Source: EURLEX
Language: en
Format: md

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 the partner countries' initiatives to develop
societies based on political freedoms and economic
prosperity.

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.

Tacis works closely with the partner countries 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 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 reforming legal and regulatory 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.

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

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

Contents

Commissioner's statement 2

Tacis in 1995 - consolidating reform 3
Tacis and European Union policy 4

Tacis financial overview 5

Operational management of the Tacis Programme 8
Tacis and the European Community institutions 11
Bilateral and international cooperation 12

Armenia 13

Azerbaijan 15

Belarus 17

Georgia 19
Kazakhstan 21

Kyrgyzstan 23

Moldova 25

Mongolia 27
Russian Federation 28

Tajikistan 37
Turkmenistan 38

Ukraine 39

Uzbekistan 42

Multi-country programmes 44

Future outlook 48

Special feature
Tacis in the NIS energy sector 33

Annexes

Tacis funds allocated by sector 49
Tacis financial performance 52
List of major contracts signed in 1995 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 thorough systems for 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.

**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 lie ahead in the actual
implementation of these broad-ranging Agreements,
which encompass so many areas of political, economic,
social and cultural cooperation.

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

**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.

**Consolidation**

The Tacis Programme continues to provide grant finance
for know-how in clearly defined priority sectors, in
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 the preservation of the environment. 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.

**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 longerterm planning and, for individual projects, quicker
inception and greater concentration.

Meanwhile the commitment towards 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.

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 in the New
Independent States.

1995 saw the significant strengthening of the political
framework for relations between the European
Community and its Member States with 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 is needed by the economies of the New
Independent States.

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 important part of this process is the
reinforcement of multi-annual planning which allows a
long-term strategic approach to run in parallel with the fast
implementation of projects.

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 interstate, inter-regional and cross-border cooperation,
including small infrastructure projects in cross-border
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.

The Tacis Programme has now been providing grant
finance for the provision of know-how to its partner
countries in the NIS for five years. In that time,
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.

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 development of political freedoms including the
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 international relations, globally and
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 support partner countries' efforts to
consolidate democracy and to complete the transition to
the market economy.

**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 initialled them with Armenia,
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

parties to benefit from the trade and commercial
provisions of the PCAs at the earliest possible moment.

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**

In 1995 the Commission considered that the time had

come to bring together the experience, the instruments,
and the possibilities offered by the contractual
arrangements of the Partnership and Cooperation
Agreements, into a set of comprehensive strategy
documents covering the full range of relations with each
partner and region.

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 for many of its
components.

### 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**

```
                             511.19 [3 ]

               472.09

        418.91
 396.50

          «IP

```

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.

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 1992

```

```
1993

```

1994 1995

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

Azerbaijan

Baltic States

Belarus

Georgia

Kyrgyzstan

Moldova

Mongolia

Russian

Federation

Tajikistan

```
1991

1992

1993

1994

1995

1995

1991

1992

1993

1994

1995

```

i

1994 budget also covered activities in 1995

Turkmenistan `1991`

```
           1992

           1993

           1994

           1995

```

Ukraine

```
           1991

           1992

           1993

           1994

           1995

```

Multicountry

programmes

**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
approach within the Commission in the area of external
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 reorganisation reflects the role of 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 structure integrates the
management of the Tacis Programme with all other areas
of EC-NIS relations, including political, economic and
trade areas. This is designed to enhance policy
consistency and overall efficiency.

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.

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.

A new unit C6 defines the policy for monitoring and
evaluation, and determines Tacis sectoral strategies. It
also manages the majority of Tacis framework
programmes, including those for 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.

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 for the
coordination both of multi-country programmes and of
relations with Member States and other donor

organisations, and for the management of those
framework programmes which work closely with other
international donors.

**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.

In 1995, Tacis carried out an internal review of its
programming procedures. The review showed that the
multi-annual planning process had 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.

However, the review also concluded that there was a
need to enhance the strategic orientation of the
Programme by further promoting the multi-annual
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
the partner countries to committing to political and
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.

In order to implement this new programming
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 teams, composed of
independent experts from both the partner countries and
the European Community, completed their reports in mid
1995.

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 the 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.

**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, country 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.

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 new approach to monitoring and evaluation
complements the reorganisation of 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
and activities of the Tacis Programme, and giving
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**

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. It responds to some 25,000
telephone and fax enquiries each year, and receives over
4,000 visitors. The Information Unit - Tacis is also
preparing to make information available through an on-line
service.

In Russia, the implementation of a specific in-country
communications programme is underway. 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.

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
out by the Commission's Directorate General for
Information, in collaboration with the Delegations in
Russia, Ukraine, Kazakhstan and Georgia. Principal
activities include a fortnightly TV programme broadcast
across the NIS from Russia, and a monthly TV
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 Russian with a 16-page insert in EU
languages - continued in 1995 with a print run of 100,000.

### Tacis and the European Community institutions

**Court of Auditors**

In 1995, the Court of Auditors published its annual report
on Tacis activities in 1994. This report's conclusions on
Tacis' fourth year of operation 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.

Tacis frequently works with other international donors on
an individual project basis. In addition, progress was
made in developing a framework for increased
coordination of donor activities which facilitate contact

with other donors across all Tacis sectors at country, local
and central level.

While the current Tacis Regulation limits Tacis activities to
the provision of technical assistance, 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 19961999. 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

Russian-Finnish border

- identification of the environment (institutional
strengthening, legislation, training) as a priority area
. reduced ceiling for Direct Agreements from ECU
300,000 to ECU 200,000

- an annex setting out the basic principles for the
awarding of contracts, and in particular 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 crossborder cooperation
a 10 per cent ceiling on projects to promote
cooperation in higher education, to include the
Tempus programme
a fixed allocation of ECU 50 million for projects

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

The Commission plays an important role in the
coordination of international assistance in 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 Member 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
determine how to coordinate most effectively, to
exchange information on existing activities and ideas for
future programmes.

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

**Coordination with the United States**

Informal working relations between the EU and the US,
agreed in 1993 and implemented in 1994, were
strengthened in 1995. The EU-US coordination meeting in
Brussels in November 1995 sought to develop the current

**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 EBRD. These improve the
coordination of joint actions concerning country strategies
and priorities between the Commission and the EBRD
both centrally and at local field office level.

**Cooperation** **with the World Bank**

Cooperation with the World Bank continued in 1995 with
Tacis participating in a series of consultative group
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 recognises the
independence, sovereignty and territorial integrity of
Armenia and emphasises the need for cooperation
between the states of the Transcaucasus in order to

further the development of the region. An Interim
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 political and economic situation in Armenia improved
in 1995. In the legislative elections in June, the liberal
democratic reform-minded government remained 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.

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 through Georgia is frequently
disrupted. Armenia also suffers from an antiquated
national energy distribution network.

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.

Tacis projects in 1995 were directed at the long-term
goals of modernising the energy 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.

The Energy Centre established in Yerevan, as part of a
network of Tacis Energy Centres in the NIS, continued its
work in 1995. It provides 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 Ministry of Energy. Another project for the
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

**13**

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.

The 1995 Tacis initiatives in human resources

development are geared at complementing the
Government's plans for the reorganisation of the
education sector. Following the generation of much useful

14

data by a previous Tacis policy advice project on
education, a 1995 project with the Armenia State
Pedagogical Institute has been reoriented towards
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
administrators for government service. Tacis' 1995
activities were aimed at implementing the school
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**

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

0.3

0.7 3.54

0 1.5

0 1.66

1.3 0

0 0

0 2.85

0 0

0 0

0 0

2.3 9.55

2.3

0

4.1

0

0

0

8

0.8

17

1.5

0

2

0

0

0

0

0.5

6

0.3

8.54

4.8

1.66

7.4

0

2.85

0

8

1.3

34.85

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

#### Azerbaijan

Azerbaijan and the European Community and its Member
States formalised their relations with the initialling of a
Partnership and Cooperation Agreement in December
1995. The Agreement establishes a framework for
cooperation between the European Community, 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.

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 illustrated the commitment to

democratic reform, although they were criticised by
observers.

In 1995 Azerbaijan's Government attempted to address
the country's continuing economic decline. Measures to
decrease the budget deficit were agreed and the
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
through the Tacis Traceca programme aimed at
increasing regional cooperation by developing transport
networks.

**Developing energy potential**

Access to Azerbaijan's oil resources remains an important
factor in the continuation of the region's development.
Tacis is supporting the pipeline network in 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.

At the end of 1995 the Government 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 for energy, and studies aimed at 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.

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**

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**

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 foreign 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.

Support for small and medium-sized enterprises was
another priority in 1995. An ECU 500,000 extension
project was launched with the Small and Medium
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

**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 for 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.

**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

Agriculture

Energy

Transport

Policy advice

Telecommunications

Humanitarian aid

Other sectors

Total

0 2.6

1.3

0

2.5

0

0

0

0

0.4

6

6.3

6.1

2.9

6.1

0

4.4

0

8

1.1

34.9

0.4

0

0

0

0

0

0

0.4

2.5

0

0

4.4

0

0

0

12.5

1.9

0

3.6

0

0

0

0

0 0 7

### Belarus

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 between 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, the establishment and operation of
companies, cross-border supply of services, payments
and capital, competition, intellectual, industrial and
commercial property protection, legislative, economic,
cultural and financial cooperation.

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 postponement of the second
instalment of the EC balance of payments loan.

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
and national enterprises is progressing slowly, as a
favourable environment for small and medium-sized

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

. enterprise restructuring and development

- food production, processing and distribution

- energy

. transport.

The 1995 Action Programme was designed in February
under the assumption that Belarus would progress rapidly
with reform. In July 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 launched, Belarussian commitment to and
achievement in reforming the relevant sectors would be
closely reexamined.

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.

Agriculture 1.6 2.51 2 0

Energy 4.1 1.9 0 0

Transport 2.24 1 2 1.3

Policy advice 0 0.7 0 0

Telecommunications 0 0 0 0

Humanitarian aid 0 0 0 0

Other sectors 0 0 1 0.7

**Total** **8.92 14.63** **9** **7**

**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

Public administration
reform, social services O.i
and education

1

5 21.82

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
in December 1995 and started Interim Agreement
negotiations in order to bring into force the trade-related
measures of the PCA as soon as possible. The
Agreement provides a framework for the further
development of political and economic relations between
the European Community, its Member States and
Georgia, and stresses the importance of regional
cooperation between the three republics of the
Transcaucasus. The closer relations formalised in the

Agreement were furthered by the European Commission
Delegation in Tbilisi, which was opened in 1994.

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

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
Traceca programme (which is aimed at developing
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.

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 to meet the energy demands of private
consumers and future private enterprise, and to attract
foreign investment. The recommendations 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.

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 in training and advising the Preparation and
Implementation Team preparing the Sakenergo utility
company to meet the World Bank's and other donors'
conditions for investment.

**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.

Under the 1995 Programme ECU 700,000 was
committed to assist 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

20

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 the Georgian scientific community to
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

3.5

**0** **3.6** **1.9**

**1.3** 5.53

Public administration
reform, social services 1.18 1.25
and education

Agriculture 2.65 1.5

Energy 0.4 0

Transport 0.73 0

Policy advice 0 2.75

Telecommunications 0 0

Humanitarian aid 0 0

Other sectors 0 0

**Total** **4.96** **9**

5.95

**2.7**

0.73

2.75

**0**

**6**

1.3

**33.96**

1.8

0

0

0

0

0

0.8

0

2.3

0

0

0

0

0.5

6

### Kazakhstan

The signing of the Partnership and Cooperation
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 Interim Agreement covering the 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.

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
transformation to a market economy. Following
discussions with international donors, the Kazakh
government focused on stimulating production and
attracting foreign investment in 1995.

**Support for Kazakhstan**

The prime sectors for Tacis action in 1995 were

- enterprise restructuring and development

- food production, processing and distribution
. human resources development.

Tacis committed ECU 15 million for the national

programme in Kazakhstan under the 1995 budget.
Kazakhstan also benefited from Tacis multi-country funds.

**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 of Tacis' actions for 1995
complemented actions taken under the 1994 Programme.

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.

Tacis also supported the Kazakh government's
commitment to move forward with a privatisation
programme. Continued assistance has been given to the
State Committee for State Property and the State
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 reference to 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.

**Reshaping the agricultural sector**

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.

22

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**

**1991** **1992** **1993** **1994** **1995** **Total**

Nuclear
safety and
environment

Restructuring state
enterprises and private

sector development

0 0 0 0 0 0

0 6.54 6.3

6.3

5.9 25.04

2.9 14.12

Public administration
reform, social services 4.87
and education

1.4 3.15

Agriculture 2.16 3.06 3.15 3.15

14.52

3.9

0

8.03

0

0

5.72

Energy

Transport

Policy advice

Telecommunications

Humanitarian aid

Other sectors

0.7

0

0

0

0

0

3.2

0

6.4

0

0

0

0

0

0

0

0

1.4

**14**

3

0

0

0

0

0

3.2

**15** **71.33**

0

0

1.63

0

0

1.12

**14**

**Total** **7.73** **20.6**

### 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.

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 the rate of privatisation 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
involved with information about agricultural markets,
pricing and distribution alternatives.

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

agricultural products and the upgrading of food
standards.

Tacis launched a two year Agricultural and Food
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 is to improve the speed and efficiency of
production, marketing and distribution of food products.

**23**

The private farm development programme includes onfarm 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.

**Modernising the energy sector**

Kyrgyzstan has signed the European Energy Charter and
the Energy Charter Treaty. This is an important step in
facilitating much needed foreign investment for 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

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.

**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

Agriculture

Energy

Transport

Policy advice

Telecommunications

Humanitarian aid

Other sectors

**Total**

0.7 **9.23**

**0** **0** **0** **0** 0

0 0.82

0 0

0 2.71

3.7 10.41

**8** **27.93**

0

0 0.82

1.6

4.2

0

2.6

**4**

**2.4**

**0**

**0**

**0**

**0**

**1**

**10**

1.7

0

0

0

0

1

4.8

0

5.7

0

0

2

0.7

0

0

0

0

0

0

0

5.7

0

0

0

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

## Moldova

Relations between Moldova and 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, the 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.

In December 1995, the Government successfully
concluded a mass privatisation campaign which
auctioned off 1,132 large enterprises. The lack of foreign
investment remains a problem which the Moldovan
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**

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 to improve 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.

Two other projects were developed in 1995: 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**

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 the development and
implementation of conservation policy.

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**

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 labour market and strengthening 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

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 the Moldovan health authorities to address
primary health care systems and the reform of health
management.

**Funds allocated by sector each year**

**1991** **1992** **1993** **1994** **1995** **Total**

Nuclear
safety and
environment

Restructuring state
enterprises and private

sector development

1.5

6.03

2.5 10.44

**0** 1.73

0 1.45

1.9

4.7

0.6

0.6

0

0

0

0 0.75

0 10

Public administration
reform, social services 0.13 2
and education

Agriculture 0.97 2.27

Energy

Transport

Policy advice

Telecommunications

Humanitarian aid

Other sectors

**Total**

0

0

0

0

0

0

**1.1**

1.5

0

0

0

0

1.5

9

4.1

0.6

1

0

0

2.25

**29.1**

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

## Mongolia

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

A priority for the Mongolian government is strengthening
the national economy through increased 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 concerning the management of
unemployment.

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
continued throughout 1995, particularly in the agroprocessing sector. The objective for enterprise
restructuring and development projects remains the

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

27

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

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**

1991 1992 1993 1994 1995 Total

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

0 0.64 0

0 8 0

0 0 0 0 0 0

0 0 0 2.56

0 3.8

0 2.56

3.8

0

1

0

0

0

0

0.64

### Russian Federation

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

Russia progressed further towards the establishment of a
market economy in 1995. The real gross domestic
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 to 131 per cent 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.

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 improved, with the
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.

**28**

**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.

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
privatisation to individual sales designed to boost
production efficiency.

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
seeking to establish long-term institutions supporting
enterprise development, particularly in the Russian
regions.

Tacis' main priorities for 1995 complemented those of

1994, and covered training in corporate finance,
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 postprivatisation 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
official element of the Government's privatisation

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
for dissemination. Improvement of input supplies for
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 institutes, by supporting their
conversion plans. It supports new enterprise management
and promotes the development of industrial partnerships
and joint-ventures with European partners.

In St Petersburg, a Tacis enterprise restructuring project
supported the restructuring of the Izhorsky power
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.

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 for the Russian Record Rocket engine
programme. Total funding for the military conversion
sector in Russia was ECU 7.2 million.

**30**

**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.

**Energy, environment and science**
Under-performance in gas, oil, electricity and coal
production continued throughout 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.

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.

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

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**

**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
trade relations between Russia and the European
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.

**Bistro programme**
The Bistro programme is designed for 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**
The Productivity Initiative framework programme has
generated positive responses from senior-level European
and Russian participants. The programme aims to change
Russian management methods in private and stateowned sectors through intensive training seminars and
three-month work placements for Russian executives in
western companies. In many ways the Productivity
Initiative programme represents a reverse process from

**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
and evaluation team. This will allow any potential
difficulties to be identified and resolved earlier in the

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.

**32**

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

Restructuring state
enterprises and private

sector development

Public administration

reform, social services

and education

Agriculture

Energy

Transport

Policy advice

Telecommunications

Humanitarian aid

Other sectors

12.; 0 12.1

27.2 29.76 54.5 43.4 40.6 195.46

46.64 24.57 44 18.85 52.8 1i

50.85 21.49 12.5 16.3 17 118.14

41.5 16 21.1 19.5 18 116.1

32.87 14.25 13.55 13.9 12.6 87.17

0 0 0 18.95 0 18.95

0 4.93 5.1 4.1 5.4 19.53

0 0 0 0 0 0

0 0 10 15 14.79 39.79

**Total** **211.95** **111 160.75** **150 161.19** **794.89**

###### **Tacis**

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

**NIS energy**

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
investment which has aggravated inefficiencies and
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 safety of older reactors and the
establishment and effective operation of independent
regulatory authorities.

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.

**Tacis initiates major energy reforms**

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
and demonstration projects which are designed for
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
development of a larger energy market throughout
Europe, while improving the security of energy supply,
efficiency and safety, and minimising environmental
problems.

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 multicountry 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**

**Each of the Tacis partner countries**
**poses very different problems and**
**challenges** **in 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,**
**which** **are** **comparatively** **rich** **in**
**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.**

**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.

**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.

**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.

**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.

**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**

**1991** **1992** **1993** **1994** **1995** **Total**

Armenia

Azerbaijan

Baltic States

Belarus

Georgia

Kazakhstan

Kyrgyzstan

Moldova

Mongolia

Russia

Tajikistan

Turkmenistan

Ukraine

Uzbekistan

Multi-country

**Total**

0

3.6

0

0

0

0

0

0.6

1

19.5

**1.3**

**0**

3

4.1

0.4

0.7

0.7

0

0

41.5

0

**0**

**0**

**0**

**1.9**

**0**

**3.2**

**0**

**2**

**0**

**16** 21.1

**0** **0**

4.1

0

0

0

0

0

2.4

0

0

2

2.5

0

3

2.3

0

1.7

1.5

0

18 116.1

7.4

6.1

3

**9**

**2.7**

**3.9**

**4.8**

4.1

1

1 0.95 1.95

0 0 1

15 6.9 41.58

0 0 5.68

3 3.5 19.7

**0** **1**

**6.2** 8.08

**0.4** 5.28

**6.7** **1.5**

**65 38.96**

0

5.4

0

5

**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

- supporting the reorganisation of oil sector
administration at national level; including 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 know-how and training on the
modernisation of energy production facilities
supporting improvements in the functioning and
efficiency of the power generation, transmission and
distribution system
introducing modern computer-based automatic
power distribution billing and settlement systems
fostering technology transfer for the modernisation of
existing and new design power stations.

**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**

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.

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

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.

##### 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 jointventure 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
would immediately benefit from Tacis know-how, to
improve the overall efficiency of the sector and increase
Tajikistan's level of self-sufficiency.

Tajikistan consistently produces high quality fruit and
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
sector by encouraging stronger links between the
organisations involved, and by working with individual plants

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 knowhow 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**

**1991** **1992** **1993** **1994** **1995** **Total**

Nuclear
safety and 0 0 0 0 0 0
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**

0

**1.** 1.75 3.43

0.95 1.95

0 0

0 0

0 0

0 0

0 0.32 0.3 0.62

**0** **4** **4** **8**

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

37

### Turkmenistan

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 EU Presidency and 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.

Although rich in natural resources and export potential,
Turkmenistan lacks the know-how fully to exploit 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.

**Tacis supports development**

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

- food production, processing and distribution
. enterprise restructuring and development
. human resources development.

**Extending the agricultural sector**

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
essential for the development of important financial
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.

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 fishery development. Tacis expertise
concentrated on ensuring that the studies were of
international standard, thus increasing chances of gaining
further support from international agencies or joint-venture
investors.

38

**Strengthening enterprise development**

Tacis continued to offer the Turkmen authorities high level
policy advice on enterprise development in 1995,
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.

**Human 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.

**Funds allocated by sector each year**

**1991** **1992** **1993** **1994** **1995** **Total**

Nuclear
safety and 0 0
environment

Restructuring state
enterprises and private 0 0.57
sector development

Public administration
reform, social services 0 1.05
and education

Agriculture 0.88 3.68

Energy 0 1

Transport 0 0

Policy advice 0 2.5

Telecommunications 0 0

Humanitarian aid 0 0

Other sectors 0 0

**Total** **0.88** **8.8**

**3.6**

**0** **0**

**0**

**0**

**0**

**0**

0.32

**4**

3.37

3.85

9.84

**1**

**0**

**2.5**

**0**

**0**

1.12

**21.68**

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

### 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
President has contributed to the rise in Ukraine's

international standing in 1995.

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 is vital for Ukraine's economic
independence.

The operation of the Tacis Programme 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 Agreement 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 biannual 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 CommunityUkraine 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 the 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 in the identification and dismantling of
inefficient monopolies. In addition, inefficient production
techniques have gradually been replaced by _more_
sophisticated production methods.

**39**

An ongoing priority is to ensure that 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 to 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.

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
implement - transformation of industry through
privatisation is not matched by reform of public
administration and training.

International donors have requested 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

**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.

Ukraine faced problems securing international support for
helping with this closure project. However, Tacis helped
find solutions for the development of new technical
processes for dealing with nuclear waste, although the
project is further complicated by the difficulty in
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 feasibility study focused on proposing
techniques for dealing with the remaining damaged units.

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 funding the project. (See also 'Multi-country
programmes' section).

**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.

The volume of agricultural output has continued to
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.

Tacis therefore supported the drafting of a land
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**

The Bistro programme, designed for 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 financial support from the European
Community and its Member States is dependent on
Ukraine retaining International Monetary Fund support.

**Funds allocated by sector each year**

**1991** **1992** **1993** **1994**

Nuclear
safety and 3.54
environment

0 0 20.5

**1995** **Total**

37.5 61.54

Restructuring state
enterprises and private

sector development

1.7 16.8 12.36 4.3 10.7 45.I

Public administration
reform, social services 4.65
and education

7.36

Agriculture

Energy

Transport

Policy advice

Telecommunications

Humanitarian aid

Other sectors

7.67 12.31 10.54

6.2 8.08 5.4

4.89 7.26 3.22

0 0 0

0 0.83 0.55

0 0 0

0 0 3.82

5

15

0

0

0

0

1.7

**50.5**

7 26.01

4 39.52

6.9 41.58

15.37

0 0

0 1.38

0 0

6.4 11.92

**72.5 243.18**

**41**

**Total 28.65 48.28 43.25**

### Uzbekistan

Relations between the European Community and
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 and its Member States.
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.

In 1995 the government accelerated the 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.

**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**

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**

One of the main problems in Uzbekistan is the lack of
well-trained business professionals. The ongoing
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
and the State University of Samarkand in modern
management and language skills. Among other things, the
project includes English 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.

An important project worth ECU 2 million is now starting,
in association with the State Committee for Forecasting
and Statistics, the Ministry of Higher and Special
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 to 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.

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

**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
contributions for environmental projects. The Water
Resources Management and Agricultural Production

project is a joint endeavour with the World Bank, which
encompasses some 18 projects. In 1995, seven subprojects were started in a number of areas, including
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**

**1991** **1992** **1993** **1994** **1995** **Total**

Nuclear
safety and
environment

Restructuring state
enterprises and private

sector development

Public administration
reform, social services

and education

Agriculture

Energy

0 0 0 0 0 0

0 2.26

0 3.51

1.03 3.05

0.4 5.28

**2.2**

**0**

**0**

**0**

**0**

**0**

**1.8**

**10**

2 7.61

4 14.31

Transport 0.29

Policy advice

Telecommunications

Humanitarian aid

Other sectors

**Total**

**1.72 18.78**

0 3.35

0 6.8

0 3.35

0 0

**0**

**0**

**0**

**0**

**1.5**

**15**

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

9.63

5.68

1.97

**3**

**0**

**0**

**3.3**

**45.5**

43

## i-country programmes

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, ISTC (covered
separately in the Russia country section), and for a
number of framework programmes such as the Tacis
Democracy programme.

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 regional cooperation on nuclear safety in
countries operating Soviet-built nuclear reactors, and to
strengthen regulatory frameworks.

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 19941996) was also committed to the EU/G7 Action Plan for
Ukraine's energy sector.

Memoranda of Understanding concerning the
implementation of aspects of the nuclear safety
programme were signed between the European
Commission and Russia in February 1995, and between
the Commission and Ukraine in October 1995. The

Memoranda include nuclear indemnity statements,
freeing Tacis contractors from the potential 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 legal framework was in place.
Following the signing of the agreements, many of the
projects can now go ahead.

**44**

**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,
support for joint-ventures and the identification,
procurement and supply of spare parts.

**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.

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 that the plants may be safely
completed.

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 European Community continue to support the
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.

**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 Independent States to address their
environmental problems collectively.

Tacis is assisting the New Independent States to bridge
the gap between the requirements for environmental
action and the current capacities of national and interstate 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 the Tacis Inland Seas programme
(development of an interstate institutional capacity to
address the unique environmental issues of the
Caspian Sea, and continuation of the activities in the
Aral and Black Seas launched under the 1992 and

1993 programmes).

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 19941995; 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**

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
country. The counterpart funds are only derived
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 in the Caucasus, Kyrgyzstan and
Tajikistan.

**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**

The initial implementation of the programme was slow,
largely due to the political and military conflict in the
region. However, in 1995 the implementation of the
programme progressed significantly. In May 1995, a
Traceca project management team brought 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.

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.

The main instruments of the programme are Joint
European Projects. In these projects, higher education
institutions from two or 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.

**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 reform in 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.

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

. transfer of know-how and techniques of
parliamentary practice and organisation, to multiparty groups of parliamentarians and politicians
. 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
coordinated the work of all European organisations
(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.

**Training for Ukrainian parliamentarians**
The project aims at training deputies of the Ukrainian
Parliament in parliamentary techniques, and 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.

**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

Agriculture

Energy

Transport

Policy advice

Telecommunications

Humanitarian aid

Other sectors

**Total**

0 0.83

**105.99 108.63**

36.27

7.6

44.85

5.79

6.7

4.78

0

0

0

3.8

1.5

9

8.5

1

0

100 67.5 70.5 354.27

20

2

3

7

10.5

**3.5**

**8.5**

**0**

**2.5**

**0**

**26**

0 31.6

23 108.85

15

21

0

5

14

8 20.5

1 0

0 0

8 16.5

22.09

19.7

43.28

37

4.5

0

51.33

**672.62**

**47**

**172 141.5 144.5**

### 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
significant future developments in the Programme,
demonstrating the Commission's approach to the
challenge. Three new directions are of particular
importance:

. 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**

**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 crossborder 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
cooperation programme, and the EC's INTERREG
programme to develop its external border areas in Finland.

**Programme 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
programme - focussing on individual projects and
framework programmes - which is already under way.

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.

### 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

MCP Russia 32.61

MCP Ukraine 3.66

MCP Regional 0

**Total** **53**

0 0 0.3

0 0 0

0 0 12.89

0 20.5 37.5 61.54

0 0 2.5 2.5

38 48.5 41 38 198.11

22 30.5 24.5 18 98.66

20 21 2 12 55

**80** **100** **88** **108** **429**

Note: MCP _-_ multi-country programmes

**Public administration reform, social services**
**and education**

Funds committed by country each year

**Restructuring state enterprises and private**
**sector development**

Funds committed by country each year

**1991** **1992** **1993** **1994** **1995**

**1994**

**0**

1.9

0

5

3.6

6.3

0

1.45

2.56

43.4

**0**

1.8

4.3

3.35

**5**

**78.66**

**1995** **Total**

2 8.54

1.8 6.3

0 0

5 21.82

1.9 9

5.9 25.04

0 0.82

1.5 4.68

0 2.56

40.6 195.46

0 0

1 3.37

10.7 45.86

**2** 7.61

**0** 31.6

**72.4 362.66**

49

**1991** **1992** **1993**

Armenia 0.7 3.54 2.3

Azerbaijan 0 2.6 0

Baltic States 0 0 0

Belarus 0.3 7.52 4

Georgia 0 3.5 0

Kazakhstan 0 6.54 6.3

Kyrgyzstan 0 0.82 0

Moldova 0 1.73 0

Mongolia 0 0 0

Russia 27.2 29.76 54.5

Tajikistan 0 0 0

Turkmenistan 0 0.57 0

Ukraine 1.7 16.8 12.36

Uzbekistan 0 2.26 0

Multi-country programmes 7.6 4 15

**Total** **37.5 79.64 94.46**

1.5

1.3

**0**

**0**

1.3

2.9

1.6

**2**

**0**

Armenia

Azerbaijan

Baltic States

0 1.5

0 3

0 0

**Total**

4.8

6.1

0

1.68

5.53

14.12

4.2

6.03

3.8

Belarus 0.68 1

Georgia 1.18 1.25

Kazakhstan 4.87

Kyrgyzstan 0

Moldova 0.13

Mongolia 0

1.4 3.15

2.6

0

0

0

1.8

0

0

1.8

1.8

0

1.9

3.8

Russia 46.64 24.57

Tajikistan 0 0

Turkmenistan 0 1.05

Ukraine 4.65 3

Uzbekistan 0 3.51

Multi-country programmes 44.85 0

44 18.85 52.8 1f

0

0

7.36

0

21

1

1.8

4

6.8

20

**Total** **103 42.28 79.91 63.55** **99.4**

2

3.85

26.01

14.31

108.85

**388.14**

Agriculture

Funds committed by country each year

**1991** **1992** **1993** **1994** **1995** **Total**

Armenia 0 1.66 0 0 0 1.66

Azerbaijan 0.4 2.5 0 0 0 2.9

Baltic States 5.95 0 0 0 0 5.95

Belarus 1.6 2.51 2 0 2 8.11

Georgia 2.65 1.5 0 1.8 0 5.95

Kazakhstan 2.16 3.06 3.15 3.15 3 14.52

Kyrgyzstan 0 2.71 4 0 3.7 10.41

Moldova 0.97 2.27 0 4.7 2.5 10.44

Mongolia 0 0 0 0 0 0

Russia 50.85 21.49 12.5 16.3 17 118.14

Tajikistan 0 0 0 1.68 1.75 3.43

Turkmenistan 0.88 3.68 0 3.6 1.68 9.84

Ukraine 7.67 12.31 10.54 5 4 39.52

Uzbekistan 1.03 3.05 0 3.35 2.2 9.63

Multi-country programmes 5.79 3.8 0 2 10.5 22.09

**Total 79.95 60.54 32.19 41.58 48.33 262.59**

Energy

Funds committed by country each year

Transport

Funds committed by country each year

**1991** **1992** **1993** **1994** **1995** **Total**

Russia 32.87 14.25 13.55 13.9 12.6 87.17

Tajikistan 0 0 0 0 0 0

Turkmenistan 0 0 0 0 0 0

Ukraine 4.89 7.26 3.22 0 0 15.37

Uzbekistan 0.29 1.68 0 0 0 1.97

Multi-country programmes 4.78 9 14 7 8.5 43.28

**Total** **49.8 33.19 32.77** **22.8** **21.1 159.66**

Policy advice

Funds committed by country each year

Armenia

**0** **0** **0** **0** **0** **0**

0 0

0 4

0 6.54

0 0.73

0 0

0 0

0 0.6

0 0

Azerbaijan 0

Baltic States 4

Belarus 2.24

Georgia 0.73

Kazakhstan 0

Kyrgyzstan 0

Moldova 0

Mongolia 0

**0**

**0**

**1.3**

**0**

**0**

**0**

**0.6**

**0**

**1991** **1992** **1993** **1994** **1995** **Total** **1991** **1992** **1993** **1994** **1995**

**Total**

2.85

**4.4**

**0**

**0.7**

2.75

8.03

**5.7**

1

0

18.95

0

2.5

0

3

37

**86.88**

0 2.85

0 4.4

0 0

0 0.7

0 2.75

6.4

5.7

1

0

0

0

2.5

0

3

8.5

**37.8**

Armenia 1.3

Azerbaijan 0

Baltic States 3

Belarus 4.1

Georgia 0.4

Kazakhstan 0.7

Kyrgyzstan 0.7

Moldova 0

Mongolia 0

Russia 41.5

**16** 21.1 19.5

18 116.1

0

0

0

1.9

0

3.2

0

2

0

0 1.63

0 0

0 0

0 0

0 18.95

0 0

0 0

0 0

0 0

8 20.5

**8 41.08**

**4.1**

**0**

**0**

**0**

**0**

**0**

**2.4**

**0**

**0**

**0**

**3.6**

**0**

**0**

**0**

**0**

**0**

**0.6**

**1**

2

2.5

0

3

2.3

0

1.7

1.5

0

7.4

6.1

3

9

2.7

**3.9**

**4.8**

4.1

1

Armenia

Azerbaijan

Baltic States

Belarus

Georgia

Kazakhstan

Kyrgyzstan

Moldova

Mongolia

Russia

Tajikistan

Turkmenistan

Ukraine

Uzbekistan

Multi-country programmes

**Total**

Tajikistan 0 0

Turkmenistan 0 1

Ukraine 6.2 8.08

Uzbekistan 0.4 5.28

Multi-country programmes 6.7 1.5

**Total** **65 38.96**

**38** **43.7 42.35 228.01**

0

0

5.4

0

5

**0**

15

**0**

**3**

1 0.95 1.95

0

6.9 41.58

0 5.68

3.5 19.7

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

50

**Telecommunications**

Funds committed by country each year

**Other sectors**

Funds committed by country each year

**1991** **1992 1993 1994 1995** **Total** **1991** **1992 1993 1994 1995** **Total**

10 15 14.79 39.79

0 0.32 0.3 0.62

0 0.8 0.32 1.12

0 3.82 1.7 6.4 11.92

0 0 1.5 1.8 3.3

Armenia

Azerbaijan

Baltic States

Belarus

Georgia

Kazakhstan

Kyrgyzstan

Moldova

Mongolia

Russia

Tajikistan

Turkmenistan

Ukraine

Uzbekistan

Multi-country programmes

**Total**

0.5 1.3

0.4 1.1

0 2.05

2 3.7

0.5 1.3

3.2 5.72

1 2

1.5 2.25

0 0.64

0

0.7

0

0.7

0.8

0

0

0

0

0

0

0

0 4.93

0 0

0 0

0

0

0

0

0

0

0

5.1

0

0

0

0

0

0

0

0

4.1

0

0

0

0

0

**4.1**

0 0

0 0

0 0

0.8

0

0

1

0

0

5.4 19.53

0 0

0 0

0 1.38

**7.9** **25.41**

1.4 1.12

1 0

0 0.75

0 0.64

0 0.83 0.55

0 0 0

0 1 1

0 6.76 6.65

0

2.5

0

4.5

Armenia

Azerbaijan

Baltic States

Belarus

Georgia

Kazakhstan

Kyrgyzstan

Moldova

Mongolia

Russia

Tajikistan

Turkmenistan

Ukraine

Uzbekistan

Multi-country programmes

Humanitarian aid

Other*

**Total**

0

0

2.05

0

0

0

0

0

0

0

0

0

0

0

0 0.83 8 "16.5 "26 51.33

0 0 22 0 0 22

6.2 38.91 32.09 45.68 53 175.88

**8.25 39.74** **80.11 86.21** **111.71 326.02**

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

- 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' financial performance continued to
improve, consolidating the substantial progress which the
Programme made in 1994.

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.

**Commitment of the Tacis budget**
Tacis continued to improve its 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.

**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.

Tacis management set a number of targets for its
contracting performance in 1995. It 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
to delays in the nuclear safety and multi-country

programmes.

52

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

```
                                               i*.v.

```

```
 1991 1992 1993 1994

```

commitments contracts payments

```
1995

```

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

# **I CO**

1991 1991-1992 1991-1993 1991-1994 1991-1995

commitments contracts payments

**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.

**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.

**Commitment**  - Each year a Tacis budget is agreed,
indicating the funds which the Commission is prepared
to commit to 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.

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

**511.2**

**472.1** **469.7**

64.7

1991 budget 1992 budget 1993 budget 1994 budget 1995 budget

99.6% **99%** 87.5% 66.3% 12.7%

% contracted as of 31.12.95

contracted in 1991 contracted in 1992

- contracted in 1993 - contracted in 1994

- contracted in 1995 - not yet contracted

**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.

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.

**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.

54

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

**511.2**

**472.1** **469.7**

**396.5**

**1991 budget 1992 budget** **1993 budget** **1994 budget** **1995 budget**

82.9% 62.8% 38.8% **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

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

```
              1991 1992 1993 1994 1995

```

Cumulative contracts

as percentage of

cumulative commitments

Cumulative payments
as percentage of

cumulative contracts

1.3% 25.6% 43.3% 61% 70.5%

**7.5%** 15.6% 38.2% 47.9% 55.5%

## List of major contracts signed in 1995

**Contracts under ECU 300,000 are not listed.**

Individual projects may comprise several contracts.

Likewise, one contract may cover more than one project.

Values are given to the nearest ECU 100.

**Value in ECU**

**Armenia**

**Kazakhstan**

Support for public investment

programme management 487,400

Advice to the Ministry of Communication 526,800

Support to the privatisation of enterprises 979,000

Strengthening of training capacity

at Kazakhzstan State University 2,330,600

Monitoring of the food and agriculture sector 544,900

1994 Programme for SME development 1,019,800

Support for commercial banking 589,700

Technical assistance for economic reforms

in the food and agricultural sector 1,348,600

Support for the reorganisation of the food

production sector, Aktiubinsk Oblast 1,799,900

Strengthening of public administration 1,458,500

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 600,000

Traceca: Rolling stock maintenance, rail 695,300

General on-site assistance, nuclear safety 900,600

**Kyrgyzstan**

Legal support for the Kyrgyzstan energy sector 619,200

**Moldova**

Support for the employment services 370,700

Pilot project for the privatisation

of the Orhei region 2,394,700

Assistance to Private Farmers Association 1,395,300

Support for the promotion and development

of investment opportunities 590,000

Strengthening of government

and civil administration 1,899,800

Extension of energy saving programme

for Moldovan industry 599,500

NGO co-financing project, for the elderly

and children 300,000

**Mongolia**

Programme for SME development 2,252,100

Reinforcement of employment services 1,199,900

Support for an education information system 594,100

Reform of economics education in Mongolia 1,997,500

Improvement of energy supply to Choibalsan

and Darkhan 995,200

Support for the Coordinating Unit 535,900

55

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**

Technical assistance to Belarussian Railways

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

472,100

1,599,600

500,000

525,600

1,463,400

1,979,000

1,252,700

499,300

1,500,000

698,100

384,500

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

**Russia**

Restructuring of Soyouz Enterprise, Moscow 499,400

Development of energy saving actions, Samara 359,500

Development and establishment of employment

offices in Kaliningrad 1,347,100

Regional support to non-governmental

organisations in western and eastern Siberia 710,000

Technical assistance to October Railways 338,700

Support for a telecommunications

training centre, Moscow 300,000

Technical assistance to Novosibirsk

telecommunications training centre 696,000

Follow-up project for business and

telecommunications, Moscow 500,000

Feasibility study on the integration of GLONASS

into the European Global Navigation Satellite

System 1,000,000

Secondary legislation in the field

of telecommunications 1,030,400

Advisory services for the development

of Russian Satellite Systems 300,000

Training on-line maintenance and repair

operation of Medium Volt Grid, Tula 690,000

Energy policy advice to St Petersburg 898,600

Communication management system,

Lenenergo 489,200

Development of St Petersburg harbour 1,174,100

Modernisation of a training centre

for flight personnel 986,800

Strategic review of selected industries 799,200

Restructuring of the aluminium sector in Siberia 1,137,200

Restructuring of the aluminium sector in the Urals 1,199,100

Strategic review of food packaging 580,900

European Banking Advisory Service, Moscow 5,000,000

Russian bank training 1,500,000

Kamov helicopter study 1,271,500

Production support: Tupolev enterprise 700,000

Support for health systems development 4,500,000

City Twinning project in administration

and services 1,601,800

Management planning of education in Russia 1,468,100

Standards and certification in Russia and Ukraine 2,450,100

Development of health and safety standards 699,000

Strategic audit of coal exploitation 1,599,300

Valorisation of oil and gas streams,

Tyumen Oblast 714,100

Development, structuring and organisation

of the Russian oil industry 1,457,100

Modernisation of the gas distribution system

for St Petersburg 1,279,800

**56**

Petroleum engineering and related

management training, Gubkin Institute 800,000

Assistance for development of new oil fields 2,932,500

Management and training of senior managers,

Russian Railways 1,095,300

Multimodal freight terminals, Russia 354,500

Advice to the Ministry of Transport on

planning regulations and standards 398,500

Centres for road transport operators 1,148,000

Implementation of electronic data interchange

system in the port of Novorissiyrsk 948,900

Assistance on the implications of institutional

reforms on public transport 1,386,200

New information technology - post offices 994,900

Testing services for telecommunications

equipment 1,228,600

Establishment of a telecommunications

training centre for the Samara region 493,300

Monitoring of transport sector projects in Russia 791,700

Monitoring and evaluation, Russian Federation 583,900

Technical assistance to centres for Medium

Enterprises, Siberia 6,800,000

Support to public administration, Novosibirsk

and Tomsk 2,417,600

Technical assistance for addressing the social

impact of economic restructuring, western Siberia 846,900

Establishment of an Energy Centre,

western Siberia 2,097,100

Training for coal managers in Kemerovo

and Kuzbass 1,199,300

Energy supply and environment programme

for the Lake Baikal region 985,700

Monitoring of agriculture and food sector,

western Siberia 994,500

Technical assistance for addressing

the social impact of economic restructuring

and privatisation 406,100

Social impact of economic restructuring, Urals 953,000

Social impact of economic restructuring,

Urals (addendum) 497,100

Improvement of farm input 2,497,500

Creation of Energy Centre, Ekaterinburg 2,456,500

Technical assistance to the production

of switching equipment - joint stock companies 1,886,200

Support for restructuring of companies 1,839,800

Technical assistance centre for medium

to large enterprises in Voronezh 1,999,700

Post-privatisation support

to the Russian Federation 2,499,400

Support to the Vimpel Corporation

in the field of civil telecommunications 1,496,500

Atmosphere control in industrial areas 901,500

Support for the reorganisation of

the Tupolev Company 1,221,500

Strengthening of an SME data network

in the Russian Federation 1,954,900

Business promotion, Vladimir 1,879,800

Development and implementation

of a migration policy 484,500

Preparation and implementation of basic

legislation in occupational safety 1,499,900

Training and education in the Urals 303,900

Strengthening of management training 2,486,500

Procurement of printing equipment for

the State Committee of Higher Education 300,000

Refurbishing of heater sections, Angars 2,296,400

Promotion of clean solid fuel combustion

in Tula and Novgorod 999,900

Teacher training, Gazprom 3,840,300

Automated power consumption billing system 1,000,000

Support for energy saving in urban heating 1,482,900

Automatic power transmission and

distribution control 2,336,300

Establishment of a north west regional

telecommunications training centre 700,000

Development of teleports system in Moscow

and St Petersburg 1,236,500

ACE programme management, 1994 3,953,200

Productivity Initiative programme 3,337,400

Productivity project, local management unit,

Moscow 380,000

Monitoring and evaluation 3,298,600

Support centres for enterprises

in Rostov and Krasnodar 6,972,700

Support for Beryev aviation complex 1,150,000

Social impact of privatisation 4,298,900

Development and strengthening of

public administration in south west Russia 2,979,700

Enhancement of teaching capacity 3,233,900

Technical assistance to joint stock owned farms 2,497,600

Support to food processing industry 2,351,000

Support to fertilizer production 2,355,500

Support to individually operated farms 2,500,000

Support to agricultural machinery production 2,622,500

Modernisation of a sulphur production

and gas processing plant 1,494,400

Improvement of power supply

in the Rostovenergo area 1,806,900

Technical assistance to fish industry

complex, Kaliningrad 1,346,300

Energy supply programme, Kaliningrad 988,900

**Tajikistan**

Establishment of an agricultural strategy

and planning unit 1,449,300

Governmental advice for a strategy

plan for energy 964,900

**Turkmenistan**

National capacity building in the field

of economics and business management training 1,798,300

Business preparation for export oriented

credit line 395,000

**Ukraine**

Support to bank advisory services 596,300

Establishment of a heat metering system

for international consumers 348,200

Training programme for electricity supply personnel 449,900

Training for the coal mining industry Ukraine 349,800

Training for oil refining industry personnel 404,700

Demonstration projects on energy efficiency 690,700

Integrated regional energy plan

for the Odessa Region 572,200

Conversion of six enterprises in Ukraine 2,809,000

Advice and training for the use of waste anthracite 488,300

District heating network, Dniepropetrovsk 599,800

Feasibility study on gas turbine topping, Uglegors 399,400

Modernisation of the Lysychansk refinery 698,600

Restructuring of a mine in the Donbass coal field 398,800

Coal based methane production 399,300

Assistance for the creation of national

electricity company for the Ukraine 900,000

Establishment of a transport training centre 341,200

National road network study 600,000

Technical assistance for the development

and regulation of the aviation industry 524,200

Training maritime field, Odessa 359,800

Access to ports of Ismail and Reni 338,700

Retraining of former military officers 7,275,600

Monitoring and evaluation programme 583,400

Monitoring and evaluation programme 795,900

Ukraine nuclear electricity generator 876,700

Commercial development of the energy sector 1,683,400

Boiler and valve production for the energy sector 943,500

Study on the efficiency of power generation 2,635,400

Restructuring of the oil and gas entities 2,099,000

Cost and efficiency analysis of

urban district heating systems 2,399,900

Post-privatisation support 3,298,300

**57**

Assistance to the Ukraine government

on private enterprises 989,600

Pilot project for agricultural restructuring 4,797,300

Establishment of a training centre

for energy management 1,399,300

Support to Zaparozhye 6, Rovno 4

and Khmelnitsky 2, nuclear power plants 2,953,600

Support to Zaparozhye 6, Rovno 4

and Khmelnitsky 2, nuclear power plants 982,500

**Uzbekistan**

Support for industrial property protection 400,000

Establishment of law centres for entrepreneurs 394,300

Support for public sector reform 1,399,800

Pilot integrated development programme,

Samarkand 1,675,200

Establishment of food and agricultural policy 1,549,800

Assistance to the government of Uzbekistan 779,100

Restructuring of commercial banks 824,200

Advice to the Ministry of Communications 492,400

Regional bank training in Central Asia 999,900

**Multi-country programmes**

Support for intellectual property protection 2,000,000

On-site assistance for Kalingrad nuclear

power plant, phase 2 319,200

Procurement of equipment for nuclear

power plants 2,173,500

WER 1000 core analysis, nuclear safety 876,400

Upgrade of service and maintenance centre,

nuclear safety 1,435,300

Non-destructive examination and

in-service inspection of mechanical

equipment in Russian nuclear power plants 1,294,700

Twinning programme, engineering group 435,100

Twinning programme, engineering group 320,000

Trade and transport cooperation

and working group 990,300

Traceca: immediate training action 861,200

Traceca: forwarding and freight operation 499,800

Air traffic control and airports 609,200

Policy advice programme 400,000

Establishment of Tacis technical data centre 527,100

Recruitment of a senior project manager

for the ISTC 360,000

Russia regional venture fund framework - EBRD 722,400

Regional venture fund for Urals procurement agent 769,400

Regional venture fund for western Siberian

procurement agent 769,400

**58**

Small and medium-sized enterprises,

regional programme 3,800,000

Programme for the treatment of thyroid cancer 399,900

Rail transport feasibility study 496,600

Traceca: Rail freight traffic management 850,000

Regional traffic forecasting model 698,100

Traceca: Legal regulatory framework 1,497,600

Traceca: Implementation

of pavement management 999,100

Traceca: Infrastructure Maintenance 1 1,200,000

Requirement for extended economy and security 1,639,800

Improvement system for operational planning 1,083,000

Improvement of electricity distribution

in Central Asia 1,121,000

Technical study on the interface

of west European and east European

power systems 402,700

Regional oil and gas pipeline management

in Asian and Caucasian republics 485,500

Development Technicum (agriculture) 300,000

Databases, dictionaries and social security

for use in the energy sector 545,600

Convention between DGIA and the

European Training Foundation 602,400

Technical development of statistical

information in the NIS 1,500,000

Customs training in Kazakhstan, Kyrgyzstan

and Uzbekistan 400,000

Support for the establishment of a Tacis

technical data centre 892,700

WER-213/1000 confinement cable penetration,

nuclear safety 2,000,000

RBMK safety assessment, Phase 2,

nuclear safety 2,980,600

Development of safety panel prototype

WER 1000, nuclear safety 1,989,800

Reactors quality assurance programme 500,000

Technical assistance to Rosenergoatom 994,600

Support for licensing related assessments

of primary circuit integrity 487,700

Licensing related assessments of

safety design and operational safety 781,700

Licensing related assessments of safety

associated modules 487,300

Licensing related assessments of accident analysis 390,800

Nuclear fuel cycle and waste sorting 616,600

Management of radioactive waste, Moscow 678,300

Container for WER reactor's spent fuel 449,600

Local computer network for Beloyarsk nuclear

power plant 547,300

Establishment of nuclear engineering procedures 877,800

Development plan for creating a regional

training centre for nuclear safety 1,099,300

Development plan for creating a national

training plan for nuclear safety 1,199,500

Scheme for safety management for nuclear safety 680,100

WER primary system training specialists 849,700

Investigation of the impact of spent nuclear fuel 377,900

Support to accident analysis, Ukraine

Safety Authority 1,299,700

Urgent measures to remodel the uranium

mining in the NIS 1,415,000

Assistance for the transport of irradiated

nuclear fuel 982,000

Food quality technical support 1,117,900

Establishment of a Tacis Technical

Office in Kiev 428,800

Addendum to Technical Office in Kiev 409,100

Training in Tacis project cycle management 349,800

Russian Regional Venture Fund, Urals 1,000,000

Russian Regional Venture Fund, Urals 1,000,000

Russian Regional Venture Fund, Siberia 1,000,000

Russian Regional Venture Fund, Urals 1,000,000

Russian Regional Venture Fund, Smolensk 1,000,000

Tacis information and communications

programme 1,500,000

On-Site assistance, Balokovo 994,900

On Site assistance, Leningrad 1,319,100

On-Site assistance, Kola 1,808,100

RMBK training centre, Smolensk 498,900

Photogrammetrical equipment,

soft adaptation nuclear power plant 762,300

On-Site assistance, Kalinin 1993-94 2,611,500

General on-site assistance, bn.600 701,500

Dynamic calculations of nuclear

power plant structures 791,900

Integrity assessment WER 1000 reactors 489,000

WER tightness assessment, improvement

of seal configuration and equipment supply 1,199,100

Preparation of an industrial fatigue

diagnostic system, nuclear safety 498,800

Licensing related assessments of reactor

vessel embrittlement 487,100

Assistance and management to severe

nuclear accidents 973,300

Licensing related assessments of safety

associated modules 488,700

On-site activities, Ukraine south, phase 2 2,748,200

On-site assistance, Zaparozhye, phase 2 1,299,100

Procurement of office equipment,

nuclear safety 1,100,000

Twinning Programme engineering group 502,300

Policy and legal advice programme 1,000,000

Policy and legal advice programme 6,800,000

Policy and legal advice programme 1,000,000

SME regional programme 1994, twinning 500,000

Development of SME, 1994 NIS Partenariat 1,300,000

Study on the interconnection of the Caucasus 498,500

Support to the Agricultural Free Trade Area 1,854,300

Courses on Joint Vienna Institute 457,500

NGO cofinancing programme; support to

the disabled in the Russian Federation 300,000

NGO cofinancing programme; support

for the visually impaired in the Russian Federation 300,000

Monitoring and evaluation; for west

and south west Russia 2,499,600

Europartenariat, Lisbon 300,000

Technical assistance to Georgian agriculture 300,000

Moscow and St Petersburg, EBRD 480,000

Russia Technopark management 838,400

Development of Turkmenistan export line 990,400

Upgrading of air navigation system, Azerbaijan 300,000

Credit advisers, Petrovsky 711,600

Russia business advisory services, EBRD 575,000

Technical assistance to Tacis Coordinating

Units in Belarus, Ukraine and Moldova 1,773,800

Technical assistance to Tacis Coordinating

Units in Kazakhstan, Kyrgyzstan, Turkmenistan

and Uzbekistan 1,768,100

Technical assistance to Tacis Coordinating

Units in Armenia, Azerbaijan and Georgia 1,350,300

Service contract for travel services

for Coordinating Units 300,000

Western expertise to the Coordinating

Unit in Russia 1,144,500

Tacis information and communication strategy 2,200,000

Food aid in favour of Armenia, Azerbaijan,

Georgia, Kyrgyzstan and Tajikistan 553,000

Monitoring of food operation, Caucasus 2,065,800

Assistance to managers of the NIS component

of the Phare and Tacis Democracy programme 761,900

Russian Elections: Support to EU Election Unit 349,700

Legal system reform, Ukraine 420,000

Democracy programmes, parliamentary

training project for the Ukraine 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 **Tel** (+32-2) 295 25 85 / 296 60 65 / 296 64 94
**Mailing Address** MO 34 3/88 Wetstraat 200 Rue de la Loi B-1049 Brussels **Fax** (+32-2) 296 80 24 / 231 04 41 English
**World Wide Web Address** [http://europa.eu.int/en/comm/dg1a/tacis/home.html](http://europa.eu.int/en/comm/dg1a/tacis/home.html) **E-mail** [tacis.info@dg1a.cec.be](mailto:tacis.info@dg1a.cec.be) T/EN/08.96/02/02/11/B