Twenty Years of U.S. Economic Assistance to Eastern Europe and Eurasia
On July 22, Global Economy and Development at Brookings hosted a discussion on U.S. economic assistance in post-communist Eastern Europe and the former Soviet Union countries, centered around two reports issued by the Europe and Eurasia Bureau at USAID: “20 Years of USAID Economic Growth Assistance in Europe and Eurasia” and “The Enterprise Funds in Europe and Eurasia: Successes and Lessons Learned.”
USAID Assistant Administrator of the Bureau for Europe and Eurasia Paige Alexander provided introductory comments, followed by a presentation of the report by Stephen Eastham of USAID and a distinguished panel featuring Donald Pressley, of Booz Allen Hamilton, Ambassador William Taylor, at the U.S. Department of State, and Craig G. Buck, an international development consultant.
Alexander began her remarks by noting that through USAID, the U.S. government played a major role in helping the Europe and Eurasia region become “free, whole and at peace,” following passage of the FREEDOM Support Act . After the collapse of the Berlin Wall in 1989, USAID stepped in with over $20 billion of economic assistance in two areas: economic growth and democracy and governance.
Alexander said the overarching intent of the initiative was to foster stability and economic prosperity to help these countries “graduate” from assistance and ultimately gain membership to the European Union. Out of 29 countries that collapsed after the fall of the Soviet Union, 11 of them joined the EU, 17 joined the WTO and 12 joined NATO.
Despite tangible progress, Alexander acknowledged that there were many challenges along the way and new challenges that continue to arise. The eurozone financial crisis as well as chronic and increasing unemployment in the region has made it more difficult to make substantial progress in the region.
Stephen Eastham, the acting division chief of the Office of Economic Growth in the Bureau for Europe and Eurasia at USAID, then presented several key findings from the report, which covered six technical areas, including macroeconomic and fiscal reform, privatization, financial sector and capital markets, private enterprise development, energy and infrastructure, and agriculture and land. Eastham reiterated the key results that Alexander outlined, emphasizing a sense of urgency that USAID adopted which allowed them to develop a nimble and flexible framework to meet objectives.
Eastham cited numerous successes as a result of USAID projects in the region.
“Thousands of banks and enterprises were privatized, financial regulatory bodies were established based on international standards and staffed by well-trained professionals, electricity supply availability was greatly improved, energy efficiency reforms are still underway today, and hundreds of business advocacy organizations were created that helped improve the business enabling environment,” Eastham remarked.
Ambassador William Taylor opened the panel discussion by noting that in terms of development rhetoric, the U.S. government did not have sufficient knowledge of Europe and Eurasia prior to the fall of the Soviet Union; he said for him, the primary lesson was the importance of understanding these countries in terms of both their politics and larger societies and culture.
Craig Buck said that the report points out the need for a larger long-term commitment on the part of Americans and the international community to recognize the crucial correlation between strong governance and economic growth. He added that strengthening civil societies around the world can help countries develop stronger governance, and the commitment of the people in the areas that USAID helps is extremely important.
Finally, Donald Pressly described three important approaches that USAID took to achieve its goals. The organization took a holistic approach, in regards to working with people in a “partnership for progress.” In the early days, there was also a country-focused approach as opposed to a regional one. Thirdly, he underscored the institutional approach; that is, the importance of building sustainable institutions that can survive in the long term.