Support for East European Democracy (SEED) Act of 1989
Public Law 101–179, as amended
Support for East European Democracy (SEED) Act of 1989
179
117–286
Statute Compilation
United States House of Representatives
Office of the Legislative Counsel
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Support for East European Democracy (SEED) Act of 1989
Better Utilization of Investments Leading to Development Act of 2018
13908
101
1989-11-28
Support for East European Democracy (SEED) Act of 1989
[(Public Law 101–179)]
[As Amended Through P.L. 117–286, Enacted December 27, 2022]
[Currency: This publication is a compilation of the text of Public Law 101-179. It was last amended by the public law listed in the As Amended Through note above and below at the bottom of each page of the pdf version and reflects current law through the date of the enactment of the public law listed at https://www.govinfo.gov/app/collection/comps/]
[Note: While this publication does not represent an official version of any Federal statute, substantial efforts have been made to ensure the accuracy of its contents. The official version of Federal law is found in the United States Statutes at Large and in the United States Code. The legal effect to be given to the Statutes at Large and the United States Code is established by statute (1 U.S.C. 112, 204).]

AN ACT
To promote political democracy and economic pluralism in Poland and Hungary by assisting those nations during a critical period of transition and abetting the development in those nations of private business sectors, labor market reforms, and democratic institutions; to establish, through these steps, the framework for a composite program of support for East European Democracy (SEED).
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
SECTION 1.
[22 U.S.C. 5401 note]

SHORT TITLE AND TABLE OF CONTENTS.
(a)

Short Title.—
This Act may be cited as the “Support for East European Democracy (SEED) Act of 1989”.
* * * * * * *
SEC. 2.
[22 U.S.C. 5401]

SUPPORT FOR EAST EUROPEAN DEMOCRACY (SEED) PROGRAM.
(a)

SEED Program.—
The United States shall implement, beginning in fiscal year 1990, a concerted Program of Support for East European Democracy (which may also be referred to as the “SEED Program”). The SEED Program shall be comprised of diverse undertakings designed to provide cost-effective assistance to those countries of Eastern Europe that have taken substantive steps toward institutionalizing political democracy and economic pluralism.
(b)

Objectives of Seed Assistance.—
The President should ensure that the assistance provided to East European countries pursuant to this Act is designed—
(1)
to contribute to the development of democratic institutions and political pluralism characterized by—
(A)
the establishment of fully democratic and representative political systems based on free and fair elections,
(B)
effective recognition of fundamental liberties and individual freedoms, including freedom of speech, religion, and association,
(C)
termination of all laws and regulations which impede the operation of a free press and the formation of political parties,
(D)
creation of an independent judiciary, and
(E)
establishment of non-partisan military, security, and police forces;
(2)
to promote the development of a free market economic system characterized by—
(A)
privatization of economic entities,
(B)
establishment of full rights to acquire and hold private property, including land and the benefits of contractual relations,
(C)
simplification of regulatory controls regarding the establishment and operation of businesses,
(D)
dismantlement of all wage and price-controls,
(E)
removal of trade restrictions, including on both unports and exports,
(F)
liberalization of investment and capital, including the repatriation of profits by foreign investors;
(G)
tax policies which provide incentives for economic activity and investment,
(H)
establishment of rights to own and operate private banks and other financial service firms, as well as unrestricted access to private sources of credit, and
(I)
access to a market for stocks, bonds, and other instruments through which individuals may invest in the private sector; and
(3)
not to contribute any substantial benefit—
(A)
to Communist or other political parties or organizations which are not committed to respect for the democratic process, or
(B)
to the defense or security forces of any member country of the Warsaw Pact.
(c)

SEED Actions.—
Assistance and other activities under the SEED Program (which may be referred to as “SEED Actions”) shall include activities such as the following:
(1)

Leadership in the world bank and international monetary fund.—
United States leadership in supporting—
(A)
loans by the International Bank for Reconstruction and Development and its affiliated institutions in the World Bank group that are designed to modernize industry,agriculture, and infrastructure, and
(B)
International Monetary 9und programs designed to stimulate sound economic growth.
(2)

Currency stabilization loans.—
United States leadership in supporting multilateral agreement to provide government-to-government loans for currency stabilization where such loans can reduce inflation and thereby foster conditions necessary for the effective implementation of economic reforms.
(3)

Debt reduction and rescheduling.—
Participation in multilateral activities aimed at reducing and rescheduling a country’s international debt, when reduction and deferral of debt payments can assist the process of political and economic transition.
(4)

Agricultural assistance.—
Assistance through the grant and concessional sale of food and other agricultural commodities and products when such assistance can ease critical shortages but not inhibit agricultural production and marketing in the recipient country.
(5)

Enterprise funds.—
Grants to support private, nonprofit “Enterprise Funds”, designated by the President pursuant to law and governed by a Board of Directors, which undertake loans, grants, equity investments, feasibility studies, technical assistance, training, and other forms of assistance to private enterprise activities in the Eastern European country for which the Enterprise Fund so is designated.
(6)

Labor market-oriented technical assistance.—
Technical assistance programs directed at promoting labor market reforms and facilitating economic adjustment.
(7)

Technical training.—
Programs to provide technical skills to assist in the development of a market economy.
(8)

Peace corps.—
Establishment of Peace Corps programs.
(9)

Support for indigenous credit unions.—
Support for the establishment of indigenous credit unions.
(10)

Generalized system of preferences.—
Eligibility for trade benefits under the Generalized System of Preferences.
(11)

Normal trade relations.—
The granting of temporary or permanent nondiscriminatory treatment to the products of an East European country through the application of the criteria and procedures established by section 402 of the Trade Act of 1974 (19 U.S.C. 2432; commonly referred to as the “Jackson-Vanik amendment”).
(12)
Programs of the Overseas Private Investment Corporation.1
^1
Section 1470(m)(1) of the BUILD Act of 2018 (division F of Public Law 115-254) provides for an amendment to strike paragraph (12) and insert the following new paragraph (12). Section 1470(w) of such Act states “The amendments made by this section shall take effect at the end of the transition period.”. Section 1461(2) of such Act defines the term “transition period” as follows: “The term ‘transition period’ means the period—(A) beginning on the date of the enactment of this Act; and (B) ending on the effective date of the reorganization plan required by section 1462(e).”. For details relating to the reorganization plan, see section 1462(e) of such Act.
(12)
United states international development finance corporation.— Programs of the United States International Development Finance Corporation.
(13)

Export-import bank programs.—
Programs of the Export-Import Bank of the United States.
(14)

Trade and development program activities.—
Trade and Development Program activities under the Foreign Assistance Act of 1961.
(15)

Investment treaties.—
Negotiation of bilateral investment treaties.
(16)

Special tax treatment of below-market loans.—
Exempting bonds from Internal Revenue Code rules relating to below-market loans.
(17)

Exchange activities.—
Expanded exchange activities under the Fulbright, International Visitors, and other programs conducted by the United States Information Agency.
(18)

Cultural centers.—
Contributions toward the establishment of reciprocal cultural centers that can facilitate educational and cultural exchange and expanded understanding of Western social democracy.
(19)

Sister institutions.—
Establishment of sister institution programs between American and East European schools and universities, towns and cities, and other organizations in such fields as medicine and health care, business management, environmental protection, and agriculture.
(20)

Scholarships.—
Scholarships to enable students to study in the United States.
(21)

Science and technology exchanges.—
Grants for the implementation of bilateral agreements providing for cooperation in science and technology exchange.
(22)

Assistance for democratic institutions.—
Assistance designed to support the development of legal, legislative, electoral, journalistic, and other institutions of free, pluralist societies.
(23)

Environmental asssistance.—
Environmental assistance directed at overcoming crucial deficiencies in air and water quality and other determinants of a healthful society.
(24)

Medical assistance.—
Medical assistance specifically targeted to overcome severe deficiencies in pharmaceuticals and other basic health supplies.
(25)

Encouragement for private investment and voluntary assistance.—
Encouraging private investment and voluntary private assistance, using a variety of means including a SEED Information Center System and the provision by the Department of Defense of transportation for private nonfinancial contributions.
* * * * * * *
TITLE II—

PRIVATE SECTOR DEVELOPMENT
SEC. 201.
[22 U.S.C. 5421]

ENTERPRISE FUNDS FOR POLAND AND HUNGARY.
(a)

Purposes.—
The purposes of this section are to promote—
(1)
development of the Polish and Hungarian private sectors, including small businesses, the agricultural sector, and joint ventures with United States and host country participants, and
(2)
policies and practices conducive to private sector development in Poland and Hungary,
through loans, grants, equity investments, feasibility studies, technical assistance, training, insurance, guarantees, and other measures.
(b)

Authorization of Appropriations.—
To carry out the purposes specified in subsection (a), there are authorized to be appropriated to the President—
(1)
$240,000,000 to support the Polish-American Enterprise Fund; and
(2)
$60,000,000 to support the Hungarian-American Enterprise Fund.
Such amounts are authorized to be made available until expended.
(c)

Nonapplicability of Other Laws.—
The funds appropriated under subsection (b) may be made available to the Polish-American Enterprise Fund and the Hungarian-American Enterprise Fund and used for the purposes of this section notwithstanding any other provision of law.
(d)

Designation of Enterprise Funds.—
(1)

Designation.—
The President is authorized to designate two private, nonprofit organizations as eligible to receive funds and support pursuant to this section upon determining that such organizations have been established for the purposes specified in subsection (a). For purposes of this Act, the organizations so designated shall be referred to as the Polish-American Enterprise Fund and the Hungarian-American Enterprise Fund (hereinafter in this section referred to as the “Enterprise Funds”).
(2)

Consultation with congress.—
The President shall consult with the leadership of each House of Congress before designating an organization pursuant to paragraph (1).
(3)

Board of directors.—
(A)
Each Enterprise Fund shall be governed by a Board of Directors comprised of private citizens of the United States, and citizens of the respective host country, who have demonstrated experience and expertise in those areas of private sector development in which the Enterprise Fund is involved.
(B)
A majority of the members of the Board of Directors of each Enterprise Fund shall be United States citizens.:2 Provided, That, as to Enterprise Funds established with respect to more than one host country, such Enterprise Fund may, in lieu of the appointment of citizens of the host countries to its Board of Directors, establish an advisory council for the host region comprised of citizens of each of the host countries or establish separate advisory councils for each of the host countries (hereinafter in this section referred to as the 'Advisory Councils'), with which the Enterprise Fund's policies and proposed activities and such host country citizens shall satisfy the experience and expertise requirements of this clause.
^2
The colon following the period in subparagraph (B) is so in law. Such amendment was made by subsection (v) of title II of Public Law 104–107 (110 Stat. 714). Such amendment probably should have been made to section 201 of the Support for East European Democracy (SEED) Act of 1989 rather than the US Code citation.
(C)
A host country citizen who is not committed to respect for democracy and a free market economy may not serve as a member of the Board of Directors of an Enterprise Fund.
(4)

Eligibility of enterprise funds for grants.—
Grants may be made to an Enterprise Fund under this section only if the Enterprise Fund agrees to comply with the requirements specified in this section.
(5)

Private character of enterprise funds.—
Nothing in this section shall be construed to make an Enterprise Fund an agency or establishment of the United States Government, or to make the officers, employees, or members of the Board of Directors of an Enterprise Fund officers or employees of the United States for purposes of title 5, United States Code.
(e)3

Grants to Enterprise Funds.—
Funds appropriated to the President pursuant to subsection (b) shall be granted to the Enterprise Funds by the Agency for International Development to enable the Enterprise Funds to carry out the purposes specified in subsection (a) and for the administrative expenses of each Enterprise Fund.
^3
Section 1470(m)(2) of the BUILD Act of 2018 (division F of Public Law 115-254) provides for an amendment to strike subsection (e) and insert the following new subsection (e). Section 1470(w) of such Act states “The amendments made by this section shall take effect at the end of the transition period.”. Section 1461(2) of such Act defines the term “transition period” as follows: “The term ‘transition period’ means the period—(A) beginning on the date of the enactment of this Act; and (B) ending on the effective date of the reorganization plan required by section 1462(e).”. For details relating to the reorganization plan, see section 1462(e) of such Act.
(e)

Grants to enterprise funds
Funds appropriated to the President pursuant to subsection (b) shall be granted to the Enterprise Funds to carry out the purposes specified in subsection (a) and for the administrative expenses of each Enterprise Fund—
(1)
except as provided in paragraph (2), by the United States Agency for International Development; or
(2)
if the Enterprise Funds are transferred to the United States International Development Finance Corporation pursuant to section 1463(b) of the Better Utilization of Investments Leading to Development Act of 2018, by the Corporation.
(f)

Eligible Programs and Projects.—
(1)

In general.—
The Enterprise Funds may provide assistance pursuant to this section only for programs and projects which are consistent with the purposes set forth in subsection (a).
(2)

Employee stock ownership plans.—
Funds available to the Enterprise Funds may be used to encourage the establishment of Employee Stock Ownership Plans (ESOPs) in Poland and Hungary.
(3)

Indigenous credit unions.—
Funds available to the Enterprise Funds may be used for technical and other assistance to support the development of indigenous credit unions in Poland and Hungary. As used in this paragraph, the term “credit union” means a member-owned, nonprofit, cooperative depository institution—
(A)
which is formed to permit individuals in the field of membership specified in such institution’s charter to pool their savings, lend the savings to one another, and own the organization where they save, borrow, and obtain related financial services; and
(B)
whose members are united by a common bond and democratically operate the institution.
(4)

Telecommunication modernization in poland.—
The Polish-American Enterprise Fund may use up to $25,000,000 for grants for projects providing for the early introduction in Poland of modern telephone systems and telecommunications technology, which are crucial in establishing the conditions for successful transition to political democracy and economic pluralism.
(5)

Economic foundation of nszz solidarnosc.—
Funds available to the Polish-American Enterprise Fund may be used to support the Economic Foundation of NSZZ Solidarnosc.
(g)

Matters To Be Considered by Enterprise Funds.—
In carrying out this section, each Enterprise Fund shall take into account such considerations as internationally recognized worker rights and other internationally recognized human rights, environmental factors, United States economic and employment effects, and the likelihood of commercial viability of the activity receiving assistance from the Enterprise Fund.
(h)

Retention of Interest.—
An Enterprise Fund may hold funds granted to it pursuant to this section in interest-bearing accounts, prior to the disbursement of such funds for purposes specified in subsection (a), and may retain for such program purposes any interest earned on such deposits without returning such interest to the Treasury of the United States and without further appropriation by the Congress.
(i)

Use of United States Private Venture Capital.—
In order to maximize the effectiveness of the activities of the Enterprise Funds, each Enterprise Fund may conduct public offerings or private placements for the purpose of soliciting and accepting United States venture capital which may be used, separately or together with funds made available pursuant to this section, for any lawful investment purpose that the Board of Directors of the Enterprise Fund may determine in carrying out this section. Financial returns on Enterprise Fund investments that include a component of private venture capital may be distributed, at such times and in such amounts as the Board of Directors of the Enterprise Fund may determine, to the investors of such capital.
(j)

Financial Instruments for Individual Investment in Poland.—
In order to maximize the effectiveness of the activities of the Polish-American Enterprise Fund, that Enterprise Fund should undertake all possible efforts to establish financial instruments that will enable individuals to invest in the private sectors of Poland and that will thereby have the effect of multiplying the impact of United States grants to that Enterprise Fund.
(k)

Nonapplicability of Other Laws.—
Executive branch agencies may conduct programs and activities and provide services in support of the activities of the Enterprise Funds notwithstanding any other provision of law.
(l)

Limitation on Payments to Enterprise Fund Personnel.—
(1)
No part of the funds of an Enterprise Fund shall inure to the benefit of any board member, officer, or employee of such Enterprise Fund, except as salary or reasonable compensation for services subject to paragraph (2).
(2)
An Enterprise Fund shall not pay compensation for services to—
(A)
any board member of the Enterprise Fund, except for services as a board member; or
(B)
any firm, association, or entity in which a board member of the Enterprise Fund serves as partner, director, officer, or employee.
(3)
Nothing in paragraph (2) shall preclude payment for services performed before the date of enactment of this subsection nor for arrangements approved by the grantor and notified in writing to the Committees on Appropriations.
(m)

Independent Private Audits.—
The accounts of each Enterprise Fund shall be audited annually in accordance with generally accepted auditing standards by independent certified public accountants or independent licensed public accountants certified or licensed by a regulatory authority of a State or other political subdivision of the United States. The report of each such independent audit shall be included in the annual report required by this section.
(n)

GAO Audits.—
The financial transactions undertaken pursuant to this section by each Enterprise Fund may be audited by the General Accounting Office in accordance with such principles and procedures and under such rules and regulations as may be prescribed by the Comptroller General of the United States, so long as the Enterprise Fund is in receipt of United States Government grants.
(o)

Recordkeeping Requirements.—
The enterprise Funds shallensure—
(1)
that each recipient of assistance provided through the Enterprise Funds under this section keeps—
(A)
separate accounts with respect to such assistance;
(B)
such records as may be reasonably necessary to disclose fully the amount and the disposition by such recipient of the proceeds of such assistance, the total cost of the project or undertaking in connection with which such assistance is given or used, and the amount and nature of that portion of the cost of the project or undertaking supplied by other sources; and
(C)
such other records as will facilitate an effective audit; and
(2)
that the Enterprise Funds, or any of their duly authorized representatives, have access for the purpose of audit and examination to any books, documents, papers, and records of the recipient that are pertinent to assistance provided through the Enterprise Funds under this section.
(p)

Annual Reports.—
Each Enterprise Fund shall publish an annual report, which shall include a comprehensive and detailed description of the Enterprise Fund’s operations, activities, financial condition, and accomplishments under this section for the preceding fiscal year. This report shall be published not later than January 31 each year, beginning in 1991.
* * * * * * *