Two foundations active in Ukraine announce different paths for the future (11/22/98)

Two foundations active in Ukraine announce different paths for the future

While one moves forward...

by Roman Woronowycz
Kyiv Press Bureau

KYIV - The Eurasia Foundation marked five years of activity in Ukraine on November 18 by announcing that it will begin a new initiative aimed at supporting the development of small business in Ukraine's smaller cities and towns.

The foundation, a grant-making organization chiefly funded by the United States Agency for International Development (USAID) with additional support from other public and private financial sources, has worked in Ukraine since November 1993 to support projects in areas ranging from business development and economics education to electronics communication and the rule of law.

The Eurasia Foundation was organized with the stated mission: "to create functioning economies in which individuals have a stake; encourage citizen involvement in civic decision-making and increase local government responsiveness to citizens' needs and to improve the flow of information to the citizen."

Charles William Maynes, president of the Washington-based Eurasia Foundation, which has programs in 12 of the countries that were once republics of the Soviet Union and eight offices throughout the region, said at a press conference in Kyiv that he is thoroughly satisfied with the work of the foundation to date - especially its Kyiv office.

"Five years ago USAID did a very daring thing: created a publicly supported, private organization - that has almost never been done. I think they recognized that we faced a special situation in the countries in transition," said Mr. Maynes.

He praised the Kyiv office, the first of the eight regional offices to open, as an "extremely active office."

According to Nick Deychakiwsky, director of the Kyiv office since 1995, which coordinates the work of the foundation in Ukraine, Belarus and Moldova, 683 grants worth $18 million have been disbursed in Ukraine since the Kyiv office opened - $5 million this year alone. In addition the Kyiv office is responsible for a third of the 3,000 grants that the Eurasia Foundation has awarded since 1993.

Increasingly, the foundation is turning to outside sources of financial support. "Our funding is growing," said Yarema Bachynsky, public relations and development coordinator for the foundation. "The Kyiv office has also been able to get additional funding through private sources."

Some $4 million of the organization's financing has come from private and public sources outside USAID, such as the Charles Stewart Mott Foundation, Pew Charitable Trusts, Digital Corporation, Citicorp Foundation, the Swedish, Canadian and Netherlands governments, and the United Nations.

The Eurasia Foundation's newest effort, the "Small Business in Small Towns" program is designed to create favorable conditions for the development of grassroots entrepreneurial activity throughout Ukraine, according to Mr. Deychakiwsky. "It's an effort to create a good environment for business development," he explained.

The program is scheduled to last for two years and will include two types of grants: for local organizations to train beginning entrepreneurs in all aspects of business; and for the establishment of information services for small and medium business support and the expansion of activities of business associations and entrepreneur unions directed at market reform.

The total cost of the new program, which will concentrate on four to five oblasts in its present format and is scheduled to begin in April 1999, is currently projected to be $1 million. With additional funding, the geographic target would be expanded.

In addition to its core business development and business education grant-making program, including the small business lending program, the Eurasia Foundation currently has two other major programs.

It runs the media viability program, whose primary mission is to support the growth and development of independent media through technical assistance, grants and loans.

There is also the Economics Education and Research Consortium, a public-private partnership between the Eurasia Foundation, USAID, the governments of Norway, Sweden and Finland, and a host of U.S charitable institutions, including the Ford Foundation, the Open Society Institute and the Pew Charitable Trusts. Its goal is to broaden understanding of market institutions during economic transition and includes the development of a master's program in economics at the National University of Kyiv-Mohyla Academy.

Other Eurasia Foundation programs are aimed at improving housing services and stimulating municipal development; supporting the development of the non-profit sector in Ukraine; as well as promoting the rule of law.

In celebration of its five years of success in Ukraine, the foundation held a cocktail reception in Kyiv on November 17 attended by business and government leaders, including Roman Shpek, director of Ukraine's State Committee for Reconstruction and European Development; Volodymyr Polokhova and Kostiantyn Dvoinykha from the administration of President Leonid Kuchma; and Viktor Lysytskii, assistant chairman of the National Bank of Ukraine. The United States was represented by U.S. Ambassador to Ukraine Steven Pifer.

... another begins drastic cutbacks

by Roman Woronowycz
Kyiv Press Bureau

KYIV - Billionaire George Soros, whose money has financed a host of charitable foundations throughout Eastern Europe and the former Soviet Union, announced on November 11 that he would drastically cut funding for his Ukrainian operation.

The International Renaissance Foundation (IRF), the Ukrainian branch of Mr. Soros's Open Society Institute, which had been receiving approximately $10 million a year for projects ranging from support for contemporary art in Ukraine to the development of rule of law, will have its funding cut by half, almost immediately, explained Mr. Soros in Kyiv.

"The money spent in Ukraine has reached a peak, and from now it will only decline," Mr. Soros said at a private reception on November 11, according to the Kyiv Post. "We must conserve our resources and spend money only on certain projects."

The international financier, who had invested heavily in Russia and Asia, is said to have taken a $3 billion loss when the Asian financial crisis hit last year, and an additional $2 billion hit when the bottom fell out of the Russian market in late summer.

Mr. Soros admitted that his personal financial situation was in large measure the reason for the drastic spending cuts at the IRF. "I am spending more than I am earning," said the billionaire.

Personal finances aside, the Hungarian-born U.S. citizen who made his money in currency trading and hedge fund investments explained that the political situation in Ukraine also has contributed to his decision to reduce charitable spending in Ukraine.

At a roundtable discussion at Kyiv's Institute of International Relations, Mr. Soros said, "I have given up on Ukraine. Ukraine lacks political will and any kind of leadership."

At a press conference after a meeting with Ukraine's President Leonid Kuchma, Mr. Soros repeated his critical remarks. He said he supports the International Monetary Fund's role in Ukraine, but added that if Ukraine does not begin to follow through with promises of economic and structural reform, only a deeper crisis will follow. "There is a way out for Russia, as well as Ukraine, but it requires political will and leadership, and I don't see it at the present time in both countries," said Mr. Soros.

In 1999, IRF funding by Mr. Soros will drop from $10 million to $5 million. For 2000, Soros financing will decrease to 40 percent of 1998 levels. The financier said he will gradually continue to decrease levels of funding to the year 2010, by which time he plans to be out of Ukraine.

The IRF, which was established in 1990 by Mr. Soros's Open Society Institute in cooperation with the Prosvita Ukrainian Language Society and the Zelenii Svit (Green World) Society, will concentrate its efforts in Ukraine in the coming years on education and culture, including support for substance abuse and women's programs and minorities projects in Crimea. Gone will be financial support for civic education and publishing.

Mr. Soros, who has 30 similar foundations throughout the world to spur the efforts of countries moving toward democracy and free markets to what he calls an "open society," said that, although Ukraine is the first of his foundations to receive the financial ax, it will not be the last. He explained that 10 more national foundations will experience gradual funding reductions, followed by closings.

In Bulgaria, which Mr. Soros visited prior to arriving in Ukraine, he made similar statements, according to the Kyiv Post. It paraphrased the Bulgarian newspaper Sega as stating that Mr. Soros would "reconsider his strategy toward each individual country after 2001 and suspend aid altogether by 2010."

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