[Congressional Record Volume 140, Number 61 (Tuesday, May 17, 1994)]
[Extensions of Remarks]
[Page E]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


[Congressional Record: May 17, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
    IMPACT OF UNITED STATES ASSISTANCE TO RUSSIA AND EASTERN EUROPE

                                 ______


                          HON. LEE H. HAMILTON

                               of indiana

                    in the house of representatives

                         Tuesday, May 17, 1994

  Mr. HAMILTON. Mr. Speaker, there has been considerable discussion in 
recent months about the impact of United States assistance to the post-
communist countries of the Soviet Union and Eastern Europe. Has it been 
too much or too little? Is it properly targeted, to the right countries 
and the right sectors? Has it been provided in a timely manner?
  The administration recently provided a short paper identifying key 
U.S. assistance programs and their impact. I would like to bring that 
paper to the attention of my colleagues, as a contribution to a more 
informed debate on assistance to the countries of Eastern Europe and 
the former Soviet Union. The text follows:

    Program Results in Central and Eastern Europe [CEE] and the New 
 Independent States of the Former Soviet Union [NIS], as of March 1994

       The goals of the United States Government's assistance to 
     the CEE states and the NIS are: establishing market 
     economies, developing democratic institutions and practices, 
     and easing the human costs associated with political and 
     economic transition. In some areas the accomplishments to 
     date are very tangible. In other cases the groundwork is 
     being laid for structural change, and it may be too early to 
     judge longer-term impact. The following summarizes many 
     important accomplishments under each goal.
       1. Transition to market-based economies.--Our programs are 
     fostering the emergency of competitive, market-oriented 
     economies in which the majority of economic resources are 
     privately owned and managed. Macroeconomic stability and 
     efficiency call for legal, regulatory, procedural and 
     institutional changes to support private, market-based 
     activity. Specific results include:


                             privatization

       In Russia, two-thirds of all small scale shops (70,000) and 
     8,500 medium and large enterprises have been privatized. 900 
     medium, large and very large enterprises are being privatized 
     each month. 40% of Russia's industrial labor force is now 
     working for the private sector. 50 million Russians have 
     become shareholders.
       In Hungary, over 30% of privatization transactions have 
     been accomplished through employee stock ownerships (ESOPs).
       In the Czech Republic, a U.S. advisory team reviewed 300 
     companies proposed for privatization and helped privatize 84 
     that have led to $1.9 billion in foreign investment, with 
     $0.5 billion more expected.
       Technical advisors helped to structure the $4 billion 
     Polish Mass Privatization Program of 450 former state-owned 
     enterprises, enabling 25 million Poles to purchase shares.
       Enterprise Funds are providing capital resources and 
     technical assistance to both privatized and new enterprises 
     throughout CEE and will soon begin operations in NIS. Roughly 
     $290 million has been invested in over 3,000 new private 
     enterprises in CEE, creating an estimated 20,000 new jobs and 
     leveraging almost $200 million from other investors. The 
     Russian American Enterprise Fund opened in February and 
     should make its first investments imminently.


                            economic reform

       The 50 top Russian banks have developed detailed reform 
     plans. 250 Russian bankers have received U.S. training and 
     returned to apply new approaches to their own banks.
       In Poland, advisors are helping the Central Bank develop 
     its bank supervision capacity and are preparing several 
     state-owned commercial banks for privatization. Hundreds of 
     bankers have been trained in Poland, including 74 from 
     Belarus, Estonia, Lithuania and Ukraine.
       In Russia, laws have been passed to promote anti-trust and 
     competition procedures to permit market forces to work. 
     Bankruptcy procedures have been developed which will permit 
     restructuring of many industries.
       In Russia, we have helped regional, local and national 
     governments to develop tax and expenditure policies which 
     link revenues with public service expenditures at each level. 
     14 high-ranking officials studied U.S. approaches to state 
     and local government finances.


                                 energy

       Efficiency audits and demonstrations of U.S. technology 
     have achieved savings of up to 30 percent in Russia, 
     Kazakhstan, Kyrgyzstan and Armenia in the massive district 
     heating systems which dominate the provision of heat and hot 
     water. In one Russian city alone, Kostromo, savings were $15 
     million a year.
       In Poland, Romania, Bulgaria and other Eastern Europe 
     countries, U.S. efficiency equipment valued at over $1 
     million has been installed in over 40 industrial facilities. 
     These pilot projects are estimated to have saved over $16 
     million annually or over 1 million tons of oil equivalent.
       In Poland, a U.S. private corporation has designed and 
     installed a high efficiency flue gas desulphurization unit at 
     the Skawina power plant in Krakow. This is the first such 
     unit in Poland and will allow this plant to meet the tough 
     Polish environmental regulations go into effect in 1998. It 
     will also reduce pollution in Krakow which is destroying the 
     cultural artifacts and causing serious health problems.
       U.S. advisers demonstrated U.S. energy efficiency equipment 
     at over 40 industrial plants in CEE and saved approximately 
     $16 million in annual savings for an investment of about $1.2 
     million.
       In nuclear safety, advisors have helped improve safety at 
     plants in Bulgaria, Czech Republic, Slovakia, Hungary and 
     Bulgaria, Russia and Ukraine.


                                housing

       Armenia has adopted a housing privatization law, land tax 
     law, and a land transfer tax policy which permits land 
     privatization. It includes regulations for urban land 
     valuation and sale, and registration procedures.
       Kazakhstan has established a housing policy to privatize 
     condominiums and permit private ownership and use rights to 
     land.
       Russia has established privatized management and 
     maintenance of housing for 2,000 units in Novosibirsk and 
     7,000 units in Moscow, and has developed mortgage instruments 
     which can be used despite the current inflationary 
     environment. This may be a model for other NIS countries.
       In Poland, the first market-based mortgages have been made 
     for private individuals in Eastern Europe, through a housing 
     guaranty program which immediately affects 1,500 residential 
     units.
       In Hungary, Szolnok city officials are redirecting housing 
     subsidies to the most needy, permitting a reduction in cost 
     and greater equity in the program.
       Condominium and privatization laws in Albania have resulted 
     in over 95% of the 270,000 housing units in urban areas to be 
     privatized in one year.
       U.S. assistance was instrumental in introducing the concept 
     and substance of the Housing Privatization and Condominium 
     Law enacted by the Slovak Parliament in 1993.
       2. Building democracy.--U.S. assistance supports the 
     transition to democratic political systems, free and 
     independent media, transparent and accountable governance, 
     rule of law, and the empowerment of indigenous civic and 
     economic institutions to ensure broad-based participation in 
     political life. Specific achievements to-date include:


                   political systems and institutions

       The American Bar Association's Central and East Europe Law 
     Initiative has helped counterparts in a number of CEE and NIS 
     countries draft democratic constitutions.
       The Library of Congress has helped the parliaments of eight 
     CEE countries establish parliamentary research and 
     information systems to empower them with a source of 
     information independent of the executive branch.
       The International Foundation for Electoral Systems, the 
     National Democratic Institute and the International 
     Republican Institute have helped establish electoral systems 
     and supported party development across Central and Eastern 
     Europe.
       Parliamentary and presidential elections in Russia, 
     Ukraine, Georgia, Moldova, Albania, Romania and Estonia have 
     benefitted from U.S. NGO assistance in central election 
     commission procedures, political party development, and poll-
     watcher training.


                              rule of law

       American Bar Association technical advisers have helped 
     Russia reintroduce trial by jury for the first time since 
     1917 in nine regions.
       The American Bar Association helped draft clauses 
     protecting human rights in the new Hungarian criminal code, 
     expected to remain in the final legislation.
       U.S. anti-monopoly advisors helped draft the existing 
     competition law, with Poland becoming the first former 
     communist country to have its competition report accepted by 
     the OECD. With help from the U.S. FTC and Consumer Protection 
     Agency, a Polish Consumer Protection Department has been 
     established within the Anti-Monopoly Office.
       The National Democratic Institute has helped Romania's Pro-
     Democracy Association (PDA) launch a three-month 
     parliamentary transparency and accountability campaign. As of 
     January 1994: (1) small groups of citizens are now being 
     admitted to the plenary debates in the Senate; and (2) the 
     parliamentary newspaper will publish the upcoming draft laws 
     to be debated.


                           independent media

       The International Media Fund (IMF) has helped launch 
     independent newspapers and radio stations across CEE as well 
     as establish media resource centers in the region.
       Internews (a U.S. NGO) helped link six independent Russian 
     TV stations, for the production of two local news programs on 
     more than 40 stations in Russia, Ukraine and Kazakhstan for a 
     combined viewership of over 70 million. In the Ukraine, 
     Internews helped create a network of independent TV stations 
     with a wider viewership than Ukrainian state television.


                Local Government and Civil Institutions

       The International City Manager's Association has provided 
     technical assistance and training to several local municipal 
     government associations in Poland, the Czech Republic and 
     Slovakia, and helped to establish self-sustaining vocal 
     centers playing an important role in the decentralization of 
     power from central to regional and local governments.
       Over 200 Polish local municipal council members and 
     administrators were trained in principles of public service 
     organization, management and local finance.
       To help the Russian people build the institutions of a 
     civic society, grants were provided to over 300 indigenous 
     nongovernmental organizations and provided technical 
     assistance to encourage formation of additional NGOs. Four 
     years ago, such organizations were all but unknown. Today 
     there are a least 12,000 NGOs in the NIS.
       3. Easing human costs.--Our focus is on redefining public 
     and private sector roles in the management of humanitarian, 
     health, and related social services fundamental to a stable 
     transition. Emergency assistance provides some relief as new 
     systems are put in place. Specific achievements include:


                          Emergency Assistance

       Emergency humanitarian assistance has helped avoid hunger, 
     epidemics and other hardships in strife-torn Armenia, 
     Georgia, Azerbaijan and Tajikistan, as well as the former 
     Yugoslavia. Critically needed medical supplies and emergency 
     food aid have been directed to the most vulnerable groups. 
     Emergency kerosene and seed wheat are helping Armenia survive 
     the winter and will permit spring planting. Looking longer 
     term, pharmaceutical and vaccine production capacity is being 
     restored in Russia.
       Agricultural and dairy products to vulnerable groups in 
     Armenia, Georgia and Russia have already reached 2,226,000 
     pregnant and nursing mothers, infants and pensioners. Another 
     $38 million in such assistance is being provided this year.
       In Central Asia, vaccination of over 500,000 children has 
     prevented epidemics of measles and other childhood diseases.
       In Croatia and Bosnia-Herzegovina, we support 20 local 
     organizations, including women's groups, community 
     organizations and local voluntary organizations, to assist 
     war refugee trauma victims and reunite families separate by 
     the conflict.
       In Romania, emergency assistance was provided to many of 
     the 100,000 institutionalized children. Nearly 2,500 children 
     under three years of age have received rehabilitation 
     assistance, and 147 children have been placed with Romanian 
     and American adoptive parents.


                                 health

       To restore vaccine production, U.S. Firms are providing raw 
     materials and inputs for production of measles, polio and DPT 
     vaccines, and training in sound manufacturing practices. The 
     U.S. FDA is assisting in vaccine quality control and 
     regulation. Feasibility studies for potential private sector 
     investment in new production facilities have been completed.
       31 Partnerships between U.S. hospitals and health 
     facilities in Central and Eastern Europe and the NIS are 
     directly improving the quality of medical care in cities 
     throughout the region. To improve emergency care, ten such 
     partnerships have improved ambulance services, emergency room 
     and intensive care in Russia. Urkraine, Belarus, Kazakhstan, 
     Georgia and Armenia. Other partnerships in both CEE and the 
     NIS are improving treatment of children with leukemia, 
     improving nursing standards and skills, and updating medical 
     management.
       In Central Asia, women's access to family planning services 
     in being expanded by development of commercial supply systems 
     for modern contraceptives and training of health care 
     providers.
       Under the PROJECT HOPE Health Care Partnership, a pediatric 
     cardiovascular team from Boston Children's Hospital is 
     helping to establish high quality treatment capability in 
     Slovakia. In the first eight months of training, it is 
     reported that the number of children abroad for heart 
     treatment was reduced by 90%. Project HOPE has increased 
     cardiology services; the waiting time for surgery has been 
     shortened; and the hospital mortality rate has been reduced 
     from 12% to 5%.


                              environment

       Technical advisors have helped restore the water supply 
     system and wastewater system for the City of Yerevan, a 
     system that provides service to approximately 50% of the 
     Armenian population.
       In the Central Asian Republics we have launched an Aral Sea 
     Initiative which initially focuses on providing potable water 
     to the most affected populations. Follow-up work will include 
     TA on water resources management.
       The World Environment Center is introducing new technology 
     for decreasing industrial wastes. This helped the largest 
     refinery in the Czech Republic to decrease carcinogenic 
     emissions by 72% and will also help this company to save over 
     $130,000 yearly in production costs. Also in the Czech 
     Republic, the U.S. capitalized with $10 million dollars in 
     local currency a fund to undertake environmental activities 
     and investments.
       In Poland, the Oswiecim chemical works realized a 90% 
     reduction in emission of vinyl chloride and an annual savings 
     of $2 million by application of relatively inexpensive 
     technological changes. Replicable energy efficiency 
     demonstrations in multi-family housing in Krakow are expected 
     to realize energy savings of 30-35%. The recently-installed 
     sulfur scrubbers at the Skawina power plant near Krakow are 
     predicted to reduce sulphur dioxide emissions by 80%--from 
     4,000 tons to 8,000 tons annually.

                          ____________________