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<text> <title> Extending Assistance to Newly Emerging Democracies </title> <article> <hdr> US Department of State Dispatch, March 16, 1992 Extending Assistance to Newly Emerging Democracies </hdr> <body> Deputy Secretary Eagleburger Statement before the Foreign Operations Subcommittee of the House Appropriations Committee, Washington, DC, March 11, 1992 We have witnessed, over the last few years, breathtaking changes in Central and Eastern Europe and the former Soviet Union. For over 4 centuries, Russia had been an imperial, authoritarian state, dominating its neighbors and threatening stability in both Europe and Asia. But, now, the collapse of the Soviet empire and the discrediting of communism have provided new hope for freedom and prosperity for over 400 million people in the region. As a consequence, we enjoy the prospect of a democratic Russia which has dismantled its empire and is turning its energies inward toward reform rather than outward toward expansion. This is a prospect which bears directly on the national security of the United States, and it is, therefore, something which is in our national interest to support. But it is also a prospect which is as yet fragile, one which could easily give way to a more historically familiar state of affairs. There is no guarantee that the new states of Central and Eastern Europe or those of the former Soviet Union will evolve into friendly, prosperous democracies. They face formidable obstacles along the path of reform, as communism has driven these countries and their economies to the brink of ruin. In the final analysis, success will depend on the will and determination of the governments and peoples of the region. But Western assistance can make a difference, and we have an obligation before history and to future generations to do our part in helping to make their democratic experiment a success. What is at stake for us is whether the recent transformation of dangerous adversaries into friends and partners is a permanent or a passing phenomenon. Clearly, the United States does not possess limitless resources, especially in a time of serious economic difficulty at home. But the American people, who spent trillions of dollars to wage and to win the Cold War, hopefully are willing to allocate comparatively modest sums today in order to ensure that we do not face, once again, an old threat under a new guise. If we do the right thing today, we will have done what we could to spare our children from the specter of nuclear war and from the colossal expenditures on national defense which our generation has had to live with since World War II. Our economic well-being is also at stake. The peoples of Central and Eastern Europe and the former Soviet Union present an enormous new market for Western trade and investment. We must actively seek to involve the American private sector in the rebuilding of this region. Not only will such involvement provide new economic opportunities for America, but it will help enhance the presence and influence of the United States in these newly emerging democracies. We certainly do not want to see the old COMECON [Council for Mutual Economic Assistance] bloc closed to US trade and investment by activities and agreements struck with other trading partners. Our private sector can provide positive examples of the free market values which are the foundation of economic prosperity both here and abroad. Our assistance program itself, by utilizing US goods and services rather than writing checks to foreign governments, creates jobs at home as well as overseas. US Programs in Central and Eastern Europe As we begin to implement our assistance program in the new independent states, we can benefit from our experience to date in Central and Eastern Europe. When we started our assistance program with the SEED [Support for Eastern European Democracies] Act of 1989, only Poland and Hungary were involved in major reform efforts. Now we have programs in 10 countries in Central and Eastern Europe. During the past 2 1/2 years, we have worked with the Congress to develop a creative assistance program, combining traditional activities with innovative approaches, such as the Enterprise Funds now operating in Poland, Hungary, Czechoslovakia, and Bulgaria. We and the East Europeans have learned what works quickly and what does not, and we remain committed to adapting our programs as needed to promote our goals. The flexibility we have built into our programs has been critical in allowing us to shift resources as necessary to respond to sudden changes in individual recipient countries--changes which are inevitable given the unprecedented reforms being implemented and the resulting dislocations that are occurring. If we had, for example, allocated funds to each country for each fiscal year, we would not have been able to shift resources to respond to the dramatic developments last year in Bulgaria, Albania, and the Baltic states. In my view, we have also been correct in focusing the majority of our assistance directly on the private sector. The overthrow of communism was a rejection of state interference in daily life. We want to strengthen nascent private institutions in these countries rather than perpetuate bureaucracies. Moreover, we believe that the primary reason why the United States has been able to disburse our assistance commitments at over twice the rate of the European Community has been because we work directly with the private non-governmental sector rather through host government institutions. We have also sought to combine our assistance tools with new initiatives designed to enhance US trade opportunities and promote US investments. In the long run, the impact of US private sector capital, goods, and services will be much greater on the development of free markets abroad than any government assistance that we can offer. The Administration's FY 1993 Program for Central and Eastern Europe As we proceed with humanitarian and technical assistance for the independent states of the former Soviet Union, it is essential that we not divert resources from our programs designed for Central and Eastern Europe. The success or failure of the political and economic transition underway from the Baltics to the Black Sea will have a decisive effect on the prospects for a successful transformation in Russia and the other independent states. We are, therefore, keeping funding for our East European program strictly separate from our CIS [Commonwealth of Independent States] program. We are also asking for a $50-million increase in funding for Central and Eastern Europe in FY 1993--$450 million as opposed to the $400 million we asked for in FY 1992. The increase in our request reflects the fact that we are now providing assistance to more countries. At the time we submitted the President's budget for FY 1992, we had assistance programs for six countries. Since then, we have added Estonia, Latvia, Lithuania, and Albania to the list, and the latecomers have some of the most urgent and long-term needs in the region. As the number of recipients has changed, so have the needs we are trying to fill. While we continue to place emphasis on the transitional nature of our East European assistance program and look to "graduate" countries as quickly as possible, we recognize that we will be providing assistance to some parts of the region for much longer than we had originally anticipated. Albania, for example, is similar to a traditional developing country, where the United States and other donors will probably be involved in institution-building for many years. In program terms, we want to build on our successes. Here is what we are planning for FY 1993: -- Poland will continue to be the largest single recipient of assistance in the region, consistent with its size and importance. </p