 
the same sectors. 
In addition to the national programmes, the 1992 Tacis Programme earmarked ECU 28 
million to fund the Regional (multi-country) Programme. 
The Member States approved the Action Programme for the 11 New Independent 
States1 in November and December 1992. The related Financing Memoranda were 
signed by the European Commission and the Partner States in early 1993. 
The more concentrated approach of the 1992 Programme (fewer and larger actions, 
often integrated with others) and a greater emphasis on early and rapid implementation 
potential, provided significant scope for earlier and higher levels of commitment and 
disbursement rates compared to 1991. Accelerated programme implementation should 
also benefit from the greatly improved enabling framework that has now been 
established for the Tacis Programme, both at headquarters and in the New Independent 
States through the coordination units. 
Tacis 1993 
The European Commission submitted a proposal to the Council for a new Tacis 
Regulation in November, 1992. After along period of (often difficult) discussions 
between the Council, the Parliament and the Commission, the new regulation was 
adopted by the Council on 19 July, 1993. This delay caused considerable problems 
with regard to the timely commitment of 1993 Tacis funds. 
In line with the new regulation's provisions, the Commission prepared, in consultation 
and coordination with the authorities of the 11 New Independent States, Indicative 
Programmes for technical cooperation with these countries over the period 1993-1995. 
The 11 Indicative Programmes for 1993-1995 received the favourable opinion of the 
Tacis Committee in June, 1993. 
On the basis of the Indicative Programmes, the Commission services prepared the 1993 
Action Programmes for Armenia, Belarus, Kazakhstan, Kyrgystan, Russian Federation 
(including the newly chosen regions of Western Siberia and the Urals) and Ukraine. 
1 Tacis activities in Tajikistan have been suspended since October 1992 for political and security reasons 
12 
These Action Programmes were submitted to and approved by the Tacis Committee in 
October 1993, together with the Regional (multi-country) 'Programme. For the other 
New Independent States, the identification missions have taken place and the Action 
Programmes will be submitted to the Tacis Committee in March 1994. 
The document below summarises progress under the Tacis -Programme during 1993. 
Two critical changes were introduced at the beginning of 1993, resulting in improved 
quality and management of Tacis. First, a concerted effort was made to eliminate the 
backlog of projects which built up in the first 18 months of the Tacis programme. 
Second, multi-annual programming was introduced in order to promote earlier and 
more rapid project implementation in future. 
Seven humdred new contracts worth ECU 345 million have been awarded in 1993, 
compared to 385 contracts worth ECU 202 million in 1992. This represents an increase 
of 70 per cent in the number of contracts awarded and 57 per cent in the amount 
contracted during the year. Over 92 per cent of the 1991 programme and over 40 per 
cent of the 1992 programme have been contracted out. The monthly rate of payment 
has risen almost ten-fold, from an average of just ECU 2.5 million a month in 1992 to 
ECU 20-25 million a month in the last half of 1993. 
Although Tacis headquarters have been strengthened in terms of manpower - enhancing 
both technical and management capabilities - there are still shortages. However the 
establishment in the New Independent States of systematic monitoring and evaluation 
systems has started to generate feedback, thus strengthening future programmes and 
overall Tacis performance. At the end of 1993, the coordinating units are fully 
operational in all New Independent States (except Tajikistan) and allow Tacis to 
decentralise certain functions and to benefit from local capabilities and know-how. In 
Moscow, and now in Kiev, the European Union Delegations are also facilitating this 
decentralisation process. 
13 
Section 1 Tacis sectoral programmes 
Enterprise support services 
Financial services 
General overview 
Tacis1 main objective in this sector is to cooperate with the partner countries in the 
creation of a modern financial services sector, whose existence is an essential 
component of any market economy. Its efficient functioning is therefore a requirement 
for transformation towards market mechanisms in all other areas of economic activity. 
Successful enterprise restructuring, privatisation, SME development and investment 
promotion in different business areas depend heavily on an efficient working financial 
infrastructure. 
Given the previous political and economic system in the former Soviet Union, this 
infrastructure was underdeveloped and required major assistance. Without success in 
this process, domestic and foreign investment will continue to be discouraged. 
Tacis activities in the financial services sector can be divided into two groups. 
Financial services in support of business development, which includes 
• commercial banking (retraining of bank staff, restructuring of banks, creation of 
new financial institutions) 
• accounting and auditing (legal framework, development of standards, training) 
• insurance (legal framework, training) 
• financial markets (legal framework, training, development of pilot stock 
exchanges). 
Financial infrastructure in the public sector, which includes 
• central banking (limited to measures for the strengthening of commercial banks in 
the areas of training, supervision and payments and clearing) 
• taxation (training, tax awareness campaigns, reorganisation of tax administrations). 
In view of the limited funds available, and taking into account the involvement of other 
multilateral and bilateral donors, the Commission has to date allocated most of Tacis 
funds in this sector to projects in the field of commercial banking, since enterprise 
financing constitutes by far the most important prerequisite for the introduction of 
market mechanisms. 
Implementation progress 
By the end of January 1994, only 2.54 per cent of the 1991 programme will still be 
awaiting implementation. As for the 1992 programme, 13 lots (the projects were 
grouped into tender lots, allowing for more efficient management of contracting 
procedures and project implementation), made up of a total of 31 projects, have been 
14 
tendered. All but one of the direct agreements have been signed, which constitutes 
97.65 per cent of the 1992 programme. 
Several 1992 projects have had to be modified during the preparatory phase but, to 
date, no project has been cancelled. As of the end of January 1994, nearly all the 1992 
projects will be in the implementation phase. 
As regards the 1993 programme, terms of reference have been finalised and contract 
launching procedures have now begun. During the first half of 1994, contracts for 
projects in the four larger New Independent States will be signed. The structure of 
1993 national programmes can be outlined as follows: 
Russian Federation 
Ukraine 
Kazakhstan 
Belarus bank advisory service 
bank training - extension of support to Russian banks in 
developing in-house training capability 
support to investment services. 
training programme for the National Bank of Ukraine and 
Bank Oschadny (Savings bank) 
restructuring Bank Ukraina 
Ukrainian Bank for Reconstruction and Development. 
banking advisory service for commercial banks. 
assistance for three medium/large commercial banks to 
help them develop a long-term financing capability. 
Several projects under the 1991 and 1992 programmes had to be modified during the 
preparatory phase, for the most part due to the changed context resulting from the 
break-up of the Soviet Union and the necessity to re-direct programmes to the New 
Independent States, many of which lack well-established institutions. 
Coordination with international financial institutions (in particular the IMF and co­
operating central banks and the World Bank) has required time and effort to develop 
properly. Nevertheless, coordination arrangements for providing assistance in the 
central banking area have now been agreed between the IMF, European Union central 
banks and the Commission. 
The international financial institutions are increasingly interested in common actions, 
often involving co-financing. The Commission is working closely with the IMF in the 
field of reform of the national payments and clearing systems in several New 
Independent States and with the World Bank in the establishment of accountancy 
standards in the Russian Federation. A new, promising area of close cooperation with 
the World Bank is the field of bank restructuring advice in Kazakhstan. 
Coordination with European Union Member States is however not systematic, and the 
Commission does not always receive sufficient timely information on bilateral 
assistance. Thus, in order to avoid wasteful overlap, it has proved necessary to invest 
time in reviewing the overall bilateral assistance effort. 
15 
Cooperation with the EBRD continues to be important. Particularly noteworthy are the 
creation of a long-term investment bank in the Russian Federation, the Russian Project 
Finance Bank (RPFB) and the International Finance and Banking School (IFBS) 
project in Moscow. The RPFB project has already attracted additional know-how from 
the US and Canada and it is hoped that it will attract other potential investors. The 
Commission also works closely with the EBRD in the restructuring of individual 
commercial banks. 
Project examples 
As regards central banking, advice is being provided to the central banks of the 
Russian Federation, Ukraine, Belarus and Armenia on the long-term restructuring 
needs and options of the banking sector as a whole. In addition, new bank accounting 
standards are being developed in the Russian Federation in a pilot project, together 
with the Russian central bank, the World Bank, IMF and international accounting 
firms. 
As regards payments and clearing, a major initiative (the 18 month Action Plan) has 
been launched with the Bank of Russia as part of a common effort with the IMF, 
World Bank, EBRD,-OECD, Deutsche Bundesbank, Banque de France, Bank of 
England and the US Federal Reserve. The creation of an Inter-State Bank for 
Multilateral Clearing among the states of the former Soviet Union is being supported 
together with the IMF. 
A major training programme for the staff of the Russian Central Bank is also being 
prepared in cooperation with the IMF and several European Union Member States' 
central banks. 
In banking, three types of intervention are undertaken: 
• A massive retraining of banking staff is undertaken by a series of bank training 
projects, particularly through the IFBS in Moscow and similar major training 
projects in St. Petersburg, Tyumen, Minsk, Kiev, Alma Ata, Tashkent and all 
three Caucasian Republics. 
• Restructuring efforts of major banks, providing advice on strategic reorientation 
and internal reorganisation of banks in St. Petersburg, Kiev and Minsk, the most 
recent action being through the European Banking Advisory Service (EBAS). 
• The creation of new financial institutions complements these efforts by facilitating 
the establishment of model institutions for hitherto unknown banking activities, 
such as the Russian Project Finance Bank which is a long-term investment bank. 
In financial markets, lawyers and brokers are designing a development plan for the 
establishment of the Russian Stock Exchange. A training programme for stock 
exchange personnel, employees of financial institution and stock exchange 
administrators in Moscow, St. Petersburg and Kiev, in close cooperation with 
European Union stock exchanges, is about to start. 
16 
The restructuring needs of the insurance sector are currently being examined in the 
Russian Federation. Training centres for insurance ^are-being established at two 
locations in the Russian Federation, as well as in Kiev. 
The International Advisory Board for development in accounting and auditing in the 
Russian Federation is receiving Tacis support in the elaboration of draft legislation for 
the accounting and auditing sector and in the definition of training needs for the 
development of the accounting and auditing profession. Advice on the implementation 
of a legal framework in this field is also being provided in Ukraine, Uzbekistan, 
Kazakhstan and Turkmenistan. 
In the field of taxation, advice is also being provided to the Russian state tax service on 
the improvement of tax collection services. Similar programmes are under way in 
Ukraine and Belarus. 
Finally, a document entitled 'Orientations for Assistance to Financial Infrastructure 
Development in Economies in Transition', applicable to both Phare and Tacis partner 
countries, has recently been established. These orientations establish a set of options 
for focused actions in the financial services sector, serving as a systematic framework 
for programming and priority identification. The document has been made available to 
the Members States at the Tacis Committee. 
Observations and conclusions 
Research carried out in preparation for the above mentioned document has led to the 
conclusion that the sub-sector with the highest priority in the financial services sector is 
banking, including central banking, followed by financial markets and insurance. 
Secondary priority is attributed to accountancy and auditing. 
The stage of development of each financial sub-sector in the different New Independent 
States determines the type of assistance to be provided: 
• At the early stage of financial infrastructure development, the Commission will 
provide policy advice, improvement of framework conditions (legal, regulatory, 
accounting standards, supervision) and short-term professional training. 
• At the intermediate stage, projects for restructuring, long-term training and support 
to professional organisations can be included. 
• At the advanced stage, support will also comprise the provision of know-how for 
the creation of new or the privatisation of existing institutions. 
Immediate lessons to be learned from the implementation experience gained so far in 
the financial services sector are 
• The use of mid- to long-term experts will have to be increased, to the detriment of 
short-term advice. This shift should be made in coordination with an increased 
utilisation of qualified and reliable local expertise, a process which has already 
begun in some projects. 
17 
The number of small projects with individual contracts will be significantly reduced 
in favour of larger package projects, where several "related actions are grouped 
under one lot and/or contract. This has already proved to be a efficient way of 
decreasing the overall negotiating time of a programme. 
The introduction of flexible instruments for the provision of know-how will have 
priority in the forthcoming programmes. 
Coordination with other donors should be continued and strengthened. 
Privatisation 
General overview 
Tacis projects in the privatisation sector are either those managed by the EBRD 
(funded under the Bangkok Agreement), or those fully defined and managed by Tacis. 
The projects generally fall into three broad categories: 
• institutional support at either central or regional level 
• privatisation and/or restructuring of companies, including sectoral review 
• encouragement of contacts with foreign partners. 
The placing of advisers in the institutions involved in the privatisation process 
constitutes a major contribution to the future viability of the economy. Supporting the 
privatisation committees and departments in defining their programmes and drawing up 
the legal framework on the basis of clearly stated objectives and arguments (which 
must also reconcile the often conflicting political priorities of governments), is 
essential if these bodies are to survive in the political struggle with those vested 
interests in the sectoral ministries whose power to control sections of the economy 
should diminish or disappear following privatisation. 
Actual privatisation transactions are also an essential part of the programme, since a 
successful privatisation demonstrates more than anything the importance of reform. 
The attention given to the Russian mass privatisation programme, launched with the 
help of EBRD consultants and financed by Tacis, is indicative of the importance of 
privatisation within the overall economic and political reform of the New Independent 
States. After pioneering work in Poland and Czechoslovakia, the adoption of mass 
privatisation in the Russian Federation has set the trend for other former Soviet 
republics. The forms of mass privatisation may differ from one republic to another, but 
all are adopting some form of it to cope with the absence of capital and the need 
rapidly to reform the economic structure. All New Independent States have received, 
or are in the process of receiving, assistance from the Tacis Programme. 
However, privatisation, which changes the ownership structure, is clearly only an 
enabling factor which cannot create a market economy overnight. It neither changes 
the basic structure of industry, nor modifies the monopolistic structures inherited from 
communist times. More in depth action will be needed, both at the central level with 
de-monopolisation, and at local and regional level with programmes addressing the 
18 
modernisation and restructuring of enterprises, as well as regional re-deployment 
towards new activities. In 1993, Tacis programmes have initiated support towards the 
restructuring and re-deployment of activities, while continuing to support the long-term 
effort involved in privatisation. Furthermore, following the G7's decision at the Tokyo 
Summit in July 1993, to support the Special Privatisation and Restructuring 
Programme, Tacis has decided to contribute $100 million to the programme over a 
period of two years. 
Implementation progress 
1992 Programme 
The second half of 1993 saw an acceleration in the implementation of the Tacis 1992 
privatisation programme, with projects to the value of nearly ECU 9 million underway 
and tenders for all remaining projects launched. All projects under the 1992 Action 
Programme, worth over ECU 20 million in total, were launched by early 1994. 
1993 Programme 
Under the ECU 10 million contract to support the Russian Privatisation Centre, two 
long-term experts are now working with M. Boyko, the Chief Executive of the Russian 
Privatisation Centre, to develop the regional network and activities of the Centre. The 
restructuring of about 12 privatised enterprises and implementation on the ground 
should commence very shortly. The evaluation of a tender for a review of the Russian 
steel industry (ECU 2 million) will be completed at the end of June, 1994. The level of 
commitments under the 1993 privatisation programme in the Russian Federation has 
now reached 36 per cent. 
Project examples 
The teams implementing a 1992 project in Ukraine have already carried out sector 
analyses in consumer goods (confectionery, clothing, health care products) and in 
mechanical industry (industrial vehicles and components). These studies have enabled 
the authorities to better understand the strengths and weaknesses of their industries, 
and identify their restructuring needs. Enterprises eager for privatisation with foreign 
investors have been identified, and work on the audit and valuation of these enterprises 
has commenced. 
A multinational consortium led by the London firm of MMD has completed the 
preparation of the first auction for mass privatisation in Kazakhstan. Through a 
comprehensive information campaign set up and strict organisation ensured by the 
consortium, by mid-January 1994 (i.e. one and a half months after the launch of the 
programme), more than five million people (out of a population of 14 million) had 
already withdrawn their coupon booklets, 57 privatisation funds had been licensed, and 
some 50 more were due to be licensed. Training was, in addition, provided by the 
consortium for all participants in the programme. The consortium has spent a 
considerable amount of time working on holding companies as the creation of holdings 
will strengthen the industrial structure of the Kazakh economy. 
A project to assist Ukrainian enterprises in developing partnerships and negotiating 
with foreign investors has been set up with a private foundation, the Centre for Market 
19 
Reforms in Kiev. Enterprises were-selected in a single focal region, in Kiev, Odessa, 
Lvdvpàrid'Zàporozhye. Managers from'these enterprises-will attend a training seminar 
and exchange forum, together with potential partners from Germany. A similar centre 
is due to open in Minsk in February 1994. 
In Belarus,''CIE Consult of Dublin is continuing some very useful privatisation work in 
the Ministry of Transport, while the Spanish consultancy firm DFC, assisted by Ernst 
& Young, is assisting the Committee of State Property on the implementation of its 
voucher privatisation scheme. 
In the course of 1994, the following privatisation projects will be supported. 
In Kazakhstan, enterprises to be privatised under the 1993 Tacis Programme have now 
been selected (in continuity with the 1992 programme, in the field of chromium and 
chemical fibres). A project to be launched in February, 1994, will continue to 
strengthen the Kazakh Committee of State Property, and begin to address some post-
privatisation issues. 
In Ukraine, the 1993 programme will focus on mass privatisation and support to the 
region of Zaporozhye,; one of the most dynamic regions of Ukraine. The projects will 
be launched in February. 
Two large projects in the Trans-Caucasus (ECU 3.5 million) and Central Asia (ECU 
1.8 million) have now commenced. Resident advisors have been appointed and work in 
the most crucial areas of privatisation will be carried out over the next 18 months. 
In Belarus, following on-going discussions with the World Bank and the EBRD, Tacis 
is focusing its 1993 privatisation effort on anti-monopoly policy. Support will be given 
to the Institute for Privatisation and Management, recently set up in Minsk, and 
training provided to both the public and private sector on the crucial issues of a market 
economy. 
Finally, Tacis is expecting to launch, during the first half of 1994, the remaining 
projects in the Russian Federation in the framework of the Commission's participation 
in the G7 initiative (regional centres in the Urals and Western Siberia). 
Observations and conclusions 
The monitoring of privatisation projects has been carried out in Ukraine and 
Kazakhstan, where the first 1992 projects began in the field in July, 1993. The 
monitoring effort has enabled us to appreciate better the needs of the New Independent 
States' partners, as well as be more sensitive to emerging problems and new issues to 
be addressed under the 1994 privatisation programme. Further monitoring will be 
carried out by a team to be established during the first half of 1994. 
Coordination is ensured through regular bilateral meetings held with all donors to 
discuss the privatisation effort in the New Independent States. The EBRD, in 
particular, has indicated its interest in supporting and following up Tacis work. Joint 
missions with the EBRD have been organised, such as the mission to the Urals in 
November, 1993. 
20 
Coordination with the World Bank is sometimes more problematic, due to the large 
size of the bank's loans and the many projects^which*these -cover. Nevertheless, by 
ensuring early consultation and discussion, potentially overlapping programmes have 
been avoided. 
Thé delay in the implementation of the World Bank loan in Kazakhstan has left Tacis 
as the only provider of support to the Kazakh Committee of State Property. Although 
the bank's original terms of reference overlapped with those of Tacis, it agreed to re-
focus its know-how as a result of a more rapid deployment of the Tacis team of 
experts. Thus, the amended terms of reference will continue Tacis assistance rather 
than duplicate it. 
In both the above cases, the use of experts formerly on the World Bank staff has 
greatly facilitated coordination. 
Among the problems encountered in the coordination effort is the absence of a forward 
looking view by the potential partners, and the practice, inherited from the past, of 
requesting the same thing from all donors. This increases the need for specific 
assistance coordination and the exchange of experience between the various countries 
of both the New Independent States and central and eastern European countries. 
Parallel to the decentralisation of Tacis support to regions away from national capitals 
are increasing difficulties encountered in recruiting qualified consultants to carry out 
the privatisation projects. The development of specific incentives, including financial 
bonuses, or the grouping of projects into lots (e.g. a more straightforward project 
together with a more difficult project in a remote area) may offer solutions to this 
issue. The provision of Russian language training for experts may also be an incentive. 
Related to the above problem is the considerable time involved in travelling to some of 
the partner countries or regions, such as central Asian countries or Siberia. It could be 
envisaged that consultants be awarded contracts which allow for the possibility to work 
simultaneously on several projects, in order to maximise their use of time spent in 
areas difficult to reach. 
Finally, the political environment clearly has a great effect on privatisation 
programmes. Programmes must be flexible and reviewed regularly in order to cope 
with political changes. 
Small and medium-sized enterprises 
General overview 
Tacis aims to encourage the development of small and medium-sized enterprises 
(SME's) in the New Independent States and promote the establishment and expansion 
of contacts between New Independent States and foreign enterprises, notably those 
within the European Union. 
The programme aims to address important problems which currently impede the spread 
of enterprise in the New Independent States, including the 
21 
• lack of business awareness 
• absence of a developed business support framework 
• inadequate business training services 
• difficulties in identifying potential business opportunities in domestic and foreign 
markets 
• problems in finding potential trading/joint venture partners 
• communication difficulties. 
Undoubtedly, the effects of the transition to a market economy will greatly increase 
unemployment among groups of qualified persons in the New Independent States. The 
Tacis SME Development Programme aims to assist these groups in becoming 
economically productive. The SME programme was established under the 1992 Tacis 
Programme, with a total budget of ECU 20 million, a sum of ECU 18 million under 
national Action Programmes and ECU 2 million under the Regional (multi-country) 
Programme. The overall budget allocation for the SME sector has remained the same 
under the 1993 Tacis Programme, although funding has increased under the Regional 
(multi-country) Programme (ECU 7 million). 
Implementation progress 
1992 Programme 
The first SME initiatives were launched under the 1992 programme. Tenders for all 
national projects were launched between April and August 1993 and the four main 
tenders for SME projects under the national Action Programmes were evaluated by 
September. Representatives of the New Independent States counterpart organisations 
were invited to take part in these evaluations with an observer status. During these 
visits, they were also able to establish important contacts with SME organisations both 
in Belgium and in the Netherlands. 
By December 1993, all four contracts (amounting to a total of ECU 13.2 million) had 
been signed with western European consortia representing a wide range of SME 
development organisations. From January 1994, onwards, the contractors will initiate 
activities in view of the rapid establishment of SME Development Agencies (SMEDA) 
and Business Communication Centres (BCC) in most New Independent States capitals. 
The SMEDA's will provide support to individual New Independent State entrepreneurs 
who wish to start up business and to existing private SME's, promoting business 
awareness, in particular with regards to local authorities. Information and counselling 
will be offered to new and existing SME's, and specialist consultancy services 
provided in fields such as marketing, taxation, accountancy and product costing. In 
addition, special business training will be provided. The BCC s will contribute to the 
development of SME's through the exchange of information on export opportunities 
for indigenous enterprises, joint venture possibilities and foreign (inward) 
opportunities. 
The tender for the establishment of a SMEDA and BCC in Moldova, the establishment 
of a BCC in Samara, assistance to the Legal Committee in Turkmenistan for the 
drafting of legislation in the SME sector and assistance to the Chamber of Commerce 
of Industry in Uzbekistan will be evaluated in early January 1994. Implementation on 
the ground will then start in March 1994. 
The revised tender related to training for entrepreneurs vin Belarus will shortly be 
evaluated. The terms of reference for this programme include three components: 
training for business trainers, training for entrepreneurs and a pilot project to provide 
specific tailored assistance to a number of Belarusian enterprises. Tacis will implement 
the last component in conjunction with the EBRD and UNDP. 
1993 Programme 
SME activities will continue under the 1993 Tacis Programme in Azerbaijan, Georgia, 
Kazakhstan, Turkmenistan, Uzbekistan, Ukraine and the Russian Federation. 
Programme activities will be in continuity with the 1992 Programme, covering in 
particular 
• The expansion and deepening of activities of the SMEDA/BCC network, with he 
establishment of SMEDA's in other New Independent States, and further assistance 
provided in the Russia Federation and Ukraine for the rapid establishment of the 
SMEDA/BCC network in new regions. In cooperation with the SMEDA's and 
BCC s which will be established under the 1992 Tacis Programme, business 
advice, training of agency staff and training for trainers will be provided. Special 
emphasis will be given to information and the training of future women 
entrepreneurs. 
• Parallel to the SMEDA's, the monitoring of a limited number of selected SME's 
with growth potential. This will be organised in Azerbaijan, Uzbekistan, 
Kazakhstan and Ukraine. The objective is to stimulate entrepreneurship and 
encourage innovative processes within the local industry and service sector. The 
enterprises concerned will receive a complete range of business development 
services over a period of 12 to 18 months. 
Regional Programme 
Projects under the 1992 Regional Programme are now all successfully underway. One 
hundred and thirty missions are being carried out by the European Senior Service 
Consortium, and 30 missions have been completed. During these missions, advice is 
provided on company organisation, restructuring, privatisation and the preparation of 
business and marketing plans. In many cases, this has led to the creation of spin-offs, 
in the sense that it has encouraged the fostering of joint ventures between New 
Independent States and European enterprises. 
Under the Eurochambres Exchange Programme, 38 visits were made between October 
and December, 1993. To date, 12 staff members of New Independent States chambers 
of commerce have visited European Union chambers for a period of two weeks, and 16 
staff members of European Union chambers have visited New Independent States 
chambers for one week. It is envisaged that six Russian chambers and eight European 
Union chambers will shortly be exchanging visits. The final selection of the 
participants is scheduled for January, 1994. 
Building on the experiences gained under the 1992 Regional (multi-country) 
Programme, the Eurochambres Exchange Programme and Seminars and the European 
23 
Senior Executive Service Programme will be continued under the 1993 Regional 
Programme. 
A new initiative will also be launched to provide work experience and training 
attachments for New Independent State managers with companies in European Union 
Member States. This will build on already existing links between European Union and 
New Independent States chambers of commerce and enterprises. 
Coordination with other donors 
On 4 and 5 November 1993, Tacis, together with the EBRD, organised a international 
donor coordination meeting on SME development in the Russia Federation. 
Participating institutions included, among others, the European Union (Tacis), the 
EBRD, the IFC, the OECD, the UK Know-How Fund, US AID and the World Bank. 
The meeting greatly enhanced coordination and cooperation among the main donor 
institutions, and it was decided to reconvene the meeting in the Russian Federation 
during the first half of 1994. Furthermore, the attendance at this next meeting will be 
widened to include Russian counterparts and representatives with field experience. 
Observations and conclusions 
European Union experts under the SME programmes have been enthusiastically 
received in each New Independent State, where a high level of satisfaction has been 
noted with the services supplied.. 
In addition to the expansion and deepening of activities of the SMEDA/BCC network, 
programmes planned for 1994 will include measures to speed up the adaptation of the 
legal and institutional environment for SME development in the New Independent 
States. Creating a capability to advise and encourage governments to develop the 
environment for SME development is therefore routinely part of the mission statement 
of the new development agencies. 
Productivity initiative programme 
General overview 
During the G7 Tokyo Summit, the European Commission committed itself to 
allocating $10 million to the Productivity Initiative for Russia. This initiative, which is 
very similar to the training of European managers which took place in the 1950's in 
the framework of the Marshall plan, would consist of the financing of a number of 
small groups from Russia to come to study production and working methods in 
European Union enterprises and public administrations, with a view to ensuring a 
massive transfer of information skills. 
The basic principles of this technical cooperation would be 
• a bottom-up approach which would guarantee effectiveness despite the political and 
economic instability which exist in the Russian Federation 
24 
• a deep involvement of European Union economic operators (enterprises and public 
administrations) 
• the obligation of the Russian partners to disseminate the results of their study visits 
in view of creating a multiplier effect. 
The Productivity Initiative will consist of a large amount of study visits, integrated in a 
global training approach to ensure a maximum impact on the Russian economy. Under 
the 1993 Tacis Programme, a budget of ECU 1.2 million has been allocated to a pilot 
phase of the Productivity Initiative. 
The programme is also based on a4emporary transfer into business in the west so as to 
let the Russian managers get a first-hand experience in the functioning of an open 
market economy. This on-the-job training would consist of three months participation 
in the management process with continuous interaction between several departments 
such as marketing, finance, . lgineering, etc. and with a customer-oriented business 
approach. The programme is aimed at senior level managers and executives operating 
in medium-size and large companies and who are anxious to implement upon their 
return to their own countries the necessary changes so as to put their own parent 
company on track for the open market economy. In addition, a large number of study 
visits are expected to take place in the framework of wider projects funded under the 
1993 Tacis Programme. 
Implementation progress 
Under the 1993 Programme, a pilot phase will start with 40 participants. In order to 
coordinate the selection of the trainees and to ensure that the experience gained is 
followed through properly upon their return, Tacis has set up a support unit in Moscow 
working with a local management institute to advise returning managers on how to 
implement the necessary changes. 
The coordination with European Union companies is being handled by a consortium of 
three highly professional management training institutes from Germany, Belgium and 
Spain. These companies have already built up valuable experience in ananging 
exchange and twinning-type operations through work carried out in different regions of 
the Russian Federation. 
Observations and conclusions 
European Union experts under the Productivity Initiative visiting the European host 
companies have noted a great enthusiasm and high level of satisfaction for the 
proposed new programme. A serious expansion of the Prodictivity Initiative is planned 
for 1994. 
Conversion of defence related industries 
General overview 
As the principal beneficiary of the centralised system, the military sector was the 
strongest, most technologically capable sector within the-industry of the former Soviet 
25 
Union. Its industrial output was 20 per cent of the gross industrial output and it 
employed some 13 million people, half of them from the-Russian Federation. 
Other areas of concentration are Belarus and Ukraine, employing 500,000 and 1.2 
million people in respectively the military sector. Important military enterprises are 
located in Kazakhstan (75,000 in the shipbuilding and nuclear industry), Georgia 
(25,000 in aviation, shipbuilding, electronic and telecommunications industry), 
Uzbekistan (aviation and radio-electronic industry). Significant military enterprises 
with excellent capabilities in radio-electronics are located in Armenia (20,000 people) 
and Moldova (30,000 people). 
Since late 1989, military orders in the New-Independent States have dropped by more 
than half. As a consequence, no less than six million jobs, providing living means to 
more than 20 million people, may be dismissed in the next few years. 
The objective of the Tacis conversion programme is to save jobs and maintain existing 
technical and scientific capabilities. Conversion is to be driven by European Union 
industrial groups through the creation of joint ventures, and Tacis funds to cover the 
expenses incuned by these groups to identify business opportunities with military 
enterprises in the New Independent States. 
Implementation progress 
Seven projects for a total of ECU 15 million are being implemented under the 1992 
programme and nine projects for a total of ECU 13 million under the 1993 programme 
have been identified and prepared for tender. 
1992 programme 
At the core of the programme, a ECU 4.5 million project, which is being implemented 
by British Aerospace in association with Sofitrade Intergroupe, is aimed at the setting 
up of a coherent conversion plan in four regions where the economy was formerly 
based mainly on military production. These are the St Petersburg and Samara Oblasts, 
Kharkov and Minsk. The plans are being prepared following an assessment of the 
regions' existing industrial assets, the identification of the potentials and sizing of the 
corresponding investment needed in order to implement the conversion plans. 
Three categories of enterprises will be identified in order to evaluate conversion 
potentials: 
• Enterprises that could be rapidly adapted to civilian production without substantial 
reconstruction. It is expected that in a number of these enterprises, the conversion 
process will be driven by external investors or by the establishment of joint 
ventures during the next two years. 
• Enterprises that require fundamental reconstruction over a 5 to 10 year period. 
These enterprises will need a detailed financial analysis of the prospect of 
conversion and the conesponding costs, from organisational restructuring to the 
introduction of new processes, management method and technology. It is expected 
that most of these enterprises will find a western partners or investors within four 
"to five years. In this respect, further support may be provided by Tacis through the 
26 
agencies set up under the Financial Services programme for the promotion of 
foreign investments. 
• Enterprises that do not lend themselves to conversion or where the cost would be 
prohibitive and their future viability is doubtful. 
Another ECU 4.5 million project relates to the conversion of specific military 
enterprises in Moscow, Kiev and Minsk into enterprises producing agricultural and 
food processing equipment. 
The remaining five projects, which total ECU 5.5 million, relate to specific industries 
which present excellent potential for conversion (amongst others, the aircraft designer 
MIG and the aircraft manufacturer Lukovitsky, both located in Moscow, the optical 
manufacturer Lomo and engine manufacturer Arsenal, both located in St Petersburg, 
and manufacturer of electronic component Agat in Minsk). 
1993 Programme 
The 1993 Programme is financing eight projects in four countries: the Russian 
Federation, Ukraine,. Belarus and Moldova. Military enterprises will be converted into 
enterprises producing, among other things, air traffic control equipment, civilian 
chemical products, energy control systems, medical equipment, household appliances 
and telecommunications equipment. In addition, two enterprises producing helicopters 
will receive assistance to introduce western specifications in view of enabling them to 
establish partnership and/or subcontracting agreements with European Union 
enterprises. 
Observations and conclusions 
One of the major difficulties encountered in implementing the Tacis conversion 
programme stems from the Russian authorities' reluctance to see a permanent and 
ineversible withdrawal from military production in the Russian Federation. Their 
belief is that conversion cannot provide a means of enhancing civilian capabilities with 
an affordable investment and they argue that it is better to export high technology 
arms, and use the proceeds to import consumer and other civil goods, than to convert 
aircraft design and production facilities. 
The Russian idea does have undeniable appeal. The Russian Federation currently has 
annual export possibilities worth ECU 3.5 billion for less sophisticated weapons and up 
to ECU 10 billion if sales were opened to include most modern weapons (the total 
world exports of major conventional weapons is estimated at ECU 20 billion). 
However, the Russian government's cautious attitude towards conversion is not shared 
by the management of a number of Russian military enterprises which feel that 
conversion is necessary in order for them to continue to operate and, thus, to maintain 
employment. As a consequence, the Tacis Programme is mainly orienting its activities 
towards supporting specific enterprises, with only minor projects providing advice to 
institutions. 
Contrary to the Russian Federation, Belarus and Ukraine have a favourable attitude 
with regard to conversion. In these two countries, most of the military enterprises 
produced only components and the final product was assembled in the Russian 
Federation. As a consequence, there is currently no customer demand for their 
products and conversion is therefore seen as' the only- way of keeping enterprises 
running. 
Agriculture and food distribution 
General overview 
In the agriculture and food distribution sector, Tacis is providing support for both the 
public authorities and the emerging private sector in the New Independent States. 
Efforts are being made to cover all points of the food supply chain in order to tackle 
the existing bottlenecks and assist the transition process towards a free market and 
private enterprise system. It should be noted, however, that the current situation in the 
agriculture and food distribution sector in the New Independent States is one of total 
collapse, rather than of transition. 
Although à non-state-administered sector is expanding, aspects of the former Soviet 
system are still in place. In a number of New Independent States, an appropriate legal 
framework for a new market economy is lacking, which hampers the privatisation 
process. The notion of land, farm or factory property remains unclear. 
The situation in the food chain is as follows. 
Farming output is gradually declining, in part because of the absence of agricultural 
inputs (fertilisers, seeds, equipment, etc.) and due to the lack of credit facilities 
favourable to new private farming operators. The process of privatisation is very 
complex as privatisation of land ownership requires a specific regional approach. There 
is also a problem of water use. 
In addition to a shortage of farm input supply and the absence of rural saving and 
credit institutions, the shortage of on and off-farm storage facilities and ineffective 
food transportation (bottlenecks) are critical issues. This situation is creating enormous 
food losses, beginning before the products leave the field. In the food processing field, 
major problems are encountered in the control of produce quality, packaging and 
cooling. The product range is limited and generally produced in unhygienic conditions. 
Under the centrally planned economy, the food bases (large warehouses) performed a 
function which is somewhat similar to wholesale/distribution in a market economy. 
These organisations no longer fulfil their role, while newly established private retail 
shops and food supermarkets have to find new channels of supply. 
At the end of the food chain, consumers face the problem of food quality and pricing. 
There is both a general problem of quality standard and a suspicion of nuclear 
contamination. Prices of products are far from being rational economic information or 
regulated in the New Independent States. The rapid inflation of prices of all major 
foodstuffs is a severe obstacle to the purchase of small quantities by consumers. 
Therefore, the objectives of the Tacis programme in this sector are to 
• intervene at all stages of the entire food chain, from the farm gate to the consumer 
• concentrate its support on the reorganisation of farming, which is extremely 
complex (particularly in the case of collective farms) 
• support the improvement of foodstuff processing and marketing (including training) 
• define and support the establishment of new agricultural policies and adequate legal 
framework 
• provide support towards the definition of bankable projects in order to meet the 
strong need for investments. 
Implementation progress 
The total budget of the Tacis agriculture and food distribution sector for 1991 and 
1992 is broken down as follows: 
ECU 
Country I 1991 1992 
Russia 44,722,274 20,620,000 
Ukraine 6,739,820 11,600,000 
Moldova 1,120,000 2,500,000 
Belarus 1,330,000 2,800,000 
Kazakhstan 1,886,023 3,800,000 
Kyrgyzstan 0 2,810,000 
Uzbekistan 699,767 3,000,000 
Turkmenistan 1,000,000 3,650,000 
Tajikistan 0 0 
Georgia 2,286,495 2,500,000 
Armenia 0 2,000,000 
Azerbaijan 0 1 3,000,000 
1991 Programme 
Sixty-nine projects have been launched under the 1991 Tacis Programme in the 
Agriculture and Food Distribution Sector. A large majority of these projects concern 
the Russian Federation (53 projects). 
The largest projects concern wholesale trade in the fruit and vegetable bases of the 
Moscow region, support to food chain organisations (St Petersburg, Yaroslavl, 
Ekaterinburg, Kaluga, Samara), support to the Consumer's Union (Moscow) and an 
integrated centre for food production and distribution (Vologda). Other major projects 
include the provision of know-how in the sector of dairy products, fruit, vegetables 
and animal feed. 
At the end of 1993, 18 projects have been completed, mainly low budget and short 
term projects including, for example, the privatisation of food distribution and of 
sovkhozes in Ukraine, the de-collectivisation of kolkhozes and the development of a 
fruit and vegetable retail association in Uzbekistan. 
1991 projects which have been successfully implemented include, inter alia, the 
reorganisation of a number of processing plants in Kazakhstan, pilot operations in the 
St Petersburg Region (bakeries, collective restaurants in universities, chains of retail 
fresh produce stores) and the drafting of legislation (agricultural reforms, cadaster, 
etc.) in Georgia. 
29 
1992 Programme 
The 1992 programme includes a total of 36 projects. Some 15 projects will be 
implemented in the Russian Federation, and all other New Independent Slates (except 
Tajikistan) are covered under the programme. Projects have now been tendered, 
evaluated and launched for each country except Georgia. 
Main projects include support to Uzbek private farmers (ECU 3 million), the 
University of Tyumen (ECU 3 million) and a demonstration farm in Orekhovo Zujevo 
(Moscow Region). Other major projects cover assistance in the processing of 
vegetables and meat (Belaia Tserkov), the reduction of food losses in the distribution 
chain (Ukraine), and assistance to the pilot agro-industrial food chain (Centrobusiness) 
in Moscow. 
1993 Programme 
For the 1993 Programme, 24 projects are planned. The terms of reference of all 
projects identified under the approved Action Programmes have now been finalised. 
ECU 6.3 million will be allocated to policy advice and the establishment of 
information structures for the Ministry of Agriculture in Ukraine. Other major projects 
concern model farm management techniques, the development of agricultural input and 
marketing groups, and food distribution systems and catering. 
Regional (multi -country) Programme 
ECU 4.7 million has been allocated to a project for Water Management in Central Asia 
under the 1991 and 1992 regional programmes. The objective of this project is to 
provide a framework forming the basis of inter-republic water allocation and 
management policies amongst the five republics of the Syrdarja and Amudarja Basins. 
Specific objectives of the project are the improvement of operating systems and the 
development of new techniques in irrigation and cotton production through pilot 
projects. The five countries involved have each agreed on these objectives. 
All 1991 and 1992 projects are now subject to the Monitoring and Evaluation 
Programme which commenced in December 1993. Projects are to be monitored on a 
quarterly basis with appraisal after one year. 
Observations and conclusions 
Although the priorities and objectives of the Tacis Agriculture and Food Distribution 
Programme are globally confirmed and all critical issues mentioned above recur in all 
the New Independent States, more and more multi-country differences are appearing, 
in particular with regard to land privatisation. Tacis activities must therefore pay 
particular attention to these multi-country differences and be flexible in order to be 
adapted to individual specificity's. 
In addition, food security is becoming a major issue in many New Independent States 
cities. While increasing food shortages have clearly been evident for some years, the 
30 
food situation is now deteriorating at an alarming pace. Tackling this situation is now 
becoming a new priority for the food and agriculture sector. 
Human resources development 
Background 
Tacis is designed to assist the ex-Soviet Union meet the challenge of the world market 
economy. It is increasingly apparent that the ethical underpinning of a market economy 
is a plural and democratic society. Reinforcing this foundation is an integral part of 
Tacis work in the New Independent States, through non-governmental organisations, 
legal assistance and increasing exposure to democratic practice in the European Union. 
The transition from the command economy is leading to income disparities, 
unemployment, and a crisis of values. To keep the economic transition on track, a 
major effort is needed to ensure that there remains a consensus behind economic 
reform, at the same time conserving social consensus and providing help for the most 
disadvantaged. 
Tacis has increasingly taken up these concerns. When the programme began, the 
emphasis was placed on the creation of new skills, particularly in the field of 
management training, and also through the government advice programme. Whilst this 
remains a priority, two other major thrusts developed, one concerned with the reform 
of public administration, and the other with social protection. At the base of this whole 
approach lies a concern for a healthy society, which has militated in favour of support 
for democratic mechanisms and non-govemmental organisations. 
Building on the existing Phare Democracy Programme, a programme specifically in 
support of democratic institutions has begun under the 1993 budget. Under the 1992 
programme, an allocation has been secured for the establishment of a resource centre 
for non-governmental organisations (NGO's) and for the financing of links between 
NGO's of the New Independent States and the European Union. Comparable activities 
are to be supported in St Petersburg and Kiev through balances made available on the 
1991 budget. 
Public administration 
General overview 
The break-up of the former Soviet Union and the adoption of a market based economy 
are the two major factors driving changes in public sector management in the New 
Independent States. 
The independence of the 12 New Independent States implies that critical administrative 
and political responsibilities have been transferred from Moscow to the new 
government administrations. This has necessitated the implementation of administrative 
reform programmes aiming at the reorganisation of the new administrations both at 
central, Oblast (district) and regional level. A reduced civil service staff is to perform 
the assigned tasks better, to do so without directives and instructions originating from 
31 
the old centre of the USSR and within the context of the current economic reform 
programme, implying inter alia a redefinition of the role-of the state apparatus in 
society. New Governments are also losing some of their previous functions whilst 
acquiring others - such as customs, for instance - which were not necessary in the 
context of the past integrated economy. 
ECU 15 million was allocated to the provision of advice and training in the public 
sector under the 1992 Tacis Programme. Although the reform of public administration 
was indicated in general as a priority by all New Independent States, actions have been 
identified and undertaken only in some countries (Ukraine, Armenia, Kyrgyzstan, and 
Kazakhstan). In Russia (Moscow and St Petersburg) and Azerbaijan, projects 
specifically focused on training in public administration will soon be initiated. The 
Tacis programme for public administration has given priority to major activities in 
structural reform and training. 
Implementation progress 
Structural reform 
Structural reform projects are on-going in Armenia and Ukraine where, in addition to 
the setting up of schools of public administration, support is provided to the newly 
established Commissions for the Reform of Public Administration responsible for the 
design of an appropriate legal framework and bringing proposals for the general 
organisation of the government structure. 
Public administration training 
Following the 1991 programme which mainly focused on management training geared 
to assist the liberalisation-privatisation policy, the 1992 and 1993 Action Programmes 
include a wide range of projects in support of public administration reform in most of 
the New Independent States. A large training component is generally included and 
some projects in Turkmenistan, Azerbaijan, St. Petersburg and the Russian Federation, 
including in the Urals and Siberia, are geared to the provision of training. 
A project for the training of civil servants has begun in Moscow with the Russian 
Academy of Administration, teaching public administration to top level administrators 
and elected government officials. Particular support will be devoted to the development 
of research in public administration matters through the creation of a library and 
documentation centre linked to an international data bank. 
Specifically focused on in service practical training is a project which aims to reform 
the working methods in the three administrations of St. Petersburg (Mayor's Office, 
City Council and Oblast). The project started in November 1993. 
Observations and conclusions 
The importance of an impartial and effective civil administration at both national and 
local levels cannot be underestimated. The process is long term in that the evolution of 
a service culture in an administration, most important for stability and continuity, 
needs political support and an understanding at all levels of the hierarchy. Training 
will be needed for a long time to come, particularly in the areas of management for 
32 
results, policy formulation, organisational structure, and in changing attitudes and 
expectations in the role of the administration,- both-internally and externally, in 
addition to specific subject skill development, and will require repetition. 
The impact of the public administration on all sectors of the economy will nevertheless 
remain important. For example, the encouragement rather than the strangulation of the 
emergent private sector will require an understanding of the conditions for a private 
sector to develop. Stable legislation, administrative, financial and contract practice 
which is enforced with fairness, and the capacity for recourse to law for remedy under 
tort in a reasonable time and without fear of recrimination, are examples of those needs 
both for local and inward investment where the administration has a regulatory and 
facilitating role. 
The processes that are currently under way are but the beginning, aimed primarily at 
preparing the structures of some of the civil and public services, and setting in place 
the institutions which will propagate the message. As long as our partners are willing 
to support the activities Tacis wishes to undertake, there will be scope for assistance in 
this field so crucial for the development of a market economy. 
Policy and legal advice 
General overview 
Tacis is supporting senior New Independent States' government figures and institutions 
in their role of actors of reform in the process of transition from a centrally planned to 
a market economy. The philosophy underlining the programme is based on the premise 
that the transfer of European expertise in the form of advice to New Independent 
States' governments and institutions will provide invaluable background to and analysis 
of the policy options open to the New Independent States during this transition period. 
The European Expertise Service (EES) was set up as a mechanism through which to 
deliver the Tacis policy advice programme. The Commission supervises and monitors 
the provision of advice through the EES, while the operation as a whole is managed by 
sub-contractors. During its first 15 months of operation, the EES concentrated its 
activities in the Russian Federation, Ukraine, Belarus and Kazakhstan. Policy advice 
has primarily focused on the following areas: 
• macroeconomics, including subjects such as interstate economic relations, 
budgetary matters, specific advice to key ministries and other agencies engaged in 
the process of economic reform, labour market and securing a social safety net 
• institution building, including such matters as the working of democratic 
government, the structure of ministries in a market economy, in particular the 
relationship between central and other tiers of government 
• economic restructuring covering, for example, definition, development and 
application of strategies for sectoral reform, anti-monopoly policy and the 
promotion of competition. 
33 
Implementation progress 
Policy advice 
The state of play in the Russian Federation, Ukraine and Kazakhstan will illustrate the 
types of areas covered. 
- Russian Federation • government restructuring and reform 
budget policy and revenue mobilisation 
industrial restructuring 
market regulation 
support to the Central Bank of Russia on managing inter-
enterprise debt and monitoring the performance of 
enterprises 
• support for the management and financing of the higher 
education sector. 
Building on the recommendations of projects already completed, a number of projects 
currently in progress focus primarily on privatisation involving foreign investment, 
enterprise monitoring in the Central Bank of Russia and the structure of the apparatus 
of Government. 
Other on-going projects include policy advice on 
• higher education 
• Civil Service reform to the Head of the Administration of the President 
• budget policy 
• Kaliningrad regional development to the Kaliningrad Regional Administration. 
EES support to the Macroeconomic and Finance Unit in the Ministry of Finance is also 
on-going, guaranteeing a continuity of Tacis efforts to strengthen the capability of 
economic analysis and strategic planning in the Russian Federation. 
- Ukraine 
In contrast to in the Russian Federation, there is no comprehensive economic reform 
programme to date in Ukraine. Thé privatisation programme approved by the 
Ukrainian Parliament has not been implemented and the restructuring of the banking 
sector is yet to begin. In addition, Parliamentary elections will be held on 27 March 
1994, followed by Presidential elections on 26 June 1994. 
However, against this discouraging background, the EES has provided advice on 
• the structure of government to the First Deputy Minister of Economics 
• the structure of Ministries to the First Deputy Prime Minister 
• the relationship between the legislative and the executive bodies of the government, 
and the tiers of the Ukrainian Government, to the Deputy Speaker of the Supreme 
Rada. 
34 
- Kazakhstan 
In Kazakhstan, policy advice has been provided to the Ministry of Finance on tax 
policy. Another major project on public investment management (in coordination with 
the World Bank) was also undertaken by thé EES. 
A major on-going policy advice project in Kazakhstan relates to support of new 
economic structures and restriction of monopolistic activity and is being addressed by 
the Deputy Minister and Vice Chairman of the Committee. A second project focuses 
on central and local government finance. 
Although the broad outline of the overall reform in Kazakhstan is in place, the 
government is still facing serious difficulties, considering that output has declined 
dramatically in recent years and about a quarter of the Kazakh population is living in 
extreme poverty. 
The sequencing of reform currently links price and trade liberalisation to reduced 
government market intervention, to enterprise adjustment and market based financial 
sector intermediation. It is on this sequence of events that EES activities in 1994 will 
primarily focus. 
The three main areas in which policy advice will be provided are 
• economic and monetary policy 
• industrial restructuring and private investment 
• restructuring and rationalising the machinery of government. 
Legal advice 
The priority areas under the Tacis Legal Reform Programme are 
• investment legislation 
• preparation of civil codes 
• classification of law. 
A programme to provide know-how, supporting the review and preparation of 
legislation in the New Independent States in the defined priority areas, has been 
launched, with an allocation of ECU 2 million under the 1992 Tacis budget. 
In Armenia, a project for the revision of Company Law is currently under 
implementation. In Belarus and in Kazakhstan, projects for the revision of the Civil 
Code are also on-going. 
Important projects to be implemented in the next semester include 
Russian Federation and Ukraine • revision of the Civil Code and investment 
legislation 
Belarus • revision of the investment legislation 
Azerbaijan • revision of the draft Civil Code 
Georgia • preparation of insurance law 
35 
Observations and conclusions 
In the Russian Federation, the elections of 12 December, 1993, have resulted in 
considerable uncertainty as to whether, and at what speed, reforms will proceed. Given 
this uncertainty, it is concluded that the Tacis policy advice programme should aim to 
• consolidate and expand existing support in the area of macroeconomic policy 
advice 
• strengthen the profile of industrial policy and strategy 
• place greater emphasis on policy support to social safety issues with a view to 
improving the management of the social implications of economic reform 
• provide greater support to promote restructuring and effective management of 
major areas of government expenditure such as education, health and agriculture 
• promote effective management and implementation of economic reform through 
regional administrations and cities. 
In addition, it is envisaged to create a research centre in the Russian Federation 
employing a permanent staff of Russian reform-minded economists, assisted by 
European advisers. 
In Ukraine, it is expected that 1994 will see a new Constitution and the definition of an 
economic reform programme. Although the potential contributions of the EES in these 
matters are substantial, it is unlikely that Ukrainian government officials will actively 
seek EES support before March, 1994. Furthermore, to identify beneficiaries at this 
stage in the government structure entails important risks, as key figures are likely to 
change following the elections. For this reason, it is important to identify key areas 
where policy advice could be provided to reformers, with an aim to enable them to 
develop and strengthen a programme of economic reform. Thus, a major EES project 
that will enhance the country's capability of gathering, analysing and disseminating 
information on the trends of the key economic indicators in a systematic fashion is a 
clear priority. 
Social protection 
General overview 
Before the 1993 programme, only limited action had been undertaken under Tacis in 
the field of social security. Funds were only allocated for work in this field in 
Kyrgyzstan. 
The Russian Government has now given high priority to the establishment of a system 
of sustainable social protection for the population of the Russian Federation and asked 
the European Union for advice and support in the establishment of this system. The 
initial action consists of the project identification study necessary for a major 
intervention in the coming years. The objectives of the study are to develop a 
mechanism in order to provide the Russian government with policy and legal advice 
and advice on the reorganisation of the administration by drawing on the pool of skills 
and the experience in the field of social security which exists within the European 
Union. 
36 
In the run-up to the G7 meeting in Tokyo, it was decided that in addition to assistance at 
a policy level, social protection is to be an important consideration in conjunction with 
privatisation under western programmes of assistance for the transition process in the 
New Independent States. Social protection is indeed already an important factor in the 
World Bank's programme. 
Implementation progress 
1991 Programme 
Under the 1991 training programme, a project is being financed to assist the Russian 
Federal Employment Services in establishing adequate local employment offices and 
networks with basic facilities, equipment and trained staff. It also aims to develop an 
unemployment benefit system capacity to handle registration benefit calculation, payment 
processes, supported by basic computerisation and to develop a placement and job 
referral system capable of matching the unemployed clients to jobs, training options and 
to public works. The cost of the project is ECU 2.95 million and its duration two years. 
Implementation started in January 1993 and is running well. 
Tacis is also supporting the Information Systems Department of the Federal Employment 
Service (FES). Difficulties were encountered here in identifying local equipment needs, 
and the classification of sites for installation and service have been delayed due to 
communication difficulties with the regions. 
Tacis is also participating in the FES Technical Assistance Group meetings. At the 
meeting held in March 1993, the specific problems existing in Russia (primitive 
information network, low unemployment benefits, underdeveloped retraining, no capacity 
for responding to mass redundancies) were pointed out and it was decided that the 
models presently being established under the Tacis Programme could be replicated 
throughout the country. 
1992 Programme 
Projects in the field of employment services are being funded in Russia, Ukraine, Belarus, 
Moldova, Uzbekistan and Georgia. The terms of reference of these projects were 
reviewed at the beginning of 1993 and tenders subsequently launched. 
The main objective of these projects is the creation of employment services aimed at 
providing a better knowledge of the labour market situation, defining employment 
strategies and policies and assisting in the organisation and management of the institutions 
in charge of applying the employment policy. 
37 
The implementation of most of these projects started early 1994. 
1993 Programme 
Under the 1993 Programme for Russia, efforts are being made to identify activities 
which'define a clear link between privatisation and the social response to that 
privatisation. This has been done in the geographical zones of focus of the Tacis 
Programme - in western Siberia and the Urals. 
Moreover, projects related to the reform of the social security systems and the creation 
of pension funds, in some cases with the wide scope of assisting in the overall reform 
of the social security system, have been worked out in Armenia, Kyrgyzstan, Georgia 
and the Russian Federation. 
The reform of the health sector is starting with a ECU 4 million project designed for 
four regions in the Russian Federation. The project focuses on support to primary care 
services and assistance in some institutional and financial issues. 
Finally, a small project will be carried out in Azerbaijan to support the employment 
services. 
Training 
General overview 
The Tacis education and training projects aim to develop capabilities of New 
Independent States institutions to deliver training courses to managers of state and 
private enterprises, officials who have responsibilities in state economy management, 
young students and starting entrepreneurs who need to acquire new competencies for 
their future jobs and activities. Through the provision of know-how knowledge in the 
field of training is transferred to already existing New Independent States training 
institutes (both state and private), and the central and local authorities which administer 
the education system. 
Implementation progress 
Management training 
On the basis of the 1992 programme, and building on the 1991 training programme 
which concentrated its activities in the Moscow and St Petersburg regions, it was 
decided to assist existing training institutions in the New Independent States with the 
establishment of management schools in Georgia, Uzbekistan and Moldova. 
Preparatory work for these projects has been carried out in the course of 1993 and 
project implementation should commence shortly. 
Under the 1993 programme, new management schools will be set up in several Russian 
regions, Kazakhstan and Turkmenistan. 
38 
Language Training 
Terminology projects have been identified with Russian partners to establish 
dictionaries - in an initial phase, from Russian to English and German and vice-versa -
within areas where no terminology exists so far in Russian. The first of these 
dictionaries, covering economics and management terminology- was finalised in 
December 1993. The publication will be extended during the first half of 1994. The 
second dictionary, dealing with taxation terminology, is expected to be finalised during 
1994. The programme is extended under the 1993 budget. 
The training of trainers programme, targeted at fifty language teachers selected from 
ten university centres in the Russian Federation, covers issues such as community 
affairs, international institutions and international relations. The trainees are trained by 
the College of Europe in Bruges and the EIPA in Maastricht. The first session of three 
weeks started on 1 May, 1993, and the last one took place in October, 1993. The 
programme will be continued under the 1993 Regional Programme. 
The second intensive course in English, German and French started in the second half 
of 1993. This action is being implemented over an eight month period, due to its 
complexvcharacter (three languages, 290 participants from 12 countries to be trained in 
four European Union member states for six weeks). 
Distance teaching 
A distance teaching pilot programme was launched in June 1993. Some 209 project 
proposals were received, following an invitation published in the Official Journal C 
166 of 17 June 1993. Following the success of this invitation the original number of 
six pilot projects of ECU 300.000 each has been raised to nine. These nine successful 
pilot projects in the Russian Federation, which use five different methods of distance 
teaching, will begin in March 1994, and last until March 1995, at which point an 
intensive evaluation process will take place. The aim of this process is to select the 
most effective methodology. After the evaluation, and pending approval of the Russian 
Federation and the other New Independent States, Tacis should be able to offer more 
distance learning projects in these countries. 
Military retraining 
One of the most important and politically sensitive groups to be retrained in the 
Russian Federation, and perhaps in other New Independent States, are the military. 
They are a highly trained and politically influential group, so it is vital that they are 
able to find places in the market economy and have skills which the market values. 
This is the purpose of the human conversion programme. 
The first project in this area was the military officers retraining project for the Russian 
Federation, to which a total budget of ECU 14 million has been allocated. The 
immediate objective of this three-year project has been to strengthen a network of 15 
selected training centres already existing in different regions in the Russian Federation, 
which-will eventually train a minimum of 16,000 officers in the second and third years 
of the project. The tender process for the ECU 12 million training component of this 
project has been finalised and implementation is about to commence. 
39 
On the basis of the 1993 Action Programme for Ukraine, a similar project will be 
launched. ECU 7 million have been allocated to this project. 
Observations and conclusions 
1993 was the year during which the first activities of Tacis developed from plans to 
effective programmes under implementation. In training, this tested the capacity of 
both New Independent States counterparts and European Union experts to manage 
change and reform institutions. By the end of the year, a body of experience had been 
built up, and exchange of that experience was seen as a key to advance. 
During the year, a newsletter for management schools was tested, and later it was 
decided to hold in 1994 a workshop for all the different actors: New Independent 
States counterparts, European Union experts, contractors, as well as the Commission. 
The interplay between pilot activities as models, and systemic change through policy 
reform continue to be a key issues of the sector. The extension of TEMPUS to other 
New Independent States, and the decision of the European Council in October 1993 to 
set up a new European Training Foundation in Turin, set the scene for a new phase of 
cooperation-between.the New Independent States, Tacis, and the many partners and 
institution in the European Union whose experience may be shared. 
Statistics 
General overview 
The reform process currently underway in the New Independent States towards the 
establishment of a market economy and democratic society entails a strong need for the 
reform of statistical offices. These offices previously focused on the massive (but quite 
different) information requirements of a centrally- planned economy. Furthermore, in 
most New Independent States the statistical system was mainly based on data collection 
and did not entail the processing, analysis and the actual use of data. It is today clear 
that the provision of reliable and adequate information is extremely important for 
attaining the objectives of reform in the New Independent States. 
Implementation progress 
The long-term objective of the Tacis statistics programme is to contribute to the 
process of the establishment of adequate statistical systems, and the restructuring of the 
National Statistical Offices in each New Independent States, which are the former 
branches of the Central Statistical Office in Moscow. Two ECU 4 million projects 
under the 1991 budget are currently under implementation by a consortium under the 
supervision of Eurostat. They are aimed at the development of statistical information 
systems, in which institution building plays a central part, the upgrading of technical 
capabilities of staff working in statistical offices, which consists of training of trainers 
and general training. Both projects include substantial linguistic support. 
Observations and conclusions 
40 
In general, projects in all the New Independent States are moving as planned. Results 
however, may depend on the specific situation-of ^every-single republic. Compared to 
the situation at the start of the programme, several presidents of the statistical offices 
of the republics have changed. Therefore, some changes have taken place in the role 
and organisation of statistics (e.g. in respect of data collection for foreign trade 
statistics by the statistical office or the customs administration). 
For the Russian Federation, some delays in implementation have occurred due to a 
change of management of the statistical office. As regards business registers and 
enterprise statistics, all actions will be organised as planned. Delays may be expected 
in the area of foreign trade statistics where the competence for data collection between 
statistical office and customs administration have to be clarified. 
Customs 
General overview 
The break-up of the former Soviet Union has led to drastic changes in the role of 
national -customs., authorities. While before, the customs authorities within the 
individual countries had mainly an executive and administrative function, they now are 
responsible for developing an adequate legal framework and the institutional policies 
necessary to adapt the customs services to the needs of a market economy. Policies, 
legal and administrative measures in the field of customs have to be developed which 
support and are in line with overall national, economic and financial policies on 
foreign investment and international trade, privatisation, monetary policies, 
international security, taxation etc. of the individual countries. At the same time, the 
capacity of the customs authorities to implement the new laws and regulations must be 
strengthened. Customs operations should also generate revenue for the state. 
The long-term objective of the Tacis.customs programme is to assist the national 
customs organisations of the New Independent States in restructuring their operations 
to meet the needs of a market-driven economy. 
Implementation progress 
ECU 7 million have been allocated for customs activities under the 1991 Tacis budget. 
Actions supported include 
• training and the provision of know-how for customs and customs officials in the 
New Independent States (implemented by Eurocustoms, the consortium of 
European Union Member States' Customs Administrations) 
• a feasibility study for the computerisation of customs 
• visits of New Independent States customs officials to their counterparts in 
European Union Member States. 
In addition, advice is given by enforcement specialists in the field of drugs and 
customs fraud. Further assistance in terms of practical training and provision of basic 
equipment will also be given. 
41 
The new allocation of ECU 1 million under the 1993 Regional (multi-country) 
Programme will provide for more assistance in individual-countries. Further to that, 
activities tailored to the needs of each country will be designed. 
Observations and conclusions 
The European Union Member States have showed a very positive reaction to the Tacis 
customs programme and the work carried out by Eurocustoms has to date been very 
satisfactory. 
The implementation of the Tacis customs programme is at various levels of completion 
in the different republics. These vary according to the level of development of national 
customs legislation, the level of development of the customs administrations and the 
possibility and their readiness to cooperate at international level. 
As the reforms are more advanced in some countries than in others, and in order to 
achieve the maximum benefit for all republics, the original time frame of the 
programme will be extended. 
As regards the computer feasibility study, the first results have shown that all republics 
face common problems, albeit at different levels in the computerisation process. 
Efforts will be made to arrive at a common approach, which is necessary in order to 
avoid future communication problems between the different New Independent States' 
customs administrations. 
Democracy programme 
General overview 
Supporting transparent and pluralistic development has always been a central concern 
under the Tacis programme. By broadening the base of economic activity, the 
foundations of a richer and more pluralistic society are being laid. Tacis has therefore 
introduced a democracy programme under the 1993 Tacis Programme. 
The interpretation of the promotion of democracy is broad. Parliamentary practice is a 
very important element of it, but it also includes the improvement of the transparency 
of public administration, support for the development of democratic structures, the 
promotion of an independent and pluralistic media, awareness building and conflict 
prevention, promotion of human rights, and the monitoring of security structures. 
Although the democracy programme will be allocated a separate budget line from 
Tacis in 1994, it will continue to be managed as a coherent part of the Community's 
support for the transition process in the New Independent States. 
Implementation progress 
The monitoring of the Russian elections in December, 1993, was one of the first 
activities supported under the democracy programme, not only to meet a legitimate 
European Union foreign policy objective, but also in order to use the elections for 
training related to better understanding of the democratic process. 
42 
Early in 1994, a fresh initiative is to be taken, jointly with Phare, to invite any 
association bringing together more than one European Union Member State to put 
forward proposals for projects promoting a more just and plural society. It is expected 
that hundreds of requests will be submitted by end April, 1994. The Commission 
intends to repeat the call for proposals later in the year. 
It should be mentioned that Tacis already supported a number of projects related to the 
above objectives well before the democracy programme was adopted. An example of 
this is the programme in the Russian Federation supporting the development of trade 
unions which have a sound understanding on how to operate effectively in a market 
economy. 
Observations and conclusions 
The scale of the task at hand under the democracy programme is very great. It has 
therefore been necessary to limit the number of activities which are directly initiated, 
and to open the rest of the programme to indirect management. The Commission will 
accordingly use the services of the European Human Rights Foundation in order to 
advertise-the programme and to facilitate the most deserving and highest priority 
proposals put to the Commission. They will be implemented in projects based on 
cooperation between non-state, non- profit organisations in Europe and the New 
Independent States. 
The regulation governing Tacis refers not only to economic transformation but also to 
progress in the setting up of free democratic systems, open an respecting human rights. 
The democracy programme specifically pursues these objectives and, in so doing, 
gives a human and social dimension to the economic transformation process. 
Twinning 
A two-year pilot programme on city twinning in administration and services was 
established under the 1993 Tacis Programme. This ECU 6 million (ECU 3 million 
from the Regional (multi-country) Programme and ECU 3 million from the budget for 
the Russian Federation) is intended to offer practical help to New Independent States 
local administrators through direct exposure in European Union towns, cities and 
regional authorities. In the first instance, the emphasis is to be put on exchange and 
training in fields where Tacis is already very active, i.e. employment and SME 
creation, management of employment services, privatisation and accounting. Over 
time, links will be built up in other areas such as the social safety net. By emphasising 
twinning, the programme is intended to create links between administrations which can 
form a nucleus around which a broad range of cooperation between cities or regions 
may grow. 
A variety of bodies may take part in the programme. In addition to local authorities, 
regional associations, local public associations of towns or counties and even private 
associations, agencies or other non-profit companies can be considered as hosting 
institutions, depending on the level and constitutional delegation of responsibility in the 
individual legal framework of different European Union Member States. 
43 
Networks 
Background 
Under thé former Soviet system, infrastructure was developed to meet the requirements 
of what was one country. Energy was supplied very cheaply, leading to the inefficient 
usage of energy resources. Transport was basically oriented towards Moscow and 
communications were designed to serve inner-USSR needs rather than world-wide 
links. 
Establishing infrastructure that meets the needs of each New Independent States is 
therefore important and Tacis has been working with these countries to restructure 
energy, telecommunications and transport networks, as well as introducing efficiencies 
in the operation and use of these networks. 
Energy 
General overview 
There are considerable energy resources in the New Independent States (with the 
exception of Belarus and Ukraine), raw materials remain plentiful and electricity 
generation levels are high. However, structural problems in the industry, coupled with 
inefficient production techniques, mean that much investment is needed in order to 
reach a level of operating efficiency allowing the sector to play its full role in 
underpinning industrial restructuring and economic development. 
In the Russian Federation, oil production has seen a decline of 30 per cent since the 
late 1980s, from a peak of 560 million tonnes to 396 million tonnes in 1992. Coal 
production is also declining, though less dramatically at present. Natural gas 
production, on the other hand, has remained stable: around 640 billion cubic.metres. 
The reduction in oil production has hit Russia's hard currency earnings particularly 
hard, as the 35 per cent decline in export levels since 1990 coincides with a period of 
very low world oil prices. 
Despite reductions in Russian oil and coal production, generating capacity and 
electricity output have remained relatively stable: a little over 1000 TWh, with 20 
GWe of installed capacity in the nuclear sector, 43 GWe in hydropower, and 140 GWe 
in thermal power. The decline in coal generated power appears to have been offset by 
natural gas, with a consequent reduction in the proportion available for export (down 
from 64 billion cubic metres, for western Europe in 1991 to 61 billion cubic metres, in 
1992). 
The energy sector in the New Independent States faces problems at three principal 
levels : 
• Difficulties in primary energy production, partly linked to remoteness of resources 
and harsh climatic conditions, and partly to the lack of recent New Independent 
States or foreign investments. 
44 
• The inefficiency of much of the power generation sector, and its environmental 
problems, including those linked to the safe operation of the nuclear sector (the 
subject of a separate programme). 
• The inefficiency of industry in terms of its very high energy requirements. 
The Tacis" programme aims to provide support for the establishment of dynamic energy 
sectors responsive to market conditions, for the efficient use of energy resources, and 
advice on energy consumption and saving. 
Particular attention has been paid to the integration of concerns for environmental 
protection into the definition and execution of projects. This is of major importance in 
projects aiming to improve the use of the natural resource base as well as in the energy 
saving sector. In general, two dimensions can be distinguished: the environmentally 
sustainable design of capital projects, and the introduction of environmentally sound 
management procedures in institutional development and training projects. 
Implementation progress 
1991 Programme 
The total budget of ECU 17 million allocated to the electricity sub-sector under the 
1991 programme has now been contracted. Projects launched in this field concern 
principally the following activities: 
• assistance for the reform of management methods in power distribution companies, 
in order to achieve improved company production and profitability 
• assistance in repairs, renovation of power plants, drafting of new electricity tariffs 
(calculation of costs, tariff structures, means for metering and monitoring, etc.), 
training of local staff 
• the improvement of the electricity network including interconnections with the 
European system. 
Similarly, in the oil and gas sub-sector, all the funds (ECU 17 million) have been 
contracted. An important oil and gas project in the Tyumen region aims to stabilise 
and, if possible, increase hydrocarbon production and boost foreign interest in the -local 
oil and gas industry. 
Other major projects relate to the development of recommendations for the Russian gas 
industry's transition to market conditions, and ah implementation plan for these 
recommendations; the evaluation of the main oil and gas pipelines in the Russian 
Federation to improve capacity and reduce losses, and the examination of compressor 
stations in trunk pipelines; and, finally, the optimisation of the petroleum refining 
facilities of several refineries. 
In the energy saving sub-sector, the budget contracted to date is ECU 19.8 million 
from a total of ECU 21 million. ECU 10 million have been allocated to the 
strengthening of energy saving centres in Moscow, St. Petersburg, Minsk and Kiev, 
established under the EC/THERMIE Programme, which form the nucleus for the 
future establishment ôf a network of such centres operating throughout the New 
Independent States. The objective of these centres is to ensure coherent action in the 
area of energy saving, principally by improving the performance of the energy systems 
45 
in the New Independent States and by facilitating the transfer of European energy 
technology. 
A further ECU 11 million have-been allocated to energy saving demonstration projects. 
Finally, in the sectoral structures sub-sector, support is being provided in legislative 
development. The principal action in this field is a long-term action of legal assistance 
in the subject of hydrocarbon legislation for the Russian Federation. This action is a 
continuation of a Tacis-sponsored workshop which was able to settle a dispute between 
the draft laws that were competing for adoption. The resulting law will form the 
backbone of the reform of the oil and gas sector. 
1992 Programme 
The 1992 energy budget is approximately ECU 46 million and includes 48 projects. 
Activities under the 1992 programme are foreseen at three levels: advice to the 
governments, advice to industry and training. 
High level expertise will be provided to help design overall energy policies, with 
particular emphasis on oil and gas production and inter-state transport, including 
measures that will improve the industry's efficiency. The Tacis Programme will 
support energy-related advisory services at governmental level, and projects aimed at 
the restructuring and modernisation of major energy consuming industries. Other 
activities will focus on the training of engineers and future managers in the energy 
sector. Pilot projects will be carried out, mainly in the energy efficiency sector, to be 
duplicated and disseminated. 
1993 Programme 
The following projects have been identified under the 1993 energy programme. 
In the Russian Federation, assistance has been extended to the regions of the Urals and 
Western Siberia. The five projects to be supported relate to the development of a 
structure and organisation of the Russian oil industry: 
• the audit of coal exploitation 
• assistance provided to the Moscow authorities to promote an energy policy and 
energy saving measures 
• the development of new oil fields in the Tyumen region 
• the development of the oil equipment industry capacity in the Russian Federation. 
In St Petersburg, three projects in the gas sector and one project relating to electricity 
tariffs will be financed. 
In the Urals region and Western Siberia, energy centres will be set up in Ekaterinburg 
and Novosibirsk. Energy supply projects in the Baikal Region and management 
training projects for the Russian coal mining industry in Kemerovo are also foreseen. 
In Ukraine, actions will be initiated in 4 main areas: coal, oil and gas, electricity and 
energy saving. 
46 
In the coal sector, support will be provided towards the restructuring of mining 
enterprises through the establishment of a model mine management system in the 
Donbass region. Two other projects in this sector will seek improvements in the 
production and use of coalbed methane, and provide advice and training for the use of 
waste anthracite. 
In the gas sector, expertise will be provided in the assessment of the current state of 
the natural gas grid and its future maintenance requirements and development. 
In the oil sector, Tacis will support the modernisation of the Lysychansk refinery, the 
largest oil refinery of the former Soviet Union. 
In the electricity sub-sector, a project is directed at the development of an electricity 
generation and cost management system for scheduling load in order of merit. A 
second project matches the recommendations of the World Bank, EBRD and G7 for 
power plant rehabilitation. This project encompasses a feasibility study on combined 
cycle gas topping for the Uglegorsk power station. 
In the field of energy saving, Tacis will support two projects related to the 
improvement of vtne .district heating system in Dnepropetrovsk and energy efficiency 
restructuring of the fertiliser industry. 
In Kyrgyzstan, three projects will prepare the ground for the setting up of a future 
Kyrgyzstan Energy Centre. The projects will provide management training to the staff 
of key energy sector institutions, improve the efficiency of energy utilisation by 
addressing issues related to energy saving in buildings and support activities under the 
existing Tacis Energy Law legal support programme. 
Energy has been selected as the focal sector in Armenia under the 1993-1995 
Indicative Programme. The main objective of the programme relates to energy saving 
and efficiency, with special attention paid to integrating concerns for environmental 
protection in the definition and execution of projects. The assistance is focused on the 
extension and strengthening of the energy savings programme initiated in 1991 and 
1992, and on the rationalisation and diversification of energy supply. Actions within 
the latter area will concentrate on the improvement of the gas supply system with a 
view to the expected introduction of Iranian gas in the Armenian pipeline system. 
In Azerbaijan and Moldova, identification missions were carried out in the course of 
the second half of 1993, and the Action Programmes will be submitted to the Tacis 
Committee in March, 1994. 
Regional Programme 
Building on the 1992 Regional Programme which provides assistance in the 
management of oil and gas pipelines, the following actions will be undertaken. 
Extension of the 1992 pipeline management project to Moldova and Ukraine; follow-
up in Central Asia and the Caucuses, focusing on feasibility studies for new oil and gas 
transport routes, considered for funding under the 1994 budget. 
47 
Advice on effective management, operation and development of regional electricity 
networks in Ukraine, Belarus and Moldova: 
• a technical study of the .interface between the extended west European power 
system and its eastern neighbours (in conjunction with a Phare project for the 
neighbouring countries of eastern Europe) 
• improvements in system operational planning, operation and control practices in the 
Caucuses and central Asia 
• improvement in electricity transmission, distribution and end-use efficiency in 
central Asia 
• common technical and organisational requirements for extended economy and 
security of power systems operation in all the New Independent States. 
Humanitarian aid in the energy sector 
Following the Commission's decision on 22 September 1993, to allocate an ECU 8 
million grant to the purchase and transport of fuel oil for two of Armenia's thermal 
power stations, contracts were signed with a procurement agent and independent 
inspectors. A call to tender for suppliers of fuel oil was issued and a further contract 
•signed1 with a supplier: By 31 December 1993, some 16,000 tonnes, of fuel oil had 
reached their destination, under very difficult conditions. 
As in the case of Armenia, a ECU 6 million Tacis project in Georgia is being financed 
under the Tacis 1993 budget in order to deliver fuel oil for use in thermal power 
stations which provide electricity for heating and lighting to the Georgian population at 
large. Fuel oil supplies arrive from the Russian Federation or Turkmenistan via Baku 
in Azerbaijan. 
Observations and conclusions 
1993 is the year during which real progress has been made under Tacis in the energy 
sector. Tacis experts have been received very favourably in each New Independent 
States, and'a'high* level'of satisfaction with the services supplied has been observed. 
During the course of 1994, the result of this work will be assessed. 
Close coordination was assured with other donors such as the World Bank and the 
EBRD during the preparatory phase of the 1993-1994 programmes. Such coordination 
is vital in order to avoid any overlapping of projects, but also in order to identify the 
best way to put into practice the results of the Tacis studies which have been carried 
out. This is done by ensuring appropriate follow-up investment, which is seen as the 
final objective of any development programme. 
Transport 
General overview 
The transport sector in the New Independent States is currently going through a 
process of decentralisation and moving towards a more market-oriented operation. 
However, the sector still suffers from institutional problems and poor technical 
capacity. The former Soviet transport system was strictly centrally planned and 
48 
vertically organised, with practically no links between the different transport sectors. 
This rendered the transport terminals very inefficient; creating huge bottlenecks in the 
distribution system. 
The Tacis transport programme therefore covers activities in inter modal transport and 
théralleviation of bottlenecks in the transport terminals. In addition, a training 
component is included, aiming to make better use of the existing infrastructure. 
Implementation progress 
1991 Programme 
The implementation of the 1991 programme is being carried out successfully. 
Attempts are being made to secure funding from financial institutions for those 1991 
transport projects where feasibility studies have been completed. Positive support has 
been secured from the EBRD for the upgrading of the road from Brest to Minsk. The 
EBRD may also support the modernisation of St Petersburg Airport and the cargo 
terminal at Yerevan. 
A number of projects under the 1991 programme have been continued and included in 
the 1992 programme, e.g. projects providing assistance to the Ports of St Petersburg 
and Odessa. 
1992 Programme 
The 1992 transport programme covers the following transport modes: civil aviation, 
railways, road and multimodal transport. 
In the field of civil aviation, an important training programme is supported in the field 
of air traffic control, to review the organisation and the costing of international air 
traffic and to carry out a master plan and business plan for one of the largest airports 
of the region, the Nizhny Novgorod Airport. 
In railways, organisational and technical means to upgrade the track between St 
Petersburg and Moscow are being investigated to allow higher running speeds and 
assist the railways in business management and operations monitoring. This assistance 
to the Russian railways in the field of management training and freight operations 
monitoring and control will be dovetailed with the Railways Modernisation Programme 
of the EBRD. 
In addition, Ukraine is receiving assistance in improving existing railway lines and 
institutional support is being provided to the rail organisations of Turkmenistan and 
Armenia. 
In road transportation, action is being taken in support of the development and the 
operations of new transport operators and the maintenance and rehabilitation of 
highway infrastructures. Support to the transport industry is also being provided 
through the privatisation study of a road transport company and the creation of a 
training centre for transport operators. 
49 
Assistance in the field of road infrastructure is being provided in Belarus, Armenia and 
Azerbaijan. Emphasis is being placed on obtaining funding from outside financing 
institutions for the proposed investments. 
An important programme of assistance is also being implemented in the maritime 
sector ? The programme builds on initiatives developed^under the-1991 programme for 
the ports of St Petersburg and Odessa. A study to assess the organisation and structure 
of the Caspian shipping company in Azerbaijan is included in the programme. 
Under the Regional (multi-country) Programme, a major conference on regional 
transport, TRACECA, was held in Brussels on 3-7 May 1993. The meeting concluding 
with the signature by the states of the Caucuses and Central Asia and the Commission 
of a declaration on future cooperation. Agreement was also reached on the main 
outlines of future know-how provision. 
1993 Programme 
In the Russian Federation, Tacis is providing further assistance in the field of air traffic 
control and towards the privatisation of Aeroflot, the development of multimodal 
transport terminals, continued support to the port of St Petersburg, the extension of 
activities to the port of Novorossysk and assistance to the road transport sector in a 
number of fields. 
In Ukraine, the focus is on improving the main road infrastructure, the regulation of 
the aviation sector together with continued support for the airline, and assistance to the 
ports with an extension of activities to the Danube ports of Ismail and Reni. 
In Moldova, a study has been initiated to assess the viability of constructing a new port 
in the South of the country. The Moldovan airline will also receive Tacis support. 
Observations and conclusions 
The scale of the assistance requirements in the telecommunications sector in the New 
Independent States is enormous. However, considering that the Tacis budget is very 
small in comparison to the tasks at hand in the sector, the Tacis telecommunications 
programme is having a remarkable impact in the New Independent States. This is 
particularly noted in the field of air traffic control. 
Telecommunications 
General overview 
Due to the former centrally planned system and the low priority given to trade and 
services, public telecommunications were largely neglected in the former Soviet 
Union. As a result, this sector is currently among the least developed areas in the New 
Independent States' economies in terms of regulation, organisation, and equipment. 
This makes it particularly hard for the new economic actors to establish productive 
horizontal ties, which are essential for the growth and efficiency of a market economy. 
50 
While the particular structure and development of the telecommunications sector varies 
In the'different New Independent States, and the particular needs are to be addressed in 
the definition and implementation of each project, a number of common issues can be 
identified. These concern in particular legislation and regulation, network 
development, layout and interconnection. Development needs in these areas serve as 
common basic indicators for the overall programme "strategy in the Tacis 
telecommunications sector. 
Under the 1992 and 1993 programmes, the following budgetary resources have been 
allocated to the telecommunications sector: 
ECU 
1992 I 9,410,000 
1993 6,150,000 
Total 1 15,560,000 
Implementation progress 
1992 Programme 
The 1992 Tacis telecommunications programme focuses on the review and elaboration 
of all aspects of the legal and regulatory framework of the sector. In addition, in order 
to plan for the development of the physical telecommunications infrastructure, it 
includes projects for the technical review of the existing network; the identification of 
a short-term rehabilitation programme; an assessment of the market for 
telecommunications projects and the development of standards in cooperation with 
European institutes. These advisory services, directed at upgrading the structural 
conditions of the sector, are provided directly to the New Independent States Ministry 
of Telecommunications. The 1992 projects will prepare the ground for the more 
technically oriented projects to be implemented under the 1993 programme. 
Other projects included under the 1992 programme are directed at providing training to 
the major New Independent States institutes of telecommunication, such as the 
Moscow Technical University for Communication and Informatics and the Central 
Asian Regional Telecommunications Training Centre in Tashkent. 
1993 Programme 
The 1993 Tacis telecommunications programme focuses on network development, 
layout and interconnection. 
The most important common shortcomings of the New Independent States 
telecommunications networks are an inadequate and highly variable quality of the 
public network, the low density of main lines, the particularly low penetration rates in 
rural areas, and the co-existence and insufficient interconnection of the public networks 
and various closed private as well as by-pass networks. 
The 1993 programme addresses specific aspects of these problems. Projects include 
• assistance to improve testing services for telecommunications equipment in the 
Russian Federation 
51 
• support for the production of switching equipment at a factory in the Urals region 
• the provision of know-how for the production of 'automatic telephone stations in 
Western Siberia 
• advisory services for the construction of two optical fibre links in the Ukraine; 
• support in the development of new information technology for the Russian 
Federation's post offices 
• follow up on Support for the central Asian telecommunications training centre in 
Tashkent. 
These projects are to be launched in the course of 1994. 
Observations and conclusions 
Telecommunications is one of the most rapidly expanding sectors in the world 
economy, as well as a sector that stimulates wider economic development and growth. 
To create more effective competition vis-à-vis the global leaders in the 
telecommunications market, support in this sector should therefore promote mutually 
beneficial cooperation between the European Union and New Independent States. At 
policy level, there is clearly a need for more regular communications, information 
technology • and space.institutions. The European Commission (and not just Tacis but 
all relevant Commission services) should take the initiative in setting up such policy 
dialogue. Advance in this dialogue and policy definition on both sides should make it 
easier to implement specific projects which provide know-how and business 
cooperation in the future. It should be mentioned that the difficulties and subsequent 
delay which Tacis encountered in launching a project for the conversion of military 
satellites resulted mainly from unresolved questions at policy level. 
Nuclear safety 
General overview 
The Tacis nuclear safety programme aims to improve the safety of power plants and 
other civilian nuclear fuel and waste treatment facilities, to strengthen regulatory 
regimes and to promote regional cooperation on nuclear safety among countries 
operating Soviet-designed nuclear power facilities. 
Specific programme objectives are to 
• assist operators and design institutes in assessing the most important technical and 
safety problems and to implement suitable short and medium-term improvements 
• improve plant operation through better organisation and procedures, upgrade 
inspection facilities and procedures and improve training and quality assurance 
• develop strong, independent regulatory authorities and technical support 
organisation in charge of the safety of the population and the protection of the 
environment 
• provide assistance in the field of nuclear fuel cycle and waste treatment and 
storage. 
52 
To date, the Commission has committed the following budgetary resources to nuclear 
safety in the framework of the Tacis Programme: 
ECU 
1991 I 53,000,000 
1992 80,000,000* 
1993 103,000,000 ** 
Total I 236,000,000 
* including a Community contribution of ECU 20 million to 
the International Science and Technology Centre (ISTC) in Moscow. 
** including a Community contribution of ECU 15 million to the Multilateral 
Nuclear Safety Fund recommended by the Gl at the Munich Summit. 
A nuclear safety budget of ECU 75 million is foreseen under the 1994 Tacis 
Programme. 
Implementation Progress 
1991 Programme 
The 1991 Tacis nuclear safety programme includes 35 projects which are mainly 
generic safety studies (i.e. they cover specific types of reactor, especially those 
considered least safe, such as the RBMK and VVER 230) or training projects. A 
number of these activities have been partially subcontracted to Russian organisations 
and institutes. 
The signature of the contracts was delayed significantly by an issue raised by western 
experts: the liability which would be borne vis-à-vis third parties in the case of a 
nuclear accident. After difficult negotiations, the Commission succeeded in finding an 
interim solution in May 1993. This essentially entailed a two-phase approach which 
allowed the contracts to be signed and the projects to begin immediately. 
The first phase of these projects has now been underway for a number of months and 
initial results are now available. During a second phase, the progress made to date 
should be secured by a comprehensive agreement to be reached with the Russian 
government on the question of liability, which for the moment has not been extended 
to cover changes in operating procedures or installation of equipment. 
1992 Programme (ECU 60 million and ECU 20 million ISTC) 
The 1992 Tacis nuclear safety programme takes account of the priorities proposed by 
G7, concentrating to a large extent on the on-site assistance component: 
Safety of nuclear installations ECU 
Operational safety (on-site assistance) 38,000,000 
Design safety (generic studies) 10,000,000 
Assistance to safety authorities 6,500,000 
Master Plan 3,500,000 
contingencies 2,000,000 
Total 1 60,000,000 
53 
In addition, a ECU 20 million contribution has-been allocated to the International 
Science and Technology Centre (ISTC) in Moscow. 
On-site assistance 
As recommended by the G7, the European Commission is providing valuable on-site 
nuclear safety assistance. Projects aim at the improvement of operational and technical 
aspects of the plants, going beyond formal bilateral twinning programmes. In practical 
terms, this has involved the presence of one or two Union operators at each of the 
eight sites in the Russian Federation and Ukraine since June, 1993. 
At this point, the initial phase of the on-site assistance has been completed, resulting in 
a close cooperation with the partners and, most importantly, in the elaboration of 
specifications for safety equipment as well as for engineering studies. Equipment 
tendering and procurement procedures are well underway and the first pieces of 
equipment are currently being manufactured and delivered. 
In addition, part of the nuclear safety budget has been allocated to the supply of spare 
parts in-Ukraine. The on-site Community operators have cooperated with the three 
Ukrainian plants in the programme (a ninth site having been added under the 1993 
programme) to establish a list of urgently required safety-related spare parts which are 
now being purchased and delivered. 
Two major projects related, respectively, to the de-commissioning operations for units 
(reactor blocks) 1, 2 and 3 and the management of radioactive waste dumps in the 
Chernobyl exclusion area are now being launched. 
In October 1993, the Ukrainian authorities confirmed their desire to have a feasibility 
study of the unit 4 sarcophagus carried out under the Tacis programme (provision 
under the 1992 budget). The evaluation of tenders is soon to be completed. 
Generic safety studies are to be launched for the VVER 213 and 1000 reactors and for 
fuel cycle operations. Tenders are currently being launched for some of these projects, 
while for others the terms of reference are being drafted. 
Two large projects providing advice to safety authorities on the transfer of western 
European regulatory methodology are being carried out in the Russian Federation and 
Ukraine since December 1993. 
In addition, plans have been drawn up to answer the computer and organisational needs 
of the Russian and Ukrainian safety authorities. Equipment is currently being procured 
and delivered. 
The Master Plan, initiated under the 1992 Tacis Programme, is designed to establish a 
coherent policy framework for the nuclear safety activities vis-à-vis the relevant New 
Independent States and central and eastern European countries, over a period of four to 
five years. It should develop a set of policy recommendations concerning the 
appropriate measures which need to be taken to improve the safety of all aspects of the 
civilian nuclear fuel cycle. 
54 
As a first step, a methodology for a Master Plan was developed. Since then, detailed 
studies and preparatory work for the ••' development of- an action plan have been 
undertaken. This action plan will be drawing on the basis of a matrix covering 
individual-beneficiary countries and different reactor types. Inputs must come from the 
partner countries, in particular through their domestic nuclear safety programmes. 
Other inputs are policy guidelines as well as results of safety assessments and other on­
going nuclear safety activities. 
Tacis 1993 Programme (ECU 88 million and ECU 20 million ISTC) 
The 1993 programme foresees a continuation of the on-site assistance with the 
inclusion of a ninth site (Zaporozhe, Ukraine). 
For the design safety projects, a first set of technical terms of reference have been 
submitted to the Russian side. For the other parts of the programme, such as nuclear 
fuel cycle and waste management, specific projects are being defined and selected. 
In addition to the ECU 88 million allocated to the Tacis Programme, ECU 20 million 
(ECU 15 million Tacis and ECU 5 million Phare) will be contributed to the EBRD 
Nuclear-Safety Account, recommended by the Munich summit and created to complete 
bilateral engagements concentrating on urgent upgrading operations for the most unsafe 
reactors. 
Observations and conclusions 
The most important obstacle to a rapid implementation of nuclear safety projects in the 
New Independent States remains the lack of formal guidelines governing the nuclear 
liability of western experts. The Commission has been forced to find ad hoc solutions 
in the form of indemnity statements from governments of the partner countries. A 
partial statement has been provided by the Russian authorities but it is not sufficient to 
allow the continuation of all projects. 
An indemnity statement was requested from the Ukrainian government in early May. 
To date, the Commission has received no satisfactory response. 
It must be noted that cooperation with New Independent States counterparts has 
improved considerably since the earlier stages of the programme. Useful working 
relationships between European Union and New Independent States partners, built up 
over time, have increased the effectiveness of support efforts. 
55 
Section 2 Other Tacis activities 
Environment 
The new Tacis Regulation (1993-1995) includes, for the first time, a specific reference 
to the environment. Article 3, paragraph 3 of the Regulation states : 
"Due regard shall be taken of environmental considerations 
when designing and implementing programmes." 
As a consequence, the Tacis Programme has not only started building an 
environmental dimension into individual projects; it is also providing support to 
institution building that can contribute towards enhanced sustainability as part of the 
general framework within which economic reform takes place. As a Treaty and 
regulation obligation, it requires an active response in the programming and the 
preparation cycle of projects. 
In that context, the environmental dimension should, as part of the Tacis Programme, 
become an integral and reinforcing part of the Tacis concentration sectors. It should, 
on the one hand, aim at strengthening The New Independent States' capabilities, 
especially through institution building, awareness creation, and the development of a 
minimum legal framework. On the other hand, it should ensure that economic reform 
and short-term economic gains are not accompanied by further environmental damage 
of lasting consequence. Sustainable economic reform must become one of the central 
objectives of Tacis. 
Concrete steps towards integration of environmental principles, such as a training 
seminar for Task Managers and the staff in the coordinating units and the inclusion of 
environmental chapters in the country Sector Strategy papers, are under preparation 
and will soon be implemented. 
1992 Programme 
The implementation of the environment projects under the 1992 Tacis Programme is 
proceeding satisfactorily. The 'Analysis of Data and Management capabilities of the 
Black Sea Laboratories' project is under implementation in four of the five 
participating countries. But due to the continued fighting and civil unrest in Georgia, 
the programme activities envisaged in the Black Sea coastal region of Georgia had to 
be postponed. It seems, however, that the monitoring stations at Batumi have been 
spared major damage from the fighting and, if the current calm persists, the team of 
experts will proceed to Georgia as soon as possible. 
The Environmental Legislation Seminar will take place in April 1994, in Kiev. It will 
assist the riparian states to establish an institutional (including legislative) framework, 
to fight pollution and stimulate sustainable development. Tacis is providing the 
European Union environmental legislation with regular updates, as well as a 
consultation service. Georgia will also participate in this seminar. 
Through the Bistro Facility in Moscow, Tacis has provided funding to the 
environmental non-governmental organisation Globe. This organisation, which 
56 
operates from within the Russian Parliament, is responsible for the monitoring of 
environment related developments and for assisting with the drafting of environmental 
legislation. It is supported by a network of European Parliamentarians. Following the 
recent violent events in Moscow and the closure of the Parliament, the project has been 
temporarily halted. Globe is however refocusing its efforts on the translation of 
legislation into Russian and will resume its original tasks* as soon as the new Parliament 
becomes operational. 
1993 Programme 
The only environmental programme under the 1993 Tacis Programme is the regional 
environmental facility, which aims at integrating environmental considerations in the 
economic reform process. The tender was launched in January 1994. The focal areas 
of the Facility are project preparation, natural resources management, public awareness 
and non-governmental organisation support, and legislation, the Black Sea and the 
Caspian Sea. Under the natural resources tranche, special attention will be paid to 
Lake Baikal, in follow-up to the recent resolution of the European Parliament calling 
for the protection of this important natural resource and the world's deepest sweet 
water lake. 
Humanitarian aid 
Background 
The Tacis Regulation states at the request of a beneficiary state, humanitarian aid and 
technical assistance for its implementation can exceptionally be provided (art. 6). In the 
minutes of the regulation, it is indicated that up to 10 per cent of Tacis budgetary 
provisions can be allocated to humanitarian aid. 
Implementation progress 
In 1993, Tacis financed three major humanitarian aid operations. Two of these 
operations relate to the energy sector and involve the provision of fuel oil, to Armenia 
and Georgia (see chapter 1 on energy sector). 
In the case of Azerbaijan, Tacis has provided a ECU 8 million grant for the purchase 
and delivery of pre-fabricated housing for some 15,000 persons displaced by the 
conflict in and around the region of Nagorny Karabakh. The funds will also cover 
associated requirements for sanitation, water supply and basic household needs. 
The provision of a basic infrastructure will be complemented by a financial allocation 
from ECHO of ECU 3 million, which will supply the camps with food and medicines. 
In accordance with Tacis aims, management of the camps will gradually be transferred 
to Azéris after an initial period of management assistance. Tacis has given a delegation 
to ECHO for signing contracts and making payments, after which the programme will 
be implemented by ECHO. 
57 
Regional programme 
Background 
A Regional (multi-country) Programme was included under the 1992 Tacis Programme 
to cover'areas where there are advantages in adopting a regional approach, either in 
terms of economy and synergy - in using the same frameworks and models for similar 
activities in different states - or where there are problems of genuinely regional 
dimensions, such as regional transport networks or water resources. 
1992 programme 
ECU 28 million have been allocated to the 1992 Regional (multi-country) Programme. 
All of the planned projects are now well underway. These projects are referred to in 
the chapters earlier in this report. 
1993 programme 
Tacis drafted a 1993 Regional (multi-country) Programme on the basis of preliminary 
discussions with and proposals put forward from governments and the Coordinating 
Units in 11 New Independent States. The proposals cover 
• support for the developing economic sector (financial services, partnerships in 
enterprise) 
• assistance to the environment and water resources 
• democratic structures 
• networks (transport, energy and telecommunications) 
• human resources (government and legal advice, language training, statistical 
services, town twinning) and support related to the consequences of the Chernobyl 
accident. 
Tacis information activities 
Within the new Tacis Council Regulation, information is now mentioned as one of the 
areas covered under the programme (Art. 4.2). On this basis, a financing proposal 
outlining the new Tacis communication programme was established and a 
corresponding tender launched. 
The general objectives of the Tacis information and communications activities are to 
increase transparency of programme operations and provide information on Tacis to 
the programme's target audiences. 
In 1993, the main task carried out has been the laying of the foundations for the new 
Tacis communications programme. Although budgetary resources are still modest in 
comparison to the strategic importance of the Tacis Programme, the situation has 
substantially improved. The infrastructure and basic conditions for the implementation 
of a new communications programme have now been created. This more concrete and 
complex work programme was launched at the end of 1993. Consequently, over the 
last year, much work has been carried out relating to general strategic aspects of Tacis 
communications. This includedimportant analytical aspects -such as an assessment of 
58 
the strengths and weaknesses of the current situation, the definition of target audiences 
and the development of working plans for the different levels and areas concerned. 
On this basis, work has started .on the basic instruments required. A new visual 
identity, together with a corporate identity manual, are currently under preparation. 
Thé existing mailing list has been completely revised and extended to serve as a 
communications database. The publications programme has also been substantially 
extended. 
New documents published include 
Summary of Indicative Programmes 1993-1995 
The Tacis Progress Report January-July 1993 
Tacis Activities in Ukraine 
Tacis Activities in Belarus 
Tacis Contract Information - Budget 1993. 
The last mentioned publication, in particular, represents an important contribution 
towards an increase in transparency of Tacis activities, providing all relevant data to 
economic operators interested in participating in the programme. 
Furthermore, many new publications have been or are currently being prepared: 
Tacis Activities in Kazakhstan 
Tacis Activities in the Russian Federation 
Compendium of Tacis Action Programmes 1993 
The Tacis Newsletter 
Russian version of: - Summary of Indicative Programmes 
- Progress Report January - July 1993 
- Report on Activities 1992 
• An English - Russian Glossary of key Tacis terms 
• Progress Report July - December 1993 
• What is Tacis? 
• How to work with Tacis. 
Cooperation between the Tacis information office and the Commission Spokesman's 
Service has intensified, especially in terms of regular flow of information for the 
drafting of press releases on Tacis. 
The last year has also seen a sharp increase in the information office's attendance at 
speaking engagements such as conferences, seminars and workshops and meeting 
individuals and smaller groups for in-depth interviews at the Tacis information office. 
In addition, the Tacis Information office participated in and was present at a number of 
important events, including the World's biggest industrial fair in Hannover in April, 
1993. This was combined with targeted press work, lectures on Tacis and direct 
interviews with hundreds of visitors. Tacis is currently preparing its participation in a 
similar event in London, the CEETEX exhibition in May 1994, which will be attended 
by over a 1,000 exhibitors from the New Independent States and central and eastern 
European countries. This will provide a forum of major importance to Tacis. 
59 
A number of important steps have also been taken to intensify cooperation on 
information work with the Tacis coordinating units in the New Independent States. 
Finally, close cooperation has been maintained between the Tacis Information service 
and DG X's external information unit. 
DG X has continued its information work following the guidelines of the 1991 
Commission paper on information strategy towards central and eastern Europe and the 
New Independent States. The demand for information on the European Union, its 
institutions and policies is enormous and still growing following the development and 
widening of bilateral relations. The budgetary resources, made available under the 
Tacis Programme and divided for the implementation of information work on Tacis 
itself and information on the European Union in general, are modest and inadequate in 
comparison to the importance of the strategic goals of the European Union in the 
region. A better informed public in the New Independent States could only ease the 
achievement of these goals and help overcome the misunderstanding of the European 
Union and the negative attitude towards it in some of these countries. 
The actions providing information on the European Union were concentrated on the 
general public and specific audiences (decision-makers, media people, academics, 
students, young people). There were television and radio programmes on various 
aspects of the European Union and its relations with the New Independent States, 
which were regularly broadcast on channels covering the whole territory of all 12 
countries. Programmes on the European Union were also aired by local television and 
radio stations in Moscow. Due to high demand, the circulation of the Europa 
magazine (84 per cent of which is being sold in all New Independent States and the 
rest distributed by mailing list) has been increased from 100,000 to 120,000. articles 
on the European Union in general were published in leading newspapers and 
magazines. 
It is important to underline that cooperation between DG X, DG I, DG IA and the 
delegation in Moscow in this area has continued to be excellent. 
Although significant progress has been made in the area of Tacis communication work, 
it is clear that much remains to be done. A further extension and intensification of this 
programme therefore continues to be a priority for the Commission Services. 
60 
Section 3 Legal and operational aspects 
Coordination of assistance to the New Independent States 
Multilateral Coordination 
Following the Tokyo Conference on Assistance to the New Independent States in 
October 1992, a new phase in coordination began. The World Bank was given a 
mandate to convene Country Consultative Groups (CGs) for each of the twelve New 
Independent States. This more standard mechanism for international aid coordination 
on a country-by-country basis replaced the international conferences which had been 
responsible for coordination of assistance to the New Independent States as a whole. 
To date, CG meetings have been held for Kazakhstan and Kyrgyzstan (December 
1992), Russia (June 1993), Belarus and Moldova (September 1993). A meeting for 
Kazakhstan will be held in January, 1994. These meetings are open to all donor 
countries and international organisations with a meaningful contribution to make to the 
transformation process, and are held to review the balance of payments situation and 
external financing requirements as well as technical assistance needs. In the absence of 
sufficient progress towards an agreement with the IMF on macro-economic 
stabilisation, pre-CG meetings can be held which are limited to discussions on the 
provision of know-how. 
At each of these meetings, the Commission presented its programmes to the other G7 
donors and discussed progress and the future orientations for reform in each of these 
countries. 
In the Belarus and Moldova CG meetings, the Commission led the discussion on food 
production processing and distribution, which is a Tacis priority sector in both these 
countries under the 1993-1995 Indicative Programmes. 
Other Coordination 
Outside the context of the CG meetings, further coordination at the operational level is 
necessary to avoid overlapping, fill gaps, ensure complementarity between donor 
programmes and to allow an informal exchange of views and experiences. Tacis is 
actively involved in pursuing such coordination with other multilateral institutions and 
major bilateral donors. 
World Bank 
Through an exchange of letters in April, 1993, the Commission and the World Bank 
have continued to deepen their contacts, both at a policy and working level, in order to 
exploit better the complementarity between their respective activities in the New 
Independent States. 
In addition, Tacis and the World Bank are now cooperating on a number of projects in 
different countries, including the Russian Federation, Kazakhstan and Ukraine, across 
a wide range of sectors such as energy, financial services and telecommunications. 
61 
IMF 
Cooperation with the IMF in the field of central banking, training and the 
reorganisation of payments systems is well underway. One example illustrating this 
cooperation is the participation of Tacis and the IMF in creating an inter-state bank 
with the Russian Federation, Ukraine, Belarus and Kazakhstan. 
EBRD 
Relations with the EBRD are mainly based on the Bangkok Agreement (concluded in 
October, 1991) through which in 1993 ECU 20 million were set aside from the 
Community budget for EBRD operations in the New Independent States. The 
Agreement is aimed at combining the Commission's capacity for grant funding of 
feasibility studies and other preparatory work and the EBRD's capacity to generate 
investment projects in order to ensure the complementarity of both institutions. Tacis 
and the EBRD are currently cooperating on more than 40 projects under this 
agreement. 
Outside the Bangkok Agreement, there are, in addition to regular working level 
contacts, a number of joint projects underway. Examples include cooperation in 
transport projects in both Belarus and the Russian Federation. 
OECD 
Close links are also being maintained with the OECD, as Tacis continues to provide 
regular updating of project information for the CCEET (Centre for Cooperation with 
the European Economies in Transition) Register. 
Coordination with European Union Member States 
Significant steps have been taken in 1993 to improve the coordination of Tacis 
activities with those of the European Union Member States. Two meetings have taken 
place at which Member States presented their activities in all of the New Independent 
States, and a number of specific ideas for advancing coordination on a policy and 
project level were discussed. These meetings provided a useful forum for an initial 
exchange of information on strategies and projects, and form a basis on which more 
detailed work on the ground and at an operational level can build. 
One element which emerged from the first of these meetings was the new Partnership 
and Coordination Programme within Tacis. Approved by the Tacis Committee and the 
Commission in December, 1993, with an initial budget of ECU 5 million, the 
programme will support projects proposed by organisations in the Member States on a 
cost-sharing basis. Projects must be within the Tacis priority sectors as identified in the 
1993-1995 Indicative Programmes and will be expected to complement, but not 
duplicate,' on-going Tacis and other assistance. The new programme solicits proposals 
directly from European Union economic operators with sound knowledge and 
experience of the region concerned, contributing to a better understanding of the 
problems to be faced, the generation of sound project ideas and the identification of the 
right partners and final recipients. The cost-sharing formula has the dual advantage of 
doubling the budgetary allocation to projects and of being selective, since it ensures 
62 
real interest on the part of the European Union operator. This, in turn, leads to 
sustainable projects and a better chance of follow-up actions. 
Finally, by encouraging the coordination of Member States bilateral programmes with 
that of Tacis, the Partnership and Coordination Programme will contribute to a more 
effective use of available resources. Final details of the programme are currently being 
discussed in close consultation with the Member States, and the programme should be 
under implementation in the first quarter of 1994. 
Tacis committee meetings 
Seven Tacis Committee meetings and one informal meeting took place in 1993. 
Discussions focused mainly on the following points : 
the new Tacis Council Regulation and orientations for the 1993 Programme 
coordination with other institutions providing know-how to the New Independent 
States 
the methodology and progress of the Monitoring and Evaluation Programme 
the extension of the TEMPUS programme to the New Independent States 
internal Rules of Procedure of the Committee 
guidelines on conditionality of the technical assistance 
financial infrastructure development in economies in transition 
TRACECA agreements , 
Chernobyl situation 
progress on the Monitoring and Evaluation Programme 
follow-up of the G7 Summit held in Tokyo in July 1993 
Tacis 1994 budget and the European Parliament 
statistics and graphics on contracts, commitments and payments 
Tacis National Coordinators meeting held in Brussels in November 1993 
Tacis assistance in the elections for the Russian Parliament in December 1993. 
The Committee gave a unanimous favourable opinion on 
• the eleven 1993-1995 Indicative Programmes 
• the 1993 Action Programmes for the Russian Federation, western Siberia, Urals 
Region, Belarus, Ukraine, Kazakhstan and the 1993 Regional Action Programme 
• the 1993/94 Armenia and Kyrgyzstan Action Programmes 
• the Tacis 1993 Nuclear Safety Programme 
• the Tacis Partnership and Coordination Programme 
• the humanitarian aid projects for Azerbaijan and Georgia 
• Tacis information activities financing proposal; 
Relations with European Parliament 
Besides the usual visits to the European Parliament to answer questions and the many 
replies to letters on behalf of constituents. This year the European Parliament dedicated 
a full Public Hearing to Tacis and Phare 8-9 June, 1993 in order to review and 
critically analyse the effectiveness of the programmes. Sir Leon Brittan presented the 
final address at this Hearing, in which all main issues raised during the meeting were 
63 
responded to. Representatives from various Parliamentary Committees and all units of 
Tacis and Phare, as well as a number of delegates from the partner countries were 
present. 
Other meetings between Tacis and the European Parliament have also frequently been 
conducted. For example with the European Parliament and New Independent States' 
delegations and the Budgetary Control and REX Committees. A number of meetings 
have been held with the European Parliament and New Independent States delegations 
in order to brief its members on the state of play of Tacis operations. During much of 
1993, discussions were dominated by the issue of the freezing of the 1994 Tacis budget 
by the European Parliament. Forty-five per cent of the budget was unfrozen in 
December 1993. 
Although discussions have covered a wide range of subjects, the same issues prevailed: 
transparency of Tacis operations 
need to monitor what aid goes where, and what effect it has 
over-reliance on consultancies 
greater involvement of local expertise 
move towards greater decentralisation 
lack of links between structures in the east and west at all levels 
lack of follow-up investment 
lack of coordination on whether work is being duplicated 
non-implementation in the New Independent States of recommendations outlined in 
Tacis reports. 
Coordinating units 
Apart from their regular duties relating to the implementation of the 1991 and 1992 
Tacis Programmes and the inception of the 1992 projects, the activities in 1993 of the 
coordinating units focused on the 1993 Action Programmes. 
In the four larger New Independent States (Belarus, Kazakhstan, Ukraine and the 
Russian Federation), where the project identification was concluded in the first half of 
1993, the coordinating unit's main task was to ensure that the terms of reference were 
approved and the statements of endorsement signed by the New Independent States 
counterparts. 
In the remaining seven New Independent States (Armenia, Azerbaijan, Georgia, 
Kyrgyzstan, Moldova, Turkmenistan, Uzbekistan) the coordinating units played an 
essential role in the pre-identification phase. Based on the 1993-1995 Indicative 
Programmes, potential New Independent State counterparts and projects were 
identified. In the identification phase, the coordinating units assisted Tacis experts and 
Task Managers in selecting projects. Consultations with the relevant ministries were 
held, prior to the National Coordinators giving their approval in principle of the final 
list of projects. Altogether, the coordinating units performed extremely well and 
contributed to a coherent outcome of the identification missions. 
Efforts have been continued towards the improvement of the logistic and staff situation 
in the coordinating units. The coordinating unit in Uzbekistan relocated to new offices. 
64 
A number of new staff were recruited to re-establish the balance in units where 
vacancies had arisen, and these appointments are proving<to be a great success. The 
team of experts in the Russian coordinating unit was reduced as discussions took place 
over the future structure of the unit and the availability of office space. 
The centralisation, of international aid coordination is-in-the pipeline in several New 
Independent States. Following the establishment of the Agency for International 
Cooperation and Development in Moscow an the Agency for International Cooperation 
and Investments in Kiev, other New Independent States (Kyrgyzstan, Azerbaijan, 
Belarus, Kazakhstan, Uzbekistan) have taken measures in the course of the year to 
improve the structures of their aid coordination. However, in most cases, the central 
aid coordination agencies are not yet operational. In all these cases, the coordinating 
units will be affected in terms of status and responsibility, and Tacis is studying the 
possible implications and the action that may need to be taken. 
The annual National Coordinator's Meeting was held from 8 to 12 November 1993. It 
was attended by Commission officials and by staff from twelve National Coordinating 
Units, as well as delegates from Mongolia. This included several National 
Coordinators, the Executive Directors and European Community team Leaders of the 
coordinating units,.. 
A broad range of topics was extensively discussed, including the implementation of the 
1991 and 1992 Tacis Programmes, procedural and regulatory aspects of programme 
implementation and the coordination of the Tacis Programme with other donors. Tacis 
sector activities were discussed in working group meetings, to which the New 
Independent States delegates contributed actively as speakers and panellists. The 
opportunity to exchange information on Tacis and strengthen relationships between 
New Independent States and European Commission officials was much appreciated. 
The meeting resulted in a series of conclusions and recommendations for the future. 
Tacis 1993 Council Regulation 
n° EEC (Euratom) 2053/93 of July 1993 
The first draft of the Tacis Council Regulation was finalised in July 1992. It was 
approved by the Commission on 25 November 1992. 
Discussions on the 1993 Regulation started on 27 November 1992 in the Council 
Working Group. The draft version was revised by the jurists-linguists and agreed upon 
on 7 January 1993. The final version was sent to the Council and to the European 
Parliament on 15 January 1993. 
The European Parliament was asked to deliver an opinion through the urgency 
procedure in March 1993. This was refused, due to the fact .that by that time the 
Council and the Commission had already agreed in principle on the text of the 
regulation. The European Parliament discussed the proposal during its plenary session 
of May 1993, and decided to send the proposal back to the Committee, as a result of 
their disagreement with the comitology proposed. The Council then decided, a second 
time, to request for urgency. The urgency was accepted, but the proposal was sent 
back again in June 1993. During its plenary session of July, the EP decided to deliver 
a négative'opinion,' reflecting its disagreement'with 'the comitology.-
65 
The Council of Foreign Affairs adopted the ^regulation on 19 July 1993. It was 
published on 29 July, 1993, and entered into force on 2 August 1993. 
The new regulation encompasses the following new elements, as compared to the 
previous Tacis regulation: 
• modification of the title, reflecting the inclusion of the 12 New Independent States, 
rather than the former USSR 
• extension of activities to the republic of Mongolia (as from 1994) 
• multi-annual programming 
• slight redefinition of some sectors in the annex II (but maintaining the same 
priorities) 
• inclusion of triangular operations, on a case by case basis, with Phare countries and 
Mediterranean countries 
• inclusion of humanitarian aid 
• coordination of know-how with international finance institutions. 
In addition, the European Commission has been requested to introduce a number of 
transparency elements in the new regulation. In future, the Commission will therefore 
provide a report to the Tacis Committee every six months, as well as pre-tender 
information on projects expected to be put out for restricted tender. 
66 
Section 4 Conclusions and future orientation 
Improving programme performance 
The measures instituted to overcome or circumvent the inevitable constraints and 
difficulties associated with Tacis' infancy have now started to bear fruit, not least as a 
result of the systematizing of all stages of the Tacis project cycle and enhancing 
programme quality through increased cohesion of design and the diversity of 
instruments. Some of the more important measures are 
Improved quality, effectiveness and coherence 
The shift to multi-annual programming has allowed Tacis to develop strategic priorities 
and a greater concentration of available resources in a limited number of key areas for 
greater impact. At the same time, Tâcis has started to benefit form the standardisation 
and formulation of all its procedures, from the introduction of programming guides, 
systems and improved criteria, and from the strengthening of the human resources for 
effective programme preparation and management in both Brussels and the New 
Independent "States. At the same time, a diversification beyond the traditional 
consultant or expert assignments have induced innovative programmes for the 
mobilisation of skills and know-how (e.g. Productivity Initiative, Twinning, 
EBRD/Tacis Bangkok Facility, European Senior Service Consortium) often with rapid 
and highly visible impact at relatively low know-how unit costs. 
Measures to accelerate programme implementation 
Every effort is being made to further accelerate programme delivery, in particular 
through a shift towards fewer, larger and faster disbursing projects, with a shorter 
average duration and more up-front disbursements, and by grouping different smaller 
projects under a facility managed by one appropriate implementing institution or 
operator. These measures, and the introduction of multi-annual programming, are 
already having a significant impact on both accelerated commitment and disbursement 
rates. 
Institutional improvements 
Tacis headquarters have been strengthened significantly (although with 32-A staff 
remains Small by any standards), enhancing both technical and management 
capabilities. The establishment in the New Independent States of systematic monitoring 
and evaluation systems has started to generate feedback, thus strengthening future 
programmes and avoiding past mistakes. Of great importance also are the coordinating 
units, fully operational in all New Independent States except Tajikistan, and allowing 
Tacis to decentralise certain functions and to benefit from local capabilities and know-
how. In Moscow, and now also in Kiev, the European Union Missions are also 
facilitating this decentralisation process. 
67 
Donor coordination 
Tacis has been instrumental in establishing effective coordination mechanisms with 
other donors,- and in .particular .with .the Member States, the Washington-based 
institutions and EBRD. 
Regular meetings with the Tacis Committee provide an effective forum for the 
exchange of information and overall coordination between Member States and the 
Commission. In addition, coordination with Member States has been improved through 
special meetings to discuss programming and projects at an operational level. 
Furthermore, Tacis participates actively in the G7 forum, the Consultative Group 
process and similar groupings. 
Relations with the European Parliament 
In the course of last year, Tacis' relations with the European Parliament have been 
intensified. Tacis has had increasingly regular contacts with the European Parliament, 
particularly with the European Parliament-New Independent States delegation and with 
the Budgetary, External Economic Relations and Budgetary Control Committees. The 
•Commission is anxious, to build on these fruitful contacts. 
Cooperation between Commission services 
Within the Commission, the main responsibility for Tacis rests with the Directorate-
General for External Economic Relations. In many cases, the specialist know-how of 
other Commission services is drawn upon to assist DG I, for instance, in the 
identification of projects, the drafting of terms of reference or the participation in 
tender evaluations. In a few cases, other directorates-general may assume a leading 
role in the technical preparation and execution of projects. 
Financing proposals for Tacis programmes are discussed with other Commission 
services at a concertation meeting held before the proposal is submitted for a decision. 
Monitoring and evaluation 
A programme like Tacis, which aims to contribute to reform, must have an 
independent overview and reporting system in order to ensure that the projects 
undertaken remain on course and fulfil the programme's objectives. Such a system can 
also help to ascertain whether maximum value is derived from expenditure, and 
provide information that may be used for future programming. 
The Tacis Monitoring and Evaluation Programme was launched in 1993. The 
programme is divided into two parts. Monitoring is carried out whije projects are in 
operation, indicating whether or not projects are on course and providing early 
warning of potential problems so that adjustments can be made with minimal 
disruption. During the Evaluation phase, the monitoring information which has been 
gathered is summarised, and the sustainability and impact of individual actions or 
lessons learned from individual projects can be assessed. 
68 
At present, the focus is more on monitoring than evaluation because the latter is 
normally carried out ex-post. As most Tacis projects are-still operational, it is still too 
early to get significant evaluation information. 
In the Russian Federation, a monitoring and evaluation core team made up of one 
independent western representative per sector is based in Moscowr each with a Russian 
counterpart. The team works closely with the Commission, and in particular with the 
provision of know-how section of the Commission delegation. It is responsible for all 
aspects of monitoring and evaluation, including the quality and timeliness of reports, 
the coordination of monitoring and the follow-up of recommendations made in the 
monitoring reports. For each priority sector, Tacis has provided specialist monitoring 
and evaluation support teams who are responsible for specific projects alongside 
members of the core team. Each monitoring and evaluation specialist also has a 
Russian counterpart. This enables monitoring and evaluation activities to be carried out 
jointly by both western and Russian members, and reports to be agreed and co-signed 
by both. 
In the other New Independent States, the Monitoring and Evaluation Programme is 
implemented in the same way as above, although the activities of the Core Team are 
» assumed by* the sector co-ordinators at Tacis headquarters in Brussels. 
Information 
The Commission is committed to making the Tacis programme as transparent as 
possible. The Tacis Information Office plays a key role in increasing the transparency 
of programme operations and in providing the relevant information on Tacis to the 
target audiences of the programme, such as economic operators, European institutions, 
Member States, media, coordinating units and all other bodies interested in following 
the evolution of the Tacis Programme. 
The infrastructure and basic conditions for the implementation of a new information 
and communications programme have been created. The launch of this new, more 
complex and strengthened work programme started at the end of 1993. 
Future orientations 
Decentralisation 
Tacis is moving towards greater decentralisation at two levels: 
• stronger involvement of recipients in the planning process and the administration of 
Tacis 
• the transfer of some of the Commission's responsibilities from headquarters in 
Brussels to the Commission delegation in the recipient country (in those countries 
where an office is already in place). 
Involvement of recipients in planning and administration requires a balanced approach 
between, on the one hand, the need for acceptance of the programme by the partner 
and, on the other hand, the need for proper management according to the European 
Union's budgetary rules. 
69 
Initially, recipient institutions had little or no "experience in implementing Tacis 
projects, and so most decisions and all the administration were handled centrally by the 
Commission in Brussels.-Three years on, the partner countries are playing a more 
important role, particularly with regards to Tacis programming, project identification 
and preparation. 
Concentration on regions 
Decentralisation is also taking place at a regional level. In Russia, for instance, Tacis 
has included priority regions in each annual programme since 1992. The advantage of 
regional decentralisation lies in the creation of direct links with the local authorities, 
and in the combination of a critical mass of programmes in different sectors. Given 
these advantages, regional focusing of the Tacis programme is likely to increase and is 
also planned for other large countries like Ukraine and Kazakhstan. 
Subcontracting to local companies and experts 
Given that a key objective of Tacis is the mobilisation of know-how through 
'partnerships;-links and,networks with the New Independent States, it is natural that the 
programme should draw on employing the services of western economic operators. 
Nevertheless, Tacis is now making systematic efforts to encourage the participation of 
local companies and experts in Tacis projects. This not only helps to increase their 
involvement and commitment to the projects, but also makes it more likely that they 
will have a lasting impact. In the tender evaluation procedure, marks are allocated for 
the use of local expertise and its integration into the project. The marks allocated vary 
from project to project but can make the difference between success and failure in a 
competitive tendering situation. This should over time steadily increase the 
involvement of local companies and experts. 
Tacis administrative procedures 
Tacis has tried to adapt its procedures as much as possible to meet the needs of speedy 
response and flexibility. Large programmes have to follow the full cycle which, 
although long in absolute terms, is still shorter than the cycle of most other donors, 
including the World Bank. 
For smaller projects and urgent needs, a number of short cuts have been designed, 
such as the Multidisciplinary Facility under which experts can be mobilised within 
weeks; the Small Scale Technical Assistance Facility and the Bistro programme for 
quick operations to be mobilised by the Commission Delegation in the country; the 
EBRD-Bangkok facility; and a system of framework contracts allowing speedy 
recruitment of experts for short assignments. The Commission has also increasingly 
built an element of flexibility into regular tendered contracts and has standardised and 
simplified its contracts. Tacis will continue to look for ways to reduce the burden of 
procedures without endangering financial priorities. 
70 
New themes 
Tacis focuses on key sectors needing reform, but a number of horizontal issues are 
becoming increasingly important. The Tacis approach to the four most important of 
these is outlined below. 
Seeking a holistic approach to the transformation process 
Initially, Tacis implemented single projects, but it looks increasingly to develop a 
broader approach to reform. Tacis is drawing out the connections between privatisation 
and restructuring of production on the one hand, and the reorganisation of social issues 
and public administration on the other. Care is being taken to ensure that an integrated 
approach ministers to the social as well as economic needs of the recipients. 
Democracy 
Supporting transparent and pluralistic development has always been a central concern 
under the Tacis programme. By broadening the base of economic activity, the 
foundations of a richer and more pluralistic society are being laid. Tacis has, for 
example, helped to^upport the development of trade unions in Russia and introduced a 
Democracy Programme under the 1993 Tacis Programme. 
Support for women 
The Commission works actively to support equal opportunities, not as a separate 
programme but through the normal facilities open to Tacis. A number of projects of 
this sort have already been supported through the Bistro facility in Moscow, while 
projects such as, for example, in Uzbekistan to spread information on management and 
the market economy will have a women entrepreneurs organisation as one of the main 
beneficiaries. 
Environment 
The environment plays a very important role under Tacis, a role which has been 
extended with the support of the European Parliament. It is not supported as a separate 
sector under the Tacis Programme. Instead, environmental concerns are integrated into 
every project. Most sectors include environmental projects, such as Energy, with its 
focus on conservation and efficiency, and Agriculture, under which locals are trained 
in the management of by-products and waste in food processing operations. In 
addition, the Commission finances certain projects where the links between economic 
reform and environmental protection are evident, such as the Black Sea Environmental 
Management Programme. 
Environmental projects that do not fit into any of the Tacis sectors but are worthwhile 
can be financed under the regional Environmental facility, which is currently already 
discussing joint projects with the World Wildlife Fund for Lake Baikal. 
71 
ISSN 0254-1475 
COM(95) 57 final 
DOCUMENTS 
EN 11 
Catalogue number : OB-CO-95-070-EN-C 
ISBN 92-77-86164-9 
Office for Official Publications of the European Communities 
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