European Commission: The Tacis Programme - Annual Report 1995
Date: 1996-07-22
Institutions: European Commission
Subjects: Commonwealth of Independent States, EU programme, Mongolia, development policy, international cooperation

European Commission: 
The Tacis Programme 
Annual Report 1995 

Brussels 22.07.1996 Com (96) 345 final 

What is Tacis? 

The Tacis Programme  is a European Community  initiative 
for  the  New  Independent  States  and  Mongolia,  which 
fosters  the  development  of  harmonious  and  prosperous 
economic  and  political 
links  between  the  European 
Community  and  these  partner  countries.  Its  aim  is  to 
support 
to  develop 
societies  based  on  political  freedoms  and  economic 
prosperity. 

the  partner  countries' 

initiatives 

Tacis  does  this  by  providing  grant  finance  for  know-how 
to  support  the  process  of  transformation  to  market 
economies  and democratic  societies.  In its first five years 
of  operation,  1991-95,  Tacis  has  made  available  more 
than  ECU  2,268  million  to  launch  more  than  2,200 
projects. 

the  partner  countries 

Tacis  works  closely  with 
to 
determine  how  funds  should  be spent.  This  ensures  that 
Tacis  funding  is  relevant  to  each  country's  own  reform 
policies  and  priorities.  As  part  of  a  broader  international 
effort,  Tacis  also  works  closely  with  other  donors  and 
international organisations. 

Tacis  promotes  understanding  and  appreciation  of 
democracy  and  a  market-oriented  social  and  economic 
system  by  cultivating 
lasting  relationships 
between  organisations  in the  partner  countries  and  their 
counterparts  in the European Community. 

links  and 

the  key  areas 

The  main  priorities  for  Tacis  funding  are  common  to  all 
partner  countries,  although  each  is at  different  stages  of 
transformation.  Currently, 
include: 
restructuring  of  state  enterprises  and  private  sector 
development,  building  an  effective 
food  production, 
processing  and  distribution  system,  developing  energy, 
transport, 
infrastructures, 
telecommunications 
nuclear  safety,  environment,  public  administration  reform, 
social services and education. 

and 

Tacis  provides  know-how  from  a  wide  range  of  public 
and  private  organisations,  which  allows  western 
experience  to  be  combined  with  local  knowledge  and 
skills.  This  know-how  is  delivered  by  providing  policy 
advice, expert  teams, studies  and training, by  developing 
and 
frameworks, 
institutions  and  organisations,  and  by  setting  up 
partnerships,  networks,  twinnings  and  pilot  projects. 
Tacis  is  also  a  catalyst,  unlocking  funds  from  other 
lenders  by  providing  pre-investment  and 
feasibility 
studies. 

legal  and 

regulatory 

reforming 

Contents 

Commissioner's  statement 
Tacis  in 1995  - consolidating  reform 
Tacis and  European  Union policy 
Tacis financial overview 
Operational  management  of the Tacis  Programme 
Tacis and the  European Community  institutions 
Bilateral and  international  cooperation 
Armenia 
Azerbaijan 
Belarus 
Georgia 
Kazakhstan 
Kyrgyzstan 
Moldova 
Mongolia 
Russian Federation 
Tajikistan 
Turkmenistan 
Ukraine 
Uzbekistan 
Multi-country  programmes 
Future outlook 

Special feature 
Tacis in the NIS energy sector 

Annexes 
Tacis funds allocated  by sector 
Tacis financial  performance 
List of major contracts  signed  in 1995 

2 
3 
4 
5 
8 
11 
12 
13 
15 
17 
19 
21 
23 
25 
27 
28 
37 
38 
39 
42 
44 
48 

33 

49 
52 
55 

Commissioner's statement 

The Tacis  Programme  reached an important  turning  point 
in  1995,  as  it  prepared  for  its  next  major  programming 
cycle. 

Five  years  since  its  inception,  it  has  reached  a  level  of 
maturity in which it can point to significant advances made 
in enhancing  the  reform  process  in the  New  Independent 
States.  It  can  claim  this  with  the  assurance  of  having 
instituted  extensive  and 
the 
monitoring  and  evaluation  of 
individual  projects  and 
framework  programmes.  Its  challenge,  therefore,  is  to 
make  the  best  possible  use  of  the  weight  of  this 
experience,  by  shaping  it  to  formulate  plans  for  the  new 
programming cycle from  1996 to  1999. 

thorough  systems 

for 

Tacis  in  context 
As Tacis embarks upon this task, the relationship  between 
the  European  Community,  its  Member  States  and  the 
New  Independent  States  is  entering  a  new  stage.  Long 
and  involved  negotiations  have  brought  us  to  a  point  at 
which  we  have  signed  Partnership  and  Cooperation 
Agreements  with  the  majority  of  our  partner  countries. 
Even  greater  challenges 
the  actual 
these  broad-ranging  Agreements, 
implementation  of 
which  encompass  so  many  areas  of  political,  economic, 
social and cultural cooperation. 

lie  ahead 

in 

remains  an 

for 
In  this,  Tacis 
facilitating  the  implementation  of  the  broad  objectives  of 
the Partnership and Cooperation Agreements. 

instrument 

important 

in  clearly  defined  priority  sectors, 

Consolidation 
The Tacis  Programme  continues  to  provide  grant  finance 
in 
for  know-how 
accordance  with  the  needs  and  wishes  of  its  partner 
countries.  It stands  by the principles  which underpin all its 
activities,  such  as the  respect  for  democracy  and  human 
rights  and 
It 
continues  to  consolidate  its  activities  with  those  of  other 
international  donors  and  lenders.  It maintains  its efforts  to 
enhance  its  accessibility,  with  a  readiness  to  provide 
timely and substantial information about the Programme. 

the  preservation  of 

the  environment. 

Innovation 
At the same time, Tacis has shown  itself to  be adaptable, 
demonstrating  the  broadening  scope  of  the  Programme, 
and  exemplifying  the  spirit  in  which  it  is  prepared  to 
develop  practical solutions in a relationship with its partner 
countries which is constantly evolving. 

I consider  multi-annual  programming  essential, in order  to 
enhance  the  impact  of  the  Programme,  allowing  longer-
term  planning  and, 
individual  projects,  quicker 
inception and greater concentration. 

for 

towards 

the  commitment 

Meanwhile 
the  funding  of 
investment  support  for  EC-NIS  small  and  medium-sized 
enterprise joint  ventures  and  for  small-scale  infrastructure 
projects  in  border  areas,  as  proposed  in  the  new  Tacis 
Regulation,  represents  another  important  new  departure 
for the Programme. 

Priorities for the  Programme 
The  European  Commission  is  addressing  this  task  by 
reaffirming  the  commitment  to  principles  and  procedures 
established  under Tacis, while adapting itself to'move with 
the times and maintain the impact and performance of the 
Programme in its second five years of operation. 

For this  reason  I attach  particular  importance  to  both  the 
consolidation  and  the  innovation  which  took  place  within 
the Tacis Programme in 1995. 

I  commend  this  Annual  Report,  which  charts  the  most 
important  developments  in the Tacis  Programme  in 1995, 
another year of notable achievement.  In particular,  I would 
again like to pay tribute to the performance and dedication 
of the individuals who manage the Programme. 

Hans van den  Broek 
Member of the European Commission 

Tacis in 1995 - consolidating reform 

Tacis  is  the  largest  grant  finance  programme  providing 
know-how  to  the  New  Independent  States.  Five  years 
after  its inception  in 1991, Tacis has committed  over ECU 
2,268  million and launched more than 2,200  projects. The 
Programme  is  now  contracting  as  many  projects  each 
year as it did in its first three years of operation combined. 

Tacis is now well established, and plays an acknowledged 
role in the processes of fundamental  economic  and social 
change  which  are  currently  unfolding 
the  New 
Independent States. 

in 

between 

relations 
its  Member  States  with 

1995  saw  the  significant  strengthening  of  the  political 
the  European 
framework 
for 
Community  and 
the  New 
Independent  States,  through  the  conclusion  of  a  number 
of  Partnership  and  Cooperation  Agreements,  PCAs.  The 
Agreements  have  a  wide  scope  in  covering  all  political, 
commercial,  economic  and  cultural  cooperation  between 
the  European  Community,  its  Member  States  and  the 
New  Independent  States, NIS. They also draw together all 
the  elements  of  European  Community  support  towards 
the  partner  countries.  One of the  primary  aims of Tacis  is 
to  contribute  to  the  realisation  of  the  objectives  of  these 
PCAs.  Agreements  have  been  signed  by  six  New 
Independent States and initialled by a further three. 

Once  ratified  and  in force,  the  Agreements  will  also  offer 
greater  security  to  companies  and  investors  from  the 
European Community, to encourage the direct  investment 
which 
the  New 
Independent States. 

the  economies  of 

is  needed  by 

The year  1995  also  saw  enhanced  coordination  between 
Tacis  activities  and  those  of  Member  States  and  other 
donor organisations working in the NIS. Tacis worked with 
other organisations primarily on an individual project basis. 

The  new  monitoring  and  evaluation  system  for  Tacis 
projects  became  fully  operational  in  1995  and  has  been 
highlighting areas where improvements can be made. 

Meanwhile  Tacis  can  now  concentrate  on  responding 
more  rapidly  to  changing  needs,  and  on  implementing 
projects  quickly  once  they  have  been  identified  and 
agreed.  An 
the 
reinforcement  of  multi-annual  planning  which  allows  a 
long-term strategic approach to run in parallel with the fast 
implementation of projects. 

important  part  of 

this  process 

is 

The  proposed  new  Regulation  allows  Tacis  to  provide 
funding  for  investment  support  to  EC-NIS  small  and 
medium-sized  enterprise  joint  ventures.  Assistance  may 
be  provided  through  a combination  of  INTERREG,  Phare 
and Tacis to  support  measures aimed at  promoting  inter 
inter-regional  and  cross-border  cooperation, 
state, 
in  cross-border 
including  small  infrastructure  projects 
areas.  The  environment 
(institutional  strengthening, 
legislation,  training)  has  been  identified  as  a  priority  area. 
However, the transfer of know-how  remains the hard core 
of  Tacis  activity,  and  this  is  largely  done  through  the 
individual  country  programmes  which  comprise  some  60 
per cent of the annual Tacis budget. 

These  issues  are explained  in more  detail  in the  following 
chapters. 

Tacis and European Union policy 

The  Tacis  Programme,  developed  by  the  European 
Community  in  1991,  was  one  of  the  first  instruments  to 
support the New Independent  States in the  reconstruction 
of their economies and societies. 

in 

In 

for 

that 

the  NIS 

five  years. 

The  Tacis  Programme  has  now  been  providing  grant 
finance  for  the  provision  of  know-how  to  its  partner 
time, 
countries 
developments  have  made  it  clear  that  overall  relations 
between  the  European  Community,  its  Member  States, 
and  each  partner  country  should  be  put  on  a  different, 
broader  footing.  For this  reason, a new  set  of  contractual 
arrangements with the  individual partner countries,  known 
as  Partnership  and  Cooperation  Agreements,  PCAs,  is 
now replacing the  1989 Agreement on Trade, Commercial 
and Economic  Cooperation which was drawn up between 
the Communities and the entire former Soviet Union. 

Although  these  Agreements  are  diverse,  reflecting  the 
differences  between  the  partner  countries  themselves, 
each  establishes  a  close  form  of  contractual  relations:  a 
political and economic  partnership, covering all aspects of 
relations, from trade  and  investment  to  cooperation  in the 
areas of home affairs and justice. 

including 

freedoms 

The  concept  of  partnership  embodies 
the  shared 
principles  and  objectives  which  are  the  basis  for  the 
relationship:  respect  for the  rule of  law  and  human  rights, 
the 
the  development  of  political 
establishment  of  a  multiparty  system  with  free  and 
democratic  elections,  and 
the  establishment  of  a 
functioning  market  economy.  Furthermore,  it  aims  to 
support the integration of the NIS into the world economy, 
the  promotion  of  peace  and  security,  and 
the 
development  of 
relations,  globally  and 
international 
regionally,  in accordance  with the  principles  of the  United 
Nations,  UN,  and  the  Organisation  for  Security  and 
Cooperation in Europe, OSCE. 

The  PCAs  use  Tacis  as  the  most  important  tool  to 
facilitate  cooperation  under  each  Agreement.  It  provides 
the  means 
to 
consolidate  democracy  and  to  complete  the  transition  to 
the market  economy. 

to  support  partner  countries'  efforts 

Towards broader political relations 

By  the  end  of  1995,  the  European  Community  and  its 
Member  States  had  negotiated  Partnership  and 
Cooperation  Agreements  with  the  majority  of  the  New 
Independent  States. Having concluded  PCAs with Russia, 
Ukraine  and  Moldova  in  1994,  during  1995  the  EU 
negotiated  and  signed  PCAs  with  Belarus,  Kazakhstan 
and  Kyrgyzstan  and 
them  with  Armenia, 
initialled 
Azerbaijan and Georgia. Exploratory  PCA talks also began 
with Uzbekistan. 

While  the  PCAs  await  full  ratification,  a  number  of  Interim 
Agreements covering the trade aspects of the  Partnership 
and  Cooperation  Agreements  have  been  negotiated  and 
some  of  these  have entered  into force. This will allow  the 
trade  and  commercial 
the 
parties 
provisions of the PCAs at the earliest possible moment. 

to  benefit 

from 

Contractual  relations with  Russia moved forward, with the 
signature of the  Interim Agreement  in July  1995. This took 
place after a difficult  period  in EU-Russian  relations  which 
was  prompted  by the events  in Chechnya.  Out  of  serious 
concern  for  the  situation  there,  the  Commission  initially 
froze  procedures  for  the  entering  into force  of  the  Interim 
Agreement,  until  conditions  agreed  by  the  EU  were  met 
by the Russian government. 

The  Interim  Agreement  with  Ukraine  was  signed  in  June 
1995 and entered into force in February  1996. Throughout 
the  year,  the  European  Union  developed  a  close  and 
structured  dialogue with  Ukraine.  Meetings  at a ministerial 
level  have  become  a  regular  means  of  facilitating  this 
dialogue.  Ukraine  also  joined  the  Council  of  Europe  in 
November  1995. 

In  March  1995  Belarus  signed  a  Partnership  and 
Cooperation  Agreement  with  the  European  Community 
and its Member States and initialled an Interim Agreement. 
However,  given  the  difficulties  involving  the  Belarussian 
parliamentary  processes, and the fact that  Parliament was 
only  constituted  late  in the  year,  in  1995  Belarus  did  not 
meet  the  requisite  political  conditions  for  the  signature  of 
the Interim Agreement. 

Moldova  signed  an  Interim  Agreement  with the  European 
Community  in  October  1995,  while  the  Partnership  and 
Cooperation  Agreement  is  pending  ratification.  Moldova 
was  the  first  of  the  New  Independent  States  to  join  the 
Council of Europe, in July 1995. 

A new integrated regional approach 

From strategy to  implementation 

the  possibilities  offered  by 

In  1995  the  Commission  considered  that  the  time  had 
come  to  bring  together  the  experience,  the  instruments, 
and 
contractual 
the  Partnership  and  Cooperation 
arrangements  of 
Agreements, 
into  a  set  of  comprehensive  strategy 
documents  covering  the  full  range  of  relations  with  each 
partner and region. 

the 

It therefore  prepared  three  individual  Communications  on 
relations  with  Russia,  the  states  of  the  Caucasus,  and 
those  of  Central Asia. These  proposed  to  the Council  the 
basis  for  an  integrated  policy  for  each  area, as  had  been 
done for Ukraine in 1994. 

The debate over the Commission  Communications  on the 
Transcaucasus  and  Central  Asia  continues.  However,  in 
November  1995 the Council of  Ministers  adopted  a set of 
strategic  principles for the European Union's  relations with 
Russia. These covered  economic  transformation,  support 
to  democratization,  security,  foreign  affairs,  and  issues 
related to  home  affairs  and justice. The strategy  elements 
were  confirmed  by  the  European  Council  at  the  Madrid 
summit  in December.  At the same time the  Ministers also 
agreed  that  the  Union  should  develop  an Action  Plan for 
Russia,  identifying  short-  and  medium-term  actions  in all 
the different  areas  of the  relationship, and  drawing  on the 
experience  and  potential  of  Tacis 
its 
components. 

for  many  of 

Tacis financial overview 

In  1995,  the Tacis  Programme  committed  a total  of  ECU 
511.19  million,  including  ECU  10  million  for  the  Tacis 
Democracy  Programme.  The  total  Tacis  commitments 
over  the  five years  of  the  Programme's  life  now  stand  at 
ECU 2,268.37 million. 

During  1995,  Tacis  launched  projects  and  contracted 
funds  to  a value  of  ECU  527  million. This  compares  to  a 
total of ECU 557.2 million contracted from 1991 -1993. 

Tacis funds  committed from  1991 to  1995 
ECU 2,268.37  million 

511.193 

The  Tacis  Programme  paid  out  ECU  374.5  million,  an 
increase  of  24.7  per  cent  from  the  previous  year  and  76 
per  cent  more than  the  amount  that  was  paid  out  during 
the first three years of the Programme combined. 

This  means that  of the total Tacis commitments,  70.5  per 
cent  has  now  been  contracted,  and  of  the  amount 
contracted 55.5  per cent has been paid. 

The time lag between commitment  and payment  is normal 
for a programme of this type. After five years of operation, 
Tacis  has  disbursed  82.9  per  cent  of  its  initial  1991 
budget. 

396.50 

418.91 

472.09 

1991 

1992 

«IP 
1993 

1994 

1995 

1  For  1993,  figures  include  ECU  22  million  for  humanitarian  aid  to 
Armenia, Azerbaijan  and Georgia  (managed  by Tacis) 
2  For  1994,  figures  include  ECU  10  million  for  the  Tacis  Democracy 
Programme  (managed  by Tacis  under  a separate  budget  line) 
3  For  1995,  figures  include  ECU  10  million  for  the  Tacis  Democracy 
Programme  (managed  by Tacis  under  a separate  budget  line). 

1991-1995 funds committed by country (in ECU million) 

Azerbaijan 

Baltic  States 

1991 
1992 
1993 
1994 
1995 

Belarus 

Georgia 

i 

Kyrgyzstan 

Moldova 

Mongolia 

Russian 
Federation 

Tajikistan 

Turkmenistan 

Ukraine 

Multicountry 
programmes 

1995 

1991 
1992 
1993 
1994 
1995 

1991 
1992 
1993 
1994 
1995 

1991 
1992 
1993 
1994 
1995 

1994 budget also covered activities in 1995 

1991-1995 funds allocated by sector (in ECU million) 

Nuclear safety 
and environment 

Restructuring 
state enterprises 
and private sector 
development 

Public administration 
retorm, social 
services and 
education 

Agriculture 

Energy 

Transport 

Policy advice 

Telecommunications 

Other sectors 

Operational management of the Tacis 
Programme 

In  1995  the  structure  of  the  operational  management  of 
Tacis  was  adapted  to  respond  to  the  new  geographical 
the  Commission  in the  area  of  external 
approach  within 
relations.  Tacis  also  reviewed 
its  programming  and 
planning  procedures  and  restructured  its  monitoring  and 
evaluation  teams,  while  strengthening  its  presence  in the 
partner  countries  and  continuing  a  broad-based 
communications  programme  to  inform  all  those  working 
with and interested in the Programme. 

Reorganisation of the NIS/Tacis Directorate 

The  NIS/Tacis  Directorate,  which  manages  the  Tacis 
Programme within  Directorate General  IA (Europe and the 
New  Independent  States,  Common  Foreign  and  Security 
Policy and External Missions) was reorganised in 1995. 

the 

reflects 

role  of 

reorganisation 

The 
the  Tacis 
Programme  within the wider  context  of  relations  between 
the  European  Community,  its  Member  States  and  the 
New Independent  States. It acknowledges the  importance 
of  Tacis'  experience  on  the  ground  in  the  development 
and implementation of the Union's policy towards the NIS. 
The  new  organisational 
the 
management  of the Tacis  Programme with all other  areas 
of  EC-NIS  relations,  including  political,  economic  and 
trade  areas.  This 
to  enhance  policy 
is  designed 
consistency and overall efficiency. 

integrates 

structure 

Each  geographical  unit  is  now  responsible  for  all  Tacis 
activities  relevant to  a given country, with the exception of 
nuclear  safety  which  covers  Phare  and  Tacis  countries. 
Nuclear  safety  programmes  are  managed  by  unit  C5, 
which  is  also  responsible  for  related  horizontal  activities 
and donor coordination. 

including 

the  majority  of  Tacis 
those 

A  new  unit  C6  defines  the  policy  for  monitoring  and 
evaluation,  and  determines  Tacis  sectoral  strategies.  It 
framework 
also  manages 
programmes, 
policy  advice, 
democracy  and  cofinancing  with  non-governmental 
organisations.  Unit  C7  is  responsible  for  Tacis  financial 
and  administrative  management, 
including  budget, 
contracts, accounting and payments. It supports the other 
units  in  the  preparation  of  tenders  and  contracts,  and  is 
also in charge of liaison with the Court of Auditors and the 
Tacis Committee. 

for 

Meanwhile  unit  C1  is  dedicated  to  the  development  and 
pursuit  of  a  coherent  policy  approach  towards  the  New 
Independent  States.  The  unit  also  manages  the  overall 
Tacis  programming,  and  takes  responsibility 
the 
coordination  both  of  multi-country  programmes  and  of 
relations  with  Member  States  and  other  donor 
organisations,  and 
those 
framework  programmes  which  work  closely  with  other 
international donors. 

the  management  of 

for 

for 

As  a  consequence, 
the  original  sectoral  split  of 
responsibilities  has  been  replaced  along  geographical 
lines. The  new  unit  C2  is  responsible  for  Russia,  unit  C3 
covers  relations  with  Ukraine,  Belarus  and  Moldova,  and 
C4  with  the  countries  of  central  Asia  (Kazakhstan, 
Kyrgyzstan,  Tajikistan,  Turkmenistan,  Uzbekistan  and 
Mongolia)  and  the  Transcaucasus  (Armenia,  Azerbaijan 
and Georgia). Within their geographical competence, each 
of these units is responsible for 

•  preparation,  negotiation  and 

implementation  of 
Partnership  and  Cooperation  Agreements  and 
Interim  Agreements 

.  management  of  political,  security,  economic  and 

trade  relations 

.  programming  and 

implementation  of 

the  Tacis 

Programme. 

This  new  structure  allows  for  the  development  of  an 
integrated approach for each country. The creation of one 
contact  point  for  each  partner  country  facilitates  direct 
relations  with  that  country  and  with  the  desk  officers  of 
other donor organisations. 

Multi-annual planning 

In order to  improve Tacis performance and to reduce time 
spent  planning  the  actions  in  different  partner  countries, 
Tacis  started  its  first  multi-annual  programming  cycle  in 
1993. This meant that the Indicative Programmes outlining 
the  basic  objectives  and  strategy  for  Tacis  in  each 
individual country were established for a three-year  period 
instead  of  a  one-year  period.  This  allowed  the  earlier 
framing  of  annual  Action  Programmes,  which  identify  the 
individual projects and activities to be undertaken, and the 
speedier selection and implementation of Tacis projects. 

planning 

In  1995,  Tacis  carried  out  an  internal  review  of  its 
programming  procedures.  The  review  showed  that  the 
multi-annual 
significantly 
accelerated  the  implementation  of  Tacis  projects,  which 
has  been  reflected  in the  increasing  number  of  contracts 
and  payments.  Multi-annual  planning  also  gave 
the 
Programme  a more strategic  focus,  as well as  motivating 
the partner countries to assess their long-term needs. 

process 

had 

to  enhance 

the  strategic  orientation  of 

However,  the  review  also  concluded  that  there  was  a 
need 
the 
the  multi-annual 
further  promoting 
Programme  by 
approach.  This  is  to  be  done  by  concentrating  Tacis 
activities  on those  areas where the  Programme  can  most 
effectively assist reform, and increasing the size of projects 
where  possible.  In  this  way,  Tacis  will  serve  as  a  more 
integral  and  effective  component  in  the  Commission's 
overall relations with partner countries. 

To  enhance  the  efficiency  of  the  Tacis  Programme, 
Indicative  Programmes  will  become  four-year  instruments 
(rather  than  three  as  before)  and  the  majority  of  Action 
Programmes  will  become  biannual  instruments  (rather 
than  annual  as  before).  For  Russia  and  Ukraine  annual 
Action  Programmes  will  be  retained.  This  multi-annual 
approach  is reflected  in the  Commission  proposal  for  the 
new Tacis Regulation. 

The  new  Indicative  Programmes  will  be  more  substantial 
documents  than  their  predecessors,  giving  a  coherent 
view  of  Tacis'  intended  role  in  a  restricted  number  of 
priority sectors over a number  of years. They will also bind 
to  political  and 
the  partner  countries  to  committing 
economic  reform  on  a long-term  basis, as a condition for 
the provision of Tacis support. 

In  addition,  and  as  proposed  under  the  new  Tacis 
Regulation, four-year financial estimates will be included in 
each  Indicative  Programme, even though the overall Tacis 
budget  remains  subject  to  the  standard  annual  budget 
cycle of the European Commission. 

to 

implement 

programming 
this  new 
In  order 
methodology, 
the  Commission  developed  operational 
guidelines  setting  out  procedures  by  which  programming 
will  take  place.  The  guidelines  will  support  the  efficient 
management  of the Programme  in Brussels in rationalising 
the  procedures,  while  leading  to  a  more  systematic 
approach throughout  all the partner countries. 

Strengthening structures in the partner 
countries 

The  Coordinating  Units  represent  the  governments  of  the 
partner countries and play an important  role in defining the 
objectives  of  the Tacis  Programme  in their  country.  They 
have an  important  role in ensuring  close cooperation  with 
partner governments and partner organisations. 

Coordinating  Units  are  run  by  national  representatives 
supported  by  national  experts,  supplemented  by  a  small 
number of experts from Member States financed by Tacis. 
In  1995, the contracts for all experts  in Coordinating  Units 
were  renewed.  The  exceptions  were  Mongolia,  where 
Tacis  only  started  in  1994,  and  Tajikistan,  where  the 
operations of the Coordinating  Unit were delayed because 
of the civil war in that country. 

In  1995, 
the  Mongolian  Coordinating  Unit  was 
strengthened with an additional expert and is now working 
with two  experts. The Coordinating  Unit  in Dushanbe was 
reopened  in  1995  after  the  relaunch  of Tacis  in Tajikistan 
in  late  1994.  The  unit  is  now  fully  operational  with  two 
Tacis  experts.  Tenders  have  been  launched  for  the 
running of both units in order to ensure continuity. 

Increased monitoring and evaluation 

The  monitoring  and  evaluation  process,  which  was 
initiated  in  1994,  continued  in  1995.  Following  four  years 
of  Tacis  activity,  there  were  now  a  sufficient  number  of 
completed  Tacis  projects  which  could  be  evaluated. The 
monitoring  and  evaluation 
composed  of 
independent  experts  from  both  the  partner  countries  and 
the European Community,  completed their  reports  in mid-
1995. 

teams, 

The  Moscow  team  evaluated  49  completed  projects  of 
which  45  were  related  to  1991  Tacis  funds,  and  four  to 
1992.  Although  these  results  are  promising,  Tacis  will 
continue to  improve  its  performance  and will  increase the 
sample of projects to be evaluated in 1996. 

The  evaluators  indicated  that  the  following  factors  are 
crucial for the successful implementation of Tacis projects 

. 

real partnership  between the western experts and the 
local  partners 

.  advance  preparation  of the  experts 
. 

the  right  combination  of  experienced  people  and 
appropriate  activities 

.  a set of clearly defined  objectives  that  reflect  the  local 

context. 

The  evaluation  report  also  underlines  that  Tacis  needs  to 
put  more  weight  on 
long-term  sustainability  of 
projects, as the scores given for sustainability are generally 
not as high as those given for other  key criteria, relating to 
project implementation. 

the 

The  review  of  the Tacis  written  and  visual  identity,  as the 
key tool  in raising the visibility  and  understanding  of Tacis 
in the  EC, its  Member  States  and the  NIS, has now  been 
completed.  Its  introduction  to  the  Commission  Services, 
Delegations,  Coordinating  Units  and  contractors  has 
started,  including  a  presentation  at  the  EC  Moscow 
Delegation in November  1995. 

The  Information  Unit  - Tacis yearly  provides  speakers  and 
supporting  material  for  about  160  conferences,  seminars 
and  background  briefings throughout  the  Member States, 
and  supports  Delegations  and  Coordinating  Units  with 
material to  organise  events for  about  60 Tacis  projects  in 
Russia  and  Ukraine. 
to  some  25,000 
telephone  and fax  enquiries  each  year,  and  receives over 
is  also 
4,000  visitors.  The 
preparing to make information available through an on-line 
service. 

Information  Unit  -  Tacis 

It  responds 

In  Russia,  the  implementation  of  a  specific  in-country 
communications  programme 
Its  main 
elements  are a range of  publications, targetted  at  existing 
and  potential  partner  organisations,  media,  and  Tacis 
contractors. Tacis  now  produces  a quarterly  newsletter  in 
Russian. 

is  underway. 

In addition, ECU 2 million of Tacis funds were used for the 
implementation  of  activities  to  raise  the  profile  of  the  EU 
within  the  NIS,  and  to  provide  information  of  a  more 
general  nature  on  the  European  Union. This  was  carried 
for 
out  by 
the  Commission's  Directorate  General 
Information,  in  collaboration  with  the  Delegations 
in 
Russia,  Ukraine,  Kazakhstan  and  Georgia.  Principal 
activities  include  a  fortnightly  TV  programme  broadcast 
from  Russia,  and  a  monthly  TV 
across 
programme 
on  Ukrainian  Television.  In  1995,  each 
programme  was  watched  by  an  average  of  4  million 
Ukrainians  and  8.5  million  Russians.  Furthermore, 
publication  of  the  bi-monthly  Evropa  -  a  44-page  colour 
magazine 
in  EU 
languages - continued in 1995 with a print run of 100,000. 

in  Russian  with  a  16-page 

the  NIS 

insert 

New evaluation teams 

The  original  structure  of  the  Tacis  evaluation  teams  was 
replaced  in  1995.  Instead  of  a core  team  for  Russia  and 
several  sector 
teams  have  been 
established  in Russia,  Ukraine and  Kazakhstan. The team 
in  Kiev  evaluates  Tacis  projects  in  Ukraine,  Moldova  and 
Belarus,  and  the  team  in Almaty  covers  the  evaluation  in 
the central Asian and the Caucasian countries. 

teams,  country 

In  addition,  the  new  teams  now  cover  all  the  financial 
aspects  of  Tacis  projects.  Projects  in  the  nuclear  safety 
sector,  which  had  been  excluded  thus  far  due  to  their 
technical  complexity,  are  now  evaluated.  The  same 
applies to Tacis framework  programmes. 

the 

reorganisation  of 

to  monitoring  and  evaluation 
The  new  approach 
complements 
the  NIS/Tacis 
Directorate  and  will  ensure  a  better  country  coherence. 
Projects  can  be  more  effectively  tailored  according  to  the 
conditions  of  the  relevant  partner  country.  The  new 
monitoring and evaluation structure is also consistent  with 
the  Commission's  overall  priorities  for the  evaluation  of all 
external aid. 

The  setting-up  of  the  new  monitoring  and  evaluation 
teams  started  in  mid-1995  and  the  contract  for  the  first 
country team was signed in November  1995. 

Tacis communications  programme 

Since  1993,  the  Commission  has  responded  actively  to 
the  increased  interest  that  the  European  Community 
institutions  and  advisory  bodies,  Member  States  and 
partner  countries  have  shown  in  the  activities  and  the 
development  of  the  Programme.  The  implementation  of 
the  Tacis  communications  programme  (ECU  3  million) 
was continued in 1995. 

Over  the  course  of  the  year,  a  substantial  publications 
programme  has continued, aimed at explaining the nature 
the  Tacis  Programme,  and  giving 
and  activities  of 
guidance  to  all those  interested  in participating  in it,  both 
in Europe  and the  NIS. Tacis  has  now  published  over  80 
titles  in  12  languages  and  has  distributed  over  940,000 
copies through its database alone, which holds the names 
of some 30,000 individuals and organisations  interested in 
Tacis.  A  quarter  of  these  titles  are  produced  in  Russian 
and distributed to targeted audiences in the NIS. 

10 

Tacis and the European Community 
institutions 

Court of Auditors 

fourth  year  of  operation 

In  1995, the Court  of Auditors  published  its annual  report 
on  Tacis  activities  in  1994.  This  report's  conclusions  on 
Tacis' 
illustrated  significant 
achievements  in  the  quality  and  implementation  of  the 
Programme.  The  Court  emphasises  that  despite  the 
criticisms  levelled at Tacis in the past, the efforts  made by 
the  Commission  to  improve  the  overall  operation  of  the 
Programme  should  be  given  proper  recognition.  The 
Court  also  acknowledges  the  difficulties  which  Tacis 
encounters  with  the  constantly  changing  political  and 
economic environment  in the New Independent States. 

The  report  outlined  the  improvements  in  Tacis'  financial 
performance,  and  highlighted  successful  actions  and 
projects.  The  Court  also  listed  some  areas  which  it 
considered would benefit from increased attention in order 
to improve project quality. 

These issues were proposed for further attention 

. 

. 

. 
. 

the  need  for  careful  identification  of  projects  and 
project  partners 
the  need  for  improved  monitoring  and  setting-up  of 
evaluation  systems 
the need for  better  coordination  between  donors 
the need for  more  investment-orientation  of  projects. 

Responding to suggestions 

Several of the  issues raised by the Court  of Auditors  have 
been addressed by the Commission. 

Tacis  has  built  up  a  comprehensive  monitoring  and 
evaluation system which is now operational. Its monitoring 
and  evaluation  teams  delivered  their  first  results  in  1995, 
which  concluded  that  effective  evaluation  has  contributed 
to  better  project  identification  on  the  ground.  In addition, 
local  partners  are  increasingly  involved  in  the  tender 
process which  has  helped to  raise the  quality  of  selected 
Tacis experts and project  sustainability. 

in  developing  a 

Tacis  frequently  works  with  other  international  donors  on 
an  individual  project  basis.  In  addition,  progress  was 
made 
increased 
coordination  of  donor  activities  which  facilitate  contact 
with other donors across all Tacis sectors at country, local 
and central level. 

framework 

for 

technical  assistance, 

While the current Tacis  Regulation  limits Tacis activities to 
the  provision  of 
the  Court's 
remaining  concerns  will  be  addressed  by  the  new  Tacis 
Regulation.  The  proposed  new  Regulation  offers  the 
scope  for  small-scale  infrastructure  investments  in  the 
context  of cross-border  cooperation, and for the  provision 

of  equity  capital  in the joint  venture  programme  for  small 
and medium-sized enterprises. 

European Parliament and the negotiations 
for a new Tacis Regulation 

In  1995  the  European  Parliament  again  played  a  major 
role in monitoring the performance of the Programme, and 
formulating the Tacis budget. 

At  the  beginning  of  1995,  the  Commission  adopted  a 
proposal  for  a new Tacis  Regulation  for the  period  1996-
1999.  The  proposed  Regulation  was  submitted  to  the 
Council  of  Ministers  who  consulted 
the  European 
Parliament. A number of key amendments were  proposed 
to  the  Regulation.  However,  by  the  end  of  the  year  no 
overall  consensus  had  been  reached  in  the  Council  of 
Ministers. 

The  new  Tacis  Regulation  contains  the  main  elements  of 
previous Regulations, reemphasising the provision of grant 
finance for the transfer of know-how  as the central activity 
of  the  Tacis  Programme.  The  main  themes  of  the  new 
Regulation are as follows 

. 

. 

increased  multi-annuality  through  four-year  Indicative 
Programmes for each  partner  country 
reinforced  conditionality:  the  possibility  of  suspending 
assistance to a partner country  in the case of violation 
of  a  key  component  of  cooperation,  in  particular  the 
respect for democracy  and human  rights 

.  small-scale  infrastructure  projects  at  border  areas, 
and  small  and  medium-sized  enterprise  joint  venture 
equity  investment,  not to  exceed  10 per cent  of Tacis 
funds 

.  combination  of Tacis  and  INTERREG  activities  on the 

• 

. 

of 

Russian-Finnish  border 
the 
identification 
strengthening, legislation, training) as a priority area 
reduced  ceiling  for  Direct  Agreements  from  ECU 
300,000 to  ECU  200,000 

environment 

(institutional 

in  particular 

•  an  annex  setting  out  the  basic  principles  for  the 
awarding  of  contracts,  and 
those 
awarded  by restricted tendering, being  revised  by the 
Council  with  qualified  majority  on  the  proposal  of  the 
Commission 
the  remaining  implementation  modalities  (with  regard 
to  cross-border  and  industrial  cooperation,  contract 
information,  monitoring  and  evaluation,  progamming, 
coordination  and  reporting)  would  make  up an  annex 
to  be revised by the Tacis  Committee. 

. 

In  addition,  in  1995  the  European  Parliament  stipulated 
the  following  requirements  for  the  execution  of  the  1996 
Tacis budget: 

11 

a  separate  ECU  30  million  budget  line  for  cross-
border  cooperation 
a  10  per  cent  ceiling  on  projects 
cooperation 
to 
Tempus  programme 
a  fixed  allocation  of  ECU  50  million  for  projects 

to  promote 
the 
include 

in  higher  education, 

• 

designed to  protect  the  environment 
fixed  allocations  of  ECU  11  million  and  ECU  1 million 
for the Tacis  Democracy  programme,  and  specifically 
for the  promotion  of a free press,  respectively. 

The new Regulation is scheduled to come into force in 1996. 

Bilateral and international cooperation 

in 

role 
in 

important 
international  assistance 

the 
The  Commission  plays  an 
coordination  of 
the  New 
Independent  States.  The  organisational  restructuring  of 
Tacis  on  geographical  lines  facilitates  easier  coordination 
with counterparts from other organisations.  It has become 
increasingly  evident  that  effective  coordination  achieves 
better  results  than  single  initiatives  by  one  donor.  Where 
several  donors  have  formulated  a  common  response  to 
issues,  the  impact  on  the  partner  countries  has  been 
greater. 

Improved  coordination  with  M e m b er  States 

The  Tacis  Partnership  and  Coordination  programme, 
PCP, was in its second year of operation  in 1995. With an 
ECU  5  million  budget,  it  continued  to  cofinance  projects 
developed  through  close  cooperation  between  Member 
State  organisations  and  the  Tacis  Programme,  in  pursuit 
of shared goals in the provision of assistance to the NIS. A 
decision was made to allocate a further  ECU  10 million for 
the third round of the programme. 

In  1995  Tacis  also  looked  at  the  type  of  assistance 
programmes  run  by  the  Member  States,  in  order  to 
to 
determine  how 
exchange  information  on  existing  activities  and  ideas  for 
future programmes. 

to  coordinate  most  effectively, 

In  addition  there  were  regular  meetings  of  the  Tacis 
Committee,  composed  of  representatives  of  Member 
States,  which  assists 
the 
implementation  of the Tacis  Programme.  These  meetings 
provide an important forum for the exchange of views and 
the coordination of activities. 

the  Commission 

in 

Coordination with the United States 

Informal  working  relations  between  the  EU  and  the  US, 
agreed 
in  1994,  were 
strengthened  in  1995. The  EU-US coordination  meeting in 
Brussels  in November  1995 sought  to  develop the  current 

in  1993  and 

implemented 

12 

relationship  based  on  of  informal  information  exchange. 
Sessions  identified  specific  areas  that  would  benefit  from 
more  closely  coordinated  activities,  while  Tacis  also 
participated in meetings with USAID in 1995. 

Cooperation with the European Bank for 
Reconstruction and Development 

The main arrangement for cooperation  between Tacis and 
the  European  Bank  for  Reconstruction  and  Development 
(EBRD)  remains the  Bangkok  facility.  In  1995 this  allowed 
for ECU 20 million of Tacis funds to be used to provide the 
necessary  know-how to support  EBRD equity and lending 
projects. 

Additional  cooperation  has  been  assisted  through 
a 
series  of  new  operational  arrangements  agreed  by  the 
Commission  and 
the 
coordination  of joint  actions  concerning  country  strategies 
and  priorities  between  the  Commission  and  the  EBRD 
both centrally and at local field office level. 

the  EBRD.  These 

improve 

Cooperation with the World Bank 

Cooperation  with the World  Bank  continued  in  1995  with 
in  a  series  of  consultative  group 
Tacis  participating 
meetings 
for  Moldova,  Kazakhstan,  Kyrgyzstan  and 
Ukraine,  and  in  follow-up  meetings  concerning  Armenia 
and Georgia. 

Coordination  of  activities  remains  most  effective  at  task 
manager  level, particularly  with  regard to  the  use of Tacis 
funds to support World Bank loan preparation activities. 

Cooperation with the International  Monetary 
Fund 

Increasingly  Tacis  grants  are  dependent  on 
the 
International  Monetary  Fund  (IMF)  matching  loans  or 
assisting with balance of payments deficits. 1995 also saw 
the coordination  of  macro-economic  loans to  Ukraine and 
Moldova. 

Armenia 

Dialogue  between  the  European  Community,  its  Member 
States  and  Armenia  made  significant  advances  with  the 
initialling  of  a  Partnership  and  Cooperation  Agreement  in 
December  1995.  The  Agreement 
the 
integrity  of 
independence,  sovereignty  and 
Armenia  and  emphasises 
for  cooperation 
between  the  states  of  the  Transcaucasus  in  order  to 
Interim 
further 
Agreement  is  being  negotiated  so  that  the  trade-related 
measures of the Agreement  can  be implemented  as soon 
as possible, while the full PCA awaits ratification. 

the  development  of 

region.  An 

recognises 

the  need 

territorial 

the 

reform-minded  government 

The  political  and  economic  situation  in Armenia  improved 
in  1995.  In  the  legislative  elections  in  June,  the  liberal 
democratic 
in 
power  and  a  new  constitution  was  passed  in  July.  The 
cease  fire  in  the  conflict  with  Azerbaijan  over  Nagorno 
Karabakh  is  being  respected,  however  progress  in  the 
Organisation  for  Security  and  Cooperation  in  Europe 
peace talks is slow. 

remained 

The  government  continued  its  policy  of  radical  economic 
reform  and  rapid  privatisation.  As  a  result,  the  Armenian 
economy  was  strengthened  in  1995.  Armenia  was  the 
only country of the New Independent  States to  experience 
positive  GDP  growth  at  5  per  cent.  Inflation  decreased 
drastically  compared  to  the  rate  in  1994,  and  the  new 
currency,  the  dram,  remained  relatively  stable.  Armenian 
exports to the European Community are also rising. 

Tacis support for reform 

Tacis is supporting the Government  in its reform efforts  by 
focusing on the following sectors 

•  energy 
.  enterprise  restructuring  and  development 
•  human  resources  development. 

In  1995, Tacis  committed  ECU 6  million for the Armenian 
national  programme.  Armenia  also  benefited  from  funds 
committed  to  the  Tacis  Traceca  programme  which  aims 
at increasing  regional cooperation through  more extensive 
transport links. 

Developing the energy sector 

Armenia  suffers  from  a  serious  lack  of  domestic  energy 
sources  and  is dependent  on  imports  of  energy  supplies. 
The  main  gas  pipeline  from  Azerbaijan  has  been  shut 

down  since  1992  and  rail,  road  and  pipeline  transport  of 
oil  and  gas  products 
is  frequently 
from  an  antiquated 
disrupted.  Armenia  also  suffers 
national energy distribution  network. 

through  Georgia 

In order to address these energy distribution problems in a 
comprehensive  manner,  Tacis  has  established  a  pipeline 
working  group  which  includes  representatives  from  ten 
New  Independent  States,  including  Armenia.  The  group 
aims  to  identify  and  solve  regional  energy  distribution 
problems. 

the  energy 

Tacis  projects  in  1995  were  directed  at  the  long-term 
goals  of  modernising 
infrastructure  and 
reorganising  the  energy  sector 
in  order  to  make  it 
commercially  efficient.  With  Tacis  support  worth  ECU  1 
million,  an  implementation  unit  for  energy  sector  projects 
will  be  created  within  the  Ministry  of  Energy.  The  unit  is 
responsible  for  developing  a  long-term  energy  strategy 
and coordinating national energy projects and resources. 

Following  a  successful  1993-1994  project,  Tacis 
continued  its efforts  to  restructure the  gas  sector  in order 
to  make  it  commercially  viable.  An  ECU  1  million  project 
focusses  on  an  analysis  of  the  integrity  of  the  main  gas 
pipelines,  and  on a  rehabilitation  plan for the  national  gas 
transport system and the distribution system in Yerevan. A 
second  ECU  1  million  project  includes  the  reorganisation 
of  Armgazprom,  the  state  gas  company,  around  its  core 
business  of  supply  and  transmission  as  well  as  the 
restructuring and privatisation of non-strategic activities. 

in  1995. 

It  provides 

The  Energy  Centre  established  in  Yerevan,  as  part  of  a 
network  of Tacis  Energy Centres  in the  NIS, continued  its 
work 
information,  training  and 
technical  support  for various  energy  efficiency  initiatives in 
industry and the public  service sector.  In 1995 the  Energy 
Centre  carried  out  energy  audits  in  major  Armenian 
industries,  identifying wasteful  procedures  and formulating 
strategies for reduced energy consumption. 

A  project  for  the  evaluation  of  Armenia's  hydrocarbon 
deposits  has  now  produced  a  technical  dossier  on  the 
country's  oil and  gas  potential, as well  as  a databank  for 
the 
the  Ministry  of  Energy.  Another  project 
implementation  of  a  national  energy  conservation 
programme  continued, 
focussing  on  energy  pricing, 
legislation  and  restructuring,  district  heating,  industry, 
building,  agriculture  and  transport.  The  government's  top 

for 

13 

data  by  a  previous  Tacis  policy  advice  project  on 
the  Armenia  State 
education,  a  1995  project  with 
towards 
reoriented 
Institute  has  been 
Pedagogical 
assistance to the  Ministry of  Education  in Armenia.  It aims 
to  contribute  to  the  development  of  effective  educational 
management  and  programming  systems,  in  order  to 
adapt  the  education  system  to  the  evolving  needs  of  the 
labour market. 

The  1995  Programme  also  continued  to  provide  support 
for  the  Armenian  School  for  Public  Administration  which 
was  established  under  the  1992  budget.  The  school  is a 
training  institute  which  prepares  local  and  central  civil 
for  government  service.  Tacis'  1995 
administrators 
activities  were  aimed  at 
the  school 
implementing 
management  plan  in  order  to  make  it  sustainable  in  the 
long  term.  The  ECU  900,000  Tacis  project 
includes 
support  for  a  research  unit  which  identifies  and  assists 
projects  which  will  continue  to  develop  modern  public 
administration structures. 

Funds allocated  by sector  each  year 

1991  1992  1993  1994  1995  Total 

0.3 

8.54 

Nuclear 
safety and 
environment 

0.3 

Restructuring state 
enterprises and private 
sector development 

Public administration 
reform, social services 
and education 

0.7 

3.54 

2.3 

0 

1.5 

1.5 

4.8 

Agriculture 

0 

1.66 

0 

Energy 

1.3 

Transport 

Policy advice 

Telecommunications 

Humanitarian aid 

Other sectors 

0 

0 

0 

0 

0 

0 

0 

2.85 

0 

0 

0 

Total 

2.3 

9.55 

4.1 

0 

0 

0 

8 

0.8 

17 

0 

2 

0 

0 

0 

0 

1.66 

7.4 

0 

2.85 

0 

8 

0.5 

1.3 

6 

34.85 

Note: Armenia did  not  receive funds  under the  1994  budget. 

priority  is the system of  billing and collection of  payments. 
The  project  has developed  a system for the calculation of 
electricity tariffs and for  revenue collection.  In two  districts 
of  Yerevan  there  have  also  been  successful  experiments 
in the  creation  of  non-profit  cooperatives  dealing with  the 
supply  of  electricity  and  the  collection  of  customer 
payments. 

Enterprise  development 

As  a  result  of  the  Government's  ambitious  privatisation 
programme,  more than  1,500 enterprises  were  privatised 
in 1995 and 4,000 enterprises were in the pre-privatisation 
stage. 

Tacis  is  supporting  a  project  designed  to  assist  the 
Privatisation  Commission  and  Board  with  the  launch  of 
the  voucher  privatisation  scheme.  The  ECU  1  million 
project  includes  advice to  the  government  on  a variety  of 
privatisation  related  issues,  the  establishment  of  regional 
auction  centres  and the  provision of advice to  enterprises 
on the consequences and responsibilities of privatisation. 

Tacis  also  continued  to  support  the  successful  Business 
Communication  Centre.  The  Centre  and  the  Small  and 
Medium  Enterprise  Development  Agency  merged  so  that 
business  plan  preparation  and  establishment  of  contacts 
with foreign partners  became a single service provided by 
one agency. This has increased the Centre's  prospects of 
becoming  an  independent  consulting  agency  when  Tacis 
support ends. 

Continuing  human  resource  development 

Armenia's  large national budget  deficit  has led to  reduced 
expenditure  and  investment,  particularly  in  the  human 
resources  sector.  The  education  system  has  been 
particularly  affected.  Many schools  have been closed  due 
to  a  lack  of  funding  and  training  institutes  have  cut  their 
costs drastically. 

initiatives 

resources 
The  1995  Tacis 
the 
development  are  geared  at 
Government's  plans 
the 
education sector.  Following the generation of  much  useful 

complementing 
reorganisation  of 

in  human 

the 

for 

14 

Azerbaijan 

Azerbaijan  and the  European Community  and  its  Member 
States  formalised  their  relations  with  the  initialling  of  a 
Partnership  and  Cooperation  Agreement  in  December 
for 
1995.  The  Agreement  establishes  a 
cooperation  between 
its 
Member  States  and Azerbaijan  and emphasises the  need 
for  cooperation  between  the  three Transcaucasian  states 
in order  to  promote  stability  and  prosperity  in the  region. 
An  Interim  Agreement  is  being  negotiated  to  bring  into 
force the trade-related  measures of the Agreement. 

framework 
the  European  Community, 

The  cease-fire  concerning  the  conflict  over  Nagorno 
Karabakh  held  throughout  1995  but  peace  negotiations 
have  not  progressed  markedly.  The  dispute  over  the 
region  is  draining  Azerbaijan's  resources  and  has  further 
exacerbated  economic  instability.  The  refugees  resulting 
from the conflict  (some  1 million  people)  put  an  additional 
strain  on  government  decision-making.  The  legislative 
elections  in  November 
to 
democratic  reform,  although  they  were  criticised  by 
observers. 

illustrated  the  commitment 

the  budget  deficit  were  agreed  and 

In  1995  Azerbaijan's  Government  attempted  to  address 
the  country's  continuing  economic  decline.  Measures  to 
the 
decrease 
Government  embarked  upon  an  economic 
reform 
programme.  The  privatisation  process 
is  slow  and 
although the  decrease  in GDP  has slowed, there was still 
no  growth  in  1995.  Tacis  advisers  are  working  in  close 
cooperation  with the World  Bank and the Government  so 
that the privatisation process can continue, and Azerbaijan 
can fulfil the obligations of the  recently signed World  Bank 
Rehabilitation Loan. 

Tacis  reform  priorities 

The  Tacis  Programme  is  backing  Azerbaijan's  reform 
process by concentrating on the following sectors 

.  energy 
•  enterprise  restructuring  and  development 
.  human  resources  development. 

Under the 1995 budget, Tacis committed  ECU 6 million to 
the  national  programme  and  also  committed 
funds 
the  Tacis  Traceca  programme  aimed  at 
through 
increasing  regional  cooperation  by  developing  transport 
networks. 

Developing  energy  potential 

is  supporting 

the  pipeline  network 

Access to Azerbaijan's  oil resources remains an important 
factor  in  the  continuation  of  the  region's  development. 
Tacis 
the 
Transcaucasus,  Central  Asia,  Ukraine  and  Moldova, 
through  the  newly  created  Tacis  pipeline  working  group. 
This  aims  to  encourage  regional  cooperation  in  energy 
supply  distribution.  Azerbaijan's  vast  oil  deposits  in  the 
Caspian  Sea  can  potentially  provide 
the  necessary 
impetus  and  finances  to  modernise  and  restructure  the 
national economy. 

in 

the  Government 

the  end  of  1995 

At 
reached  an 
agreement  with a consortium  of western  oil companies  to 
exploit  the  Azeri  oil  fields  in  the  Caspian  Sea.  The 
agreement  anticipates  investment  of  ECU  6.3  billion  for 
the development  of the two  main oil fields and foresees an 
annual  output  of  40  million  tonnes  of  oil  in  fifteen  years 
time.  In  1995  the  government  of  Azerbaijan  decided  to 
construct  a  dual  pipeline  network  through  both  Georgia 
and Russia. 

The Tacis Programme was actively involved in other areas 
concerning  the  development  of  the  energy  sector  in 
Azerbaijan  in  1995.  A  project  was  completed  with  the 
Azeri  Government  which  included  the  development  of  a 
general  energy  policy,  the  drafting  of  an appropriate  legal 
framework 
the 
restructuring  of the  national electricity  company  Azerenerji 
and  oil  company  SOCAR.  The  project  also  included 
energy  saving  initiatives,  training  of  managers,  audits  of 
energy companies and development of electricity facilities. 

for  energy,  and  studies  aimed  at 

Two  projects  were  initiated  under  the  1995  Programme. 
An  ECU  1.5  million  feasibility  study  to  upgrade  and 
complete  the  Karadag  gas  storage  facility  was  launched. 
The project's objective is to satisfy World Bank and EBRD 
investment  requirements  so  that  planned 
investment 
needed  for  the  completion  of  the  plant  can  be allocated. 

15 

Upgrading social services 

An  ECU  1.3  million  Tacis  project  was 
launched  in 
conjunction  with  the  Azerbaijan  Ministry  of  Labour  and 
Social  Protection.  Support  will  be  provided  with  a 
strategic  review  of  current  legislation  and  labour  policies, 
with  specific  advice 
the  General  Employment 
Department  which  provides  short-term  social  support  for 
the  unemployed  and  assists  them  in  finding  jobs.  The 
Department will also be assisted in the setting up of a staff 
training centre, and in developing a  computerised  system 
designed to match job seekers with current vacancies. 

for 

Funds allocated  by sector  each  year 

1991 

1992  1993  1994  1995  Total 

Nuclear 
safety and 
environment 

Restructuring state 
enterprises and private 
sector development 

Public administration 
reform, social services 
and education 

0 

2.6 

1.9 

6.3 

Agriculture 

0.4 

2.5 

Energy 

Transport 

Policy advice 

Telecommunications 

Humanitarian aid 

Other sectors 

0 

0 

0 

0 

0 

0 

0 

0 

4.4 

0 

0 

0 

1.3 

6.1 

0 

0 

3.6 

2.5 

0 

0 

0 

0 

0 

0 

0 

0 

2.9 

6.1 

0 

4.4 

0 

8 

0 

0 

7 

0.4 

1.1 

Total 

0.4 

12.5 

6 

34.9 

The  second  project  comprises  support  for  the  drafting  of 
energy  legislation, taxation and finance  issues. The ECU 1 
million project's objective is to facilitate the passing of new 
energy  legislation,  train  SOCAR  staff,  provide  training 
equipment  and  assist  Azerenerji  with  the  implementation 
of its restructuring programme. 

Investing in private enterprise 

foreign 

Privatisation has not started on a large scale in Azerbaijan. 
There  has,  however,  been  progress  in  developing  the 
private  sector  through  joint  venture  investment  and  other 
forms  of 
investment.  As  privatisation  of  a 
substantial number of small and medium-sized  enterprises 
is  planned  in  the  future,  there  will  be  an  increasing 
demand for financial auditors to fulfil the legal  requirement 
of  annual  audits.  Tacis  has  initiated  an  ECU  1.3  million 
project  designed to train a large group of financial auditors 
and  receivers  and  to  develop  a programme  aimed  at  the 
creation  of  accepted  professional  standards  for  auditors 
and receivers. 

launched  with 

Support  for  small  and  medium-sized  enterprises  was 
another  priority  in  1995.  An  ECU  500,000  extension 
the  Small  and  Medium 
project  was 
Enterprise  Development  Agency,  SMEDA.  Tacis  intends 
to  support  the  three  agencies  through  advice  on  how  to 
develop,  strengthen  and  organise  their  activities  for  the 
maximum  benefit  of  small  and  medium-sized  enterprises 
in  Azerbaijan.  A  tutoring  programme  for  businessmen  in 
SMEs was also initiated, working through the SMEDA. 

16 

Belarus 

between 

After  the  conclusion  of  negotiations,  a  Partnership  and 
Cooperation Agreement with Belarus was signed in March 
1995.  The  Agreement  replaces  the  1989  Trade  and 
Cooperation  Agreement 
the  European 
Community, the European Atomic  Energy Community and 
the  Soviet  Union, and  is concluded  for  an  initial  period  of 
ten  years.  It  foresees  the  establishment  of  intensive 
political  dialogue  and  covers  trade  in  goods,  labour 
conditions, 
and  operation  of 
companies,  cross-border  supply  of  services,  payments 
and  capital,  competition, 
industrial  and 
commercial  property  protection,  legislative,  economic, 
cultural and financial cooperation. 

the  establishment 

intellectual, 

While  the  ratification  of  the  Agreement  is  pending,  an 
Interim  Agreement  covering  the  trade-related  aspects  of 
the Agreement was initialled in April 1995. 

Political impasse and mixed economic 
signals 

Economic  reform in Belarus slowed  in 1995, particularly in 
the financial  sector.  This  led to  the suspension  of the  IMF 
programme  and 
the  second 
instalment of the EC balance of payments loan. 

the  postponement  of 

In  March  1995,  the  Belarussian  government  called  for 
elections  for  a  new  Parliament.  Due  to  the  complicated 
voting  system,  a  fully  operational  Parliament  was  only 
established at the end of  1995. 

This inability to constitute  a Parliament almost  blocked the 
political  system.  It  meant  that  there  was  no  significant 
progress  in  the  economic  reform  programme  and  that 
economic commitments were not met. 

However,  there  were  signs  of  stabilisation  in  Belarus  in 
1995, with the macro-economic  programme  on  structural 
adjustment,  adopted  in  October  1994,  showing  its  first 
positive  results.  The  negative  growth  of  the  GDP  slowed 
down considerably  and now stands at minus  11 per cent. 
Due  to  a  strict  monetary  policy,  the  inflation  rate  was 
reduced to 703 per cent from 2,220 per cent at the end of 
1994. 

On the  other  hand, the  privatisation  of the  1,700  regional 
is  progressing  slowly,  as  a 
and  national  enterprises 
for  small  and  medium-sized 
favourable  environment 
enterprises  has  not  yet  been  established  and  the  legal 
framework and fiscal incentives are still lacking. 

Increased support - and conditionality 

Tacis  funding  for  Belarus  in  1995  amounted  to  ECU 
12 million. The priorities for the Tacis Programme are 

food  production, processing  and  distribution 

.  enterprise  restructuring  and  development 
• 
•  energy 
. 

transport. 

In  July 

The  1995  Action  Programme  was  designed  in  February 
under the assumption that  Belarus would  progress  rapidly 
with  reform. 
the  Tacis  Committee  gave  a 
favourable opinion on the  programme, with the  stipulation 
that  more  conditionality  would  be  introduced  at  the 
implementation  stage. The  European Commission  agreed 
with the Member  States that  before the programme  could 
be 
and 
achievement  in  reforming  the  relevant  sectors  would  be 
closely reexamined. 

launched,  Belarussian 

commitment 

to 

Due to  unsatisfactory  progress  in reforming  the  economy 
during the second  semester,  the launching  of  most  of the 
programme has been delayed, with the energy sector and 
Tempus being the only areas where no major delays could 
be  expected.  However,  projects  from  previous  Action 
Programmes were continued or concluded  successfully in 
1995. 

In 1995, a feasibility study for an equity  investment fund in 
Belarus was  completed. The report,  commissioned  under 
the  1993  Action  Programme,  drew  positive  conclusions 
about  investment  and  joint-venture  opportunities.  The 
fundraising  has started and the  EBRD is expected to take 
a  30  per  cent  share  in  the  equity  provided  that  other 
investors are identified to ease the subscription. The fund, 
which  should  be  created  in  1996,  will  work  closely  with 
the network established throughout  Belarus. 

17 

A  parallel  and  related  project  concluded  successfully  in 
July  1995. The project, from the  1993 Action  Programme, 
prepared  three  Minsk-based  banks  to  meet  the  eligibility 
criteria set  by the  EBRD. The  bank's  technical  skills  were 
upgraded  and  the  EBRD's  US$  30  million  credit  line  is 
successfully  being  disbursed  to  small  and  medium-sized 
enterprises. 

Another  project  successfully  completed  in  1995  was  the 
training  of  banking  personnel  in  Minsk.  The  project,  from 
the  1992  Action  Programme,  trained  over  30  trainers  in 
general  and  specialised  banking  skills. The  Tacis  project, 
based at a training centre  in the business school  linked to 
the Minsk State University, trained both professionals from 
the  banking  world  and  academics  from  the  university. 
Seminars  given  by  Tacis  experts,  and  later  local  staff, 
taught  general  and  specialised  modern  banking 
techniques. As the centre charges  a fee for the training, it 
is intended that  it may become financially self-sufficient  by 
increasing the quantity of personnel trained. 

Funds allocated  by sector  each  year 

1991 

1992  1993  1994  1995  Total 

Nuclear 
safety and 
environment 

Restructuring state 
enterprises and private 
sector development 

0.3 

7.52 

5  21.82 

Public administration 

reform, social services  O.i 
and education 

1 

Agriculture 

1.6 

2.51 

Energy 

4.1 

1.9 

Transport 

2.24 

1 

Policy advice 

Telecommunications 

Humanitarian aid 

Other sectors 

0 

0 

0 

0 

0.7 

0 

0 

0 

Total 

8.92  14.63 

2 

0 

2 

0 

0 

0 

1 

9 

0 

0 

1.3 

0 

0 

0 

0.7 

7 

8.11 

9 

6.54 

0.7 

0 

0 

3.7 

12  51.55 

Georgia 

Georgia  and  the  European  Community  and  its  Member 
States  initialled a Partnership and Cooperation  Agreement 
Interim  Agreement 
in  December  1995  and  started 
negotiations  in order  to  bring  into  force  the  trade-related 
the  PCA  as  soon  as  possible.  The 
measures  of 
Agreement  provides  a 
further 
development  of  political  and  economic  relations  between 
its  Member  States  and 
the  European  Community, 
regional 
Georgia,  and  stresses 
cooperation  between 
the 
Transcaucasus.  The  closer  relations  formalised  in  the 
Agreement  were  furthered  by  the  European  Commission 
Delegation in Tbilisi, which was opened in 1994. 

importance  of 

republics  of 

framework 

three 

the 

the 

the 

for 

The  Georgian  political  situation  improved  markedly  in 
1995.  Georgia  held  both  parliamentary  and  presidential 
elections  in November  1995 which  affirmed  the  country's 
commitment 
the  democratic  process.  Although 
improvements  were  registered  in  the  economic  field,  the 
country  continues  to  be  disrupted  by  the  civil  conflict  in 
Abkhazia. 

to 

The  Georgian  economy  made  modest  progress  in  1995. 
Tighter  fiscal  and  monetary  policy  reduced  inflation  and 
the  new  currency,  the  lari,  introduced  in  September, 
remained stable. The Government's  policy for  accelerating 
the  reform  process  has also  led to  increased  privatisation 
of small scale businesses. 

Maintaining the momentum for reform 

Tacis  is supporting  the Government  with  its reform  efforts 
by focusing on the following sectors 

.  energy 
•  enterprise  restructuring  and  development 
.  human  resources  development. 

Under  the  1995  budget,  Tacis  made  ECU  6  million 
available  for  the  Georgian  national  programme.  Georgia 
also  benefited  from  funds  committed  through  the  Tacis 
is  aimed  at  developing 
Traceca  programme  (which 
regional  transport  networks)  and  through  the  Democracy 
programme and the policy and legal advice service. 

Focus on energy 

Tacis  is  working  with  national  authorities  to  propose 
solutions  for  Georgia's  energy  problems.  The  lack  of 
domestic  energy  resources  and  problems  with  external 
supply  have  contributed  to  the  energy  crisis.  Georgia  is 
dependent  on oil, gas and  electricity  imports  and  external 
supply  lines have been cut. The energy  infrastructure  was 
also  inadequately  maintained  and the  damage  caused  by 
the  civil  conflict  added  to  the  disruption.  The  serious 
energy shortages  have obliged the Georgian authorities to 
request  a  reprioritisation  of  the  Action  Programme  with  a 
greater focus on the energy sector. 

to  meet 

In  1995,  an  ECU  700,000  Tacis  project  to  support  the 
development  of an energy policy was extended  in order to 
focus  on  the  implementation  of  the  various  measures 
identified  in  the  energy  policy  exercise.  A  system  of 
rational management  has been highlighted for  introduction 
in  order 
the  energy  demands  of  private 
consumers  and  future  private  enterprise,  and  to  attract 
foreign 
for  an 
integrated  energy  policy  identified  energy  priorities  and 
indicated which steps need to be taken in order to  reduce 
waste and improve energy efficiency. The conclusions and 
recommendations  were  widely  accepted  by  partner 
organisations. An  important  aspect  of the  project  was the 
drafting of an investment  plan which  is to  be presented  to 
foreign investors and international financing institutions. 

recommendations 

investment.  The 

In  1995  two  new  energy  sector  projects  were  identified: 
Support for the energy Coordinating  Unit (ECU 1.3 million); 
and  Support  at  industry  and  consumer  level  (ECU  1 
million).  These  projects  focus  on  energy  policy,  pricing, 
legislation,  energy  efficiency,  the  promotion  of  the  use  of 
indigenous sources like peat and coal, and the asessment 
of wood fuel production. One of the projects'  components 
is 
the  Preparation  and 
Implementation  Team  preparing  the  Sakenergo  utility 
company  to  meet  the  World  Bank's  and  other  donors' 
conditions for investment. 

training  and  advising 

in 

19 

Privatisation continues 

Increasing  economic  stability 
in  1995  allowed  great 
progress in privatisation, and a mass  privatisation  scheme 
started in 1995. Over 7,000  SMEs have been privatised to 
date. Tacis  support  is being given to the  Ministry  of  State 
Property  Management  for  the  design  and  implementation 
of  the  privatisation  programme.  Tacis  is  also  supporting 
the  Small  and  Medium  Enterprises  Development  Agency 
and two Business Communication Centres. 

1995  saw  the  initiation  of  a  post-privatisation  programme 
offering  support  to firms directly following  privatisation. An 
ECU 1.2 million Tacis project was put into place to provide 
this  support  through  the  Post-Privatisation  Development 
Centre.  It  will  assist  firms  in  the  assessment  of  their 
management  needs,  provide  the  necessary  support  in 
marketing  and  financial  strategy,  and  provide  national 
authorities with information concerning the needs of newly 
privatised firms. 

to  assist 

the  1995  Programme  ECU  700,000  was 
Under 
committed 
in  the  creation  of  a  securities 
exchange.  The  project  also  provides  advice  on  legal  and 
tax  frameworks  and  the  rules  governing  the  internal 
organisation of the market. 

Research and development for growth 

The  Government  has  requested  that  the  emphasis  in 
1995  be  placed  on  strengthening 
research  and 
development  capabilities. In December  1994 the Georgian 
Parliament  passed  a  law  emphasising  the  need  to  gear 
research  and  development  activities  towards  concrete 
results. The  1995  Tacis  Programme  initiated  an  ECU  1.3 

million  project  aimed  at  assisting  the  Committee  for 
Science  and  Technology  in this  endeavour.  The  project's 
objectives are to evaluate the potential of existing research 
and  development  programmes,  to  encourage  research 
and  development  in small  and  medium-sized  businesses 
and  partnerships,  to  train  management  specialists  and  to 
encourage 
to 
community 
the  Georgian  scientific 
participate in international programmes and networks. 

Funds allocated  by sector  each  year 

1991 

1992  1993  1994  1995  Total 

Nuclear 
safety and 
environment 

Restructuring state 
enterprises and private 
sector development 

Public administration 
reform, social services 
and education 

3.5 

0 

3.6 

1.9 

1.18 

1.25 

1.3 

5.53 

Agriculture 

2.65 

1.5 

1.8 

0 

5.95 

Energy 

0.4 

Transport 

0.73 

Policy advice 

Telecommunications 

Humanitarian aid 

Other sectors 

0 

0 

0 

0 

Total 

4.96 

0 

0 

2.75 

0 

0 

0 

9 

0 

0 

0 

0 

0 

2.3 

2.7 

0 

0 

0 

0 

0.73 

2.75 

0 

6 

0.8 

0.5 

1.3 

6 

33.96 

20 

Kazakhstan 

the  Partnership  and  Cooperation 
The  signing  of 
Agreement  between  Kazakhstan  and 
the  European 
Community  and its Member  States, in January  1995, was 
a conclusive step  in formalising  relations  between the two 
parties.  The  Agreement  provides  a  framework  for  the 
further  development  of  political  and  economic  relations 
between  the  European  Community,  its  Member  States 
and  Kazakhstan, and  stresses  the  importance  of  regional 
cooperation  between the five republics of central Asia and 
Mongolia.  An 
trade 
aspects  of  the  Agreement  has  been  negotiated,  and 
procedures  have  started  towards  its  entering  into  force. 
Separate  agreements  covering  trade  in steel  and  nuclear 
materials,  and  nuclear  safety  and  thermonuclear  fusion, 
are due to  be negotiated. A textile agreement  has already 
been drawn up. 

Interim  Agreement  covering 

the 

Despite  adopting  structural  reform  programmes  and  an 
ambitious  macro-economic  stabilisation  programme,  the 
Kazakh  economy  has  continued  to  decline.  Inflation  and 
unemployment  rates  have  continued  to  rise,  and  the 
spiralling  budgetary  deficit  remains  difficult  to  control. The 
Government  pledged  to  reduce  the  budget  deficit  by 
increasing  taxes  and  restricting  spending  -  including  cuts 
in government staff at all levels. 

The  Kazakh  government  remained  in  favour  of  rapid 
to  a  market  economy.  Following 
transformation 
the  Kazakh 
discussions  with 
government 
focused  on  stimulating  production  and 
attracting foreign investment  in 1995. 

international  donors, 

Support for Kazakhstan 

Supporting the enterprise sector 

Tacis helped to  reinforce the  Kazakh government's  efforts 
to  promote  small  business  development  at  a  local  level, 
manage  the  privatisation  process  at  a  national  and 
regional  level, and  to  achieve  a  modern  financial  services 
framework.  Many 
1995 
of  Tacis' 
complemented actions taken under the 1994 Programme. 

actions 

for 

Tacis funding  worth  ECU 5.9  million supported  a number 
of 
initiatives.  The  establishment  of  a  Business 
Communications  Centre  which  offers  advice  to  small 
businesses;  and  a  small  and  medium-sized  enterprise 
Development  Agency  planned for Aktyubinsk  which  offers 
expertise  in  developing  financial  expertise  and  long-term 
management  and  technical  support  for  new  enterprises. 
Tacis know-how  also contributed  to an  institution-building 
programme and policy advice for the Kazakh government, 
the  National  Bank  of  Kazakhstan, 
and  the  National 
Congress of Entrepreneurs. 

supported 
to  move 

for  State  Property  and 

the  Kazakh  government's 
Tacis  also 
commitment 
forward  with  a  privatisation 
programme.  Continued  assistance  has  been  given to  the 
the  State 
State  Committee 
Privatisation  Fund.  Tacis  offered  policy  advice  and 
planning  to  enhance  competition  and  develop  long-term 
strategies. Both Tacis' and the partner organisation's main 
concern  was  the  development  of  the  energy  sector  with 
particular 
the  oil  and  gas  sector.  An 
evaluation  of  the  tourism  sector  was  also  pursued. 
Practical  advice  was  also  given  to  the  new  National 
Association of Investment Funds. 

reference 

to 

The prime sectors for Tacis action in 1995 were 

Reshaping the agricultural sector 

•  enterprise  restructuring  and  development 
• 
.  human  resources  development. 

food  production, processing  and  distribution 

the  national 
Tacis  committed  ECU  15  million 
the  1995  budget. 
programme 
Kazakhstan also benefited from Tacis multi-country funds. 

in  Kazakhstan  under 

for 

Tacis'  objectives  in  this  area  focused  on  supporting  the 
development  of  the  farming  sector  in  an  increasingly 
competitive  market.  In  particular,  Tacis  supported  efforts 
to  increase exportable  produce, to  promote  investment  in 
agro-industries  and  to  create  commercial  networks  for 
commodities. 

21 

Following  Tacis'  experience  in the  Almaty  region,  a Tacis 
project  worth  ECU 3 million proposed the development  of 
an Agricultural  Management  Information  System  in  1995. 
Tacis  and  the  Kazakh  authorities  aimed  at  creating  an 
Agricultural  Marketing  and  Management 
Information 
Centre which would  provide data on prices and availability 
of  inputs.  In addition,  the  project  aims  to  establish  a pilot 
wholesale market for fresh produce in the Almaty region. 

Tacis  supported  the  Kazakh  authorities  in  attempts  to 
ensure  the  production  and  supply  of  food  to  the  local 
domestic  market  and  also  to  develop  the  agricultural 
sector  so  that  future  privatisation  is  an  attractive  option 
and  an  economically  viable  choice  for  investors.  Activities 
in  Akmola  (the  new  capital)  and  Aktyubinsk  have  been 
started, in order to enhance the food production  sector. 

Additional  investment  is  essential  in  order  to  develop 
production  techniques  and  to  improve  efficiency  and 
increase  production.  Tacis  know-how  supported  local 
initiatives  in the  Almaty  and  Taldy  Kurgan  regions  to  train 
commercial  operators 
in  business  and  accounting 
principles to ensure that  resources were used to their best 
advantage. 

Upgrading Kazakhstan's human resources 

Tacis  support  to  this  sector  has  focused  primarily  on 
providing  training  to  the  public  administration  services 
working  with  new  regulations,  and  on  social  protection 
restructuring  in  an  initiative  to  respond  to  the  increasing 
social consequences of economic reform. 

A  project  worth  ECU  2.9  million  helped  upgrade  the 
management  and  economics  skills  base  in  Kazakhstan. 

Tacis also helped to develop the new  MBA programme at 
the  Kazakhstan  Institute  of  Management  and  Economics. 
Additional  Tacis  resources  will allow  KIMEP to  strengthen 
its MBA faculty  and administration  in order to  support  the 
long-term  viability  and  sustainability  of  the  programme, 
and to enable the faculty to  become  involved in a network 
of  European  Business  Schools  and  Universities.  Specific 
training  has  also  been  provided  for  the  local  banking 
system  through  the  courses  of  the  Almaty  Bank  Training 
Centre and the Banking Advisory Service. 

Funds allocated  by sector  each  year 

Nuclear 
safety and 
environment 

Restructuring state 
enterprises and private 
sector development 

Public administration 
reform, social services 
and education 

1991 

1992  1993  1994  1995  Total 

0 

0 

0 

0 

0 

0 

0 

6.54 

6.3 

6.3 

5.9  25.04 

4.87 

1.4 

3.15 

2.9  14.12 

Agriculture 

2.16 

3.06 

3.15 

3.15 

3 

14.52 

Energy 

0.7 

3.2 

Transport 

Policy advice 

Telecommunications 

Humanitarian aid 

Other sectors 

0 

0 

0 

0 

0 

0 

6.4 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

1.63 

0 

0 

0 

0 

0 

0 

0 

3.9 

0 

8.03 

0 

0 

1.4 

1.12 

3.2 

5.72 

Total 

7.73 

20.6 

14 

14 

15  71.33 

22 

Kyrgyzstan 

Kyrgyzstan and the European Community and its Member 
States  signed  a  Partnership  and  Cooperation  Agreement 
in  February  1995.  The  Agreement  provides  a  framework 
for future relations in political, economic, trade and  related 
areas.  An  Interim  Agreement  was  finalised  in  1995  which 
will  bring  the  trade-related  measures  of  the  Agreement 
into force. 

The government  of  Kyrgyzstan  has consistently  illustrated 
its  commitment  to  market-oriented  reform  and  market 
liberalisation,  and  has  experienced  a  more 
rapid 
progression  than  many  of  the  other  New  Independent 
States. 

Legislative  elections  in  February  1995  established  a  new 
bi-cameral  parliament  and  a  new  constitution  was 
accepted in October  1995 via national referendum. 

the  rate  of  privatisation 

Kyrgyzstan  has  been  ambitious  in  its  economic  reform 
efforts  and  in  1995  began  to  reap  the  benefits  of  this 
approach.  The three year  reform  programme  launched  in 
1994  to  reduce  state  interference  in  the  economy  and 
increase 
is  currently  being 
enacted. Tight  monetary  and fiscal  policy  have resulted in 
greater  control  of  inflation, currency  stability  and a growth 
of  GDP of  2  per  cent.  None the  less, Kyrgyzstan  remains 
one  of  the  poorest  of  the  New  Independent  States,  and 
standards of living are low. The European Community  has 
provided  food  aid  to  Kyrgyzstan  for  two  years  running, 
and  it  it  has  also  received  humanitarian  aid  through 
ECHO.  The  country  is  also  critically  short  of  energy  and 
depends  on  neighbouring  Uzbekistan  for  its  supplies  of 
natural gas.  Foreign trade  is low  and the  privatisation  rate 
is slow. 

Stimulating reform in Kyrgyzstan 

Tacis  is  supporting  Kyrgyzstan's  reform  programme  with 
ECU  8  million  committed 
in  1995.  The  Programme 
focusses on the following sectors 

food  production, processing and  distribution 

• 
•  energy 
•  human  resources  development. 

In  1995 
the  European  Community  also  addressed 
humanitarian  needs  with  humanitarian  and  food  aid 
projects in conjunction with the ECHO programme. 

Restructuring the agricultural sector 

Kyrgyzstan  has  suffered  a  substantial  decline  in  food 
production  since  independence,  yet  the  reversal  of  this 
trend  has  started.  In  1995,  Tacis  initiated  two  new 
projects,  building  on  the  successes  of  the  1992  Tacis 
project  which  formulated  a  strategic  master  plan  for  the 
agriculture and food sector. 

Tacis  launched  an  ECU  1.3 million  project  with the  Policy 
and  Agro-business  Support  Unit  in  the  Ministry  of  Food 
and  Agriculture.  The  project  aims  to  accelerate  the 
restructuring  of the food  and agricultural  sector through  a 
variety  of  measures.  Through  policy  advice  and 
development, Tacis advisors help to  initiate the creation of 
new legislation necessary for a smooth transition to private 
farming and  restructuring  of the food  industry. The  project 
supports  the  development  of  private  farming  by  training 
farmers,  disseminating  the  benefits  of  land  reform to  both 
private farmers  and  local  administrators,  and  providing all 
information  about  agricultural  markets, 
involved  with 
pricing and distribution alternatives. 

Business  management  services  are  being  set  up  to 
the  newly  privatised  and  soon-to-be-
support  both 
privatised  food  processing  and  distribution  firms.  The 
service  provides 
in  accounting,  marketing, 
finances  and  investment.  Another  aspect  of the  project  is 
for 
the  definition  and  enforcement  of  standards 
agricultural  products  and 
food 
the  upgrading  of 
standards. 

training 

launched  a 

two  year  Agricultural  and  Food 
Tacis 
Development  Programme  in the  Issyk-Kul oblast  in  1995. 
The  ECU  2.4  million  project  aims  to  interlink  primary 
producers,  the  processing  industries,  and  markets.  It will 
function  as  a  pilot  project 
for  similar  programmes 
throughout  Kyrgyzstan  in the future. The  main goal of  the 
project 
the  speed  and  efficiency  of 
production, marketing and distribution of food products. 

improve 

is  to 

23 

The  private  farm  development  programme  includes  on-
farm  management,  the  establishment  of  credit  lines  for 
businesses  in  the  sector,  training  of  key  personnel,  and 
product  development.  The  project  also  offers  quality  and 
efficiency  enhancement,  market  research,  and  supports 
the  foundation  of  a  local  trade  association  to  facilitate 
contact  between  all  those  in  the  food  production  and 
processing business. 

of policies throughout  the administration. Through an ECU 
1.6  million  project,  Tacis  is  providing  advice  on  the 
management  and  development  of  service  and  staff 
management  issues such as selection criteria,  recruitment 
and  career  development.  The  programme  also  includes 
in-service  training  and  supply  of  equipment  as  well  as  a 
monitoring  plan  to  establish  whether  policy  is  enforced 
across all levels of the administration. 

Modernising the energy sector 

Funds allocated  by sector  each  year 

Nuclear 
safety and 
environment 

Restructuring state 
enterprises and private 
sector development 

Public administration 
reform, social services 
and education 

1991 

1992  1993  1994  1995  Total 

0 

0 

0 

0 

0 

0 

0.82 

0 

0 

0 

0.82 

0 

0 

2.6 

1.6 

4.2 

Agriculture 

0 

2.71 

Energy 

0.7 

Transport 

Policy advice 

Telecommunications 

Humanitarian aid 

Other sectors 

0 

0 

0 

0 

0 

0 

0 

5.7 

0 

0 

0 

4 

2.4 

0 

0 

0 

0 

1 

3.7  10.41 

1.7 

4.8 

0 

0 

0 

0 

1 

0 

5.7 

0 

0 

2 

Total 

0.7 

9.23 

10 

8  27.93 

Note:  Kyrgyzstan  did  not  receive funds  under the  1994  budget. 

for 

foreign 

investment 

Kyrgyzstan  has  signed  the  European  Energy  Charter  and 
the  Energy  Charter  Treaty.  This  is  an  important  step  in 
facilitating  much  needed 
the 
country's  energy  sector.  The  Kyrgyz  National  Energy 
Holding  Company  and  Tacis  are  working  together  to 
address  a  number  of  energy  issues  and  to  develop  a 
strategy for the sector for the next ten years. The ECU 1.1 
million  project  includes  the  following  issues:  support  for 
the  drafting  of  energy  and  electricity  laws,  advice  on 
energy strategies, the promotion  of energy saving, training 
of  managers  in  the  energy  sector  and  supply  of  energy 
equipment. 

In  1995,  Tacis  also  initiated  a  project  valued  at  ECU 
600,000  to  support  the  State  National  Coal  Company 
Kyrgyz Komur with high level policy advice and training. 

Strengthening  the  civil  service 

Kyrgyzstan  and  Tacis  are  working  to  strengthen  the 
structure of the civil service and to facilitate the enactment 

24 

Moldova 

between  Moldova  and 

Relations 
the  European 
Community  and  its  Member  States  are formally  based  on 
a  Partnership  and  Cooperation  Agreement  which  was 
signed  in  November  1994.  The  Agreement  provides  a 
framework  for  political,  economic,  trade  and  cultural 
relations.  In  order  to  bring  into  effect  the  trade-related 
measures  of  the  Agreement,  an  Interim  Agreement  was 
signed in October  1995. 

1995  saw  a  stabilisation  of  the  political  situation  in 
Moldova.  In January  1995  the  Gagauz  region  was  given 
autonomous  status,  removing  a  potentially  destabilising 
issue from  the  political agenda. The separatist  tendencies 
of  the  trans-Dniester  region  continued  to  disrupt  the 
country's  development.  Negotiations  to  find  a  settlement 
did not reach solid conclusions in 1995. 

The  Government's  reform  efforts  in  1995  resulted  in  a 
GDP  growth  of  1.5  per  cent, 
first  rise  since 
independence.  A  rigorous  monetary  policy  has  reduced 
inflation to  2 per cent  and the currency, the  leu, remained 
stable.  Moldovan  exports  increased  substantially  in  1995, 
especially  to  the  European  Community  where  exports 
almost doubled. 

the 

the  Government  successfully 
In  December  1995, 
concluded  a  mass  privatisation  campaign  which 
auctioned  off  1,132  large  enterprises.  The  lack  of  foreign 
the  Moldovan 
investment  remains  a  problem  which 
authorities hope to address by continuing with a stabilising 
monetary policy and increasing the privatisation of firms. 

Tacis priority sectors 

In order to support  Moldova in its reform efforts, the  1995 
Tacis  Programme  committed  ECU  9  million  to 
the 
Moldovan  national  programme.  The  Programme  focused 
on the following sectors in 1995 

food  production, processing  and  distribution 

. 
.  enterprise  restructuring  and  development 
•  energy 
.  human  resources  development. 

Moldova also benefited from Tacis multi-country funds. 

Modernising the food sector 

to 

improve 

An  ECU  1.3  million  project  was  agreed  upon  in  1995, 
aimed at  improving the marketing of agricultural  products. 
The  project,  run  in  conjunction  with  the  Ministry  of 
Agriculture  and  Food  and  the  Export  Promotion  Centre, 
aims 
the  operation  of  private  sales  of 
agricultural products. It also helps to create pilot  marketing 
operations  with  tradesmen  and  encourages  the  creation 
of  independent  professional  federations.  Following  the 
break-up  of  the  Soviet  Union,  Moldova  lost  much  of  its 
traditional  export  market.  The  Tacis  project  assists  the 
Moldovan  agricultural  community  to  regain  these  export 
markets,  to  develop  new  export  opportunities  and  to 
improve domestic marketing. 

in  1995: 

Two  other  projects  were  developed 
the 
improvement  of  seed  quality  (ECU  400,000)  with  the 
Moldovan agricultural firm Semintse, and the development 
of  credit  to  private  farmers  (ECU  800,000).  The  first 
project's  aim is to  modernise  production  and  improve the 
quality  of  vegetable  seeds  by  introducing  new  varieties 
and encouraging  contact  between  seed producers  in and 
outside  Moldova.  The  second  project  addresses  the 
growing  demand  at  private  banks  for  credits.  Tacis  is 
helping to increase the capacity of the credit  institutions to 
handle  the  rising  credit  demands  of  private  farmers  by 
providing  training  and  advice  at  the  Agroindbank  and 
training of private operators in credit  management. 

Privatising enterprise 

Moldova's  privatisation  programme  has  set  a  target  of 
privatising  an  additional  one-third  of  state  companies 
under  its  1995-1996  programme.  If  these  plans  are 
successfully  implemented  a  total  of  two-thirds  of  state 
property  will  have  been  privatised.  Tacis  supported  the 
privatisation  drive  through  two  projects.  Firstly,  support 
continued  for  the  successful  1994  Business  Centre  of 
Moldova  project  in  Chisinau.  In  order  to  disseminate 
information  about  various  aspects  of  privatisation,  the 
Centre  has created  affiliated centres throughout  Moldova. 
An  ECU  500,000  Tacis  project  aims  to  reinforce  the 
expert  team  at  the  Centre  and  develop  relationships 
between  local  and  international  institutions  in  order  to 
attract  financial  support  and  assist  enterprises  to  devise 
and implement  business strategies. 

25 

In  1995  two  projects  were  launched:  the  reform  of  the 
social  protection  system  (ECU 1.5 million), and support  to 
the  health sector  (ECU 500,000). The first  project  aims  to 
develop  a  new  social  protection  system  and  an 
accompanying  legal  framework  through  advice  to  the 
Moldovan government. The second  project  is designed to 
support 
to  address 
primary  health  care  systems  and  the  reform  of  health 
management. 

the  Moldovan  health  authorities 

Funds allocated  by sector  each  year 

1991 

1992  1993  1994  1995  Total 

Nuclear 
safety and 
environment 

Restructuring state 
enterprises and private 
sector development 

Public administration 
reform, social services 
and education 

0 

1.73 

0 

1.45 

1.5 

0.13 

2 

Agriculture 

0.97 

2.27 

Energy 

Transport 

Policy advice 

Telecommunications 

Humanitarian aid 

Other sectors 

0 

0 

0 

0 

0 

0 

Total 

1.1 

1.9 

4.7 

0.6 

0.6 

0 

0 

0 

6.03 

2.5  10.44 

1.5 

0 

0 

0 

0 

4.1 

0.6 

1 

0 

0 

0 

0 

0.75 

1.5 

2.25 

10 

9 

29.1 

Note:  Moldova did  not  receive funds  under the  1993  budget. 

A  second  project,  the  ECU  1  million  Tacis  enterprise 
isolation  programme,  will  commence  in  1996.  It  will  help 
identify  insolvent  enterprises  and  provide  advice  either  to 
restructure them, liquidate them, or support them  through 
loans systems. 

Conserving energy - a priority 

In the energy sector, Tacis committed support worth  ECU 
1.25 million for the national Energy Efficiency Office, which 
was  set  up  under  the  1992 Tacis  Programme.  The  office 
ran two  projects  on  energy  conservation  in  1995,  both  of 
which  were  directed  at 
and 
implementation of conservation policy. 

the  development 

Another  project  launched  in  1995  provides  policy  advice 
to  the  State  Department  of  Energy  concerning  the  costs 
and  benefits  of  possible  alternative  sources  of  energy 
supply. 

Developing Moldova's skills base 

labour  market  and  strengthening 

In  the  human  resources  sector, 
two  projects  were 
completed  in  1995  and  two  new  ones  identified.  The 
employment  services  project  (ECU  1  million),  aimed  at 
reinforcing  the 
the 
employment  programme  at  the  Ministry  of  Labour  and 
Social  Protection,  was  successfully  completed.  The  ECU 
1.25 million  management  training  project  at the  Academy 
of  Economic  Sciences  was  completed  successfully  and 
some  30  of the trained  managers  are now  working  at the 
Academy. 

26 

Mongolia 

The  dialogue  between  the  European  Community  and 
Mongolia  intensified  during  1995,  and  included  a  visit  to 
Brussels by President Ochirbat. 

provision  of  high  level policy  advice to  the  Government  in 
small  and  medium-sized  enterprises  development 
techniques. 

through 

increased 

A  priority  for  the  Mongolian  government  is  strengthening 
the  national  economy 
industrial 
production.  With  up  to  40  per  cent  of  the  state  budget 
currently  subsidising  unprofitable  state  enterprises,  future 
economic  growth  in  Mongolia  is  largely  dependent  on 
developing  the  private  sector.  Important  sectors  in  the 
economy,  including  services  and  agro-processing,  have 
been  fully  privatised  and  large  state-owned  companies 
have  been  replaced  with 
small  and  medium-sized 
enterprises. 

Maintaining support for Mongolia 

The  1994-1995  Tacis  Action  Programme  continued  to 
build  on  the  projects  that  were  initiated  during  1994.  In 
that  year  a  budget  of  ECU  8  million  was  allocated  for 
Mongolia, which focused on the following activities 

.  human  resources  development 
•  enterprise  restructuring  and  development 
•  energy. 

Developing human resources 

The Tacis objectives for  human resources development  in 
Mongolia focus  on  developing  the  skills  necessary  for  the 
effective  implementation  of  social  protection  measures, 
and the  operation  of  efficient  new  economic  operators. A 
project  for the  reinforcement  of  employment  services  was 
allocated  a budget  of  ECU 1.2 million for  1994-1995. The 
objective  of  this  project  is  to  support  the  Ministry  of 
Labour  and  Population  Policy  and  also  to  put  in  place 
policy  elements 
the  management  of 
unemployment. 

concerning 

The Tacis  project  Reform  of  economic  education  (ECU 2 
million)  has  initiated  the  restructuring  of  the  curricula  and 
organisation  of  the  Mongolian  National  University.  The 
objective  of  this  Tacis  project  has  been  to  contribute  to 
the  adaptation  of  economic  education  to  the  needs  of  a 
free market economy. 

Optimising business development 

Tacis  support  for  small  and  medium-sized  enterprises 
in  the  agro-
continued 
enterprise 
processing 
the 
restructuring  and  development  projects 

throughout  1995,  particularly 
sector.  The  objective 

remains 

for 

The  past  four  years  have witnessed  the  establishment  of 
29,000  new  firms  and  cooperatives.  The  current  Tacis 
project  has  been  building  a framework  for  new  business 
associations, which  provide an important  support  function 
to the newly established companies. 

Improving energy supply 

The  availability  of  reliable  and  cost-effective  energy  is the 
key  to  the  continued  development  of  private  businesses. 
Tacis  has  therefore  initiated  an  energy  project  with  the 
objective  of  improving  the  reliability  of the  power  plants in 
Dharkan  and  Choibalsan  in  rural  Mongolia.  The  ECU  1 
million project  now works with  both  cities, and  has been 
implemented  to  find  cost-effective  means  to  improve  the 
efficiency  and  reliability  of 
local  energy  supply.  The 
Darkhan  project  is  aimed  at  providing  a  cost/benefit 
analysis  design  for  its  upgrade.  In Choibalsan  the  project 
is analysing  how  to  extend  the  plant's  life by  a further  10 
to 20 years. 

Funds allocated  by sector  each  year 

Nuclear 
safety and 
environment 

Restructuring state 
enterprises and private 
sector development 

Public administration 
reform, social services 
and education 

Agriculture 

Energy 

Transport 

Policy advice 

Telecommunications 

Humanitarian aid 

Other sectors 

Total 

1991 

1992  1993  1994  1995  Total 

0 

0 

0 

0 

0 

0 

0 

0 

0 

2.56 

0 

2.56 

0 

3.8 

3.8 

0 

1 

0 

0 

0 

0 

0 

0 

0.64 

8 

0 

0 

0.64 

Note:  Mongolia did  not  receive funds  under the  1991 -1993  budgets. 
The  1994  budget  also covered activities  in  1995. 

27 

Russian Federation 

Russia's  economy  showed  signs  of  further  stability  in 
1995.  Despite 
trends 
remaining negative, the  main indicators  illustrated that  real 
improvements  had been made in key areas. 

the  overall  macro-economic 

Russia  progressed further  towards  the establishment  of a 
in  1995.  The  real  gross  domestic 
market  economy 
product  improved  compared  with  1994  figures,  from 
minus  15  per  cent  to  minus  4  per  cent.  Overall  industrial 
production  also  increased  from  minus  21  per  cent  to 
minus 3 per cent,  mainly due to gains  made  by traditional 
heavy industry. 

The financial  position  of the  Russian  Federation  improved 
slightly in 1995. The budget  deficit  improved by 6 per cent 
to minus 4 per cent of GDP. The inflation rate continued to 
fall,  from  840  per  cent  in  1993, to  215  per  cent  in  1994, 
falling  again 
in  1995.  Currency 
depreciation continued slowly  in an attempt  by the Central 
Bank  to  compensate  for  inflation.  However,  this  largely 
stabilised the currency from mid-1995 onwards. 

to  131  per  cent 

The  Russian  Federation's  trade  surplus  increased  further 
in  1995  to  ECU  25  billion. This  represents  an  increase  of 
ECU  6.5  million  on  1994's  figure.  Russian  trade  with  the 
European  Community  has  also 
the 
improved,  with 
Community  remaining Russia's largest trading partner. 

Social consequences of reform 

Unemployment  rose  to  8.2  per  cent  of  the  work  force  in 
December  1995,  from  7.1  per  cent  in  1994.  A  decline  in 
real  income  by  12  per  cent  on  1994 figures  also  poses a 
considerable  problem  for  the  Russian  authorities.  Wages 
decreased  by  31  per  cent  and  pensions  by  15  per  cent. 
Delays  and  non-payment  of  wages  is  one  of  the  more 
pressing  problems  and  affected  approximately  1  million 
people per month across Russia throughout  1995. 

Meanwhile the avoidance of tax and social fund  payments 
by  not  registering  wages  is  an  increasingly  common 
feature  of  the  Russian  economy.  As  real  living  standards 
continue to  decline, the  reform  programme  is  increasingly 
being  questioned  by  the  general  populace,  which  led  to 
increased  strike  action  and  collective  labour  disputes  in 
1995. 

Relations with the European Union 

The entering into force of the Interim Agreement,  designed 
to  implement  the  trade  and  commercial  aspects  of  the 
Partnership  and  Cooperation  Agreement,  was  delayed  in 
1995 due to the  European  Union's concerns  with  respect 
to  the  conflict 
in  Chechnya,  and  the  repercussions 
connected with the human rights situation in that region. 

The Interim Agreement was, however, signed in July 1995 
and  the  procedures  to  bring  it  into  force  were  launched. 
The Agreement  will operate  until the  more  comprehensive 
Partnership and Cooperation Agreement  comes  into force 
following  the  assent  of  the  European  Parliament,  and  the 
Parliaments  of  the  Member  States  and  of  the  Russian 
Federation. 

Duma elections 

As  part  of  a major  programme  involving  32  countries,  the 
Tacis  Democracy  Programme  supported  the  monitoring 
of  the  Russian  elections  for  the  Second  House  of  the 
Duma, which were held in December  1995. It also carried 
out  a  voting  awareness  campaign  specifically  in  the  St 
Petersburg region. 

The  monitoring  effort  concluded  that  across  95,000 
polling  stations,  involving  a  potential  105  million  potential 
voters,  democratic  practices  continue  to  improve  with 
each  election.  Public  interest  in  the  Duma  elections  was 
high,  as  illustrated  by  a  64.4  per  cent  voter  turnout. 
Russia's  ability to  hold  elections  in a free and  democratic 
way  is  one  of  the  signs  that  political  reform  remains  on 
track.  For  the  first  time,  the  new  Russian  Federation 
successfully  transferred  constitutional  power  from  one 
legislature to a successor. 

Tacis priority sectors and regions 

Tacis  priority  sectors  in  the  Russian  Federation  for  1995 
were 

enterprise  restructuring  and  development 
human  resources  development 
food  production,  processing  and  distribution 
energy 
transport 
telecommunications. 

28 

Tacis regional funding for  1995 concentrated on 

the  Lake Baikal  region 

. 
.  north-west  Russia. 

The Tacis  1995 budget  committed  ECU 161.19 million for 
the  national  programme  in  Russia.  Russia  also  benefited 
from  Tacis  multi-country  funds,  including  ECU  38  million 
for the nuclear safety sector. 

Tacis priority sectors 

Restructuring  and establishing  enterprises 
The  privatisation  process  in  Russia  progresses,  while  the 
restructuring  of  privatised  enterprises  remains  difficult  to 
implement.  Over two-thirds of newly privatised  companies 
are still controlled  by their former  management,  who  slow 
the  pace  of  change.  Towards  the  end  of  the  year  the 
Prime  Minister  declared  a  reduction 
in  the  scale  of 
privatisation  so that  Russia could  move from  quick,  mass 
to  boost 
privatisation 
production  efficiency. 

individual  sales  designed 

to 

In  June  1995  the  State  Committee  of  the  Russian 
Federation  for  the  support  of  small  businesses  was 
created  by  presidential  decree, and  passed  by the  Duma 
in July. Along with numerous  official endorsements  on the 
role  of  private  enterprise  in  Russia,  this  development  has 
had a positive impact on the coordination of Tacis projects 
institutions  supporting 
long-term 
seeking  to  establish 
enterprise  development,  particularly 
the  Russian 
regions. 

in 

in  corporate 

Tacis'  main  priorities  for  1995  complemented  those  of 
1994,  and  covered 
finance, 
training 
enterprise  restructuring,  support  to  the  second  stage  of 
privatisation,  sectoral  and  small  and  medium-sized 
enterprise assistance and support for the national Russian 
agencies  responsible  for  the  development  of  the  market 
economy.  To  help  develop  long-term  strategic  support, 
monitoring  and  forecasting  of  small  and  medium-sized 
enterprises development was added to the list of priorities. 

In  1994,  a  commitment  was  made  to  support 
the 
privatisation  process when  a regional  network  of  13 post-
privatisation  consulting  centres  was  planned.  During 
1995, six of these centres were fully established, of which 
three technical  assistance  centres  in Novosibirsk,  Barnaul 
and  Kemerovo aim to  help with  problems of restructuring. 

Three  enterprise  support  centres  in  Perm,  Ekaterinburg 
and  Chelyabinsk  prepare  organisations  for  investment. 
Funding  for  these  established  centres  and  others  in 
development for  1995 totalled just under ECU 30 million. 

For  smaller  enterprises,  a  network  of  23  Development 
Agencies was  established  in  1995.  Between  the  Moscow 
and St Petersburg agencies alone, over 3,500  prospective 
entrepreneurs  have  been  offered  business  development 
advice.  In the  autumn  of  1995  an  executive  decree  was 
signed  making  the  Development  Agency  network  an 
the  Government's  privatisation 
official  element  of 
programme. 

In the financial  sector,  Tacis  provided  funding  worth  ECU 
5  million to the  Financial  Institutions  Development  Project, 
which  was  established  in  partnership  with  the  European 
Bank for  Reconstruction  and  Development  and the World 
Bank.  The  project  aimed  to  provide  twinning  services  for 
36  Russian  banks  in  order  to  improve  and  develop 
corporate financial services. 

Support for the agriculture  sector 
Overall agricultural  output  fell by  10 per cent  in  1995. The 
Russian grain harvest  hit a record  low of 64  million tonnes 
in  1995  (from  81  million  tonnes  in  1994). This  was  partly 
due  to  a  drought  across  the  Volga  region  and  central 
Russia in May-July  1995. 

In addition  to the  low  levels of agricultural  output  in  1995, 
the  development  of  private  and  cooperative  agriculture 
progressed  far  more  slowly  than  the  privatisation  of 
industry and commerce -  a continuation of  1994's trend. 

The agricultural sector's  legislative agenda changed little in 
1995, primarily due to the failure of the Land Code to pass 
through  the  Duma.  This  code,  which  outlines  the  legal 
situation  for  private  land  ownership,  has  been  pending 
ratification  for  two  years.  Without  the  Land  Code  being 
enforced,  it  is  unclear  how  agricultural  land  can  be  sold. 
Legislation  giving  legal  status  to  agricultural  production 
cooperatives was however passed in December  1995. 

Tacis'  primary  focus  in  1995  was  the  identification  of 
successful  and  complementary  agricultural  projects,  the 
findings  of  which  could  benefit  additional  projects  both 
locally  and  nationally.  The  development  of  wholesale 
marketing  (in the  Samara  and  Moscow  regions)  and farm 

29 

restructuring  and support  to  private farmers  (developed in 
the  Leningradskaya  region)  were  two  of  the  key  subjects 
input  supplies  for 
Improvement  of 
for  dissemination. 
agricultural  producers,  specifically  of  seeds  and fertilisers, 
was included as a key focal area. 

Fisheries  and  forestry  development  also  merited  special 
attention  in  1995.  An  ECU  2.5  million  Tacis  project  in 
Murmansk  was  established  to  improve  fish  distribution 
networks  throughout  Russia.  This  project  complemented 
an  existing  ECU  1.5 million  project  improving  fishing  fleet 
and  processing  structures.  In  Karelia  and  Lake  Baikal, 
reforestation initiatives  were developed, following previous 
massive exports  of timber. Training  in forest  management 
and  harvesting  methods  was  also  started.  In  Baikal, 
studies  were  prepared  developing  environmentally 
preferable forms of animal husbandry. 

Notable  projects  in  1995 were  implemented  in  Kemerovo 
and  Novosibirsk  in Siberia,  and  Chelyabinsk  and  Perm  in 
the Urals. The two former projects included the opening of 
a  wholesale  market  and  establishment  of  producer 
associations.  The  latter  included  the  restructuring  of  two 
large collective  farms, the  improvement  of  the  production 
of  agricultural  equipment  and  initiatives  for  increased 
equipment sales. 

Capitalising  on military  conversion 
Tacis  support  aims  to  save  the  scientific  and  industrial 
potential of former  defence  production  units and  research 
and  development 
their 
institutes,  by 
conversion plans. It supports new enterprise  management 
and  promotes  the  development  of  industrial  partnerships 
and joint-ventures with European partners. 

supporting 

the 

restructuring  of 

In  St  Petersburg,  a Tacis  enterprise  restructuring  project 
Izhorsky  power 
supported 
engineering  plant. A  holding  company  was  established  to 
promote  the  creation  of  new  enterprises  using  the  old 
plant's 
industrial  assets.  Tacis  experts  also  provided 
expert  support  for  approved  projects  in  technical,  legal, 
financial and human resources areas. 

the 

Human  resources  - a continuing  priority 
Unemployment  continued  to  rise  in  1995.  Extensive 
debates  continued  concerning  the  social  consequences 
of  privatisation.  As  in  1994,  Tacis  priorities  in  the  sector 
addressed  these  issues.  Tacis  experts  have  provided 
training  in  business,  economics  and  management;  and 
advice  on  public  administration,  social  protection  and 
health  care  reform.  Particular  support  was  provided  to 
regional  administrations,  reflecting  the  general  focus  on 
regional, rather than centralised, activities. 

In  the  south-west  (Stavropol,  Krasnodar  and  Rostov)  an 
ECU  3.4  million  Tacis  project  was  set  up  to  strengthen 
business  and  economics  teaching  and  research.  In  the 
Urals and western Siberia two  projects, both with  budgets 
of  ECU  2.5  million,  focused  on  strengthening  public 
administration 
through  policy  advice  and  expanding 
training capacity. 

Tacis  experts  worked  alongside  the  State  Committee  of 
Higher  Education  and  the  Ministry  of  Education  in  1995, 
on  an  ECU  2  million  training  and  education  project.  This 
project  aimed  at  developing 
the  management  and 
organisational aspects of education in a market economy. 

One  of  Tacis'  largest  projects  - 
the  officer  retraining 
project  which  started  in  1994  (ECU  14  million)  -  reached 
its mid-term  evaluation  point  in 1995.  New elements  such 
as  mobile  teaching  units  and  training  in job-seeking  and 
application  processes  were  introduced.  The  project  will 
continue until the end of 1996. 

continued 

throughout 

Energy, environment  and  science 
in  gas,  oil,  electricity  and  coal 
Under-performance 
production 
1995,  whilst 
transportation  methods,  distribution  and  consumption 
levels  remained  inefficient.  Energy  prices  stabilised  to  a 
certain extent  but failed to  be cost-effective,  particularly  in 
the  domestic  sector.  By  contrast, 
industrial  prices 
approached  cost-effectiveness.  Developing  this  sector 
has always been a priority for Tacis in Russia. 

High-level policy advice was given to the State Committee 
of Defence Industry. Additional  individual projects  included 
assistance  to  the  Institute  of  Aircraft  Equipment,  and 
support 
the  Russian  Record  Rocket  engine 
programme.  Total  funding  for  the  military  conversion 
sector in Russia was ECU 7.2 million. 

for 

Two  new  energy  centres  were  established  in  1995,  in 
Ekaterinburg and Novosibirsk, bringing the total number of 
energy  centres funded  by Tacis  in the  Russian  Federation 
to four.  A fifth energy  centre,  in Tyumen,  is funded  by the 
European  Union's  Thermie  Programme.  These  centres 
have  been  set  up  to  provide  a  focus  for  a  range  of 
activities  aimed  at  stimulating  efficient  energy  production 
and  use.  It  was  agreed  that  the  work  of  the  existing 
Moscow  and  St  Petersburg  centres  should  be  continued 
for two years. 

30 

in 

the  Lake  Baikal 

the  effectiveness  of  cooperation 

region 
Environmental  activities 
demonstrated 
in 
environmental  protection.  The  comprehensive  regional 
development  plan took  into  account  all the  environmental 
issues 
the  area.  However,  despite  cooperation 
achieving  results  for  some  small  projects,  Russia  is  still 
lacking  a  coherent  approach 
tackling  more 
fundamental environmental problems. 

for 

in 

The 
International  Science  and  Technology  Centre 
continued  to  develop  in  1995  with  the  main  objective  of 
funding  civilian  research  projects  and  thereby  redirecting 
weapons  scientists  and  engineers  to  peacetime  activities. 
The  centre  is  funded  by  the  Russian  Federation,  the 
European  Community, 
the  European  Atomic  Energy 
Community,  Japan,  the  United  States  and  Sweden.  By 
the  end  of  1995  the  centre  was  supporting  over  11,000 
scientists  from  the  New  Independent  States.  Projects 
funded by the centre were valued at ECU 104 million. 

Broad support  across the transport  sector 
In  1995,  ECU  12.5  million were  allocated  to the  transport 
sector  in  Russia.  Projects  identified  covered  air  transport, 
ports,  road  and  rail,  space  navigation  and  transport 
economics,  with  a particular  focus  on  North  West  Russia 
where  the  ports  of  Murmansk,  Archangelsk  and  their 
hinterlands will receive assistance in the improvement  and 
facilitation  of the handling of goods, traffic  forecasting  and 
staff  training.  The  port  of  St  Petersburg  will  receive 
assistance  to  complete  actions  undertaken  in  1992  and 
1994.  The  approach  to  transport  is  now  more  integrated 
and  multi-modal  special  attention  is  being  given  to  the 
creation of  institutional  bodies  and  legal frameworks,  and 
to assisting private operators. 

Tacis priority regions in 1995 

relations  between  Russia  and 

North-west  Russia  - a gateway  to  Europe 
When Finland joined the European Union in January  1995, 
Russia's  first  border  with  the  European  Community  was 
established.  This  was  an  important  step  to  encourage 
the  European 
trade 
Community.  Tacis'  activities  reflected  this, with  a  majority 
of the  regionally  focused  budget  (ECU 27.5  million)  spent 
in  the  Karelia,  Archangelsk  and  Murmansk  regions  of 
north-west  Russia.  One-third  of  Tacis'  transport  budget 
for  1995 was allocated to encouraging the generation of a 
network  of  transport  corridors  for  trade  and  specific 
projects for the ports of Archangelsk and Murmansk. 

Lake  Baikal  - environmental  initiatives 
Industry  in  the  region  is  increasingly  threatening  this 
unique lake's eco-system. Tacis projects  concentrated  on 
specific  environmental  objectives  -  decreasing 
the  air 
pollution  from  the  Angarsk  oil-chemical  company  and 
Irkutsk  thermo-electric  power  station,  sewage  disposal 
and  the  major  reconstruction  of  the  Baikalsk  pulp  and 
paper  plant.  Tacis  committed  ECU  14  million  to  sectoral 
investment  and  advice  which 
included  enterprise 
restructuring,  human  resources  development,  energy 
policy  and  efficiency,  natural  resource  management  and 
environmental  information campaigns. 

Framework  programmes 

Framework  programmes  package  together  projects  on  a 
smaller  scale,  or  those  of  a  similar  type,  under  one 
umbrella  so  that  services  can  be  delivered  quickly  and 
efficiently.  They  complement 
the  conventional  Tacis 
programming  process  which  sets  up  individual  projects, 
usually  of  a  much  larger  size.  The  following  outlines  the 
type of projects covered by some framework  programmes 
in Russia. 

for 

is  designed 

Bistro  programme 
The  Bistro  programme 
the  quick 
implementation of small projects with a brief life span. The 
average  contract  amount  in  1995  was  ECU  64,000. 
Managed  by  the  Tacis  section  of  the  Delegation  of  the 
European  Commission  in  Moscow,  the  most  common 
Bistro  projects  are  conferences,  seminars,  workshops, 
training  and  sector  studies  -  some  of  the  most  visible 
aspects  of  the  Programme.  Some  examples  of  activity  in 
1995 include the organisation  of an  Environment  Week in 
the  St  Petersburg  region  (which  has  subsequently  been 
adopted  by  the  local  administration  as  an  annual  event), 
and  studies  in  areas  such  as  Soya  development  in  the 
Krasnodar  region  and  an  assessment  of the  basic  needs 
of mentally handicapped children in Segesha district. 

Stimulating  greater  productivity 
Initiative  framework  programme  has 
The  Productivity 
generated  positive  responses  from  senior-level  European 
and Russian participants. The programme aims to change 
in  private  and  state-
Russian  management  methods 
owned  sectors  through  intensive  training  seminars  and 
three-month  work  placements  for  Russian  executives  in 
western  companies. 
the  Productivity 
Initiative  programme  represents  a  reverse  process  from 

In  many  ways 

31 

the usual know-how structure, in that the know-how  is not 
'delivered'  to  partner  organisations  but  has to  be  sought 
out  by  them.  In  1994,  40  executives  took  part  in  the 
programme.  In 1995, ECU 5.5  million was contracted and 
200  work  placements  took  place,  with  a  further  100 
arranged for  1996. 

The new monitoring and evaluation team 

A  new  monitoring  and  evaluation  team  started  work  in 
September  1995.  With  a  staff  of  twenty  Moscow-based 
experts  and  a further  eight  local  experts  in the  field,  the 
team  reflects  the  new  geographical  approach  in  Tacis. 
The  team  visits  projects  regularly  and  reports  on  a 
quarterly  basis.  Improvements  were  made  on  previous 
quarterly  coverage,  and  for  the  first  time  all  of  Russia's 
320  Tacis  projects  were  evaluated.  The  European 
Commission's  Delegation  in  Moscow  concentrated  on 
the  supervision  of  projects  in tandem  with the  monitoring 
team.  This  will  allow  any  potential 
and  evaluation 
resolved  earlier  in  the 
difficulties  to  be  identified  and 
project cycle. 

Relationships with other donors 

Tacis  cooperates  closely  with  other  donors  active  in  the 
Russian  Federation, such  as the World  Bank  and the G7. 

The  European  Bank for  Reconstruction  and  Development 
strengthened  its  local  representation  in  Moscow,  which 
has  enabled  Tacis  to  work  even  more  closely  with  it  in 
preparing projects for financing. 

Funds allocated  by sector  each  year 

1991 

1992  1993  1994  1995  Total 

Nuclear 
safety and 
environment 

12.; 

0  12.1 

Restructuring state 
enterprises and private 
sector development 

Public administration 
reform, social services 
and education 

27.2  29.76 

54.5 

43.4 

40.6  195.46 

46.64  24.57 

44  18.85 

52.8  1i 

Agriculture 

50.85  21.49 

12.5 

16.3 

17  118.14 

Energy 

41.5 

16 

21.1 

19.5 

18  116.1 

Transport 

32.87  14.25  13.55 

13.9 

12.6  87.17 

Policy advice 

Telecommunications 

Humanitarian aid 

Other sectors 

0 

0 

0 

0 

0 

0  18.95 

0  18.95 

4.93 

5.1 

4.1 

5.4 

19.53 

0 

0 

0 

10 

0 

0 

0 

15  14.79  39.79 

Total 

211.95 

111  160.75 

150  161.19 

794.89 

32 

Tacis 

Maximising resources and minimising waste: 
Tacis in the NIS energy sector 

NIS energy 

Tacis initiates major energy reforms 

The New  Independent  States  - and Russia and the states 
of Central Asia in particular  - are among the world's  most 
important  producers  of  energy.  These  countries  have 
large reserves of oil and gas, with exports accounting for a 
large proportion of hard currency earnings. 

However,  across  the  NIS  the  energy  sector  faces  a 
number of serious problems, largely due to the production 
of cheap energy, especially for industry, with little attention 
paid to energy efficiency, in supply and usage. 

More  recently,  the  sector  has  suffered  from  a  lack  of 
inefficiencies  and 
investment  which  has  aggravated 
wastage  in  supply,  and  from  the  postponement  of  new 
energy  supply  projects.  Meanwhile  the  environmental 
implications of energy production and wastage are huge. 

Each  energy  resource  presents  its  own  problems  and 
challenges.  Oil  and  gas  production  levels,  for  instance, 
need  to  be  maintained  and  coupled  with  energy  saving 
measures.  Nuclear  power,  which  accounts  for  some  12 
per cent of electricity generation in Russia and 34 per cent 
in  Ukraine,  must  be  subject  to  intense  scrutiny,  epecially 
regarding 
the 
establishment  and  effective  operation  of 
independent 
regulatory authorities. 

the  safety  of  older 

reactors  and 

Meanwhile  energy  wastage  is  such  that  western  experts 
have  estimated  that  the  NIS  industrial  sector  should 
reduce its requirements by up to 40 per cent. In the longer 
term,  the  solution  to  this  problem  lies  in the  adoption  of 
prices which  are more  closely  related to  the  real costs  of 
production  and  supply,  and  to  the  demand  for  specific 
energy carriers. 

The  reform  and  modernisation  of  the  energy  sector  is 
crucial  to  the  process  of  building  up  a  market  economy, 
and for five years Tacis has been playing an important  role 
in the  sector,  transferring  know-how  and  promoting  pilot 
for 
and  demonstration  projects  which  are  designed 
replication. 

It operates  alongside and in close coordination  with  other 
donor  organisations,  particularly  the  World  Bank  and  the 
European  Bank for  Reconstruction  and  Development.  An 
important  point  of  departure  for 
its  activities  is  the 
European  Energy  Charter,  which  aims  to  promote  the 
throughout 
development  of  a 
Europe,  while  improving  the  security  of  energy  supply, 
efficiency  and  safety,  and  minimising  environmental 
problems. 

larger  energy  market 

Over  150  Tacis  energy  projects  have  now  been  carried 
out  -  in  Belarus,  the  three  countries  of  the  Caucasus, 
Kyrgyzstan,  Moldova,  Mongolia,  Russia,  and  Ukraine. 
ECU  228.01  million  have  been  allocated  to  the  energy 
sector  over  the  period  1991-1995,  of  which  Russia  has 
received  ECU  116.1  million  and  Ukraine  ECU  41.58 
million.  The  remaining  Tacis  partner  countries  have  all 
benefited  from  energy  projects  within  the  Tacis  multi-
country programme. 

Programme activities 

Tacis  activities  in the  NIS  energy  sector  are  at  both 
operational  and  institutional  level,  and  come  under 
four broad headings 

•  energy efficiency and  conservation 
. 

rehabilitation  and  modernisation  of  oil,  gas 
and  electricity  production, 
transmission  and 
distribution 

.  support for legal and administrative  frameworks 
.  coal sector  restructuring. 

33 

in 

Each  of  the  Tacis  partner  countries 
poses  very  different  problems  and 
challenges 
the  energy  sector. 
Situations range from that in Armenia -
where  water  and  electricity  can  at 
times  be  available  for  only  an  hour  a 
day  -  to  Uzbekistan  and  Kazakhstan, 
in 
which  are  comparatively 
resources. Tacis activities  are  oriented 
according to the quality and quantity of 
the  energy  resource,  the  efficiency  of 
infrastructure, and the country's status 
as a net energy exporter or importer. 

rich 

Moldova 
As a pure importer of energy, 
Moldova has been badly hit by 
the rise in energy prices, and 
remains beholden to Russia for 
the bulk of its supplies. It can 
improve its own situation by 
promoting energy saving and 
efficiency in the industrial, 
commercial and domestic 
sectors. 

Ukraine 
Ukraine has an energy import dependence, 
worsened by the growing costs of imported 
energy following the break-up of the former 
Soviet Union. The G7 Action Plan required the 
restructuring of Ukraine's energy sector: viable 
options are to diversify both the energy mix 
and the supply countries, and to encourage 
energy saving and efficiency. 

Georgia 
Georgia's only significant indigenous source of 
energy is hydroelectric power, which has meant 
that it is now heavily dependent on imports, which 
are no longer subsidised. The country's energy 
infrastructure  is old and in bad condition due to 
inadequate maintenance and inappropriate 
operational practices. 

Armenia 
The main constraints for Armenia's economic 
growth lie in the limited availability of its natural 
resources, while obsolete technologies and 
inefficient practices make its industry energy-
intensive. The country relies heavily on imports 
of energy products. As such, consumption has 
dropped rapidly. The country needs to develop 
its domestic hydrocarbon deposits to relieve 
some of the dependence on imports. 

Azerbaijan 
The country has proven oil reserves which may 

become the foundation for the restructuring of its 

economy. However, its production levels have 

fallen due to low investment levels and bad pipeline 

networks. 

Turkmenistan 
Turkmenistan boasts major oil and gas 
reserves. In the past it has focused on 
regional markets, but is now turning its 
attention to Europe and Asia. 

34 

Uzbekistan 
Endowed with large natural gas deposits and newly-
discovered oil, the country is potentially self-sufficient 
in energy. However, expert advice is required to 
make the sector viable and to satisfy international 
financing criteria for investment. 

Kyrgyzstan 
The country has no significant oil or 
gas reserves. It is, however, rich in 
hydroelectric capacity and plays a key 
role in the region's water distribution 
system. 

Belarus 
With few local energy resources, Belarus has 
suffered sharply from the high cost of 
importing its fuel. Energy is one of the key 
sectors affecting its balance of payments 
deficit. The government has taken steps to 
institute key reforms in the energy sector and 
recognises that there is, inter alia, great 
potential for improving energy efficiency. 

Kazakhstan 
Kazakhstan has very significant 
oil and gas reserves, and is 
committed to promoting foreign 
investment in its energy sector. 

Russia 
The energy sector constitutes an 
important basis for Russian economic 
restructuring, accounting for two-thirds 
of Russia's exports to the EU. The 
sector remains distorted by pricing 
policies, torn between the pressure to 
raise prices to economic levels and the 
political necessity of keeping energy 
prices affordable. There are natural 
monopolies in electricity and gas which 
need to be regulated, while the sector 
still suffers from excessive wastage. 

EC Energy centre 

Total  expenditure 

Budgets committed by the Tacis Programme 
to the NIS energy sector in ECU million 

Armenia 

Azerbaijan 

Baltic States 

Belarus 

Georgia 

Kazakhstan 

Kyrgyzstan 

Moldova 

Mongolia 

Russia 

Tajikistan 

Turkmenistan 

1991 

1992  1993  1994  1995  Total 

1.3 

0 

3 

4.1 

0.4 

0.7 

0.7 

0 

0 

0 

0 

0 

1.9 

0 

3.2 

0 

2 

0 

4.1 

0 

2 

7.4 

0 

0 

0 

0 

0 

2.4 

0 

0 

3.6 

2.5 

6.1 

0 

0 

0 

0 

0 

0 

3 

2.3 

0 

1.7 

3 

9 

2.7 

3.9 

4.8 

0.6 

1.5 

4.1 

1 

0 

1 

41.5 

16 

21.1 

19.5 

18  116.1 

0 

0 

0 

1 

0 

0 

1 

0 

0.95 

1.95 

0 

1 

Ukraine 

6.2 

8.08 

5.4 

15 

6.9  41.58 

Uzbekistan 

Multi-country 

0.4 

5.28 

6.7 

1.5 

0 

5 

0 

3 

0 

5.68 

3.5 

19.7 

Total 

65  38.96 

38 

43.7  42.35  228.01 

Tajikistan 
A large hydro-electric power potential has been only partially 
exploited, and the availability of abundant water resources allows 
the country to increase its electricity production both for local 
consumption and export, alleviating the pressure caused by the 
need for imported oil, gas and coal. 

Mongolia 
In Mongolia's harsh climate, the energy 
supply has an immediate impact on living 
conditions. Much of the energy-generating 
infrastructure is ageing and in need of 
replacement or refurbishment. 

35 

The range of Tacis energy activities 

Energy solutions 

Tacis  runs  a  wide  range  of  energy  projects.  Its  most 
common activities include 

.  providing 

information  on  energy  saving  methods 
together  with  pilot  projects  which  put  conservation 
theory into  practice 

The Tacis  Programme  -  in conjunction  with the  European 
Commission's  Thermie  Programme  -  has  set  up  a 
network  of  ten  energy  centres  in  the  NIS.  These  are 
designed to  help provide solutions to energy  conservation 
issues affecting local industry in its partner countries. 

•  supporting 

of 

level; 

reorganisation 

oil 
including 

sector 
the 
administration  at  national 
the 
development  of  the  laws  and  regulations  necessary 
to encourage foreign  investment  in the oil  industry 
assisting  the  modernisation  of  heating  units  at  oil 
refineries 
cooperating  with city authorities to evaluate the  urban 
heating  sub-sector 
providing  know-how  on  prospecting  and  production 
in the gas  sector 
providing 
modernisation  of energy  production  facilities 
functioning  and 
supporting 
efficiency  of  the  power  generation,  transmission  and 
distribution  system 
introducing  modern 
power  distribution  billing and settlement  systems 
fostering  technology  transfer  for  the  modernisation  of 
existing and new design power  stations. 

computer-based 

improvements 

know-how 

automatic 

training 

in  the 

and 

the 

on 

legal 

range 

The  centres'  activities 
from  auditing  boiler 
performance  at  industrial  plants  to  launching  consumer 
information  and  environmental  awareness 
and 
technology 
campaigns.  They  conduct  market  and 
evaluations 
energy 
of 
technologies, workshops, training and site visits. They also 
set up contacts among equipment  producers and buyers. 

exhibitions 

organise 

and 

Initially, the  centres  are staffed  with  experts  from  western 
Europe  who  work  with  local  experts,  training  them  to 
analyse  and  solve  problems  on-site.  Once  the  western 
experts'  job  is complete,  they  hand  over  responsibility  to 
the now fully-trained local specialists. 

EC  energy  buses,  which  operate  from  most  energy 
centres, are the focal point of the efficiency drive. They are 
equipped  with  monitoring  equipment  and  software,  and 
visit  major  industrial  zones  and  district  heating  plants  to 
carry out on-the-spot audits and monitoring activities. 

Project focus 

Tacis' energy-saving  initiatives  in  Ukraine 
Tacis  evaluation  teams  have  been  working  closely 
with the Ukrainian government to ensure that  realistic 
solutions  to  the  overriding  problems  in the  country's 
energy  sector  can  be put  into  practice. This  process 
began with an extensive quantitative  research survey 
carried out  in tandem with the Ministry of Energy and 
Electrification,  the  State  Committee  of  Oil  and  Gas, 
the  State  Committee  of  Coal,  and 
the  State 
Committee for Communal Services. 

Project  findings  indicate  the  need  for  establishing  a 
pricing  policy  and  set  tariffs  for  energy  use, and  the 
creation  of  a  national  energy  agency.  This  agency 
would  rationalise  energy  use  and  assume  overall 
responsibility  for  energy  policy  (including  tariffs  and 
pricing).  It  would  also  ensure  that  individual  energy 
saving  projects  are  implemented  as  part  of  a  larger 
strategy. 

36 

Tajikistan 

Domestic  political  instability  has prevented  the  initiation of 
a  Partnership  and  Cooperation  Agreement  between 
Tajikistan  and  the  European  Community  and  its  Member 
States.  Relations  are  based for  the  moment  on the  1989 
Trade and Cooperation Agreement with the former USSR. 

Elections in February resulted in overwhelming  parliamentary 
support for the president, and negotiations throughout  1995 
made slow progress in resolving the civil war which started in 
1992.  Further  internal  disruption  has  led  to  the  removal  of 
the Prime Minister and his principal deputy. 

Tajikistan  was  the  last  of  the  New  Independent  States  to 
introduce  its  own  currency  in  May  1995.  The  new  Tajik 
government  reiterated its commitment  to progressing with 
an  ambitious  economic  reform  programme.  However, 
inflation  remains  high,  running  at  about  80  per  cent  a 
month.  In  1995  Tajikistan  embarked  on  several  joint-
venture  mineral  mining  projects  with  western  partners. 
Tajikistan  is  concentrating  on  market  reform  initiatives  for 
its  agricultural  sector,  particularly  in  land  privatisation  and 
the  encouragement  of  increased  private  production  and 
processing  systems.  Attention  is  now  concentrating  on 
the  different  negotiations  with  the  International  Monetary 
Fund  on  a  reform  programme  which  would  justify  a  loan 
under the Fund's Structural Transformation Facility. 

Encouraging reform in Tajikistan 

The  1995  Tacis  budget  committed  ECU  4  million  for  the 
national  programme  in  Tajikistan,  concentrating  on  the 
following priority sectors 

food production, processing and  distribution 

. 
.  human  resources  development 
.  energy. 

Tajikistan  also  benefited  from  European  Community  food 
aid and from humanitarian aid through ECHO. 

Improving food  production 

An  earlier Tacis  project  helped  establish  a policy  advisory 
unit  within  the  Ministry  of  Agriculture.  In  1995  Tacis 
continued  to  assist  the  Ministry  to  identify  areas  which 
to 
would 
improve  the  overall  efficiency  of  the  sector  and  increase 
Tajikistan's level of self-sufficiency. 

immediately  benefit  from  Tacis  know-how, 

fruit  and 
Tajikistan  consistently  produces  high  quality 
vegetables,  but  lacks  a  developed  system  for  efficient 
processing and exporting. A Tacis project (ECU 1.75 million) 
supported  Tajikistan's  plans  to  develop  the  processing 
the 
sector  by  encouraging  stronger 
organisations involved, and by working with individual plants 

links  between 

to  improve  processing  techniques  and  management  skills. 
The project  also worked  at  developing  support  services for 
newly emerging private farmers and processors. 

Providing knowledge and skills 

Tacis  continued  to  strengthen  the  teaching  of  market 
economics  and  management 
in  1995  in  the  human 
resources  sector 
-  expanding  and  complementing 
activities  undertaken  in  1994.  An  ECU  1  million  Tacis 
project  supported  the  two  training  centres  in  Dushanbe 
and  Khodzhand  established  in  1994.  It  included  training 
for the trainers of these institutions and provision of  know-
how  for  the  development  of  tailor-made  curricula  and  for 
course  development.  Tacis  involvement  encourages  both 
centres  to  continue  on  a  commercial  basis  following  the 
completion of the project. 

Energy -  developing  an essential  resource 

Hydro-electricy  is the  main source  of  energy  in Tajikistan, 
although  the  country  remains  dependent  on  imports  for 
its  oil  and  gas  requirements.  Tacis  has  helped  the  Tajik 
energy  authorities  determine  how  best 
to  utilise  its 
available  hydro-power  resources  and  develop  energy 
trade  with  neighbouring  countries.  A  Tacis  project  worth 
ECU 950,000  contributed  to the  preparation  of  studies to 
determine  the  economic  feasibility  of  completing  certain 
unfinished and outdated  hydro-electric  plants. The  project 
also  examines  cost  and  efficiency  in  energy  supply,  and 
overall awareness of energy efficiency questions. 

Funds allocated  by sector  each  year 

Nuclear 
safety and 
environment 

Restructuring state 
enterprises and private 
sector development 

Public administration 
reform, social services 
and education 

Agriculture 

Energy 

Transport 

Policy advice 

Telecommunications 

Humanitarian aid 

Other sectors 

Total 

1991  1992  1993  1994  1995  Total 

0 

0 

0 

0 

0 

0 

0 

1. 

1.75 

3.43 

0.95 

1.95 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0.32 

0.3 

0.62 

4 

4 

8 

Note: Tajikistan did  not  receive any funding  1991-1993. 

37 

Turkmenistan 

the  EU  Presidency  and 

The  Council  of  Ministers  requested  the  Commission  to 
carry  out  exploratory  discussions  with  Turkmenistan,  in 
view  of  a  possible  strengthening  of  contractual  relations. 
As  with  Uzbekistan, 
the 
Commission  had  drawn  up  a  report  on  the  human  rights 
situation  in  the  country.  Turkmenistan  made  an  official 
request  towards  the  end  of  1995  to  initiate  negotiations 
for a Partnership and Cooperation Agreement.  Meanwhile, 
Turkmenistan's  priorities  in  1995  continued  to  focus  on 
maintaining economic and political stability. 

fully  to  exploit 

lacks  the  know-how 

Although  rich  in  natural  resources  and  export  potential, 
Turkmenistan 
its 
advantages.  Economic  performance  has however  in some 
respects improved. Inflation decreased from 649 per cent in 
1994 to  150  per cent  in  1995. Turkmenistan  is still  having 
difficulty  in  obtaining  payment  from  its  principal  trading 
partners in the NIS for the natural gas which represents the 
largest  portion  of  its  exports.  This  has  led  to  serious 
domestic  economic  problems  and  even  to  a  shortage  of 
grain.  At  present  the  country  relies  exclusively  on  the 
Russian network of pipelines for the export of its gas. 

Strengthening enterprise development 

Tacis continued to  offer the Turkmen  authorities  high level 
in  1995, 
policy  advice  on  enterprise  development 
concentrating  on  building  on  the  achievements  of  earlier 
projects.  The  development  of  and  support  for  the  small 
but  thriving  small  and  medium-sized  enterprise  sector 
remains  a  priority,  as  does  the  implementation  of  an 
effective  large-scale  privatisation  strategy.  In  1995,  both 
Tacis  and  the  EBRD  worked  to  promote  joint-venture 
projects in the mineral, industrial and textile sectors. 

H u m an  resources  -  an  untapped  resource 

Recent Tacis support to human resources development  in 
Turkmenistan  has  centred  on  civil  servant 
training, 
culminating  in the establishment  of a public  administration 
institute  in  1995.  Tacis  know-how  also  assisted  in  the 
development  of  a  legal  and  institutional  framework  for 
human  resources  management. The Tacis  project  (ECU 1 
million)  is also  helping the Turkmen  authorities  to  develop 
the public  administration  system to adapt to the  changing 
needs of a market economy. 

Tacis supports development 

Funds allocated  by sector  each  year 

The  Tacis  programme  for  Turkmenistan  totalled  ECU 
4 million in 1995, focusing on three main areas in 1995 

1991  1992  1993  1994  1995  Total 

Nuclear 
safety and 
environment 

Restructuring state 
enterprises and private 
sector development 

Public administration 
reform, social services 
and education 

0 

0 

0 

0.57 

0  1.05 

Agriculture 

0.88 

3.68 

Energy 

Transport 

Policy advice 

Telecommunications 

Humanitarian aid 

Other sectors 

0 

0 

0 

0 

0 

0 

1 

0 

2.5 

0 

0 

0 

Total 

0.88 

8.8 

3.6 

0 

3.37 

3.85 

9.84 

1 

0 

2.5 

0 

0 

0 

0 

0 

0 

0 

0.32 

1.12 

4 

21.68 

Note: Turkmenistan  did not  receive funds  under  the  1993  budget. 

food  production, processing  and  distribution 

• 
.  enterprise  restructuring  and  development 
.  human  resources  development. 

Extending the agricultural sector 

for 

the  development  of 

Tacis  concentrated  on  assisting  the  Turkmen  authorities 
to  develop  and  improve  the  output  and  efficiency  of  the 
meat  and  milk  processing  sector.  Tacis  know-how  was 
financial 
essential 
feasibility studies for selected  plants, concentrating on the 
development  of  long-term economically viable  investment 
projects to attract joint venture partners. The  project (ECU 
930,000)  also  recommended  privatisation  strategies  for 
the future. 

important 

A  second  Tacis  project,  worth  ECU  750,000,  initiated  an 
unprecedented  review  of  the  Turkmen  fisheries  industry, 
determining future investment  opportunities and assessing 
fresh-water 
expertise 
concentrated  on  ensuring 
the  studies  were  of 
international  standard, thus  increasing  chances  of  gaining 
further support from  international agencies or joint-venture 
investors. 

development.  Tacis 

fishery 

that 

38 

Ukraine 

The  reform  policy 
implemented  by  the  Government 
produced  significant  results  in  1995.  However,  while  the 
need for  reform  is widely  understood, the  decline  in living 
standards  weakens  the  support  for  the  difficult  decisions 
which  are  necessary  to  implement  the  Government's 
programme.  Nevertheless  the  policy  implemented  by  the 
in  Ukraine's 
President  has  contributed 
international standing in 1995. 

the  rise 

to 

During his visit to the European Commission  in Brussels in 
June  1995, the  Ukrainian  President  reiterated  his  support 
for  closer  links with the  European  Community  and for  the 
continuation of the reform process. He emphasised that a 
strong  economy 
for  Ukraine's  economic 
independence. 

is  vital 

the  Tacis  Programme 

The  operation  of 
in  Ukraine 
continued  with  notable  achievements  in  1995,  particularly 
in energy sector  reform and enterprise  restructuring.  1995 
also  saw  the  decision  by  Ukraine  to  close  the  Chernobyl 
power plant, and the signature by the G7 and Ukraine of a 
Memorandum  of  Understanding,  with  a  commitment  by 
the G7 members to support this closure. 

The  recent  establishment  of  a  Tacis  section  in  the 
European  Commission  Delegation  in  Kiev  is  leading  to 
closer  and  more  effective  interaction  and  communication 
between Tacis and its partners in Ukraine. 

Interim  A g r e e m e nt  signed 

The  Partnership  and  Cooperation  Agreement  signed  in 
March  1994  was  still  in  the  process  of  being  ratified  in 
1995.  Political and economic  dialogue  is in place, with  bi 
annual ministerial meetings, and Tacis is helping Ukraine in 
the  adaptation  of  its  legislation  to  the  standards  of  the 
PCA.  Much  still  has  to  be  achieved  in  the  fields  of  non 
discrimination  against  foreign  companies,  market  access 
for foreign products, and access for foreign investments. 

The  Interim  Agreement  was  signed  in June  1995.  It  was 
given  the  positive  opinion  of  the  European  Parliament  in 
October  1995 and gave effect  to the trade  aspects of the 
Partnership and Cooperation Agreement. 

As  part  of  the  Agreement,  the  European  Community-
Ukraine  Joint  Committee  met  in  Brussels  in  March  1995 
and  developed 
'a  close  and  structured  dialogue' 
concerning trade and economic relations. 

Ukraine's  accession  to  the  Council  of  Europe  was  also 
seen as a clear  indication  of  its long-term  commitment  to 
closer political relations with the European Union. 

Tacis  -  strengthening  reform  initiatives 

Tacis  supported  Ukraine's  reform  efforts  in  1995  by 
focusing on the following sectors 

•  energy 
•  enterprise  restructuring  and  development 
•  nuclear  safety and the  environment 
•  human  resources  development 
• 

food production, processing and distribution. 

The Tacis  budget  for  the  national  programme  for  Ukraine 
in 1995 totalled ECU 72.5 million, including ECU 35 million 
for  the  national  programme  and  ECU  37.5  million  as  the 
Tacis  contribution  to  the  EU/G7  Action  Plan for  Ukraine's 
energy sector.  Ukraine also benefited from  ECU 18 million 
of  Tacis  multi-country  funds  in  the  nuclear  sector,  and 
from  other  multi-country  funds  covering  policy  and  legal 
advice,  democracy  projects,  and  cooperation  in  statistics 
and customs. 

Energy  -  central  to  t he  Ukrainian  challenge 

The  long-term  economic  prosperity  of  Ukraine  depends 
on  substantial  reform  of  this  sector.  The  high  cost  of 
energy  imports  continues  to  weigh  heavily  on  Ukraine's 
balance of payments and budget deficit. 

Many  energy  sector  reform  plans  were  initiated  in  1994 
with  considerable  involvement  by Tacis, and  its  interest  in 
this  sector  continued  in  1995.  In  close  cooperation  with 
the  Ukrainian  administration,  four  priority  areas  were 
identified  for Tacis  action  in  1995:  assistance  to  national 
energy-saving  institutions  and  actions,  support  to  the  oil 
and  gas  sub-sector,  assistance  in  creating  a  unified 
Ministry  of  Fuel  and  Energy,  and  assistance 
in  the 
rehabilitation  of  the  Trypolye  power  station  with  an 
economic analysis of modern combustion technologies. 

Tacis-funded  studies  completed  in  1994  had  already 
reviewed  the  demand  and  supply  situation  in  Ukraine. 
Based  on  the  conclusions  of  these  studies,  progress  is 
being  made 
identification  and  dismantling  of 
inefficient  monopolies.  In  addition,  inefficient  production 
techniques  have  gradually  been 
replaced  by  more 
sophisticated  production methods. 

in  the 

39 

is  to  ensure  that 

An  ongoing  priority 
the  Ukrainian 
administration  adopts  an energy  pricing  policy that  reflects 
the true cost of supplies and promotes energy saving. Gas 
metering  projects  for  domestic  and  industrial  users  were 
initiated  in the later  part  of  1995 and will continue  in 1996. 
It  is  intended  that  industrial  and  domestic  users  should 
start  to  pay  for  their  real  energy  consumption.  Only  by 
doing  this  will  the  overall  demand  and  supply  situation 
improve. 

Steps  have  also  been  taken  to  reduce  the  numbers  of 
unpaid  gas  bills.  Until  January  1996  outstanding 
payments were met  by Government  subsidies, which only 
added 
the  pressure  on  the  state  budget.  With 
government  subsidies  for  energy  payments  ending  as  of 
January  1996,  companies  will  no  longer  receive  energy 
credits until they have paid all outstanding bills. 

to 

The success  of energy  sector  reform  has however  added 
to  the  problems  faced  by  domestic  users  and  small 
businesses unable to pay for the additional costs incurred. 
These  problems  are  set  to  increase  as  government 
subsidies  come  to  an  end.  Ukraine  will  focus  on  the 
development  of  fuel  and  energy  systems  in  the  future, 
aiming  at  introducing  energy  saving  technologies  for  all 
users. 

Enterprise restructuring and privatisation 

Enterprise  restructuring  and  development 
remains  a 
priority  for  Ukraine.  Many  actions  in  this  sector  were 
agreed  or  initiated  in  1994,  although  their  progress  in 
1995 was  marred  by continuing  problems  concerning  the 
mass privatisation programme. 

Tacis  continued  its  support  for  the  State  Property  Fund 
with an extended  ECU 1 million grant in addition to  1994's 
ECU  3  million  allocation.  Tacis  is  also  assisting  the 
development  of  pilot  share  registries  and  is  advising  on 
techniques for streamlining  procedures.  However,  despite 
much  of  the  infrastructure  for  effective  privatisation  being 
in  place,  improvements  are  needed  if  established  targets 
are  to  be  met.  Economic  restructuring  proves  difficult  to 
industry 
implement 
through 
privatisation 
reform  of  public 
administration and training. 

- 
transformation  of 
is  not  matched  by 

International  donors  have 
the  Ukrainian 
administration to redesign the privatisation process so that 
the  pace  of  privatisation  improves,  the  number  of  shares 
increases,  and  the  confusion  over  unclear  procedures  is 

requested 

40 

reduced.  Coordination  meetings  between 
international 
donors,  instituted  and  hosted  by  Tacis,  USAID  and  the 
World  Bank,  illustrate  the  commitment  to  establishing  an 
effective  and  internationally  accepted  privatisation system. 
It  is  hoped  that  further  Tacis  action  will  focus  on  the 
redesign  of  the  privatisation  process.  Working  groups 
have  been  established  by  Tacis  to  address  the  most 
urgent problems. 

Tacis  support  to  the  small  and  medium-sized  enterprise 
sector  continued  in  1995  with  real  success.  In  both  Kiev 
and  Zaporozhye,  SME  Development  Agencies  and 
Business  Communication  Centres  have been established, 
providing seminars and training consultancy. A network of 
Post-Privatisation  Support  Centres  is  being  developed, 
providing  much  needed  support  to  recently  privatised 
enterprises.  The  Kiev  centre  has  been  operational  for 
some  months,  and  will  be  joined  by  centres  in  Lugansk 
and  Zaporozhye  in  1996.  Additional  centres  are  planned 
as a result of achievements in 1995. 

Improving nuclear safety and protecting the 
environment 

Nuclear  safety  and  environmental  projects  remain  an 
important  priority for Ukraine, and the largest proportion of 
Tacis funding for Ukraine is allocated to this sector. 

The  decision  to  close  the  Chernobyl  nuclear  power  plant 
by  the  year  2000  was  taken  in  April  1995  by  the 
governments  of  Ukraine,  the  G7  countries  and  the 
European Commission. 

is 

Ukraine faced  problems  securing  international  support  for 
helping  with  this  closure  project.  However,  Tacis  helped 
find  solutions  for  the  development  of  new  technical 
the 
processes  for  dealing  with  nuclear  waste,  although 
project 
in 
further  complicated  by 
determining  just  how  much  the  project  will  cost  until  the 
relevant  feasibility  studies  are  completed.  One  Tacis 
project, worth  ECU 1.5 million, played an important  role in 
devising  a  decommissioning  strategy.  Meanwhile  the 
sarcophagus 
focused  on  proposing 
techniques for dealing with the remaining damaged units. 

feasibility  study 

the  difficulty 

In  December  1995  Ukraine  signed  a  Memorandum  of 
Understanding  with  the  members  of  the  G7  and  the 
European  Commission, which  pledged  long term  support 
for 
'Multi-country 
programmes' section). 

the  project. 

(See  also 

funding 

Agriculture -  an ongoing priority 

Supporting  the  ailing  agricultural  sector  is  becoming  an 
increasingly  important  priority  for  Ukraine.  Since  1991 
more than ECU 35 million have been spent by Tacis in the 
food  and  agriculture  sector.  However,  at  a  political  level 
the  formulation  and  implementation  of  an  agricultural 
policy  is still at a comparatively  early stage, although Tacis 
projects  have  been  praised  by  the  President  for  their 
quality and output. 

to 
The  volume  of  agricultural  output  has  continued 
decrease.  In  all,  average  family  expenditure  on  basic 
foodstuffs  is  more  than  half  the  monthly  income.  Now 
unable  to  depend  on  government  subsidies,  many  farms 
are  on  the  brink  of  collapse.  There  are  continued 
uncertainties  about  land titles, there  remains  little  security 
in  market  transactions,  and  institutional  frameworks  are 
ineffective.  Even  by  the  end  of  1995,  there  was  no 
consensus as to how to privatise this sector. 

the  drafting  of  a 

therefore  supported 

land 
Tacis 
registration  system, 
intended  to  establish  regulations 
governing  the  transfer  of  land  from  state  to  private 
ownership.  This  will  help  to  improve  the  likeliness  of 
privatisation  in  the  agricultural  sector.  Tacis  also  helped 
improve storage techniques for grain. 

Human resources 

In  1995  a  major  project  commenced  to  support  the 
retraining  and  reemployment  of  military  officers,  designed 
to  develop  management  training  courses  for  officers  and 
to  promote  their  reintegration  into  active  economic  life. 
Another  project  was developed to assist the reform of the 
social protection system, while Tacis continues to  support 
the  evolution  of  public  employment  services  and  active 
labour market measures. 

Banking and finance -  developing skills 

Most  of  Tacis'  support  to  Ukraine's  banking  sector  has 
been  in  the  provision  of  training.  The  Tacis  European 
Banking  Advisory  Service  has  been  an  important  tool  for 
providing  support 
to  selected  commercial  banks. 
Individual training  programmes  have also  been  developed 
for  Bank  Ukraina and the Oschadny  Bank. Tacis  has also 
established  a  bank  training  school,  and  an  insurance 
training school. 

It  has  also  been  working  with  banks  participating  in  the 
European Bank for  Reconstruction  and Development  Line 
of  Credit  scheme.  The  project  concentrates  on  giving 

advice  to  banks'  credit  departments.  Tacis'  involvement 
has  greatly  improved  the  long-term  effectiveness  of  this 
scheme. 

Bistro programme 

for 

The  Bistro  programme,  designed 
the  quick 
implementation of small projects with a brief life span, was 
launched 
in  Ukraine  in  1995.  The  average  contract 
amount  in  1995 was  ECU 58,000.  Managed  by the Tacis 
section  of the  Delegation  of the  European  Commission  in 
Kiev,  Bistro  projects  cover  all  the  priority  sectors  of  the 
Indicative  Programme.  Support  is  also  given  to  improve 
investment and trade conditions. 

Relations with other donors 

There  are  many  international  organisations  working  with 
the  Ukrainian  administration  in  their  efforts  to  restructure 
the  economy.  In  1995  Tacis  played  a  central  role  in 
coordinating  the  international  response  to  Ukraine's  ailing 
privatisation  programme  and  participated  in  the  working 
groups  established  to  answer  the  most  urgent  problems. 
In  addition,  it  provided  ECU  37.5  million  for  the  EU/G7 
Action Plan for the Ukrainian energy sector. 

In  December  1995,  the  International  Monetary  Fund 
suspended the Standby Arrangement for Ukraine because 
a  number  of  performance  criteria  had  not  been  met. 
Continued 
the  European 
support 
Community  and  its  Member  States  is  dependent  on 
Ukraine retaining International Monetary Fund support. 

financial 

from 

Funds allocated  by sector  each  year 

Nuclear 
safety and 
environment 

Restructuring state 
enterprises and private 
sector development 

Public administration 
reform, social services 
and education 

1991  1992  1993  1994 

1995  Total 

3.54 

0 

0  20.5 

37.5  61.54 

1.7 

16.8  12.36 

4.3 

10.7  45.I 

4.65 

7.36 

7  26.01 

Agriculture 

7.67  12.31  10.54 

Energy 

6.2 

8.08 

5.4 

Transport 

4.89 

7.26 

3.22 

Policy advice 

Telecommunications 

Humanitarian aid 

Other sectors 

0 

0 

0 

0 

0 

0 

0.83 

0.55 

0 

0 

0 

5 

15 

0 

0 

0 

0 

4  39.52 

6.9  41.58 

15.37 

0 

1.38 

0 

0 

0 

0 

3.82 

1.7 

6.4  11.92 

Total  28.65  48.28  43.25 

50.5 

72.5  243.18 

41 

In  1995  Uzbekistan  received  ECU  10  million  from  the 
Tacis  budget 
for  the  national  programme  and  also 
benefited from Tacis multi-country  programme funds. 

Training for future managers 

business 

One  of  the  main  problems  in  Uzbekistan  is  the  lack  of 
ongoing 
well-trained 
professionals.  The 
privatisation  of 
industry  and  farmland  requires  future 
entrepreneurs  to  broaden  their  skills  base  and  develop 
business  techniques.  In  1995,  Tacis  complemented  its 
1993  management  training  project  in Tashkent  with  two 
projects  in  Ferghana  Valley  and  Samarkand  Oblast.The 
objectives  of  the  two  projects,  each  committing  ECU  1 
million, is to train teachers at the Ferghana State University 
in  modern 
and 
management  and language skills. Among other things, the 
project 
language  courses,  market 
economics  and  management,  improvement  of  teaching 
programmes  and  materials, and advice to the faculties on 
how best to manage and organise curricula. 

the  State  University  of  Samarkand 

includes  English 

An  important  project  worth  ECU 2  million  is now starting, 
in  association  with  the  State  Committee  for  Forecasting 
the  Ministry  of  Higher  and  Special 
and  Statistics, 
Secondary  Education,  and  the  Ministry  of  Labour.  The 
project  aims  to  implement  a  labour  statistics  system  of 
international  standard,  and  to  develop  labour  market 
oriented  training  programmes  for  the  unemployed  and 
school leavers. 

Preparing for private enterprise 

The  rapid  development  of  new  legislation  and  regulations 
necessitates  the  retraining  of  personnel  in  a  variety  of 
sectors. Tacis  launched  an  ECU  1 million  project  with the 
Association  of  Accountants  and  Auditors 
train 
personnel  from  private  enterprises  and  the  civil  service. 
The  project  trains  auditors  in  the  latest  methodology 
necessary for the new civil and business environment. 

to 

Tacis  also  supported  Goskommimuchestvo,  the  national 
authority responsible for privatisation, with ECU 1 million. 

Uzbekistan 

the  European  Community  and 
Relations  between 
Uzbekistan  are  based  on 
the  1989  Trade  and 
Cooperation  Agreement  with  the  former  USSR.  In  1995 
Uzbekistan  requested  the  opening  of  negotiations  for  a 
Partnership  and  Cooperation  Agreement  with 
the 
European  Community 
its  Member  States. 
and 
Consequently,  a  first  Joint  Committee  meeting  between 
the Uzbek authorities and the  European Commission  was 
held in May and exploratory discussions for an Agreement 
were  held  in  July  in  Tashkent.  These  centred  on  the 
situation 
in  Uzbekistan  regarding  human  rights  and 
democratic  reform.  As  with  other  partners,  these  are 
among  the  essential  principles  which  underpin  the  PCAs. 
During  the  talks  Uzbekistan  agreed  to  accept  know-how 
through Tacis  in these areas, which  has opened the  door 
to the initiation of PCA negotiations in 1996. 

Uzbekistan  has  benefited  from  high  world  prices  for  its 
principal  export  item,  raw  cotton.  This  has  enabled  it  to 
achieve a trade surplus for the second year running. Gold, 
uranium and other minerals are also exported. 

Uzbekistan's abundance  in mineral resources (oil, gas and 
coal)  has  made  it  almost  self-sufficient  in  the  energy 
sector.  The  government's  tight  budgetary  and  monetary 
policies  have  led to  a substantial  reduction  in the  budget 
deficit  and  a  fall  in  inflation  of  more  than  500  per  cent 
compared to  1994. 

the  government  accelerated 

In  1995 
reform 
programme  with  the  introduction  of  a  plan  demanding  a 
major  increase  in  privatisation.  However,  the  economy  is 
still  constrained  by  high  unemployment  and  a  lack  of 
foreign investment. 

the 

Tacis focus on modernisation 

Tacis  supported  the  Government  in  its  reform  efforts  by 
focusing on the following sectors 

.  human  resources  development 
•  enterprise  restructuring  and  development 
. 

food  production, processing  and distribution. 

42 

Support for agricultural training 

The  agricultural  sector  is  key  to  the  Uzbek  economy  -
employing 30 per cent of the population and producing 43 
per  cent  of  the  net  product.  The  emerging  private 
agricultural  sector  requires trained  personnel with  modern 
practical  and  commercial  skills.  The  current  educational 
system  does  not  provide  for  adequate  training  in  these 
skills. 

To  tackle  this  problem,  an  ECU  2.2  million  project  was 
initiated  with  the  Tashkent  State  Agrarian  University.  The 
project's  main aims are to train the trainers of the students 
at  the  University  in  a  variety  of  subject  areas,  and  to 
design and  develop  curricula  and  syllabi and  produce  the 
necessary  teaching  materials.  An  important  aspect  of  the 
training  is the emphasis  which  is being  put  on  awareness 
of  the  effect  that  agricultural  methods  have  on  the 
environment. The project  complements the Tacis advisory 
and  training  activities  in the  Ferghana  and  Syrdaria  areas 
and will function as a pilot for additional agricultural training 
institutes. 

Protecting the Aral Sea area 

As  a  result  of  the  overuse  of  water  supplies  feeding  the 
Aral  Sea,  the  area  around  the  Sea  is  experiencing 
disastrous  environmental  consequences.  An  interstate 
council  of  the  five  regional  states  was  set  up  to  address 
the ecological problem through an action plan. 

Tacis  has  contributed  ECU  4.75  million  of  multi-country 
funds to an international fund which  manages the financial 
for  environmental  projects.  The  Water 
contributions 
Resources  Management  and  Agricultural  Production 

project  is  a joint  endeavour  with  the  World  Bank,  which 
encompasses  some  18  projects.  In  1995,  seven  sub-
including 
projects  were  started  in  a  number  of  areas, 
studies  of  land  and  water  resource  use,  crop  irrigation 
systems,  water  management  strategies  as  well  as 
technical  support  concerning  issues  such  as clean  water, 
sanitation and health, and cost analyses. 

Funds allocated  by sector  each  year 

Nuclear 
safety and 
environment 

Restructuring state 
enterprises and private 
sector development 

Public administration 
reform, social services 
and education 

1991  1992  1993  1994  1995  Total 

0 

0 

0 

0 

0 

0 

0 

2.26 

0 

3.35 

2 

7.61 

0 

3.51 

0 

6.8 

4  14.31 

Agriculture 

1.03 

3.05 

Energy 

0.4 

5.28 

0 

0 

Transport 

0.29 

Policy advice 

Telecommunications 

Humanitarian aid 

Other sectors 

Total 

1.72  18.78 

3.35 

2.2 

9.63 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

5.68 

1.97 

3 

0 

0 

1.5 

15 

1.8 

3.3 

10 

45.5 

Note:  Uzbekistan  did  not  receive funds  under the  1993  budget. 

43 

i-country programmes 

On-site  assistance 
A  large  percentage  of  Tacis  funding  under  the  nuclear 
safety  programme  is  allocated  for  on-site  operational 
assistance. An  important  mechanism  used to  achieve this 
is  the  development  of  partnerships  between  western 
operating  companies  and  New 
Independent  States 
plants.  Through  careful  pairing,  western  operating  plants 
provide specific technical assistance such as advice in the 
preparation  of  technical  specifications  when  purchasing 
new  safety  equipment,  advice  on  organisation  and 
procedures,  and  on-the-job  training.  Tacis  experts  have 
been  providing  technical  and  operational  advice  to  the 
following  plants: Smolensk,  Balakovo,  Sosnovy  Bor, Kola, 
Kalinin,  Beloyarsk  (in  Russia),  and  Rovno,  South-Ukraine 
and  Zaporyzhe (in Ukraine). 

A  number  of  equipment  supply  contracts  were  signed  in 
1995.  Other  aspects  of  the  scheme  include  visits  by 
eastern  experts  to  plants  in  the  European  Community, 
identification, 
support 
procurement  and supply of spare parts. 

joint-ventures  and 

the 

for 

Design safety  studies 
Studies are the main instrument  used to  identify  important 
safety related issues which  need attention. In 1995, efforts 
continued  to  be  directed  at  solving  problems  caused  by 
design deficiencies  in WER  and RBMK model reactors as 
well as fuel cycle operations and waste treatment. 

Ukraine: the  EU/G7 Action  Plan 
In  December  1995,  a  Memorandum  of  Understanding 
was  signed  by  Ukraine,  the  G7  and  the  European 
Commission,  which  outlined  a  comprehensive  approach 
to  Ukraine's  energy  sector,  including  the  closure  of  the 
Chernobyl nuclear power plant by the year 2000. 

Tacis  assisted  with  the  preparations  for  closure  of  the 
plant.  In  July  1995,  the  sarcophagus  feasibility  study 
commissioned 
in  1994  was  completed.  The  study 
designed  a  method  for  enclosing  Unit  4,  the  remaining 
damaged  unit  of the  plant. Another  Tacis  project  assisted 
in the development  of a decommissioning  strategy.  Under 
the  1995 programme, Tacis is supporting the creation of a 
solid  waste  retrieval  facility  and  a  solid  waste  processing 
plant. These two  plants will provide the necessary facilities 
for  the  clean-up  of  solid  nuclear  waste  arising  from  the 
decommissioning of Chernobyl Units 1 -3. 

Tacis  has  set  up  a  number  of  multi-country  programmes 
to  enhance  cooperation  between  the  partner  countries 
and  to  address  problems  that  are  common  to  all  New 
Independent  States.  In  multi-country  programmes,  either 
the  solution to  the  problem  is the  same for  each  country, 
or groups of countries  have to work together  to achieve a 
significant  impact. 

The  1995 Tacis multi-country  programme, worth a total of 
ECU  144.5  million,  concentrated  on  the  areas  of  nuclear 
safety,  food  aid,  the  environment  and  the  building  of 
networks.  It  also  included  support  for  the  International 
Science  and  Technology  Centre, 
(covered 
separately  in  the  Russia  country  section),  and  for  a 
number  of  framework  programmes  such  as  the  Tacis 
Democracy  programme. 

ISTC 

Some  major  multi-country  programmes  are  outlined 
below. 

Nuclear safety programme 

Tacis  allocated  a  sum  of  ECU  58.5  million  for  its  nuclear 
safety  programme  in  1995.  The  programme  aims  to 
improve  the safety  of  operating  nuclear  power  plants  and 
civilian  nuclear  fuel  and  waste  management  activities,  to 
promote 
in 
countries  operating  Soviet-built  nuclear  reactors,  and  to 
strengthen regulatory frameworks. 

regional  cooperation  on  nuclear  safety 

In addition to the ECU 58.5  million which was allocated by 
the European Commission to nuclear safety in 1995, ECU 
37.5  million  (from  a  total  of  ECU  100  million  over  1994-
1996)  was  also  committed  to  the  EU/G7  Action  Plan for 
Ukraine's energy sector. 

of 

concerning 

include  nuclear 

Understanding 
aspects  of 

the 
Memoranda 
the  nuclear  safety 
implementation  of 
programme  were  signed  between 
the  European 
Commission  and  Russia  in  February  1995,  and  between 
the  Commission  and  Ukraine  in  October  1995.  The 
indemnity  statements, 
Memoranda 
freeing  Tacis  contractors 
legal 
consequences  of a nuclear  incident.  Since the start  of the 
nuclear  safety  programme,  Tacis  experts  have  been 
reluctant  to  deliver  equipment  and  important  studies 
before  a  satisfactory 
in  place. 
Following  the  signing  of  the  agreements,  many  of  the 
projects can now go ahead. 

legal  framework  was 

the  potential 

from 

44 

Health and social issues related to the Chernobyl accident 
in 1986 have also warranted Tacis involvement.  In addition 
to  some  medical  assistance  and equipment,  Tacis  is also 
involved  with  the  United  States  and  Ukraine  in  the 
definition  of  an  action  plan  to  cope  with  the  social 
consequences of the Chernobyl closure. 

Part of the  EU/G7 Action  Plan for  Ukraine's energy sector 
is  geared  to  ensuring  that  Ukraine  will  have  sufficient 
energy  sources  following  the  closure  of  Chernobyl.  In 
accordance with the plan, part of the funds were allocated 
to  the  ongoing  preparatory  work  on  the  Rovno  and 
Khmelnitsky  nuclear  power  plants.  Engineering  support  is 
being  provided  so 
the  plants  may  be  safely 
completed. 

that 

With  energy  shortages  a  major  concern  for  Ukraine,  the 
EU/G7  Action  Plan 
is  actively  encouraging  energy 
conservation  through  the  development  of  a  national 
energy  saving  programme, the establishment  of a training 
centre, and the organisation of practical demonstrations to 
industry on the topic of energy efficiency. 

Advising the safety  regulators 
In Russia and Ukraine, Tacis launched a three year plan in 
1994 to transfer the methodology and practices of nuclear 
safety  to  their  partners.  Experts  from  safety  authorities  in 
the 
the  European  Community  continue 
regulatory  bodies  through  advice  concerning  surveillance, 
inspections  and 
licensing  of  plants,  drafting  and 
implementation  of  regulations,  and  training.  After  a  slow 
start-up  period,  effective  cooperation  is  now  progressing 
well  between  the  authorities.  Tacis  also  continued  to 
provide technical safety equipment to these authorities. 

to  support 

Environment 

The  environment  was  a  priority  area  for 
the  1995 
programme and resources were substantially  increased to 
ECU 12 million. 

The  broad  objective  of  the  1995  Tacis  environment 
programme  was  to  support  the  development  capacity  of 
the  New 
their 
Independent  States 
environmental problems collectively. 

to  address 

Tacis  is  assisting  the  New  Independent  States  to  bridge 
the  gap  between  the  requirements  for  environmental 
action  and  the  current  capacities  of  national  and  inter 
state  bodies  to  develop  feasible  environmental  strategies 
and policy instruments. 

In  1995,  the  Tacis  environment  programme  has  focused 
on the following objectives 

. 

. 

. 

to  speed  up  the  formulation  of  effective  national 
environmental  strategies 
to  raise  awareness  and  to  provide  environmental 
information 
to  progress 
Inland  Seas  programme 
(development  of  an  interstate  institutional  capacity  to 
the 
address 
Caspian  Sea,  and  continuation  of  the  activities  in the 
Aral  and  Black  Seas  launched  under  the  1992  and 
1993  programmes). 

the  unique  environmental 

the  Tacis 

issues  of 

In  comparison  with  other  Tacis  sectors,  the  environment 
programme  is characterised  by a high level of activity at a 
multi-country  level  by  international  donors.  Examples  are 
the  common  approach  on  nuclear  safety  and 
the 
collaborative  projects  for  the  Black  Sea  and  Aral  Sea, 
which  involve several  major  donors. Tacis  has  responded 
to this multilateral approach, building formal  arrangements 
which allow cofinancing of actions wherever possible. 

Coordination of food aid initiatives 

1995 was the second year that Tacis played an important 
role  in  the  coordination  and  operation  of  the  European 
Community's  food  aid  operations  in the  three  Caucasian 
republics,  Kyrgyzstan  and Tajikistan. Tacis  contributed  to 
the  overall  food  aid  budget  by  providing  funds  for  its 
management  and  operation,  and  by  helping  partner 
countries  in the use of funds  received from the sale of the 
food  supplies.  It  did  this  in  close  cooperation  with  other 
international donors. 

There have been two  main food aid operations: one worth 
ECU 204  million which covered the winter  period of  1994-
1995; another worth  ECU  197 million, covering the winter 
period  1995-1996.  In  addition  to  providing  short-term 
alleviation  of  basic  food  deficits,  the  food  aid  operations 
are  intended  to  build  the  foundations  for 
long-term 
solutions to food production. 

45 

The  initial  implementation  of  the  programme  was  slow, 
largely  due  to  the  political  and  military  conflict  in  the 
in  1995  the  implementation  of  the 
region.  However, 
In  May  1995,  a 
programme  progressed  significantly. 
Traceca  project  management 
together 
experts  from  eight  Traceca  states  in  Almaty  to  agree 
priorities and coordinate further actions. Greater  emphasis 
was placed on trade facilitation aspects of the  programme 
rather  than  only  on  the  establishment  of  a  transport 
infrastructure  corridor. 

team  brought 

Working  groups were established which discussed  issues 
such as legal and regulatory  harmonisation, regional traffic 
forecasting  models,  simplification  of  customs  procedures, 
feasibility studies for  line upgrading and port  management 
improvement.  Projects  launched  in  1995  included  the 
initiation  of  a  feasibility  study  on  the  joint  venture  of  the 
trans-Caucasian  railway. 

Tacis Tempus programme 

This  programme,  a  cooperation  scheme  aiming 
to 
develop and restructure higher education institutions in the 
New  Independent  States,  received  a  total  of  ECU  23 
million  in  1995,  part  of  a total  commitment  of  ECU  48.45 
million  from  1993  to  1995.  The  programme  is  based  on 
networking  of  universities  from  the  European  Community 
and  the  New  Independent  States.  In  1995  Armenia, 
Azerbaijan,  Belarus,  Georgia,  Kazakhstan,  Kyrgyzstan, 
Moldova,  Mongolia,  Russia,  Ukraine  and  Uzbekistan 
participated in Tacis Tempus. 

from 

two  or 

instruments  of 

the  programme  are  Joint 
The  main 
European  Projects.  In  these  projects,  higher  education 
institutions 
three  different  European 
Community  countries  cooperate  with  one  university  or 
teacher-training institution from the NIS to enable the latter 
to  adapt  its  curricula,  teaching  methods  and  degrees  to 
the  challenges  of  democracy  and  the  market  economy. 
Funding 
is  spent  on  communication  equipment, 
textbooks,  teaching  assignments  and  mobility.  In  1995, 
59 full-scale and 87 preparatory projects were funded. 

The  main  areas  of  cooperation  are:  economics,  political 
science,  European  language  teaching,  social  studies, 
history and university  management. 

Unlike  humanitarian  aid  where  target  groups  are  directly 
supplied  with  basic  foodstuffs,  food  aid  products  are 
supplied  free  of  charge  from  the  European  Community 
and sold  in the  partner  countries  at  local prices  previously 
agreed with the  partner  government.  This  price takes  into 
consideration  equivalent 
local  costs  and  production 
methods.  The  revenue  raised  from  the  local  sale  of  this 
food  is  used  for  the  creation  of  'counterpart  funds'.  The 
value  of  the  counterpart  funds  remains  in  the  local 
currency  and  is  used  by  the  partner  country  for  social  or 
agricultural initiatives. 

Counterpart  funds 
The  uses  for  counterpart  funds  are  agreed  with  partner 
governments,  in line with the  primary  needs of the  partner 
funds  are  only  derived 
country.  The  counterpart 
approximately  two  months  after  the  food  supplies  are 
delivered.  Therefore  funds  from  the  1994  operation  were 
made  available  in early  1995.  These funds  were  primarily 
used  for  social  projects  in  such  areas  as  pensions 
contributions,  family  allowances  and  health  care.  In  the 
case of Armenia and  Georgia counterpart  funds  made  up 
a significant  part of these countries'  national budgets. 

The  1995 funds, available in 1996, will be used to  support 
agricultural  projects  and  to  encourage  self-sufficiency  in 
food  production 
the  Caucasus,  Kyrgyzstan  and 
Tajikistan. 

in 

Food aid  budgets 
As  the  transfer  of  know-how  is  increasingly  needed  in 
order  to  assist  governments  with  the  use  of  counterpart 
funds,  Tacis'  contribution  has  increased  from  ECU  4 
million in 1994 to ECU 17 million in 1995. 

The  overall  1995  budget  comprised  funds  from  the 
European  Agriculture  Guidance  and  Guarantee  Fund, the 
Directorate  General  for  Development  (DG  VIII),  ECHO 
(European Community  Humanitarian Office) and Tacis. 

Transport  Corridor  Europe  Central  Asia 
(Traceca) 

The  Tacis  Traceca  programme  is  directed  at  building  a 
transport  corridor  from  Central  Asia  across  the  Caspian 
Sea, through the Caucasus to Europe. It covers all sectors 
from  road,  rail and  maritime  transport  to  trade. The  1995 
Tacis budget for Traceca was ECU 2.5  million, with a total 
of ECU 18 million committed since  1992. 

46 

Tacis Democracy programme 

The  Tacis  Democracy  programme  has  been  working  on 
strengthening the pluralist society and the rule of law in the 
New  Independent  States  since  1992.  It  supports  the 
overall process of political and economic  reform and gives 
concrete support to the democratic  structures required by 
the  Partnership  and  Cooperation  Agreements.  In  1995,  it 
focused  on  continued  political 
the  New 
Independent  States,  with  emphasis  on  multi-party 
elections and the establishment  of  new  institutions.  It also 
worked  on  the  introduction  of  new  procedures  and 
practices 
in  many  sections  of  government,  and  the 
analysis  of  legal  systems,  political  parties  and  trade 
unions. 

reform 

in 

In  1995,  the  programme  received  a  budget  of  ECU  10 
million and concentrated on the 

. 

of 

know-how 

transfer 
of 
parliamentary  practice  and  organisation,  to  multi 
party groups of  parliamentarians  and  politicians 

techniques 

and 

.  strengthening  of  non-governmental  organisations 

. 

and  associations 
transfer  of  expertise  and  skills  to  professional  groups 
and  associations,  concerning  democratic  practices 
and the rule of  law. 

Monitoring  of  elections 
In  1995  the  Tacis  Democracy  programme  monitored 
media coverage of elections in Belarus, Armenia, Georgia, 
Azerbaijan  and  Russia, through  the  European  Institute for 
Media. 

In  Russia,  the  Democracy  programme  assisted  in  and 
the  work  of  all  European  organisations 
coordinated 
(Organisation  for  Security  and  Cooperation 
in  Europe, 
European  Parliament,  Council  of  Europe,  Member  States) 
involved  in  monitoring  the  Russian  elections.  It  set  up  a 
European  Union  Election  Unit  with  six experts  to  facilitate 
cooperation between the institutions and to cover  different 
areas  such  as  the  legal  aspects,  voting  and  counting 
methods,  observers  deployment  and  statistics.  (See  also 
'Russia' section.) 

Joint  programme  for  Ukraine 
In November,  the  Commission  signed  an agreement  with 
the  Council  of  Europe  to  finance  a  joint  programme  for 
Ukraine  (ECU 420,000). The programme  aims at activities 
concerning  legal  systems,  local  government  reform  and 
the  transformation  of  the  Ukrainian  law  enforcement 
system,  and  furthers  Ukraine's  capacity  to  comply  with 
the  membership  conditions  set  out  by  the  Council  of 
Europe. 

in  parliamentary 

Training for  Ukrainian  parliamentarians 
The  project  aims  at  training  deputies  of  the  Ukrainian 
Parliament 
initiates 
permanent  cooperation  with  the  Parliaments  of  France, 
Germany,  United  Kingdom,  Belgium  and  the  European 
Parliament. The project  started in December  1995 and will 
run  for  one  year,  organising  training  placements  for  170 
Ukrainian deputies in the above countries. 

techniques,  and 

Funds allocated  by sector  each  year 

Nuclear 
safety and 
environment 

Restructuring state 
enterprises and private 
sector development 

Public administration 
reform, social services 
and education 

1991 

1992  1993  1994  1995  Total 

36.27 

100 

67.5 

70.5  354.27 

7.6 

15 

0 

31.6 

44.85 

21 

20 

23  108.85 

Agriculture 

5.79 

Energy 

6.7 

3.8 

1.5 

0 

5 

Transport 

4.78 

9 

14 

2 

3 

7 

10.5 

22.09 

3.5 

19.7 

8.5 

43.28 

Policy advice 

Telecommunications 

Humanitarian aid 

0 

0 

0 

8.5 

1 

0 

Other sectors 

0 

0.83 

8 

1 

0 

8 

20.5 

0 

37 

0 

0 

2.5 

4.5 

0 

0 

16.5 

26 

51.33 

Total 

105.99  108.63 

172  141.5  144.5 

672.62 

47 

Cross-border  cooperation 

With  the  accession  of  Finland  in  January  1995,  the 
European  Community  acquired  its  first  common  border 
with  a  Tacis  country.  This  Finnish-Russian  border,  from 
the  Gulf  of  Finland  almost  to  the  shores  of  the  Barents 
Sea, is some 1,000 kilometres long. 

Border  areas  are  of  great  significance 
in  furthering 
communication  and  trade,  and  the  new  Tacis  Regulation 
opens  the  way  for  cross-border  cooperation  at  the 
Finnish-Russian  border,  at  the  borders  shared  by  Tacis 
partner  countries  and  the  Baltic  States,  Poland, Slovakia, 
Hungary  and  Romania,  and  at  borders  between  Tacis 
partner countries themselves. 

A  separate  budget  line  has  been  created  for  this  cross-
border  cooperation,  which  will  focus  both  on  small-scale 
infrastructural  projects  and  the  continued  transfer  of 
know-how.  Emphasis  will  be  placed  on  environmental 
protection  measures,  while  Tacis  will  also  build  border 
crossing  facilities,  help  to  reduce  traffic  and  customs 
bottlenecks,  and  train  border  personnel.  Where  possible 
this will proceed alongside the existing Phare cross-border 
INTERREG 
cooperation  programme,  and 
programme to develop its external border areas in Finland. 

the  EC's 

P r o g r a m me  evaluation 

For  1996,  drawing  on  the  legacy  of  its  first  five  years  of 
existence,  Tacis  management  plans  to  launch  an  overall 
evaluation  of 
the  Programme.  This  will  go  ahead 
separately  from  the  extensive  monitoring  and  evaluation 
individual  projects  and 
programme 
framework  programmes  - which is already under way. 

focussing  on 

- 

Independent  evaluators  will  look  at  all aspects  of Tacis  in 
its entirety, from the  management,  staffing  and  logistics in 
Brussels  and  in  the  partner  countries,  through  to  the 
political  and  economic  impact  of  the  Programme.  This 
evaluation,  which  was  prepared  in  1995  and  should  be 
completed  by  the  end  of  1996,  will  make  a  major 
contribution to the ongoing assessment  of Tacis  priorities, 
funding and management. 

Future outlook 

Tacis  recognises  that  it  operates  in  a  rapidly  evolving 
environment,  with  the  consequent  need  for  it  to  be  a 
flexible and fluid instrument  if it is to  have maximum  effect 
in its partner countries. 

This  Annual  Report  has  highlighted  a  number  of  Tacis 
activities  in  1995  which  have  prepared  the  ground  for 
the  Programme, 
significant 
demonstrating 
the 
challenge.  Three  new  directions  are  of  particular 
importance: 

the  Commission's  approach 

future  developments 

to 

in 

. 

• 

• 

the  investment  support  clause  in  the  new  Tacis 
Regulation 
the cross-border  cooperation  clause  in the  new Tacis 
Regulation 
the  preparation  of  an  overall  evaluation  of  the  Tacis 
Programme 

Investment support 

With  the  adoption  of  the  new  Regulation,  Tacis  will 
broaden 
its  activities  from  providing  know-how  and 
expertise  to  include  investment  support,  both  for  EU-NIS 
joint  ventures  between  small  and  medium-sized 
enterprises,  and  for  small-scale  infrastructure  projects  at 
border  areas.  In  so  doing,  it  is  following  the  Phare 
Programme  for  the  countries  of  central  and  eastern 
Europe,  in  acknowledging  the  need  to  build  upon  the 
current  provision  of  know-how  by  providing  or  attracting 
investment 
to  maintain  the  momentum  of  economic 
development. 

The  new  Regulation  allows for  up to  10 per  cent  of Tacis 
funds  to  be  spent 
in  this  way.  The  Programme  is 
committed  to  working  closely  with  other  donors  who  are 
investing directly  in the  NIS, such as the  EBRD, the World 
Bank, the US and the individual  Member  States. Tacis will 
also  continue  to  prepare  the  ground  for  investment  by 
carrying out prefeasibility and feasibility studies to establish 
the  worthiness  of  investment  projects  which  can  then  be 
funded by other donors, and by providing support so that 
projects  are  able  to  meet  the  necessary 
investment 
criteria. 

48 

Tacis funds allocated by sector 

Nuclear safety and environment 

Funds  committed  by  country  each  year 

1991  1992  1993  1994  1995  Total 

Armenia 

0.3 

Kazakhstan 

0 

Russia  12.89 

Ukraine 

3.54 

MCP Kazakhstan 

0 

0 

0 

0 

0 

0 

0.3 

0 

0  12.89 

0 

0 

20.5 

37.5  61.54 

0 

2.5 

2.5 

MCP Russia  32.61 

38 

48.5 

41 

38  198.11 

MCP Ukraine 

3.66 

22 

30.5 

24.5 

18  98.66 

MCP Regional 

0 

Total 

53 

20 

80 

21 

2 

12 

55 

100 

88 

108 

429 

Note:  MCP  -  multi-country  programmes 

Public administration reform, social services 
and education 

Restructuring state enterprises and private 
sector development 

Funds  committed  by  country  each  year 

Funds  committed  by  country  each  year 

1991 

1992  1993  1994 

1995 

Total 

1991 

1992 

1993 

1994 

1995  Total 

Armenia 

Azerbaijan 

Baltic States 

0 

0 

0 

Belarus 

0.68 

1.5 

3 

0 

1 

Georgia 

1.18 

1.25 

Kazakhstan 

4.87 

1.4 

3.15 

0 

1.8 

0 

0 

1.8 

1.8 

1.5 

1.3 

0 

0 

4.8 

6.1 

0 

1.68 

1.3 

5.53 

2.9 

14.12 

Armenia 

0.7 

3.54 

2.3 

0 

2 

8.54 

Azerbaijan 

Baltic States 

0 

0 

2.6 

0 

Belarus 

0.3 

7.52 

Georgia 

Kazakhstan 

0 

0 

3.5 

6.54 

6.3 

0 

0 

4 

0 

1.9 

1.8 

6.3 

0 

5 

3.6 

6.3 

0 

0 

5  21.82 

1.9 

9 

5.9  25.04 

0 

0 

0 

0 

0.82 

1.45 

1.5 

4.68 

Kyrgyzstan 

0 

2.6 

0 

1.6 

4.2 

Kyrgyzstan 

0  0.82 

Moldova 

0.13 

Mongolia 

0 

0 

0 

1.9 

3.8 

2 

0 

6.03 

3.8 

Moldova 

Mongolia 

0 

0 

1.73 

0 

0 

2.56 

0 

2.56 

Russia  46.64  24.57 

44  18.85 

52.8  1f 

Russia  27.2  29.76 

54.5 

43.4 

40.6  195.46 

Tajikistan 

0 

0 

Turkmenistan 

0  1.05 

0 

0 

Ukraine 

4.65 

3 

7.36 

Uzbekistan 

0  3.51 

0 

Multi-country programmes  44.85 

0 

21 

1 

1.8 

4 

6.8 

20 

2 

3.85 

26.01 

14.31 

Tajikistan 

Turkmenistan 

0 

0 

0 

0.57 

0 

0 

0 

1.8 

0 

1 

0 

3.37 

Ukraine 

1.7 

16.8  12.36 

4.3 

10.7  45.86 

Uzbekistan 

0 

2.26 

0 

3.35 

2 

0 

7.61 

31.6 

108.85 

Multi-country programmes 

7.6 

4 

15 

5 

Total 

103  42.28  79.91  63.55 

99.4 

388.14 

Total 

37.5  79.64  94.46 

78.66 

72.4  362.66 

49 

Agriculture 

Transport 

Funds committed  by country each year 

Funds committed by country each year 

1991 

1992  1993  1994  1995  Total 

1991 

1992  1993  1994  1995  Total 

Armenia 

0 

1.66 

Azerbaijan 

0.4 

2.5 

Baltic States 

5.95 

0 

Belarus 

1.6 

2.51 

Georgia 

2.65 

1.5 

0 

0 

0 

2 

0 

0 

0 

0 

0 

1.8 

0 

0 

0 

2 

0 

1.66 

2.9 

5.95 

8.11 

5.95 

Kazakhstan 

2.16 

3.06 

3.15 

3.15 

3  14.52 

Kyrgyzstan 

0 

2.71 

Moldova 

0.97 

2.27 

Mongolia 

0 

0 

4 

0 

0 

0 

3.7  10.41 

4.7 

2.5  10.44 

0 

0 

0 

Armenia 

Azerbaijan 

Baltic States 

0 

0 

4 

Belarus 

2.24 

Georgia 

0.73 

Kazakhstan 

Kyrgyzstan 

Moldova 

Mongolia 

0 

0 

0 

0 

0 

0 

0 

0 

0 

1.3 

0 

0 

0 

0.6 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

4 

6.54 

0.73 

0 

0 

0.6 

0 

Russia  50.85  21.49 

12.5 

16.3 

17  118.14 

Russia  32.87  14.25  13.55 

13.9 

12.6  87.17 

Tajikistan 

0 

0 

Turkmenistan 

0.88 

3.68 

0 

0 

1.68 

1.75 

3.43 

3.6 

1.68 

9.84 

Tajikistan 

Turkmenistan 

0 

0 

0 

0 

0 

0 

Ukraine 

7.67  12.31  10.54 

5 

4  39.52 

Ukraine  4.89 

7.26 

3.22 

Uzbekistan 

1.03 

3.05 

Multi-country programmes 

5.79 

3.8 

0 

0 

3.35 

2.2 

9.63 

Uzbekistan 

0.29 

1.68 

0 

2 

10.5  22.09 

Multi-country programmes 

4.78 

9 

14 

0 

0 

0 

0 

7 

0 

0 

0 

0 

0  15.37 

0 

1.97 

8.5  43.28 

Total  79.95  60.54  32.19  41.58  48.33  262.59 

Total 

49.8  33.19  32.77 

22.8 

21.1  159.66 

Energy 

Policy  advice 

Funds committed by country each year 

Funds committed  by country each year 

1991 

1992  1993  1994  1995  Total 

1991 

1992  1993  1994 

1995 

Total 

4.1 

0 

2 

3.6 

2.5 

Armenia 

1.3 

Azerbaijan 

Baltic States 

0 

3 

0 

0 

0 

Belarus 

4.1 

1.9 

Georgia 

Kazakhstan 

0.4 

0.7 

0 

3.2 

0 

0 

0 

0 

0 

Kyrgyzstan 

0.7 

Moldova 

Mongolia 

0 

0 

0 

2 

0 

2.4 

0 

0 

7.4 

6.1 

3 

9 

0 

3 

2.3 

2.7 

0 

1.7 

1.5 

0 

3.9 

4.8 

4.1 

1 

0 

0 

0 

0 

0 

0.6 

1 

Russia  41.5 

16 

21.1 

19.5 

18  116.1 

Tajikistan 

Turkmenistan 

0 

0 

0 

1 

0 

0 

1 

0 

0.95 

1.95 

0 

Ukraine 

6.2 

8.08 

5.4 

15 

6.9  41.58 

Uzbekistan 

0.4 

5.28 

Multi-country programmes 

6.7 

1.5 

0 

5 

0 

3 

0 

5.68 

3.5 

19.7 

Armenia 

0 

2.85 

Azerbaijan 

Baltic States 

Belarus 

Georgia 

Kazakhstan 

Kyrgyzstan 

Moldova 

Mongolia 

Russia 

Tajikistan 

Turkmenistan 

Ukraine 

Uzbekistan 

Multi-country programmes 

0 

0 

0 

0 

4.4 

0 

0.7 

2.75 

6.4 

5.7 

1 

0 

0 

0 

2.5 

0 

3 

8.5 

2.85 

4.4 

0 

0.7 

2.75 

8.03 

5.7 

1 

0 

0 

0 

0 

0 

1.63 

0 

0 

0 

0  18.95 

18.95 

0 

0 

0 

0 

8 

0 

0 

0 

0 

20.5 

0 

2.5 

0 

3 

37 

Total 

65  38.96 

38 

43.7  42.35  228.01 

Total 

37.8 

8  41.08 

86.88 

Note:  No  budgets  were allocated for policy advice  in  1991 and  1995. 

50 

Telecommunications 

Other sectors 

Funds committed by country each year 

Funds committed by country each year 

1991  1992  1993  1994  1995  Total 

1991  1992  1993  1994  1995  Total 

Armenia 

Azerbaijan 

Baltic States 

Belarus 

Georgia 

Kazakhstan 

Kyrgyzstan 

Moldova 

Mongolia 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

Russia 

0  4.93 

5.1 

4.1 

5.4  19.53 

Armenia 

Azerbaijan 

0 

0 

Baltic States 

2.05 

Belarus 

Georgia 

Kazakhstan 

Kyrgyzstan 

Moldova 

Mongolia 

Russia 

Tajikistan 

Turkmenistan 

Ukraine 

Uzbekistan 

0.8 

0 

0 

1 

0 

0 

0.7 

0 

0.7 

0.8 

0.5 

0.4 

0 

2 

0.5 

1.3 

1.1 

2.05 

3.7 

1.3 

1.4 

1.12 

3.2 

5.72 

1 

0 

0 

0 

1 

2 

0.75 

1.5  2.25 

0.64 

0  0.64 

10 

15  14.79  39.79 

0 

0 

0.32 

0.3 

0.62 

0.8  0.32 

1.12 

0 

0 

3.82 

1.7 

6.4  11.92 

0 

1.5 

1.8 

3.3 

0.83 

8  "16.5 

" 26  51.33 

0 

22 

0 

0 

22 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

Tajikistan 

Turkmenistan 

0 

0 

0 

0 

0 

0 

Ukraine 

0  0.83  0.55 

Uzbekistan 

Multi-country programmes 

0 

0 

0 

1 

0 

1 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

1.38 

0 

Total 

0  6.76  6.65 

4.1 

7.9  25.41 

Humanitarian aid 

2.5 

4.5 

Multi-country programmes 

Note: The telecommunications  sector did not receive any funding in 1991 

Other* 

6.2  38.91  32.09  45.68 

53  175.88 

Total 

8.25  39.74  80.11  86.21 111.71  326.02 

*  Including  multidisciplinary  funds  (Tacis  and  EBRD),  Coordinating 
Units,  Information  and Communication,  Partnership  and  Coordination 
Programme. 

** Includes Tacis  Democracy  Programme. 

51 

Tacis financial performance 

In  1995,  Tacis' 
to 
improve,  consolidating  the  substantial  progress which  the 
Programme made in 1994. 

financial  performance  continued 

Fig. 1 -  Funds committed, contracted  and paid, 
1991 to  1995  (in ECU  million) 

Tacis  also  focused  on  decreasing 
the  accumulated 
backlog  of  uncontracted  commitments.  By  the  end  of 
1995,  70.5  per  cent  of  Tacis  overall  commitments  were 
contracted, compared to 61 per cent at the end of 1994. 

Tacis  financial  performance  is  indicated  by  the  level  of 
funds  committed,  contracted  and  paid  and 
the 
relationship between these three indicators. 

to 

its 

improve 

Commitment  of the Tacis  budget 
Tacis  continued 
level  of  budgetary 
commitment. The  Programme  committed  100 per cent of 
its funds  in  1995. The actual  amount  of funds  committed 
was  higher  in  1995  -  ECU 511.19  million compared  with 
469.68  million  in  1994.  This  raised  the  total  commitment 
over Tacis' five years of operation to ECU 2,268.37 million. 

i*.v. 

1991 

1992 

1993 

1994 

1995 

commitments 

contracts 

payments 

Amount  contracted 
In  1995,  Tacis  contracted  funds  to  a  value  of  ECU  527 
million.  This  is  an  increase  of  2.4  per  cent  from  1994, 
when a total of ECU 514.7 million was contracted. 

Fig. 2 -  Cumulative funds committed,  contracted 
and  paid, 1991 to  1995  (in ECU  million) 

It 

in  1995. 

its 
Tacis  management  set  a  number  of  targets  for 
contracting  performance 
focused  on 
contracting  all  1992  programmes,  and  on  contracting  at 
least 90 per cent of the  1993 and 60 per cent of the  1994 
programmes. While Tacis achieved these targets for  1992 
and  1994,  the  implementation  for  1993  is  lagging  slightly 
behind.  In  1995,  nearly  13  per  cent  of  the  programme 
was  contracted. This  is slightly  lower  than  expected,  due 
the  nuclear  safety  and  multi-country 
in 
to  delays 
programmes. 

CO I 1991 

1991-1992 

1991-1993 

1991-1994 

1991-1995 

commitments 

contracts 

payments 

52 

Contracts  by calendar  year 
Tacis  signed  1,472  contracts  in  1995.  As  a general  rule, 
service contracts over ECU 300,000 are awarded  through 
restricted  tendering  procedures.  The  average  size  of  a 
Tacis  contract  was  ECU  360,000.  Figure  3  shows  the 
year's budget to which the signed contracts relate. 

Fig. 3 -  Contracts  concluded  by calendar  year 
(in ECU  million) 

472.1 

469.7 

511.2 

64.7 

1991 budget  1992 budget  1993 budget  1994 budget  1995  budget 
87.5% 

66.3% 

12.7% 

99.6% 

99% 

% contracted as of 31.12.95 

contracted  in 1991 

contracted  in 1992 
•  contracted  in 1993  •  contracted  in 1994 
•  contracted  in 1995  •  not yet  contracted 

Funding procedure 

As  part  of  the  Tacis  programming  process,  there  are 
three steps which take the annual budget approved by 
the  budgetary  authorities  through  to  the  point  where 
projects  are  implemented  and  funds  disbursed.  Tacis 
has a financial management  procedure which  matches 
this process. 

to 

Commitment  -  Each  year  a Tacis  budget  is agreed, 
indicating the funds which the Commission is prepared 
to  commit 
the  Tacis  Programme.  Operational 
programmes  - the  so-called Action  Programmes  -  are 
then  designed  and  financing  proposals  prepared  on 
that  basis.  Once  these  financing  proposals  have 
received the favourable opinion of the Tacis Committee 
and  been  agreed  by  the  Commission,  the  relevant 
funds associated with these proposals are said to have 
been  'committed'. Tacis must commit  its entire annual 
budget  within  the  year  to  which  the  budget  applies. 
Uncommitted money is cancelled. 

Contracting  -  Once  funds  have  been  committed, 
tenders  are issued so that  the  activities  outlined  in the 
Action  Programmes  can  be put  into  practice. As  soon 
as  a  tender  has  been  successfully  completed  and  a 
contract  signed,  the  relevant  funds  are  said  to  have 
been  'contracted'.  Contracting  is  the  most  important 
measure of the implementation of the Programme, as it 
is via the  contracts  that Tacis funding  is unlocked  and 
real implementation on the ground can start. 

Payment  -  Payment  is  the  final  stage  of  the  funding 
process. 
It  takes  place  over  the  period  of  each 
contract,  reflecting the completion of each  component 
of  the  project.  As  projects  may  take  several  years, 
payments are often spread over the same time. It is for 
this  reason  that  payments  always  lag  behind  the 
committed and contracted amounts. 

In  1995  Tacis  made  3,347  payments,  amounting  to 
some ECU 374.5 million. 

53 

Tacis  payments 
Tacis  made  particular  efforts  in  1995  to  improve  its 
payments  performance.  This  resulted  in  an  increase  of 
24.7  per  cent  of  the  total  amount  for  payments  to  ECU 
374.5 million, compared with ECU 300.3 million in 1994. 

Fig. 4 -  Payment  in each  budget year  1991-1995 
(in ECU  million) 

472.1 

469.7 

511.2 

Tacis achieved  a  100 per cent  payment  execution  ratio in 
1995,  so  that  all  of  the  payment  appropriations  available 
under the Tacis  budget  were disbursed  during the course 
of the year. 

396.5 

1991 budget  1992 budget  1993 budget  1994 budget  1995  budget 
38.8% 

62.8% 

82.9% 

5.1% 

% paid as of 31.12.95 

paid in 1991 

paid in 1992  •  paid in 1993 
•  paid in 1994  •  paid in 1995  C  not yet paid 

Cumulative  contracts and  payments 
The  ratios  of  cumulative  contracts  and  payments  have 
increased  continuously  since  the  beginning  of  the  Tacis 
Programme  in  1991.  The  cumulative  contracts  as  a 
percentage of cumulative commitments  has risen from 1.3 
per  cent  in  1991  to  70.5  per  cent  in  1995.  Figures  for 
cumulative  payments  as  a  percentage  of  cumulative 
contracts  show a considerable  increase from  7.5  per cent 
in 1991 to 55.5 per cent in 1995. 

Fig. 5 -  Cumulative  contracts and  payments 
1991-1995  (%) 

Cumulative contracts 
as percentage of 
cumulative commitments 

Cumulative payments 
as percentage of 
cumulative contracts 

1991 

1992 

1993 

1994 

1995 

1.3%  25.6%  43.3% 

6 1%  70.5% 

7.5% 

15.6% 

38.2% 

47.9% 

55.5% 

54 

List of major contracts signed in 1995 

Contracts under ECU 300,000 are not listed. 

Kazakhstan 

1,252,700 

General on-site assistance,  nuclear  safety 

900,600 

Individual  projects  may  comprise  several  contracts. 
Likewise,  one  contract  may  cover  more  than  one  project. 
Values  are given to  the  nearest  ECU  100. 

Armenia 

Policy advice  programme  for  Armenia 
Technical assistance for the  development 
of the gas  industry 
Rehabilitation  of Armenian  Railways 

Azerbaijan 

Advice to the Ministry  of  Communication 
Improvement  of consumer  services 

in the gas and electricity  industry 
Business  development  for the oil 
equipment  manufacturing  industry 

Support  for the strengthening  of  management 
and training  capabilities 
Support  for  institutional  development 
within the employment  service 
Rehabilitation  of Azerbaijan  Railways 

Traceca: Technical  assistance 
for the development  of the Port of  Baku 

Belarus 

Value in ECU 

472,100 

1,599,600 
500,000 

525,600 

1,463,400 

1,979,000 

499,300 
1,500,000 

698,100 

Technical  assistance to  Belarussian  Railways 

384,500 

Strategy formulation  for  privatisation 
and demonopolisation 

Creation  of a transport  advisory  unit  in  Belarus 
Technical  reform of the road  building  industry 
Development  of marketing  opportunities 
for former  military  enterprises 
SME strategy for  private sector  development 
Assistance  and training for the  Belarussian 
tax  administration 
Support  for  Belarus  Belautostrada 
Privatisation  of the wood  processing  industry 

Creation of a business development  agency, 
Gomel  Oblast 

Georgia 

Policy advice  programme for  Georgia 
Technical assistance for  enterprise 
level  assistance 
1993-1994  Programme  for SME  development 
Reform and training  in the civil service 
Rehabilitation  of Georgian  railways 

636,000 
384,100 
1,287,300 

2,900,000 
1,898,000 

399,400 

1,695,000 
644,000 

349,800 

448,000 

1,800,000 
2,351,400 
1,668,800 
3,000,000 

Support  for  public  investment 

programme  management 
Advice to the Ministry  of Communication 
Support  to the  privatisation  of enterprises 
Strengthening  of training  capacity 
at Kazakhzstan  State University 
Monitoring of the food and agriculture  sector 

487,400 
526,800 
979,000 

2,330,600 
544,900 

1,019,800 
589,700 

1994  Programme for SME development 
Support  for commercial  banking 
Technical  assistance for economic  reforms 
in the food and agricultural  sector 
Support  for the  reorganisation  of the food 
production  sector, Aktiubinsk  Oblast 
Strengthening  of public  administration 
Technical assistance for addressing  the  social 
impact  of economic  restructuring  and  privatisation  1,796,900 
Assistance to the  Ministry of  Education 
for the  reform of  higher education 
Traceca:  Rolling stock  maintenance,  rail 

1,799,900 
1,458,500 

600,000 
695,300 

1,348,600 

Kyrgyzstan 

Legal support  for the  Kyrgyzstan  energy sector 

619,200 

Moldova 

Support  for the employment  services 
Pilot  project  for the  privatisation 

of the Orhei region 
Assistance  to  Private  Farmers Association 
Support  for the  promotion  and  development 

of investment  opportunities 
Strengthening  of  government 
and civil administration 
Extension  of energy  saving  programme 
for  Moldovan  industry 
NGO co-financing  project, for the elderly 
and children 

Mongolia 

Programme for SME development 
Reinforcement  of employment  services 
Support  for an education  information  system 
Reform of economics education  in Mongolia 
Improvement  of energy  supply to  Choibalsan 

and  Darkhan 
Support  for the Coordinating  Unit 

370,700 

2,394,700 
1,395,300 

590,000 

1,899,800 

599,500 

300,000 

2,252,100 
1,199,900 
594,100 
1,997,500 

995,200 
535,900 

55 

Russia 

Restructuring  of Soyouz  Enterprise,  Moscow 

Development  of energy  saving actions, Samara 
Development  and establishment  of  employment 
offices  in Kaliningrad 
Regional support  to  non-governmental 
organisations  in western and eastern Siberia 
Technical  assistance to October  Railways 

Support  for a  telecommunications 
training centre,  Moscow 

Technical  assistance to  Novosibirsk 
telecommunications  training centre 
Follow-up  project  for  business  and 
telecommunications,  Moscow 

Feasibility  study  on the integration  of  GLONASS 
into the  European  Global  Navigation  Satellite 
System 
Secondary  legislation  in the field 
of telecommunications 
Advisory  services for the  development 

of  Russian Satellite Systems 
Training on-line  maintenance  and  repair 
operation  of  Medium Volt Grid, Tula 
Energy  policy advice to St  Petersburg 
Communication  management  system, 

Lenenergo 
Development  of St  Petersburg  harbour 
Modernisation  of a training  centre 
for flight  personnel 
Strategic  review of selected  industries 
Restructuring  of the aluminium  sector  in Siberia 
Restructuring  of the aluminium  sector  in the  Urals 

Strategic  review of food  packaging 

European  Banking Advisory  Service,  Moscow 
Russian  bank training 
Kamov helicopter  study 

Production  support: Tupolev  enterprise 
Support  for  health systems  development 
City Twinning  project  in administration 
and  services 
Management  planning  of education  in  Russia 
Standards  and certification  in Russia and  Ukraine 
Development  of health and safety standards 
Strategic  audit  of coal exploitation 
Valorisation  of oil and gas streams, 

Tyumen  Oblast 
Development,  structuring  and  organisation 
of the  Russian oil industry 
Modernisation  of the gas distribution  system 
for St  Petersburg 

499,400 

359,500 

1,347,100 

710,000 
338,700 

300,000 

696,000 

500,000 

1,000,000 

1,030,400 

300,000 

690,000 
898,600 

489,200 
1,174,100 

986,800 
799,200 
1,137,200 
1,199,100 

580,900 

5,000,000 
1,500,000 
1,271,500 

700,000 
4,500,000 

1,601,800 
1,468,100 
2,450,100 
699,000 
1,599,300 

714,100 

1,457,100 

1,279,800 

56 

Petroleum engineering  and  related 

management  training, Gubkin  Institute 
Assistance for development  of  new oil fields 
Management  and training of senior  managers, 
Russian  Railways 
Multimodal freight terminals,  Russia 
Advice to the Ministry  of Transport  on 
planning  regulations  and standards 
Centres for  road transport  operators 
Implementation  of electronic  data  interchange 

system  in the port  of Novorissiyrsk 
Assistance  on the implications  of  institutional 

reforms on  public  transport 
New  information technology  - post  offices 
Testing  services for  telecommunications 
equipment 

Establishment  of a telecommunications 
training centre for the Samara  region 
Monitoring  of transport  sector  projects  in Russia 
Monitoring  and evaluation, Russian  Federation 
Technical  assistance to centres for  Medium 

Enterprises, Siberia 
Support  to  public  administration,  Novosibirsk 

and Tomsk 
Technical  assistance for addressing  the social 
impact  of economic  restructuring, western Siberia 
Establishment  of an Energy Centre, 
western  Siberia 
Training for coal  managers  in  Kemerovo 
and  Kuzbass 
Energy supply  and environment  programme 
for the  Lake  Baikal region 
Monitoring  of agriculture and food  sector, 

western  Siberia 
Technical  assistance for  addressing 
the social  impact  of economic  restructuring 
and  privatisation 

Social  impact  of economic  restructuring,  Urals 
Social  impact  of economic  restructuring, 

Urals (addendum) 
Improvement  of farm  input 
Creation  of  Energy Centre,  Ekaterinburg 
Technical assistance to the  production 
of switching  equipment  - joint  stock  companies 
Support  for  restructuring  of companies 
Technical assistance centre for  medium 

to  large enterprises  in Voronezh 
Post-privatisation  support 
to the  Russian  Federation 
Support  to the Vimpel  Corporation 
in the field of civil telecommunications 

800,000 
2,932,500 

1,095,300 
354,500 

398,500 
1,148,000 

948,900 

1,386,200 
994,900 

1,228,600 

493,300 
791,700 
583,900 

6,800,000 

2,417,600 

846,900 

2,097,100 

1,199,300 

985,700 

994,500 

406,100 

953,000 

497,100 
2,497,500 
2,456,500 

1,886,200 
1,839,800 

1,999,700 

2,499,400 

1,496,500 

Atmosphere control  in industrial areas 
Support  for the reorganisation  of 

the Tupolev  Company 
Strengthening  of an SME data  network 
in the  Russian  Federation 
Business  promotion, Vladimir 
Development  and  implementation 

of a migration  policy 
Preparation and  implementation  of  basic 
legislation  in occupational  safety 
Training and education  in the  Urals 
Strengthening  of  management  training 
Procurement  of  printing equipment  for 

the State Committee  of  Higher  Education 

Refurbishing  of  heater sections, Angars 
Promotion  of clean solid fuel  combustion 

in Tula and  Novgorod 
Teacher training, Gazprom 
Automated  power  consumption  billing system 
Support  for  energy  saving  in urban  heating 
Automatic  power transmission  and 
distribution  control 

Establishment  of a north west  regional 
telecommunications  training centre 
Development  of teleports  system  in  Moscow 
and St  Petersburg 
ACE programme  management,  1994 

Productivity  Initiative programme 
Productivity  project,  local management  unit, 

Moscow 
Monitoring  and evaluation 
Support  centres for  enterprises 

in Rostov  and  Krasnodar 
Support  for  Beryev aviation complex 
Social  impact  of privatisation 
Development  and strengthening  of 
public  administration  in south west  Russia 
Enhancement  of teaching  capacity 

Technical assistance to joint  stock  owned farms 
Support  to food  processing  industry 
Support  to fertilizer  production 

Support  to  individually  operated farms 
Support  to agricultural  machinery  production 
Modernisation  of a sulphur  production 
and gas  processing  plant 

Improvement  of  power  supply 
in the  Rostovenergo  area 
Technical  assistance to fish  industry 
complex,  Kaliningrad 
Energy supply  programme,  Kaliningrad 

901,500 

Tajikistan 

1,221,500 

1,954,900 
1,879,800 

484,500 

1,499,900 
303,900 
2,486,500 

300,000 

2,296,400 

999,900 
3,840,300 
1,000,000 
1,482,900 

2,336,300 

700,000 

1,236,500 
3,953,200 

3,337,400 

380,000 
3,298,600 

6,972,700 
1,150,000 
4,298,900 

2,979,700 
3,233,900 

2,497,600 
2,351,000 
2,355,500 

2,500,000 
2,622,500 

1,494,400 

1,806,900 

1,346,300 
988,900 

Establishment  of an agricultural  strategy 
and planning  unit 

Governmental  advice for a strategy 
plan for energy 

1,449,300 

964,900 

Turkmenistan 

National capacity  building  in the field 

of economics  and  business  management  training 
Business  preparation for export  oriented 
credit  line 

1,798,300 

395,000 

Ukraine 

Support  to  bank advisory  services 
Establishment  of  a heat  metering  system 

for  international  consumers 
Training  programme for  electricity  supply  personnel 
Training for the coal  mining  industry  Ukraine 
Training for oil refining  industry  personnel 

Demonstration  projects  on energy  efficiency 
Integrated  regional energy  plan 
for the Odessa  Region 
Conversion  of six enterprises  in Ukraine 
Advice and training for the use of waste anthracite 
District  heating  network,  Dniepropetrovsk 
Feasibility  study  on gas turbine topping,  Uglegors 
Modernisation  of the  Lysychansk  refinery 
Restructuring  of a mine  in the Donbass  coal field 

Coal  based  methane  production 
Assistance for the creation  of  national 
electricity  company  for the  Ukraine 
Establishment  of a transport  training centre 
National  road network  study 
Technical assistance for the  development 
and  regulation of the aviation industry 
Training  maritime field, Odessa 

Access  to  ports of  Ismail and  Reni 
Retraining of former  military officers 
Monitoring and evaluation  programme 
Monitoring  and evaluation  programme 
Ukraine nuclear  electricity generator 
Commercial  development  of the energy  sector 

Boiler and valve production  for the energy  sector 
Study  on the efficiency  of power  generation 
Restructuring  of the oil and gas entities 
Cost  and efficiency  analysis of 
urban district  heating systems 
Post-privatisation  support 

596,300 

348,200 
449,900 
349,800 
404,700 

690,700 

572,200 
2,809,000 
488,300 
599,800 
399,400 
698,600 
398,800 

399,300 

900,000 
341,200 
600,000 

524,200 
359,800 

338,700 
7,275,600 
583,400 
795,900 
876,700 
1,683,400 

943,500 
2,635,400 
2,099,000 

2,399,900 
3,298,300 

57 

Assistance to the  Ukraine  government 
on  private enterprises 
Pilot  project for agricultural  restructuring 
Establishment  of a training  centre 
for  energy  management 
Support  to Zaparozhye  6,  Rovno 4 
and  Khmelnitsky 2, nuclear  power  plants 

Support  to Zaparozhye  6,  Rovno 4 

989,600 
4,797,300 

1,399,300 

2,953,600 

Small and  medium-sized  enterprises, 
regional  programme 
Programme for the treatment  of thyroid  cancer 
Rail transport  feasibility  study 
Traceca:  Rail freight  traffic  management 
Regional traffic  forecasting  model 
Traceca:  Legal regulatory framework 
Traceca:  Implementation 

and  Khmelnitsky  2, nuclear  power  plants 

982,500 

of  pavement  management 

Uzbekistan 

Support  for  industrial  property  protection 

Establishment  of  law centres for entrepreneurs 
Support  for  public  sector  reform 
Pilot  integrated  development  programme, 

Samarkand 
Establishment  of food  and agricultural  policy 
Assistance to the government  of  Uzbekistan 
Restructuring  of commercial  banks 

Advice to the  Ministry  of  Communications 
Regional  bank training  in Central Asia 

Multi-country  programmes 

Support  for  intellectual  property  protection 
On-site assistance for  Kalingrad  nuclear 

power  plant,  phase 2 
Procurement  of equipment  for  nuclear 

power  plants 
WER  1000 core analysis, nuclear  safety 
Upgrade of service and  maintenance  centre, 
nuclear  safety 

Non-destructive  examination  and 
in-service  inspection  of  mechanical 
equipment  in Russian  nuclear  power  plants 
Twinning  programme,  engineering  group 

Twinning  programme, engineering  group 
Trade and transport  cooperation 

and working  group 
Traceca:  immediate training action 
Traceca: forwarding  and freight  operation 
Air traffic  control  and airports 
Policy advice programme 
Establishment  of Tacis technical  data centre 

Recruitment  of a senior  project  manager 
for the  ISTC 

Russia regional venture fund framework  - EBRD 
Regional venture fund for  Urals procurement  agent 
Regional venture fund for western  Siberian 
procurement  agent 

400,000 

394,300 
1,399,800 

1,675,200 
1,549,800 
779,100 
824,200 

492,400 
999,900 

2,000,000 

319,200 

2,173,500 
876,400 

1,435,300 

1,294,700 
435,100 

320,000 

990,300 
861,200 
499,800 
609,200 
400,000 
527,100 

360,000 

722,400 
769,400 

769,400 

Traceca:  Infrastructure  Maintenance  1 
Requirement  for extended economy  and security 

Improvement  system for operational  planning 
Improvement  of electricity  distribution 
in Central Asia 
Technical  study  on the  interface 
of west  European  and east  European 
power  systems 
Regional oil and gas  pipeline  management 

in Asian and Caucasian  republics 
Development Technicum  (agriculture) 

Databases,  dictionaries  and social  security 
for  use in the energy  sector 
Convention  between  DGIA and the 
European Training  Foundation 

Technical  development  of  statistical 
information  in the  NIS 
Customs  training  in Kazakhstan,  Kyrgyzstan 
and  Uzbekistan 
Support  for the establishment  of a Tacis 

technical data centre 
WER-213/1000 confinement  cable  penetration, 

nuclear  safety 
RBMK safety assessment,  Phase 2, 
nuclear  safety 

Development  of safety  panel  prototype 
WER  1000,  nuclear  safety 
Reactors  quality  assurance  programme 
Technical  assistance to  Rosenergoatom 
Support  for  licensing  related  assessments 

of  primary  circuit  integrity 
Licensing  related assessments  of 
safety design and operational  safety 
Licensing  related assessments  of safety 

associated  modules 
Licensing  related assessments  of accident  analysis 
Nuclear fuel cycle and waste  sorting 

Management  of  radioactive waste,  Moscow 
Container  for WER  reactor's  spent fuel 
Local computer  network for  Beloyarsk  nuclear 
power  plant 

3,800,000 
399,900 
496,600 
850,000 
698,100 
1,497,600 

999,100 

1,200,000 
1,639,800 

1,083,000 

1,121,000 

402,700 

485,500 
300,000 

545,600 

602,400 

1,500,000 

400,000 

892,700 

2,000,000 

2,980,600 

1,989,800 
500,000 
994,600 

487,700 

781,700 

487,300 
390,800 
616,600 

678,300 
449,600 

547,300 

58 

Establishment  of nuclear  engineering  procedures 
Development  plan for creating  a regional 
training centre for  nuclear  safety 
Development  plan for  creating a national 
training  plan for  nuclear  safety 
Scheme for safety  management  for  nuclear  safety 
WER  primary  system  training  specialists 

877,800 

1,099,300 

1,199,500 
680,100 
849,700 

Investigation  of the  impact  of spent  nuclear fuel 

377,900 

Support  to accident  analysis,  Ukraine 
Safety Authority 
Urgent  measures to  remodel the  uranium 
mining  in the  NIS 

Assistance for the transport  of  irradiated 
nuclear  fuel 
Food quality technical  support 
Establishment  of a Tacis Technical 
Office  in Kiev 

Addendum  to Technical  Office  in Kiev 
Training  in Tacis  project  cycle management 

Russian  Regional Venture  Fund, Urals 
Russian  Regional Venture  Fund, Urals 

Russian  Regional Venture  Fund, Siberia 
Russian  Regional Venture  Fund, Urals 
Russian  Regional Venture  Fund, Smolensk 
Tacis  information  and  communications 

programme 
On-Site assistance,  Balokovo 
On Site assistance,  Leningrad 
On-Site assistance,  Kola 
RMBK training centre, Smolensk 
Photogrammetrical  equipment, 
soft  adaptation  nuclear  power  plant 

On-Site assistance,  Kalinin  1993-94 

General on-site assistance,  bn.600 
Dynamic  calculations  of  nuclear 

power  plant  structures 
Integrity  assessment  WER  1000 reactors 
WER tightness  assessment,  improvement 
of seal configuration  and equipment  supply 
Preparation  of an industrial  fatigue 
diagnostic  system, nuclear safety 

Licensing  related assessments  of  reactor 
vessel embrittlement 

Assistance  and  management  to  severe 
nuclear  accidents 

Licensing  related assessments  of  safety 
associated  modules 
On-site  activities,  Ukraine south, phase 2 

1,299,700 

1,415,000 

982,000 
1,117,900 

428,800 

409,100 
349,800 

1,000,000 
1,000,000 

1,000,000 
1,000,000 
1,000,000 

1,500,000 
994,900 
1,319,100 
1,808,100 
498,900 

762,300 

2,611,500 

701,500 

791,900 
489,000 

1,199,100 

498,800 

487,100 

973,300 

488,700 
2,748,200 

On-site  assistance, Zaparozhye,  phase 2 
Procurement  of office  equipment, 
nuclear  safety 
Twinning  Programme  engineering  group 
Policy and  legal advice  programme 
Policy and  legal advice  programme 
Policy and  legal advice  programme 

SME regional  programme  1994, twinning 
Development  of SME,  1994  NIS Partenariat 
Study  on the interconnection  of the Caucasus 

Support  to the Agricultural  Free Trade Area 
Courses  on Joint Vienna  Institute 
NGO cofinancing  programme;  support  to 
the disabled  in the  Russian  Federation 
NGO cofinancing  programme;  support 
for the visually  impaired  in the  Russian  Federation 
Monitoring  and evaluation; for  west 
and south west  Russia 

Europartenariat,  Lisbon 
Technical assistance to  Georgian  agriculture 
Moscow  and St  Petersburg,  EBRD 

Russia Technopark  management 
Development  of Turkmenistan  export  line 
Upgrading  of air navigation  system, Azerbaijan 
Credit  advisers,  Petrovsky 

Russia business advisory  services,  EBRD 
Technical  assistance to Tacis  Coordinating 
Units  in Belarus,  Ukraine and  Moldova 
Technical assistance to Tacis  Coordinating 
Units  in Kazakhstan,  Kyrgyzstan, Turkmenistan 
and  Uzbekistan 
Technical  assistance to Tacis  Coordinating 

Units  in Armenia,  Azerbaijan  and Georgia 
Service contract  for travel  services 
for Coordinating  Units 

Western  expertise to the  Coordinating 
Unit  in Russia 
Tacis  information  and communication  strategy 
Food aid in favour  of Armenia, Azerbaijan, 
Georgia,  Kyrgyzstan and Tajikistan 
Monitoring  of food operation, Caucasus 
Assistance  to  managers  of the  NIS  component 
of the  Phare and Tacis  Democracy  programme 

Russian  Elections: Support  to  EU Election  Unit 
Legal system  reform, Ukraine 

Democracy  programmes,  parliamentary 
training  project for the Ukraine 

1,299,100 

1,100,000 
502,300 
1,000,000 
6,800,000 
1,000,000 

500,000 
1,300,000 
498,500 

1,854,300 
457,500 

300,000 

300,000 

2,499,600 

300,000 
300,000 
480,000 

838,400 
990,400 
300,000 
711,600 

575,000 

1,773,800 

1,768,100 

1,350,300 

300,000 

1,144,500 
2,200,000 

553,000 
2,065,800 

761,900 

349,700 
420,000 

949,300 

59 

ISSN 0254-1475  •  Com (96) 345 final •  DOCUMENTS •  EN •  Catalogue number: CB-CO-96-344-EN-C 
ISBN 92-78-06621-4 • Office for Official Publications of the European Communities  L-2985 Luxembourg 

European Commission  • Directorate General for External Relations: 
Europe and the New Independent States, Common Foreign and Security Policy, External Missions (DG IA) 
Information Unit - Tacis 
Office Address  Montoyerstraat 34 3/88  Rue Montoyer  B-1000 Brussels 
Mailing Address  MO 34 3/88  Wetstraat 200 Rue de la Loi  B-1049 Brussels 
World Wide Web Address  http://europa.eu.int/en/comm/dg1a/tacis/home.html 

(+32-2) 295 25 85 /  296 60 65 /  296 64 94 

Tel 
Fax  (+32-2) 296 80 24 /  231 04 41 
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English 
T/EN/08.96/02/02/11/B